Effects of Rice Importation on the Pricing of Domestic Rice in Northern Region of Ghana

Abstract

The research assessed the effects imported rice prices against domestic rice prices in Northern region of Ghana. Data from the Ministry of Food and Agricultural was used for the analysis to know the price transmission between the two prices. Johansen (1991) method of cointegration was used to test the long run co-movement of prices of imported and domestic rice prices in eight selected districts markets. Granger causality and Vector Error Correction Models (VECM) were used to detect the price leadership direction and the extent of prices response to the re-establishment of long run equilibrium when there is distortion in the market respectively. The results reflect a strong long run relationship between prices of imported rice and prices of domestic rice in the same districts markets. Also, the causality results indicate no price leadership except some few cases. Analysis from the VECM shows bilateral responses, thus, domestic rice prices in the various districts markets respond to price shock when there is disequilibrium in the long run as well as the reverse. Based on the findings, there is the need to implement appropriate government policies that will ensure fair ground for domestic rice sellers to compete with sellers of imported commodity of the same kind.