Price Behaviour of Local and Imported Rice in Rural and Urban Markets of Niger State, Nigeria

Abstract

The study analysed the price behaviour of local and imported rice in rural and urban markets of Niger state, Nigeria, specifically the study examined the trend in prices, determined the co-integration between the price series and ascertained the movement and direction of prices. Secondary data which were 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 were sourced from Niger Sate Bureau of Statistics and were analysed using descriptive statistics, Augmented Dickey Fuller (ADF) test, Johansen Cointegration Model, Error Correction Model (ECM) and Granger Causality test. The result shows that the mean prices of local rice in rural and urban markets were N41.13 and N116.22 per kilogram respectively, while that of imported rice was N201.85 and N207.55 respectively and the kurtosis shows that the variables were normally distributed, while 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 were stationary at first difference I(1), while Johansen test indicated the presence of cointegration among the local and imported rice prices in the markets 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 the marketers and also government should be firm on its policy on rice.