Abstract
This paper was prepared to investigate the integration between the domestic and world prices of sorghum and measure the rate of transmission from world price to domestic price of sorghum. The study utilized secondary data covering the period 1970-2007.The data analyzed using dynamic linear regression model. The most important results revealed from the study were that the sorghum domestic price was inelastic in respond to both sorghum production cost and adjusted world prices in short run (0.2668 and 0.39543) and in long run (0.3982 and 0.5901). The effects of adjusted world price implied that devaluation and decrease of tariff rate would lead to increase of sorghum domestic price.
Highlights
Intervention in prices of sorghum in Sudan has involved many policy instruments, including export quotas and price support
The objective of this paper is to investigate the integration between the domestic and world prices of sorghum and measure the rate of transmission from world price to domestic price of sorghum
The effects of others tow policy instruments applied in Sudan which captured by coefficient of adjusted world price
Summary
Intervention in prices of sorghum in Sudan has involved many policy instruments, including export quotas and price support. Export quotas have been a key feature of controlled prices of sorghum for previous decades They had been implemented as means of stabilizing and increasing of sorghum producers’ prices and raising producers’ income. The sorghum prices respond to macroeconomic shocks and to sector-specific shocks Under such circumstance producers of sorghum in mechanized rainfed subsector would be in conditions of risk and uncertainty about price stability and volatility. Dramatic changes in sorghum prices in domestic markets with increase in costs of production and deterioration in sorghum yield and in rain fall had put producers of sorghum in critical situation because of price instability. When domestic price is low the policy makers use export bans to increase price of sorghum. The objective of this paper is to investigate the integration between the domestic and world prices of sorghum and measure the rate of transmission from world price to domestic price of sorghum
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