Spatial analysis of price transmission efficiencies in Philippine rice market
2010
Samson, C.R., National Food Authority (Philippines) | Mataia, A.B. | Francisco, S.R., Philippine Rice Research Inst., Maligaya, Science City of Muñoz, Nueva Ecija (Philippines)
The spatial differences of rice markets where the place of production may be different from that of consumption is a policy concern of the government as this may indicate high transport cost, which is reflected in the price difference of rice paid by consumers and received by producers. This study was conducted to determine the level of market integration, measure the speed in the transmission of rice prices and the time lag of price adjustment between surplus and deficit rice producing provinces of Nueva Ecija-Batangas, Iloilo-Cebu; North Cotabato-Surigao del Norte. The analysis used monthly retail rice prices from 1974 to 2006 in the Philippines and in the selected provinces. At the national level, the results showed are not fully integrated as price changes between market pairs are not fully transmitted. Full price adjustment occurs five months for Nueva Ecija-Batangas, six months for both Iloilo-Cebu and North Cotabato-Surigao del Norte pairs. The slow transmission of rice prices between market pairs showed imperfect market integration, which can be attributed to high transport or shipping cost, undeveloped road infrastructure and government intervention in the rice market such as heavy rice injections. There is a substantial benefit in developing better road infrastructure and in providing accurate, timely and prompt market information to lessen marketing costs and improve spatial price efficiency.
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