Rice Genomics and Genetics 2015, Vol.6, No.5, 1-10
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Thus, co-integration was found in 93% of the market
pairs tested. Both the maximal eigenvalue and trace
tests were perfectly in agreement as to the number of
co-integrating vectors, despite differences in the value
of the tabulated test statistics. This confirms earlier
results by Mafimisebi (2001, 2008, 2012) for the
Nigerian dry and fresh fish markets. It can be
observed that eleven (11) market pairs showed
evidence of co-integration at 1% level while the
remaining three (3) did so at 5% level. The
implications of these findings according to
Gonzalez-Rivera and Helfand (2001) is that, though
all the markets belonged to the same economic market,
but 11 market pairs that were co-integrated at 1%
were more intimate in pricing contacts compared to
those 3 market pairs that exhibited co-integration at
5%. Thus, the results indicated that prices were
strongly linked in the IRM in the long-run.
What can be deduced from these results is that, prices
were strongly linked and markets were generally
integrated for imported rice in Southwest Nigeria. It
could be said further that, there is high degree of
marketing efficiency in the IRM in the region since
market integration is a proxy for marketing efficiency
(Hopcraft, 1987; Okon and Egbon, 2003 and
Mafimisebi, 2012). This implies that, excluding
transportation and risk factors, retail prices of
imported rice in one market do not substantially differ
from prices of the same commodity in other markets.
This finding, according to Agunbiade (2013), may be
attributed to free the flow of information on prices
within and across the contiguous states.
4.1.6 Multiple Co-integration in the Imported Rice
Market
The Johansen’s multiple co-integration results for
IRM are presented in Table 5. Both the Trace test and
Maximal Eigenvalue tests were in agreement as to the
number of co-integration vectors that existed in the
market. The two tests indicated four (4) co-integration
vectors /relationships at 95% confidence interval,
meaning that, there were four co-integrating equations
in our estimation. The interpretation of this is that the
IRM was stationary in four directions and
non-stationary in two directions (Mohammad and
Wim, 2010). The economic implication of this finding
is that IRM network in Southwest Nigeria, was only
moderately linked together, during the period studied,
and not perfectly linked as suggested by the result of
the pair-wise model.
4.1.7. Price Exogeneity in Imported Rice Market
On Table 6 is shown the results of Granger-causality
test for identifying leader market(s). From the result,
19 market pairs (out of 28), rejected the null
hypothesis of no causality. While 10 market links of
the 19 exhibited bi-directional causality, the remaining
9 showed uni-directional causality. Market pairs that
exhibited bi-directional causality included Ogun-Osun;
Ondo-Osun; Ondo-Ekiti, Osun-Ekiti and Oyo-Ekiti.
While Ekiti and Ogun Markets were stronger as they
Granger-caused Ondo and Osun Markets at 1% level,
respectively, the latter Granger-caused the former at 5%
level. The remaining six market pairs showed equal
strength as they revealed bi-directional Granger-
causality at 1%.
The results revealed that Lagos Market uni-
directionally Granger-caused the remaining five
markets. Oyo Market also showed uni-directional
causality with Lagos, Ogun, Ondo and Osun Markets.
The findings therefore provide a sufficient ground to
conclude that product deficit imported rice markets
drive the IRM in the region. This is in view of the fact
that Lagos is the only port City in Southwest, Nigeria
and serves as the landing point for imported rice. It is
from Lagos that other markets in Southwest, Nigeria
get their supply of imported rice.
Table 5 Result of Multiple Co-integration of Imported Rice Market
Null hypothesis
Trace Statistics
95% critical value
Maximum eigenvalue
95% critical value
r=0
887.66*
95.75
373.55*
40.08
r=1
514.11*
69.82
280.37*
33.88
r=2
233.73*
47.86
118.37*
27.58
r=3
115.72*
29.80
103.91*
21.13
r=4
11.80
15.49
9.51
14.26
r=5
2.30
3.84
2.303
3.84
Note: Source: Compiled from the result of Co-integration Test. Both Trace and Maximum eigenvalue tests indicate 5 co-integrating
equation(s) at the 0.05 level; * denotes rejection of the null hypothesis at the 0.05 level
