Analysis Of Dry Bean Price Behavior In Burundi

Dry bean production and price statistics for Burundi from 1972 to 1987 indicate significant year-to-year (bean production) and monthly (bean prices) fluctuations. These fluctuations are influenced by, among other things, climatic conditions, unpredictable markets, government policy, and phytopathological factors. The objective of the study is to analyze the behavior of dry bean production in Burundi under uncertain prices and assess the degree of uncertainty for the period 1972-1987. The hypotheses are that dry bean prices in Burundi are uncertain, and that annual dry bean production per capita has been falling because of dry bean price uncertainty. Two types of regressions models, one with average annual data and another with monthly real price data, were used to test the hypotheses. The variance of the error term was computed to estimate the level of uncertainty in the period prior to the creation of a state-owned marketing board (SOBECOV) (1972-1978), compared to the period during which SOBECOV existed (1979-1987). The findings indicate that dry bean prices were more uncertain in the first period than in the second period. In addition, the results showed that greater price uncertainty was associated with lower bean production. Consequently, bean price stabilization possibly leads to increased bean production.