Abstract:
Policy makers have been striving through market reforms to ensure proper functioning of
agricultural markets and marketing channels to ensure food security, realize welfare impacts
from policies, bridge the gap between the affluent and deprived regions. The core of which is
due to regional ecological differences among other factors. In addition, the purported ability of
marketing participants to influence the conduct of the market and respond to certain price
shocks faster/slowly than others warrant examining the regional maize market linkages
within the past decade. Using regional monthly wholesale price data from 2002 – 2010, the
consistent threshold autoregressive model is employed for the study considering the
robustness and the limitations of other approaches. Results indicate that regional maize
markets are integrated. Bidirectional market interdependence was found between market
pairs both in the short and long run. The long run causality was however heterogeneous with
respect to positive and negative shocks. The nature of price adjustment is asymmetric and
traders respond quickly when market margins are squeezed than when stretched for all
market pairs except between Brong Ahafo and Greater Accra market pairings. The time path
needed for adjustment ranged from 7 to 26 months. The minimum adjustment time was 7
months occurring between Brong Ahafo - Greater Accra markets linkage for positive
deviations and Brong Ahafo - Ashanti market for negative deviations. The recent expansion in
communication infrastructure motivates the regional market integration. This implies that
resources should be allocated to transportation development; the main hindrance to trade.
The suboptimal condition of asymmetry is also motivated by inventory behaviour of traders
but this remains a testable hypothesis. Traders in Greater Accra are slow in passing on price
increases for the fear of loss of goodwill and/or loss of customer share given the multiple
sources of supply
