Monthly Price Analysis of Cassava Derivatives in Rural and Urban Markets in Akwa Ibom State, Southern Nigeria

Abstract

The study examined the price transmission and extent of market integration of yellow Garri and Fufu (fermented cassava tubers) in the rural and urban markets of Akwa Ibom State in Southern region of Nigeria. Average monthly prices (measured in naira per kilogram) of Garri and Fufu 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] (2013). The data covered January 2005 to June 2013. The trend analysis showed that, prices of Garri and Fufu in the rural and urban markets have exponential growth rates less than unity, which suggests possible co-movement of these prices in the study area. Also, the Pearson correlation coefficient generated for the pair of rural and urban prices of Garri and Fufu revealed significant linear symmetric relationships. The Granger causality test further revealed bi-directional relationships between the rural and urban price of Garri and Fufu in Akwa Ibom State, Nigeria. The results of the co-integration test revealed the presence of co-integration between the rural and urban prices of Garri. The theory of one price was tested for; in the Fufu markets and the result implies weak Fufu market integration in the study area. The results of the error correction model (ECM) confirm the existence of short run market integration between rural and urban prices of Garri in the study area. In addition, the result shows that, the price of Garri in urban market adjusted faster than that of the rural market once there is exogenous shock in the marketing system in the State. The estimated index of market connection (IMC) supported the high short run market integration between prices in rural and urban markets for Garri. Based on the findings, it is recommended that, the Akwa Ibom State government should continue to provide marketing infrastructures and reduced externality costs in order to improve the symmetric nature of information among participants in Garri and Fufu marketing in the state. Also, individuals and government should established market information units or centers and awareness programmes on mass media to facilitate efficient communication of market information in the state.