ABSTRACT

The study examined the price transmission and market integration of Cowpea (Beans) in the rural and urban markets of Ahia State, Nigeria. Average monthly prices (measured in naira per kilogram) of Cowpea in rural and urban markets were used in the analysis. The study made used of secondary data and the data was obtained from the quarterly publications of the Abia State Agricultural Development Programme (Abia ADP). The data covered the period; January 2000 to June 2014. Descriptive statistics and econometric tools were used to analyze the data obtained. The trend analysis showed that, prices of cowpea in the rural and urban markets had exponential growth rates that were less, than unity, which suggested a possible co-movement of these prices in the study area. Also, the Pearson correlation coefficient generated for the pair of rural and urban· prices of cowpea revealed significant linear symmetric relationships. The result implies the existence of symmetric market information flows between the· rural and urban markets of cowpea in Ahia state. The Granger causality test revealed bi-directional relationships between the rural and urban price of cowpea in the study area: The co-integration test revealed the presence of co-integration between the rural and urban prices of cowpea. The coefficients of the price variables in the co-integration equations converged to unity or law of one price which implied perfect market integration in the long run. The results of the error correction model (ECM) also confirm the existence of the short run market integration between the rural and urban prices of cowpea in the study area. In addition> it was discovered that, the rural price of cowpea adjusted slower to the stable state in the long run than the urban price· and vice versa. The index of market connection (]MC) supported the high short run market integration for prices of cowpea in rural and urban markets in Abia state. The study concluded that the price of cowpea in either rural or urban markets in Abia state depends on each other's price movement at any given period in time. The study recommended that, the Ahia State government should continue to provide marketing infrastructures and reduced externality costs in order to improve further the symmetric nature of infonnation flow among cowpea markets in the state.