Spatial Price Transmission in the Regional Wheat Markets in Ethiopia

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.