LOCALLY PRODUCED RICE MARKET LINKAGES AND PRICE TRANSMISSION IN GHANA

Abstract

In the Ghana Agricultural Investment Plan, it is stated that Ghana is food self-sufficient in all the major staple crops except rice and millet. Stable and affordable food commodity prices are important for food security. This study was conducted to identify locally produced rice market linkages and to analyze the trend or price transmission of the locally produced rice. Monthly price data from January 2013 to February 2019 was obtained from Esoko and analyzed. Rice production records across the country for 2019 was also obtained from the Statistical Research Information Directorate (SRID) of the Ministry of Food and Agriculture (MoFA). Primary data on local rice production and prices and rice preferences were also collected from farmers, market agents and consumers from major rice producing and consuming areas in Ghana. Time series analyses was undertaken. The Augmented Dicker-Fuller, DF-GLS and Phillip Perron tests for stationarity as well as the Zivot Andrews test for breaks were carried out. From the stationarity results it was found that all the prices of the markets were integrated of Order one (I). In the verification of co-integration property between the paired market prices using Johansen method, it was concluded that there are at most three (3) co integrating relationship among the five (5) rice market prices. Granger causality was applied to find the causal relationship between paired markets of which out of the 20 market pairs, 7 of them showed Granger causality with 2 market pairs bi-directionally related and 18 uni-directionally related. The vector error correction model was applied to determine the extent of price transmission showed that when co-integration equation is out of equilibrium due to 1% shock, the price in Agbobloshie market falls with a speed of 0.32% every month in order to restore to equilibrium once again. It is therefore recommended that policies on rice importation should be reconsidered by the government since it has effect on local rice pricing. Also, government should provide izansportation infrastructure to lessen, the challenges faced by Farmers and the Market agents.