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Market Price Cointegration Of Tomato: Effects To Nepalese Farmers

Author

Listed:
  • Shrestha, Rudra Bahadur
  • Huang, Wen-Chi
  • Ghimire, Raju

Abstract

Market price cointegration is a critical issue in Nepalese vegetable industry. This study intended to analyze the market price cointegration of tomato and its effect on Nepalese farmers, using secondary monthly time series of wholesale price data (since 2000 to 2010) of the Government of Nepal. The results of error correction model (ECM) showed that the series were stationary, and Kathmandu market was well cointegrated with source markets (Chitwan and Morang). Meanwhile, the vector error correction model (VECM) revealed that price adjustment process was much faster in source markets especially in negative price shocks in response to Kathmandu market, which affected the farmers for speedy price adjustment that leads to be hurt and discouraged. The study recommend policies to establish alternative vegetable markets that reduce the price dependency of farmers on Kathmandu market, encourage traders in involving vegetable marketing, and enhance effective market information services.

Suggested Citation

  • Shrestha, Rudra Bahadur & Huang, Wen-Chi & Ghimire, Raju, 2. "Market Price Cointegration Of Tomato: Effects To Nepalese Farmers," International Journal of Food and Agricultural Economics (IJFAEC), Alanya Alaaddin Keykubat University, Department of Economics and Finance, vol. 2(2).
  • Handle: RePEc:ags:ijfaec:168582
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    References listed on IDEAS

    as
    1. Sanogo, Issa & Maliki Amadou, Mahamane, 2010. "Rice market integration and food security in Nepal: The role of cross-border trade with India," Food Policy, Elsevier, vol. 35(4), pages 312-322, August.
    2. Ihle, Rico & Amikuzuno, Joseph, 2009. "The Integration of Tomato Markets in Ghana with and without Direct Trade Flows," 2009 Conference, August 16-22, 2009, Beijing, China 51402, International Association of Agricultural Economists.
    3. Jhih-Hong Zeng & Chun-ping Chang & Chien-chiang Lee, 2011. "Are Fruit and Vegetable Prices Non-linear Stationary? Evidence from Smooth Transition Autoregressive Models," Economics Bulletin, AccessEcon, vol. 31(1), pages 189-207.
    4. Bakucs, Lajos Zoltan & Ferto, Imre & Szabo, Gabor G., 2007. "Price transmission in the Hungarian vegetable sector," Studies in Agricultural Economics, Research Institute for Agricultural Economics, issue 106, July.
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