Price Discovery and Price Volatility of Vertical Integrated Cowpea Market (Rural-Urban) In Niger State of Nigeria Price Discovery and Price Volatility of Vertical Integrated Cowpea Market (Rural-Urban) In Niger State of Nigeria

Abstract

The present study focused on price discovery and volatility of cowpea in the three major urban markets and their respective adjunct rural markets across the zones in Niger state of Nigeria. Monthly time series data spanning from January 2003 to December 2016 were used for the present study. GARCH and SUR were the models used to analyze the data. The results indicated that Bida market and its adjunct rural market (Lefane market) were found to be more efficient in marketing than their counterparts as evident from the cyclical trends of their respective seasonal pattern which were less pronounced. Also, the relationship between the urban market price and rural market price in terms of price discovery revealed non-occurrence of hedging in almost all the market periods, with neither urban nor rural market dominating the process of price discovery, thus, indicating the efficient performance of trading in cowpea by both markets. The extent of volatility in prices of cowpea due to trading was persistent in Kontagora market, and explosive in Bida and Minna markets due to some arbitrage activities in the latter markets. Therefore, the study recommends the strengthening of physical infrastructure, use of information and communication technology and well-defined transparent agricultural policy-market measures in the state that will help in the development of the single uniform economic market in the region in particular and country in general.