Cattle Markets Integration and Price Discovery in Three Developing Countries of Mali, Kenya, and Tanzania
Jean-Claude Bizimana*, Jay P. Angerer*, David A. Bessler** *Blackland Research and Extension Center, Texas A&M University, Temple, TX **Department of Agricultural Economics, Texas A&M University, College Station, TX
Poster prepared for presentation at the Agricultural & Applied Economics Association’s 2012 AAEA Annual Meeting, Seattle, Washington, August 12-14, 2012.
Copyright 2012 by Jean-Claude Bizimana, Jay P. Angerer and David A. Bessler. All rights reserved. Readers may make verbatim copies of this document for non-commercial purposes by any means, provided that this copyright notice appears on all such copies.
CATTLE MARKETS INTEGRATION AND PRICE DISCOVERY IN THREE DEVELOPING COUNTRIES OF MALI, KENYA, AND TANZANIA Jean-Claude Bizimana*, Jay P. Angerer*, David A. Bessler**
k −1
∑ i =1
*Blackland Research and Extension Center, Texas A&M University, Temple, TX **Department of Agricultural Economics, Texas A&M University, College Station, TX.
RESULTS
CONCLUSIONS
Impulse Response Function
¾Mali: markets are less integrated, exhibiting signs of independence across time
Mali: markets are less integrated KIDAL
GOSSI
0.50
0.50
0.50
0.25
2
3
4
5
6
7
8
9
10
11
12
13
14
0
1
2
3
4
5
6
7
8
9
10
11
12
13
14
0
1
2
3
4
5
6
7
8
9
10
11
12
13
14
0
1
2
3
4
5
6
7
8
9
10
11
12
13
14
1.00
0.75
1
2
3
4
5
6
7
8
9
10
11
12
13
14
15
1.50
1. 50
1.25
1. 25
1.00
1. 00
0.75
0. 75
0.50
0.50
0.50
0.50
0. 50
0.25
0.25
0.25
0.25
0. 25
0
1
2
3
4
5
6
7
8
9
10
11
12
13
14
15
0
1
2
3
4
5
6
7
8
9
10
11
12
13
14
15
0
1
2
3
4
5
6
7
8
9
10
11
12
13
14
15
0.00
1
2
3
4
5
6
7
8
9
10
11
12
13
14
15
0
1
2
3
4
5
6
7
8
9
10
11
12
13
14
15
0
1
2
3
4
5
6
7
8
9
10
11
12
13
14
15
0.00
1.50
1.50
3
4
5
6
7
8
9
10
11
12
13
14
15
2
3
4
5
6
7
8
9
10
11
12
13
14
15
0
1
2
3
4
5
6
7
8
9
10
11
12
13
14
15
0.00
1
2
3
4
5
6
7
8
9
10
11
12
13
14
15
0
1
2
3
4
5
6
7
8
9
10
11
12
13
14
15
0
1
2
3
4
5
6
7
8
9
10
11
12
13
14
15
0.00
1.50
3
4
5
6
7
8
9
10
11
12
13
14
15
2
3
4
5
6
7
8
9
10
11
12
13
14
15
0
1
2
3
4
5
6
7
8
9
10
11
12
13
14
15 1. 50
1. 25
1. 00
0.75
0. 75
0.50
0. 50
0.25
8
9
10
11
12
13
14
15
0
1
2
3
4
5
6
7
8
9
10
11
12
13
14
15
1.50
1
2
3
4
0
1
2
3
4
5
6
7
8
9
10
11
12
13
14
15
5
6
7
8
9
10
11
12
13
14
15
1
2
3
0
1
2
3
4
5
6
7
8
9
10
11
12
13
14
15
4
5
6
7
8
9
10
11
12
13
14
15
2
0
1
2
3
4
5
6
7
8
9
10
11
12
13
14
15
3
4
5
6
7
8
9
10
11
12
13
14
15
1
2
0
1
2
3
4
5
6
7
8
9
10
11
12
13
14
15
3
4
5
6
7
8
9
10
11
12
13
14
15
2
3
4
5
6
7
8
9
10
11
12
13
14
15
1
2
3
4
5
6
7
8
9
10
11
12
13
14
15
0
1
2
3
4
5
6
7
8
9
10
11
12
13
14
15
0
1
2
3
4
5
6
7
8
9
10
11
12
13
14
15
0
1
2
3
4
5
6
7
8
9
10
11
12
13
14
15
¾Tanzania: markets are integrated and show strong signs of price interdependence with Pugu as a leader ¾Cattle markets are more integrated (less exogenous) in Tanzania and Kenya than in Mali with Tanzania showing a higher level of integration
NIAMANA
WABARIA
1. 25
1. 00
0.75
KATI
0. 75
0.50
0.25
0. 50
0.25
0.00
KONNA
1
0
1. 50
1.25
1.00
0.75
0.50
0.25
0.00
KIDAL
0
0. 00 0
1.50
1.25
1.00
0.75
0.50
0.25
0.00
GOSSI
1
15
0. 25
0.00 0
1.50
1.25
1.00
0.75
0.50
0.25
0.25
0.00 0
1.50
1.25
1.00
0.75
0.50
0.25
0.00 0
1.50
1.25
1.00
0.00
0.25
0.00 7
14
0. 00
0.75
0.50
6
13
0. 25
0.75
0.50
5
12
0. 50
0.75
0.50
4
11
0. 75
1.00
0.75
0.50
3
10
1. 00
1.50
2
9
1. 25
0.25
0.00
1.25
1
8
1. 50
1.00
0.75
0.50
1.50
1.25
0
7
KONNA
0. 00
1.50
0.25
6
0. 25
1.25
0.00
5
0. 50
1.50
1.00
4
0. 75
1.25
1.00
3
1. 00
1.50
1.00
2
KIDAL
0. 00
1.25
1.00
1
1. 25
1.50
0.25
0.00
0
1. 50
1.25
1.00
0.75
0.50
0.25
0.00
2
1
0.50
0.25
0.00
1.25
1.00
0.75
1
0
1.00
0.75
0.50
0.25
0.00
0.50
0
1.50
1.25
1.00
0.75
1.50
0.25
0.00
0
1.50
1.25
1.25
1.00
0.75
0.50
0.25
0.00
2
1
0.50
0.25
0.00
1.25
1.00
0.75
0.50
1
0
1.00
0.75
0.50
0.25
0.00
1.25
0
1.50
1.25
1.00
0.75
0.50
0.25
0.00
0
1.50
1.25
1.00
0.75
GOSSI
0. 00 0
1.25
1.00
0.75
0. 25
15
1.50
1.25
1.00
0.75
0. 50
0.00
15
1.50
1.25
0.25
0.00
15
1.50
0.50
0.25
0.00
15
0.50
0. 25
0.00
NIAMANA
0. 00
WABARIA
¾Possible reasons:
KATI
livestock market information system that uses cell phone to disseminate price data has been in place longer in Tanzania and Kenya than in Mali
Kenya: markets show signs of integration Innovation to DAGORETTI
NJIRU
1. 50
1
2
3
4
5
6
7
8
9
10
11
12
13
14
NJIRU
R esponse of
4
5
6
7
8
9
10
11
12
13
14
1.25
0. 75
0.75
0. 50
0.50
0.25
2
3
4
5
6
7
8
9
10
11
12
13
14
1
2
3
4
5
6
7
8
9
10
11
12
13
14
0
1
2
3
4
5
6
7
8
9
10
11
12
13
14
1.00
0. 75
0.50
0. 25
1
2
3
4
5
6
7
8
9
10
11
12
13
14
0
1
2
3
4
5
6
7
8
9
10
11
12
13
14
0.00
15
1. 50
1. 25
1.25
1. 25
1.25
1. 00
1.00
1. 00
1.00
0. 75
0.75
0. 75
0.75
0. 50
0.50
0. 50
0.50
0.25
0
1
2
3
4
5
6
7
8
9
10
11
12
13
14
0
1
2
3
4
5
6
7
8
9
10
11
12
13
14
0
1
2
3
4
5
6
7
8
9
10
11
12
13
14
1. 50
1.50
1. 50
1.50
1.25
1. 25
1.25
1. 25
1.25
1.00
1
2
3
4
5
6
7
8
9
10
11
12
13
14
1.00
1
2
3
4
5
6
7
8
9
10
11
12
13
14
0
1
2
3
4
5
6
7
8
9
10
11
12
13
14
0
1
2
3
4
5
6
7
8
9
10
11
12
13
14
1
2
3
4
5
6
7
8
9
10
11
12
13
14
1. 50
1.50
1.25
1. 25
1.25
1. 00
1.00
1. 00
1.00
0. 75
0.75
0. 75
0.75
0. 00
0.50
0. 50
0.25
0
1
2
3
4
5
6
7
8
9
10
11
12
13
14
0.50
0. 25
0.00
15
0
1
2
3
4
5
6
7
8
9
10
11
12
13
14
1. 50
1. 00
0. 50
0.25
0. 00
15
1.50
1. 25
0
1
2
3
4
5
6
7
8
9
10
11
12
13
14
0
1
2
3
4
5
6
7
8
9
10
11
12
13
14
0
1
2
3
4
5
6
7
8
9
10
11
12
13
14
1. 50
1. 25
1.25
1. 25
1.25
1. 00
1.00
1. 00
1.00
0.75
0. 75
0.75
0. 75
0.75
0. 50
0.50
0. 50
0.50
0. 50
0.50
0.25
0. 00
0. 25
0.00 0
1
2
3
4
5
6
7
8
9
10
11
12
13
14
0.25
0. 00
15
0
1
2
3
4
5
6
7
8
9
10
11
12
13
14
0
1
2
3
4
5
6
7
8
9
10
11
12
13
14
0
1
2
3
4
5
6
7
8
9
10
11
12
13
14
0
1
2
3
4
5
6
7
8
9
10
11
12
13
14
1. 50
1.50
1. 50
1.50
1.25
1. 25
1.25
1. 25
1.25
1.00
1. 00
0.75
0. 50
2
3
4
5
6
7
8
9
10
11
12
13
14
0
1
2
3
4
5
6
7
8
9
10
11
12
13
14
0
1
2
3
4
5
6
7
8
9
10
11
12
13
14
1
2
3
4
5
6
7
8
9
10
11
12
13
14
4
5
6
7
8
9
10
11
12
13
14
15
0
1
2
3
4
5
6
7
8
9
10
11
12
13
14
15
0
1
2
3
4
5
6
7
8
9
10
11
12
13
14
15
0
1
2
3
4
5
6
7
8
9
10
11
12
13
14
15
0
1
2
3
4
5
6
7
8
9
10
11
12
13
14
15
REFERENCES ¾Barrett, C.B. 2005. “Spatial Market Integration”. The New Palgrave Dictionary of Economics, 2nd Edition. London: Palgrave Macmillan. Forthcoming
GARISSA
0.25
0. 00 0
3
0.50
0. 25
15
ISIOLO
2
0.75
0. 50
0.00
15
NJIRU
1
1.00
0. 75
0.25
0. 00
15
DAGORETTI
1. 00
0.50
0. 25
0.00 1
0.75
0. 50
0.25
0. 00
1.00
0. 75
0.50
0. 25
0
CHEPARERIA
15
1.50
1. 25
0. 75
15
0.00
15
1. 50
1. 00
14
0.25
0. 00
15
13
1.50
0. 25
0.00
15
12
GARSEN
0.00
15
1.50
1.25
1.00
0. 75
0. 25
11
0.25
0. 00
15
10
0.50
0. 25
0.00
15
9
ISIOLO
15
1.50
1. 25
0.75
1. 50
8
0.50
0
1. 50
1.00
0. 75
0. 25
7
0.00
15
1.50
1.25
1. 00
0. 50
6
0.25
0. 00
15
5
1.00
0. 25
0.00
15
4
0.75
0. 50
0.25
0. 00 0
0. 75
0.50
0. 25
15
1. 00
0.75
0. 50
0.00 0
1. 25
0. 75
0.50
0.25
0. 00
1. 50
1. 00
0.75
0. 25
3
NJIRU
15
1.50
1. 25
0. 50
2
0.00
15
1. 50
0. 75
1
0.25
0. 00
15
0
1.50
0. 25
0.00
15
Government involvement in multiplying the price information channels is more noticed in Tanzania than Kenya and Mali
0.25
0. 00
15
DAGORETTI
0.75
0. 50
0
1.50
0. 00
15
1.25
1. 00
0.00
15
0. 25
0.00 1
0
1.50
1. 25
0.25
0. 00
15
1.00
1. 00
GARISSA
3
1. 00
0
GARSEN
2
1. 25
0. 00
CHEPARERIA
1
1. 50
0. 25
ISIOLO
0
1.50
GARISSA
1. 50
0.50
0. 25
0.00
15
0.75
0. 50
0.25
0
1. 50
1.00
0. 75
0.50
0. 25
1.25
1. 00
0.75
0. 50
CHEPARERIA
1.50
1. 25
1.00
0. 75
GARSEN
1. 50
1.25
1. 00
0. 00
ISIOLO
1.50
1. 25
DAGORETTI
0
0.00
15
0
GARSEN
1
2
3
4
5
6
7
8
9
10
11
12
13
14
15
CHEPARERIA
GARISSA
¾Baulch, B.1997a. “Testing for Food Market Integration Revisited.” Journal of Development Studie, 33 (4):512-534.
Tanzania: markets show strong signs of integration
Kenya cattle markets
Innovation to PUGU
IGUNGA
1.50
R esponse of
1
2
3
4
5
6
7
8
9
10
11
12
13
14
0
4
5
6
7
8
9
10
11
12
13
14
15
0.00 0
1
2
3
4
5
6
7
8
9
10
11
12
13
14
15
0
1.50
1.50
1.25
1.25
1.25
1.25
1.00
1.00
1.00
1.00
0.75
0.75
0.75
0.75
0.50
0.50
0.25
0.00 1
2
3
4
5
6
7
8
9
10
11
12
13
14
0
1
2
3
4
5
6
7
8
9
10
11
12
13
14
15
1
2
3
4
5
6
7
8
9
10
11
12
13
14
0 1.50
1.25
1.25
1.00
1.00
1.00
0.75
0.75
0.75
0.50
0.50
0.50
0.50
0.25
0.25
0.25
0.25
0.00 2
3
4
5
6
7
8
9
10
11
12
13
14
0.00
15
0
1
2
3
4
5
6
7
8
9
10
11
12
13
14
15
1
2
3
4
5
6
7
8
9
10
11
12
13
14
0
1.50
1.50
1.25
1.25
1.00
1.00
1.00
0.75
0.75
0.75
0.50
0.50
0.25
0.00 1
2
3
4
5
6
7
8
9
10
11
12
13
14
0
1
2
3
4
5
6
7
8
9
10
11
12
13
14
15
8
9
10
11
12
13
14
15
1
2
3
4
5
6
7
8
9
10
11
12
13
14
ACKNOWLEDGMENTS
15
1
2
3
4
5
6
7
8
9
10
11
12
13
14
The author would like to thank the financial support by the USAID through the LCC-CRSP/MLPI Mali project and AgriLife Research at Texas A&M University
15
MONDULI
0.25
0.00
15
PUGU
7
0.50
0.25
0.00 0
6
KISHAPU
15
1.50
1.25
1.00
0.75
0.50
5
0.00 0
1.50
1.25
0.25
4
IGUNGA
15
1.50
1.25
1.00
0.75
1
3
0.00 0
1.50
1.25
0
2
0.25
0.00
15
1
0.50
0.25
0.00 0
1.50
0.00
¾Error correctionk model: − 1 ΔPt = ΠPt-1 + ∑ ГiΔPt-i + μ + et
3
1.50
0.50
MONDULI
2
1.50
0.25
KISHAPU
1
¾Vitale, J. and D.A. Bessler. 2006. “On the discovery of millet prices in Mali.” Papers in Regional Science 85(1):139-162.
0.50
0.25
0.00
15
PUGU
0.75
0.50
0.25
0.00 0
1.00
0.75
0.50
0.25
0.00
1.25
1.00
0.75
0.50
0.25
1.50
1.25
1.00
0.75
MONDULI
1.50
1.25
1.00
IGUNGA
KISHAPU
1.50
1.25
PUGU
METHODS
0.00 0
1
2
3
IGUNGA
4
5
6
7
8
9
10
11
12
13
14
15
0
1
2
3
KISHAPU
4
5
6
7
8
9
10
11
12
13
14
15
MONDULI
FURTHER INFORMATION Comparison of exogeneity level between Mali, Kenya, and Tanzania
i = 1
Tanzania cattle markets
Please contact Jean-Claude Bizimana for more information at
[email protected];
[email protected]
Comparison of Least Exogenous Cattle Markets
Comparison of Most Exogenous Cattle Markets 100
100
¾Innovation accounting
1. 00
0.25
0.00
OBJECTIVE This research examines cattle market integration in three developing countries of Mali, Kenya, and Tanzania. Cattle price discovery and leadership were as well studied. We used weekly cattle prices in the three case studies. Data in Mali were collected on 6 markets from November 2008 to September 2010. Data in Kenya were collected from June 2006 to December 2009 on 6 markets while in Tanzania prices were collected on 4 markets from February 2006 to January 2010.
¾Vector autoregrression VAR: xt = A0 + A1xt-1 + et
0.50
0.25
0.00 1
1.00
0.75
1.50
KATI
1. 25
0. 75
1.25
WABARIA
1. 50
1.25
1.00
0.75
0
NIAMANA
KATI
1.50
1.00
0.75
1.25
Kenya
1.25
1.00
0.75
0.00
Tanzania
WABARIA
1.50
1.25
1.00
0.75
1.50
KONNA
NIAMANA
1.50
1.25
1.00
0.75
0.25
KIDAL
KONNA
1.50
1.25
Mali cattle markets
THEORETICAL BACKGROUND ¾Competitive market and equilibrium: general equilibrium theory by Arrow and Debreu (1954) ¾Role of information in economics (Stigler 1961; Stiglitz 1985) ¾Spatial equilibrium model and the Law of One Price
¾Kenya: markets are integrated, showing signs of price interdependence across time with Chepareria leading
Innovation to GOSSI 1.50
R esponse of
CASE STUDIES INTRODUCTION One of the growing agricultural sub-sectors, in developing countries (DC), is livestock. Livestock accounts for a third of the total agricultural GDP in DC (2007). However markets in DC are less efficient compared to those in developed world (OECD), leading to economy underperformance. Market reforms policies have been introduced in many DC, especially in Africa either by their governments or international organizations such WB and IMF since the 1980s. The goal of Mali these reforms were to create a transparent and free market economy. In the last decade similar programs funded by USAID have been introduced in some African countries to create transparent markets in the livestock sector. Cases of livestock market information systems in Mali, Kenya, and Tanzania are examined in this research.
The views presented here are those of the authors.
90
95
80
i= 0
C iet−i
¾Directed acyclic graphs (DAG)
Mali
85
Mali
E x o g e n e ity %
VMA: Pt = ∑
E x o g e n e ity %
90
∞
70 60
Kenya
80
Kenya Tanzania
50
75
40
Tanzania
30
70 1
2
3
4
5
6
7
8
9
10
Steps ahead (weeks)
11
12
13
14
15
16
1
2
3
4
5
6
7
8
9
10
Steps ahead (weeks)
11
12
13
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15
16
