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SPATIAL PRICE TRANSMISSION IN PAKISTAN: THE CASE OF WHEAT AND RICE MARKETS

 Umar Ijaz Ahmed*, Liu Ying**, Muhammad Khalid Bashir***,
Muhammad Amjed Iqbal*, Muhammad Rizwan*, Muhammad Mazhar
Iqbal****, Muhammad Rafi Qamar***** and Aftab Nazeer******

 * Department of Agricultural Economics, University College of Agriculture, University of Sargodha, Sargodha, Pakistan.
** College of Economics and Management, Huazhong Agricultural University, Wuhan 430070, Hubei Province, P.R. China.
*** Institute of Agricultural and Resource Economics, University of Agriculture, Faisalabad, Pakistan.
**** Institute of Soil and Environmental Sciences, University of Agriculture, Faisalabad, Pakistan.
***** Department of Agronomy, University College of Agriculture, University of Sargodha, Sargodha, Pakistan.
****** Department of Agricultural Engineering, Bahauddin Zakariya University, Multan, Pakistan.
Corresponding author: liuyhzau@gmail.com

ABSTRACT

 This study investigates the spatial price transmission among major wheat and rice markets of Pakistan using their monthly retail prices. For analysis Vector Error Correction Model and Co-integration approach were employed. Results showed that wheat and rice market prices are integrated. Some markets have positive or negative transmission shocks on each other due to the different geographical locations and transport infrastructure. All the wheat markets are adjusted to price changes in the long run equilibrium except few markets. Unidirectional and bidirectional causality exists between wheat and rice markets. Bad and poor infrastructure is a major impediment to price transmission among the markets. These market imperfections lead to food insecurity in the country. Government should formulate better policies and develop infrastructure towards better and efficient market function. The results of this study will help the policy makers to formulate a better policy to enhance marketing function to overcome food insecurity situation.

 

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Pakistan Journal of Agricultural Research

September

Vol. 32, Iss. 3, Pages 416-561

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