Analysis of Price Transmission of Fresh Tomato and Pineapple in the Rural and Urban Markets of Akwa Ibom Sate, Nigeria

Abstract

The study investigated the dynamics of price transmission and market integration of fresh tomato and pineapple in the rural and urban markets of Akwa Ibom State, Nigeria. Average monthly prices (measured in naira per kilogram) of fresh tomato and pineapple in the rural and urban markets were used in the analysis. The data was obtained from the quarterly publications of the Akwa Ibom State Agricultural Development Programme (AKADEP). The data covered the period from January 2005 to September 2013. The trend analysis showed that, prices of fresh tomato and pineapple in the rural and urban markets have positive significant relationships with time and positive exponential growth rate. The Pearson correlation coefficient of each of the respective pair of rural and urban price of fresh tomato and pineapple revealed significant positive and symmetric relationships. The bivariate Granger causality test revealed bi-directional relationships between the rural and urban price of fresh tomato and pineapple in the State. The co-integration test revealed the presence of co-integration between the rural and urban price of fresh tomato and pineapple. The coefficients of market integration in the rural and urban price equation display varied degrees of long run market integration. The results of the error correction model (ECM) confirmed the existence of the short run market integration between the rural and urban prices of fresh tomato and pineapple in the study area. The urban price of fresh tomato adjusted faster to the stable state in the long run than its respective rural price. Also the rural price of pineapple adjusted faster to a stable state in the long run than its respective urban price. The index of market connection for fresh tomato and pineapple supported the existence of the short run market integration between the rural and urban markets. Based on the findings, it is recommended that, the Akwa Ibom State government should continue to provide marketing infrastructures in the rural areas to improve the symmetric nature of information among fresh tomato and pineapple markets in the state. Effort should also be channeled by all stake holders such as governments, trade unions and other organizations to reduce excessive externality costs associated with the marketing of fresh tomato and pineapple in the state. The government of Akwa Ibom State should established market information centers and awareness programmes on mass media to facilitate efficient information flow among fresh tomato and pineapple producers and consumers in the state.