Spatial Market Integration of Red Creole Onion in Regional Wholesale and Retail Markets in the Philippines, 2012-2023

Date

6-2024

Degree

Bachelor of Science in Agricultural Economics

College

College of Economics and Management (CEM)

Adviser/Committee Chair

Geny F. Lapiña

Committee Member

Maria Angeles P. Catelo

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Abstract

This study examined the spatial market integration of red creole onion in regional wholesale and retail marketsin the Philippines. It provided an overview of the onion market industry, described regional price behaviors at both wholesale and retail levels, determined cointegration among these markets, identified price leaders, determined the speed of adjustments of the price leaders and examined policy implications for the red creole onion industry. Secondary data from the Philippine Statistics Authority (PSA) were used for monthly wholesale and retail prices from 2012 to 2023. Prices were adjusted to real terms using the 2012 Wholesale Price Index (WPI) and 2012 Consumer Price Index (CPI). Analytical methods included descriptive statistics, price decomposition using multiplicative model, Augmented-Dickey Fuller Test for stationarity, Engle-Granger Cointegration Test, Granger Causality, and Error Correction Model.

The analysis revealed that the real wholesale and retail prices of red creole onion generally increased over time, with seasonal fluctuations and spikes due to external shocks. Prices were higher during the off-seasons of November to January, and lower during the peak season from March to July. The Augmented-Dickey Fuller Test confirmed the stationarity of price series, and the Engle-Granger Cointegration Test indicated that all wholesale markets and most retail markets, except for Western Visayas and ARMM, were cointegrated, showing a long-term equilibrium relationship.

Granger Causality tests indicated that most markets had a bi-directional relationship, showing mutual influence and predictive power. Specifically, 76% of paired wholesale markets and 59% of paired retail markets exhibited thisrelationship. Also, Ilocos Region was identified as the primary price leader in wholesale markets, while high consumption regions like Cagayan Valley and SOCCSKSARGEN acted as price leaders in retail markets. Meanwhile, some markets exhibited independent relationships, particularly ARMM in both wholesale and retail markets.

The Error Correction Model assessed the speed of price adjustments to equilibrium for the market price leaders, revealing that wholesale markets adjust within 1.2 to 3.2 months, with NCR and Bicol Region adjusting fastest, while Ilocos Region and ARMM took longer. Retail markets, specifically those paired with Cagayan Valley, showed adjustment periods ranging from 2.4 to 9.2 months. These findings suggested that monitoring and allowing time for the markets to adjust naturally is an effective response while also reviewing where to invest to improve market efficiency (i.e. transparent price information and infrastructure to reduce adjustment periods).

Policy implications highlight the need for real-time price monitoring systems to improve market coordination, infrastructure investments to support efficient goods movement, and targeted agricultural support for price leader regions to stabilize prices. The government should monitor market prices and focus on understanding the causes of longer adjustment periods and pursuing long-term solutions to improve market efficiency.

Language

English

LC Subject

Onion industry, Wholesale trade, Retail trade, Spatial analysis (Statistics)

Location

UPLB College of Economics and Management (CEM)

Call Number

LG 993.5 2024 A14 P34

Notes

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Document Type

Thesis

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