Rice price integration and transmission in Luzon regions, 2000-2015

Date

6-2016

Degree

Bachelor of Science in Agricultural Economics

College

College of Economics and Management (CEM)

Adviser/Committee Chair

Nora DM. Carambas

Abstract

The study was conducted to determine the existence of spatial market integration across market levels of rice prices in Luzon regions. Specifically, it aimed to 1) describe the regional trend in the farm gate, wholesale and retail prices of rice, 2) analyze the farm-to-wholesale and wholesale-to-retail price spreads, 3) determine the degree of responsiveness of prices at different market levels, 4) to determine the degree of price integration across different market levels and geographical locations and 5) to determine the price leader between wholesale prices across the different Luzon regions. Secondary data were gathered from the Philippine Statistics Authority. These include regional farm gate, wholesale, and retail rice prices from 2000 to 2015. Descriptive statistics like growth rates, price decomposition, marketing margins, and breakdown of consumer peso were used to analyzed the data before proceeding to price integration analysis which utilized the Engle-Granger two-stage co-integration test, Granger Causality test, and the Ravallion model to determine price relationships.Results showed that geographically separated markets within the rice industry in Luzon are co-integrated, with strong price transmission in the wholesale to retail level and vice versa. Meanwhile at farm gate to wholesale level and vice versa, price transmission was found to be weak. Across locations, all markets except for CAR paired with Central Luzon and CALABARZON were found to be weak. Across locations, all markets except for CAR causality test results reveal NCR to be the price leader, with its wholesale price also triggering wholesale prices in the rest of the Luzon regions. It is subsequently followed by Central Luzon, and CALABARZON. Based on the results of this study, and following the economic assumption that integrated markets are efficient, it can be concluded that rice markets in Luzon regions are generally efficient. Although there is widespread suspicion of rice cartels manipulating supply conditions to extract abnormal profits, and the results from this study fail to confirm such claims. Allegations regarding rice cartels are proved to be non-existent. However, it is more likely by the distortion of price information available to economic agents as well as unusual and chance situations which affect demand and supply conditions at an unpredictable time

Language

English

Location

UPLB College of Economics and Management (CEM)

Call Number

LG 993.5 2016 A14 N37

Document Type

Thesis

This document is currently not available here.

Share

COinS