Price Transmission from World to Local Grain Markets in Developing Countries: Why It Matters, How It Works, and How It Should Be Enhanced

Zorya, Sergiy; Cramon‐Taubadel, Stephan von; Greb, Friederike; Jamora, Nelissa; Mengel, Carolin; Würriehausen, Nadine

doi:10.1596/978-1-4648-0305-5_ch3

Cited by 6 publications

(3 citation statements)

References 7 publications

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“…Due to increasing food price volatility from climate 42 and geopolitical factors 43 such as the war in Ukraine, relying on agricultural trade for an adequate supply of calories and nutrients is an increasingly risky option. This could also be economically unrealistic, especially when there is not a diverse range of source markets to improve supply resilience 44 . The southern hemisphere is particularly at risk of crop yield instability due to climate change 45 .…”

Section: Policy Implicationsmentioning

confidence: 99%

Stakeholder-driven transformative adaptation is needed for climate-smart nutrition security in sub-Saharan Africa

Jennings,

Challinor,

Smith

et al. 2024

Nat Food

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Improving nutrition security in sub-Saharan Africa under increasing climate risks and population growth requires a strong and contextualized evidence base. Yet, to date, few studies have assessed climate-smart agriculture and nutrition security simultaneously. Here we use an integrated assessment framework (iFEED) to explore stakeholder-driven scenarios of food system transformation towards climate-smart nutrition security in Malawi, South Africa, Tanzania and Zambia. iFEED translates climate–food–emissions modelling into policy-relevant information using model output implication statements. Results show that diversifying agricultural production towards more micronutrient-rich foods is necessary to achieve an adequate population-level nutrient supply by mid-century. Agricultural areas must expand unless unprecedented rapid yield improvements are achieved. While these transformations are challenging to accomplish and often associated with increased greenhouse gas emissions, the alternative for a nutrition-secure future is to rely increasingly on imports, which would outsource emissions and be economically and politically challenging given the large import increases required.

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Section: Policy Implicationsmentioning

confidence: 99%

Stakeholder-driven transformative adaptation is needed for climate-smart nutrition security in sub-Saharan Africa

Jennings,

Challinor,

Smith

et al. 2024

Nat Food

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“…Several export prices could be used as the international price, such as Vietnam 5% brokens, Vietnam 25% brokens, Thailand 5% brokens, and Thailand A1 Super (Zorya et al ., ) . Jamora and von Cramon‐Taubadel () find that Vietnam 25% brokens is cointegrated with the largest number of domestic rice prices in the GIEWS database and with most of the other commonly used international prices.…”

Section: Empirical Applicationmentioning

confidence: 97%

Transaction Cost Thresholds in International Rice Markets

Jamora¹,

Cramon‐Taubadel²

2016

J Agricultural Economics

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Recent episodes of high and volatile prices for grains such as rice have raised concerns about their implications for hunger and poverty. We model price relationships between international rice prices and 221 domestic prices in 47 developing countries that import rice. We use a threshold vector error correction model that accounts for transaction costs of trade in spatial price transmission, and an improved regularised Bayesian threshold estimator for threshold models. Our results show that threshold values are higher after 2008 than before, which suggests that transaction costs in international rice trade have increased in recent years. Threshold values are highest for Latin American countries followed by African and Asian countries, and higher for retail than for wholesale prices. Since 2008, price transmission is slower in countries that responded to high and volatile prices with domestic market-based interventions such as price controls and faster in countries that responded by lowering tariffs and by implementing production support measures.

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“…Market integration is affected by several factors, including border policies, price support mechanisms, transfer costs, the exchange rate and market structure (Zorya et al 2014). Another potential source of inaccuracy in transmission estimation emanates from the lack of substitutability between domestic and foreign goods.…”

Section: Factors Influencing International Market Integrationmentioning

confidence: 99%

Transmission of global wheat prices to domestic markets in Kenya: A cointegration approach

Nzuma¹,

Kirui²

2021

AfJARE

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This paper evaluates the extent to which changes in international wheat prices are transmitted to domestic markets in Kenya using an error correction model (ECM) that employs monthly producer price data for the period 2002 to 2020. Domestic wheat markets in Kenya were found to be strongly integrated while, international wheat markets were cointegrated with domestic prices at the port of Mombasa. The long-run elasticity of price transmission was estimated at 0.91, which implies that 91% of the changes in international wheat prices are transmitted to domestic markets in Kenya. The speed of adjustment was estimated at -0.069, which implies that it takes about 14 months for the changes in the international wheat price to be fully transmitted to the Kenyan domestic market. Wheat farmers in Kenya seem to be insulated from international price shocks given the long period of time it takes for domestic markets to adjust to international price changes. Even though not explicitly analysed, government border policies, market and infrastructure impediments seem to be underlying causes of the incomplete price pass-through, along with the low speeds of adjustments. Our analysis suggests that the main constraint to a complete pass-through is the existence of price-setting power at the producer level of the wheat market in Kenya. Investments in infrastructure development and the promotion of liberal trade policies can improve the transmission of international wheat price signals to domestic markets in Kenya.

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Price Transmission from World to Local Grain Markets in Developing Countries: Why It Matters, How It Works, and How It Should Be Enhanced

Cited by 6 publications

References 7 publications

Stakeholder-driven transformative adaptation is needed for climate-smart nutrition security in sub-Saharan Africa

Stakeholder-driven transformative adaptation is needed for climate-smart nutrition security in sub-Saharan Africa

Transaction Cost Thresholds in International Rice Markets

Transmission of global wheat prices to domestic markets in Kenya: A cointegration approach

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