Retail Rural: Urban Market Integration of Plantain and Banana in Enugu State

Abstract

The knowledge about price at various markets determine to a large extent the effectiveness of information flow between the markets which further depicts efficiency of such markets for price prediction. This study examined the trend of prices of plantain and banana and their response between rural and urban markets in Enugu State based on a 36-month secondary data from Project Coordinating Unit of Federal Ministry of Agriculture and Rural Development. The methodology used was an improvement in the way regression is used to measure spatial market integration. The method used was a reduced form of an error correction model, which has the potential for providing considerable information about causality in price formation. Results indicated that the average price of banana per kilogram in the rural market was N32.93 whereas it was N46.50 in Enugu metropolis. It was also revealed that average per kilogram of plantain were N43.10 and N46.50 in both rural and urban markets respectively. While the rural price may be used to predict the price of banana in urban market and vice versa, it was discovered that only urban markets price of plantain is exogenous. The prices of banana and plantain was found to be significant at 10 %, 5 % and 1 % level after first difference with three lags. The implication of this is that the prices move together across markets showing that there is perfect information flow between the rural price and urban price of Banana and plantain in Enugu State. Nigerian Journal of Horticultural Science Vol. 10 2005: pp. 99-104