Market Integration And Price Transmission Analysis of Processed Fish Markets in Ghana

ABSTRACT 

This study presents an analysis of market integration and price transmission of 10 processed fish markets in Ghana over the period 2012-2017. Monthly processed fish prices for Koobi, Kpala and Smoked herrings from the 10 markets namely Makola, Ada, Agbozume, Cape Coast, Half Assini, Kpandu, Mankessim, Techiman, Tema and Wa markets were used for the analysis. Data were analysed using the Johansen Co-integration procedure, Granger Causality test, Asymmetric Vector Error-Correction model and Autoregressive Distributive models. The results revealed a lack of cointegration among most of the markets for Kpala, smoked herrings and kombi indicating that their markets were not linked together. The granger causality test showed unidirectional, bidirectional and independent causality in the Koobi and Kpala markets. The smoked herring markets exhibited only bidirectional and unidirectional causality. The speed of adjustment from the asymmetric vector error correction model for cointegrated markets where higher for smoked herring than for Koobi. The study further revealed that positive shocks were corrected faster than negative shocks. There was asymmetry present only in the MakolaMankessim markets for smoked herring. The results of the autoregression distributive lag model show that most of the current and previous prices of the markets did not influence the current prices in the Makola market. Thus, in most cases the price of processed fish was dependent on the prevailing market conditions. In conclusion, the results show the presence of poor price transmission and poor integration between processed fish markets. It is recommended that infrastructure could be improved to enhance market integration and efficiency. Also information on the prices of processed fish should be made available to processers to help them know which markets offer lucrative prices for their product. This could improve spatial arbitrage and hence market integration.