Food Market Integration Research Articles

Beyond Borders: A Review of Food Market Integration and Sustaiable Develomnet Goals

This paper presents a comprehensive review of food market integration research spanning 1990–2023, provides a thorough bibliography, and emphasizes its growth between developed and emerging economies. It evaluates 140 papers with the aim of highlighting the importance of price transmission, market stability and market integration in the food sector. The study provides an overview of econometric methodologies, review global assessment methods, and identifies the major elements that influence market integration, such as commerce, social capital, government interference, export policies, institutions, information, competition, and market power. The finding reveals a rise in research activities between 2000 and 2015, with a growing focus on developing countries. This work is to offer a synopsis to researchers, academicians, and policy makers on the extent of the food market both internationally and domestically. This paper will be helpful for the researchers interested in understanding and investigating the dynamics of food market integration with a useful resource by classifying previous works and identifying current developments. The review also offers commentary on current research and prospects and their implication in line with SDG 1 (No Poverty) and SDG 10 (Reduced Inequalities) as it promotes fair access to resources and economic opportunities.

Drought shocks and price adjustments in local food markets in Chile: Do product quality and marketing channel matter?

AbstractLately, economies have been facing an increase in the frequency and magnitude of droughts, which come with potential consequences on food prices. This article aims to analyze how drought disturbances affect price differences in local food markets. Special attention is paid to differences in product quality and marketing channels. To study the mechanism behind price differences, our analysis is framed within the food market integration theory. Our methodology follows a dyadic regression approach, which allows us to exploit the panel data structure of our market price data. We use monthly Asterix potato and long shelf‐life tomato market prices from traditional markets and supermarkets in Chile. To measure drought intensity, we use remote sensing data to construct a drought index. Results show that drought shocks reduce market price differentials around harvesting and commercialization periods, which is supported by the existence of market integration. We also find that prices of high‐quality products, less perishable products, and those taken from traditional markets respond more intensively to droughts and take more time to be transmitted. A direct link between droughts and crop quality, as well as supermarkets’ larger capacity for buffer stock, may be behind these interpretations. Product differentiation and retail price rigidity arguments are also discussed.

Impact of climate smart agriculture on food security: An agent-based analysis

The study proposes an agent-based model to investigate how adoption of climate smart agriculture (CSA) affects food security. The analysis investigates the role of social and ecological pressures (i.e. community network, climate change and environmental externalities) on the adoption of physical water and soil practices as well as crop rotation techniques in rural Ethiopia. The findings reveal that CSA can be an effective strategy to improve the rural populations' well-being for farm households with access to capital, strong social networks and access to integrated food markets. The climate scenario simulations indicate that farmers adopting CSA fare better than non-adopters, although CSA adoption does not fully counterbalance the severe climate pressures. In addition, farmers with poor connections to food markets benefit less from CSA due to stronger price oscillations. These results call for an active role for policy makers in encouraging adaptation through CSA adoption by increasing access to capital, improving food market integration and building information sharing among farmers.

Impact of climate smart agriculture on food security: an agent-based analysis

The study proposes an agent-based model to investigate how adoption of climate smart agriculture (CSA) affects food security. The analysis investigates the role of social and ecological pressures (i.e. community network, climate change and environmental externalities) on the adoption of physical water and soil practices as well as crop rotation technique. The findings reveal that CSA may be an effective strategy to improve the rural populations' well-being for farm households with access to capital, strong social networks and access to integrated food markets. The climate scenario simulations indicate that farmers adopting CSA fare better than non-adopters, although CSA adoption does not fully counterbalance the severe climate pressures. In addition, farmers with poor connections to food markets benefit less from CSA due to stronger price oscillations. These results call for an active role for policy makers in encouraging adaptation through CSA adoption by increasing access to capital, improving food market integration and building social networks.

Opportunities amid COVID-19: Advancing intra-African food integration

The COVID-19 pandemic comes as Africa still struggles to ensure its population’s food security and eradicate malnutrition, hunger, and starvation. Africa significantly lags other regions in turning its agri-food trade into a catalyst for economic growth and structural transformation. We argue that the COVID-19 pandemic and its ensuing economic disruptions offer opportunities that African countries could leverage by promoting a vibrant intra-African food trade and market integration. In particular, commitments to harmonizing food trade rules and policies and both tariff and non-tariff barriers by coordinating policies across Africa’s Regional Economic Communities could prove to be game-changers. The recently ratified African Continental Free Trade Agreement (AfCFTA) offers an excellent opportunity to enhance food market integration and boost intra-African food trade.

Feeding Africa through increased intra-African food trade

One of the most pressing challenges in Africa is how to eradicate hunger and extreme poverty and ensure prosperity for all people. This article argues that intra-African food trade can be an important driver in strengthening Africa’s capacity to ensure food security, as well as for its economic growth and shared prosperity. While the creation of the African Continental Free Trade Area is a critical step forward, the roll out of the implementation will be just as important. This article is looking at some of the key challenges and opportunities for intra-African food market integration. It specifically argues that the Regional Economic Communities (RECs) can and should play a particularly important role in Africa’s effort to build a strong intra-Africa food market. They are the institutions that can develop and implement programmes aimed at increasing agricultural production and productivity, help integrate smallholders in regional value chains, spearhead research on major food crops and help develop regional food industries.

Food Market Integration through Central Wholesale Marketing in Indonesia Revisited

Food Market Integration through Central Wholesale Marketing in Indonesia Revisited

Effective Communication tools for enriching farmers knowledge

Development experiences of the last decades have shown that human resources development is essential for food security and market integration. New agricultural technologies are generated by research institutes, universities, private companies, and by the farmers themselves. Agricultural advisory services (including traditional extension, consultancy, business development and agricultural information services) are expected to disseminate new technologies amongst farming community. The role of research and advisory services is to give highly accurate, specific and unbiased technical and management information and advice in direct response to the needs of the farmers. Due to poor linkages between research and advisory services, the adoption of new agricultural technologies by farmers is often very slow and research is not focusing on the actual needs of farmers. In Agricultural Knowledge and Information Systems, people and institutions are linked together to promote and enable mutual learning and generate, share and use agriculture-related technology, knowledge, skills and information. The system integrates farmers, agricultural educators, researchers, extension workers and the private sector to harness knowledge and information from various sources for better farming and improved livelihoods. The areas like; soil fertility, soil health, climate change, environment, effective utilization of water for higher productivity, watershed management, natural resource management, post-harvest technologies, are the burning issues which are to be addressed effectively to farming community in order to enrich and enhance their knowledge.

A Global Perspective of Food Market Integration: A Review

ABSTRACT This paper analyses the state of the art research on food market integration, classifies it and provides a comprehensive bibliography for researchers with interest in market integration. A thorough review of literature published between 1990 and 2014 on food market integration generated 65 articles for in-depth analysis. Findings show that the majority of research has concentrated relatively more on identifying the degree of linkages among the markets but not on its implications. The paper also identifies the following factors as very important in increasing/ decreasing the degree of market integration: physical infrastructure, market institutions, information, competition, market power, trade, social capital, public/ government intervention and export restrictions/ban. The paper further identifies several areas for future research.

Using time series structural characteristics to analyze grain prices in food insecure countries

Two components of food security monitoring are accurate forecasts of local grain prices and the ability to identify unusual price behavior. We evaluated a method that can both facilitate forecasts of cross-country grain price data and identify dissimilarities in price behavior across multiple markets. This method, characteristic based clustering (CBC), identifies similarities in multiple time series based on structural characteristics in the data. Here, we conducted a simulation experiment to determine if CBC can be used to improve the accuracy of maize price forecasts. We then compared forecast accuracies among clustered and non-clustered price series over a rolling time horizon. We found that the accuracy of forecasts on clusters of time series were equal to or worse than forecasts based on individual time series. However, in the following experiment we found that CBC was still useful for price analysis. We used the clusters to explore the similarity of price behavior among Kenyan maize markets. We found that price behavior in the isolated markets of Mandera and Marsabit has become increasingly dissimilar from markets in other Kenyan cities, and that these dissimilarities could not be explained solely by geographic distance. The structural isolation of Mandera and Marsabit that we find in this paper is supported by field studies on food security and market integration in Kenya. Our results suggest that a market with a unique price series (as measured by structural characteristics that differ from neighboring markets) may lack market integration and food security.

Why is there controversy regarding China’s staple grain food market integration? Evidence and implication from price convergent club analysis

There remains ongoing controversy regarding the degree to which Chinese food markets are integrated. Some economists conclude that China’s grain economy is well integrated, while others argue that China’s gradual reforms have led to fragmented domestic markets while others conclude that previous studies have produced mixed results. To reconcile the debate, this article models and analyses the behaviour of China’s food grain retail markets by testing for the existence of the convergent price clustering clubs using appropriate econometric methods and price data over 1997–2010. The article finds evidence as to why the controversy remains by identifying a number of small divergent price clustering clubs where it is hard to conclude that China’s food grain markets are fully integrated. However, given that large convergent clustering clubs were also identified, it can be concluded that the degree to which Chinese grain food retail markets are integrated is ‘high’. This finding is important for those who plan to investigate the economic behaviour of grain production under the assumption of a pure, fully integrated, food market economy in China.

The Role of ICT-Based Market Information Services in Spatial Food Market Integration

The government of Malawi in 2004 initiated an ICT-based Malawi Agricultural Commodity Exchange (MACE), a market information service project, to improve access by farmers to market information. MACE was intended to improve the efficiency of agricultural markets as part of the strategy to improve food security. This study uses quantitative methods to examine whether MACE has contributed to efficiency of rice markets in Malawi. It especially tests if MACE has contributed to spatial integration of rice markets. As hypothesized, the study finds that the tendency of rice prices to move together in spatially separated markets has significantly increased since the implementation of MACE. It concludes that ICT-based market information services project enhances linkages between markets and can therefore improve the efficiency with which agricultural markets perform. The study discusses implications of this finding for policy.

Food Price Differences and Market Integration in Oyo State, Nigeria*

Food Price Differences and Market Integration in Oyo State, Nigeria*

Food Price Differences and Market Integration in Oyo State, Nigeria

Food Price Differences and Market Integration in Oyo State, Nigeria

Modelling trends in food market integration: Method and an application to Tanzanian maize markets

Pushed by increasing availability of price data and extensive market liberalisation efforts in many developing countries, research on food market integration has evolved rapidly over the last two decades. Empirical methods to measure market integration diverged in two directions: on the one hand, there is the parity bounds model (PBM) using a switching regressions technique, while on the other hand the use of threshold autoregressive (TAR) models has been proposed. This article provides a discussion on the two methods and argues that TAR models are better able to capture the dynamics of the arbitrage process underlying interconnected markets. Furthermore, we extend the standard TAR model to include a time trend in both the threshold and the adjustment parameter. Using weekly maize price data on seven selected markets in Tanzania, we illustrate how both transaction cost and the speed of adjustment have changed during the nineties.

MAIZE MARKETS IN MOZAMBIQUE: TESTING FOR MARKET INTEGRATION

The issue of market integration lies at the heart of many contemporary debates concerning market liberalization, price policy, and government agency reforms in developing country food markets, Mozambique being one of the poorest. Without spatial integration of markets, price signals will not be transmitted from deficit to surplus areas, prices will be more volatile, agricultural producers will fail to specialize according to long-term comparative advantage, and the gains from trade will not be realized. The objective of this article is to indicate the extent of market integration between major Mozambican maize markets. Recognizing the statistical dangers and inaccuracies of using measures of price correlation to test for market integration, a new methodology for testing the state of food market integration is employed in this study, namely the parity bounds model, (PBM) as developed by Baulch (1997). This method provides a more reliable procedure for testing violations of spatial arbitrage conditions than conventional methods, because it compares time series of observed price differentials with transfer costs and explicitly recognizes that spatial arbitrage conditions are represented by inequality constraints. The results point to a failure of spatial arbitrage conditions between the Maputo and Chimoio markets about 23% of the time over the period

Transfer Costs, Spatial Arbitrage, and Testing for Food Market Integration

AbstractConventional tests for food market integration ask, often misleadingly, whether prices in different locations move together. In this paper an alternative methodology, the parity bounds model (PBM), is developed which uses information on transfer costs in addition to food prices to assess the efficiency of spatial arbitrage. Monte Carlo experiments using data generated by a point‐space spatial price equilibrium model show the PBM to be statistically reliable. An application to Philippine rice markets demonstrates that the PBM detects efficient arbitrage when other tests do not.

Testing for food market integration revisited

This article considers the statistical performance of four commonly used econometric tests for market integration: the Law of One Price, the Ravallion Model, cointegration and Granger causality. A spatial price equilibrium (SPE) model, that is subject to both production shocks and general price inflation, and mimics many of the key characteristics of integrated food markets, is constructed. The model is used to generate food price time series of lengths that are typical of the short sample sizes available in most developing countries, for both instantaneously integrated and independent markets. A series of Monte Carlo experiments on these artificial food price time series are performed, which show that all four of the conventional tests for market integration are statistically flawed.

Madagascar: An Empirical Test of the Market Relaxation‐State Compression Hypothesis

This article examines how liberalisation efforts in the 1980s affected spacial and temporal food market integration in Madagascar.

Cash Crop Production, Food Price Volatility, and Rural Market Integration in the Third World

AbstractLarge farmers in the Third World often devote to cash crops a larger share of their land than do small farmers. This paper suggests a possible explanation: even in the presence of food markets, Third World farmers' food security is best assured by food self‐sufficiency. A model of crop portfolio choice under multivariate risk is used to show that reasonable assumptions regarding risk and preferences reproduce the observed pattern. Simulations further indicate that food market integration reduces the need for food self‐sufficiency. Policy implications are drawn regarding domestic trade liberalization and agricultural technology.