Rice Genomics and Genetics 2015, Vol.6, No.5, 1-10
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Table 6 Result of Granger-causality Test
Null hypothesis
F-Statistics
Probability
Ogun→Lagos
5.352**
0.0060
Ondo→Lagos
9.229**
0.0002
Osun→Lagos
8.836**
0.0003
Oyo→Lagos
22.798**
5.E-09
Ekiti→Lagos
11.760**
2.E-05
Osun→Ogun
3.452*
0.0350
Ogun→Osun
5.093**
0.0077
Oyo→Ogun
4.624**
0.0117
Ekiti→Ogun
6.397**
0.0023
Osun→Ondo
6.576**
0.0020
Ondo→Osun
8.555**
0.0004
Oyo→Ondo
6.300**
0.0025
Ekiti→Ondo
6.188**
0.0028
Ondo→Ekiti
3.581*
0.0311
Oyo→Osun
7.246**
0.0011
Ekiti→Osun
13.482**
6.E-06
Osun→Ekiti
9.868**
0.0001
Ekiti→Oyo
3.020*
0.0528
Oyo→Ekiti
5.716**
0.0043
Note: Source: Compiled from the result of Granger-Causality
Test; * (**) means significant at 5% (1%) level; → indicates
direction of causality
5. Summary, Recommendations and Conclusion
5.1. Summary and Recommendations
This study examined pricing contacts in the IRM in
Southwest Nigeria with the aim of showing the extent
of pricing efficiency, if any. The price variability
analysis showed that there were low fluctuations in
the retail prices of the commodity over the period
studied. The low values of the coefficient of variation
provided the evidence that there was remarkable
stability in prices of imported rice during the period
covered by the time-series data used in this study. The
negative growth rate in the retail prices observed in
some years could be a reflection of deliberate
government policies toward securing cheap rice for its
citizens. The economic implication of the negative
growth rate recorded is that, if growth in price remains
at this trend, then the welfare of rice consumers in the
study area may be secured. This however, will be at
the expense of local rice producers, who will
experience relatively small increases in the prices of
their products.
The result of the stationarity tests indicated that the
price series for imported rice exhibited stationarity
after first-differencing. The study discovered existence
of a high level of spatial pair-wise integration in the
network of IRM across the six states which suggested
very strong pricing contacts in the market. All market
pairs had strong long-run price linkages as seen from
Johansen’s multiple co-integration test. This implied
that short-run price deviations from the equilibrium
were readily corrected through the efficient
transmission of price information.
The Granger causality tests conducted on all
inter-state market pairs showed that Lagos Market
took a sole leadership position in price formation and
transmission process in the IRM.
Based on the results of the study, some important
policy implications and recommendations emerge for
the various Governments in Southwest Nigeria in the
rice industry. It is recommended that the problem of
highly inefficient and fragmented distribution and
transportation systems be addressed for the rice
traders to take advantage of the high level of regional
spatial market integration. Also establishment of
inter-state rice markets, government price support and
other market-oriented policies should be pursued as
they will achieve intended goals. Such interventions
should begin from the Lagos Market which has been
shown to be the leading imported rice market in the
zone.
5.2. Conclusion
The existence of strong pricing contacts in the IRM of
Southwest Nigeria has been established in this study.
The results of this study contradicted findings by past
researchers of a generally low agricultural commodity
market integration in Nigeria and elsewhere which
had been attributed to the fragmented distribution
system and oftentimes inefficient transportation
system (Alexander and Wyeth, 1994; Mafimisebi,
2012). Also, the strong to near perfect market
integration may have arisen from the fact that rice is
not as highly perishable as other agricultural produce
and the fact that the markets examined are very close
in terms of spatial distance. In spite of this
commendable degree of market integration, there is
the need for all the stakeholders in the Southwest IRM
to continue to effectively perform their assigned roles
