Abstract:
The study used monthly data collected over time from 2018-2021 to test the Spatial Price
Transmission in the Regional Wheat Markets in Ethiopia. In the study, the augmented
dickey-fuller (ADF) and Phillips-perron (PP) unit root test, co-integration test, and vector
error correction model (VECM) were performed. The stationarity tests reflects that all the
data included in the tests were stationary after first differencing separately. The co-integration
test performed indicated that there is long – run friendship among the depenent variable and
independent variables in model. The analysis evidence displays a meaningful and positive
relationship al variables included in analysis. However, this result should be interpreted with
restraint given the detrimental effects of market distance to central market wheat price. The
tested co-efficient of the error correction term is statistically not significant and appropriately
signed indicating that about 10.45% percent shows that the speed of integration of the wheat
price with the selected wheat market the rate of 10.45% per year. The study recommends
that,since there were no much price difference in case of unprocessed wheat among the
selected wheat market area and, Government must come up with formulating policies which
initiate wheat processing industry in order to support producers of wheat located far from
central market. Additionally, Government perform agricultural sector structural reforms to
increase the wheat product and create producers supporting initiatives in order to produce in
enough product. Moreover, government expenditure should focus on Agricultural growth
supporting policy to solve problem of agricultural market inter-linkage and address
infrastructural deficiency in the economy.
