PRICE BEHAVOIR OF LOCAL AND IMORTED RICE IN RURAL AND URBAN MARKETS OF NIGER STATE, NIGERIA

Abstract

The study analyzed the price behavior of local and imported rice in rural and urban markets of Niger State, Nigeria, the specific objectives were to examine the trend in prices, determine the co-integration between the price series and to ascertain the market that causes the movement and direction of prices. Secondary data which was the average monthly retailed prices of local and imported rice in rural and urban markets per kilogram of rice was used from January 2000 to December 2016(204 observations). The data was sourced from Niger State Bureau of Statistic and was analyzed using descriptive statistics, Augmented Dickey Fuller (ADF) test, Johansen cointegration, Error Correction Model (ECM) and Granger Causality test. The result shows that the mean prices of local rice in rural and urban markets were N 41.13 and N 116.22 per kilogram, while that of imported rice was N 201.85 and N 207.55 and the kurtosis show that the variables are normally distributed. The graph of the trend shows an upward and irregular pattern in the prices of both local and imported rice in the two markets. The ADF test shows that the variables became stationary at first difference 1(1), and the result of the Johansen indicated the presence of cointegration among the variables as shown by the trace statistics and max Eigen statistics which were significant at 5% level of probability each. The ECM result shows that there is a long run relationship among the prices but there was a low speed of adjustment in the short run as indicated by the coefficient of -0.0139. The granger causality result shows a unidirectional causal relationship between prices of imported rice in rural and urban markets and also in prices of local rice in urban and rural markets over the period of study. It is recommended that the flow of market information should be enhanced by markers also government should be firm on its policy on rice.