AN ASSESSMENT OF DRY BEANS MARKET INTEGRATION IN SELECTED MARKETS IN KENYA

Venny K. Mayaka

No 157599, Research Theses from Collaborative Masters Program in Agricultural and Applied Economics

Abstract: Impelled by several strategies to ensure availability of food and access by all people through the ministry of agriculture, the main objective of this study was to measure the extent of dry beans market integration between surplus and deficit markets in Kenya. These markets were, Nairobi, Nakuru, Eldoret and Kitale markets. Using deflated and seasonally adjusted monthly average price data over 216 months (1994 to 2011) the study presented trade between Surplus and Deficit markets by applying Cointegration, Granger causality and the TAR model to present the relationship between the four markets. Results show that, all markets were integrated of order zero before differencing; Co-integration test revealed that all the markets were co-integrated while granger causality test confirmed independent causality with only one market link showing bidirectional causality leading to symmetric price adjustment between Kitale and Nairobi markets. Using the TAR model it was found out that it took approximately 3 weeks for a shock in Nairobi to be transmitted to Kitale market thus returning prices to their Threshold. The study concluded that, to increase the degree of market integration, the government in partnership with the private sector can give farmers incentives to produce dry beans in high production areas, improve marketing infrastructure like roads and communication facilities. This will greatly reduce transaction costs and improve price transmission. Also, it should avail market information to farmers through information banks to help them know which markets offer remunerative prices for their dry beans. In return traders will not take advantage of increased production to lower returns accruing to farmers thus, enhancing the degree of market integration.

Keywords: Crop; Production/Industries (search for similar items in EconPapers)
Pages: 65
Date: 2013-07
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Persistent link: https://EconPapers.repec.org/RePEc:ags:cmpart:157599

DOI: 10.22004/ag.econ.157599

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