Market integration of abaca fiber prices, 2006-2011.

Date

4-2013

Degree

Bachelor of Science in Agricultural Economics

College

College of Economics and Management (CEM)

Adviser/Committee Chair

Piadozo, Ma. Eden S.

Co-adviser

Quicoy, Cesar B.

Abstract

The study determined the efficiency of price linkages in the Philippine abaca fiber market using time series data on monthly abaca fiber buying prices of traders and monthly abaca fiber selling prices of the grading and baling establishments (GBEs) from July 2006 to December 2011 in selected provinces. The behavior of abaca fiber prices from the farm to the GBE level was described using linear regression analysis. Farm to GBE price spreads were also computed and analyzed. The efficiency of price transmission was also determined using the Ravallion (1986) model in testing the market integration of abaca fiber markets. The analysis on price trends revealed that the trend in farm prices and GBE prices for both hand-stripped and spindle-stripped fibers was increasing over time. The results also revealed that farm prices were changing at a slower rate while GBE prices were moving at a faster rate and with larger values. This is proven by the very high price spreads observed in all paired markets. As the large price spreads continue to increase, producers are left with barely enough to cover production costs. Thus, farmers receive unreasonable low prices for the quality of the fibers sold. The low values of the coefficient of variability contribute to price inefficiency in the abaca fiber market. The analysis on the types of marketing margin also revealed that absolute and percentage margins exist in both hand-stripped and spindle-stripped fiber markets. The presence of the combination of absolute and percentage margins indicates that price spreads of abaca fiber are increasing through time. On the other hand, the results of the market integration analysis revealed that the abaca fiber markets are integrated in the long-run but not in the short-run. Significant long-run market integration values indicated values close to one indicating that changes in the GBE markets are fully transmitted to the farm markets for both abaca fiber types in the long-run. However, in the short-run, only one paired market showed values less than one indicating a pronounced lack of short-run market integration. This implies that poor market connection exists in most farm-to-GBE markets in the short-run. This confirms the large price spreads existing in the Philppine abaca fiber market. In order to improve the efficiency of the Philippine abaca fiber markets, some policy implications are provided: stronger bargaining power for abaca fiber producers; continuous development in transportation infrastructure; continuous improvement in market information systems; and, harmonization of market rules and regulations.

Language

English

Location

UPLB College of Economics and Management

Call Number

Thesis

Document Type

Thesis

This document is currently not available here.

Share

COinS