MARKETING MARGINS AND PRICE INTEGRATION IN THE NIGERIAN PLANTAIN MARKET

Abstract

This study estimated costs and marketing margins associated with rural and urban plantain markets and determined the extent of plantain market integration in different spatial markets from selected States in Nigeria. Primary data were collected using a well structured questionnaire assisted with interview schedule from one hundred and twenty plantain marketers selected from eight rural and urban plantain markets in Ondo and Edo States using a multistage random sampling technique. Secondary data on plantain monthly average prices in Naira/Kilogram were sourced from National Bureau of Statistics and Publications from Central Bank of Nigeria. Plantain prices from year 2001 to 2010 were collected from both rural and urban plantain markets in eighteen States. Data were analyzed using descriptive statistics, marketing margin and co-integration analyses. Results revealed that 80.0% of plantain marketers in the rural markets of Ondo and Edo States consisted of females while 90.0% of plantain marketers in the urban markets were females. Approximately 73.0% and 67.0% of plantain marketers in the rural and urban markets were married while 75.0% and 77.0% of the marketers in the rural and urban markets respectively started plantain marketing business with personal savings. The marketing margin of an average plantain marketer in the rural markets was N15, 602.2/tonne while it was N19, 824.5/tonne in the urban markets of Ondo and Edo States. These represented a share margin of 15.4% and 20.0% respectively. Stationarity test revealed that plantain price series in all the rural and urban markets rejected the null hypothesis of non-stationarity at the first difference at 5% significance level. The integration test showed that 54.9% of rural and urban plantain market pairs investigated transmitted price signal to each other in the long run; 54.2% of rural market pairs were co-integrated of order I(1) while 40.5% of urban plantain market pairs examined exhibited price transmission efficiency. The Granger-causality model showed that the rural and urban markets of Kano, rural markets of Enugu and Cross-river and the urban market of Oyo occupied the leadership position in plantain price formation and transmission in Nigeria. Plantain marketing in urban markets was more profitable than in rural markets. Also, there was a moderate level of transmission of price signals between rural/urban and rural plantain markets in Nigeria while the extent of long-run co-integration and pricing efficiency was low in the urban plantain markets across Nigeria.