Market Power in Nigerian Domestic Cocoa Supply Chain
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Date
2015-03-03
Authors
Ajetomobi, Joshua Olusegun
Journal Title
Journal ISSN
Volume Title
Publisher
African Economic Research consortium
Abstract
An efficient and integrated cocoa market in Nigeria is important if the nation
is going to successfully compete with regional cocoa producers such as Cote
d’Ivoire and Ghana in the international markets. At present, Nigeria produces
just about 6% of the global production, while Cote d’Ivoire produces about 43% and
Ghana 14%. This study, therefore, is an attempt to examine whether cocoa market
liberalization reform in Nigeria has achieved its stated objective of increasing the
efficiency of the cocoa supply chain. A common indicator of efficient and functioning
markets is the presence of high level of integration among them; while lack of integration
could be an indication of private traders’ market power tendency. The analyses are based
on annual aggregate and monthly cocoa price data and done within error correction
and cointegration model framework. The results indicate both vertical and horizontal
integration of various markets along Nigerian cocoa supply chain. In specific terms,
the results show that (i) there is no tendency towards non-competitive behaviour by
major cocoa exporters in Nigeria who now interface between the world and domestic
cocoa markets, and (ii) export price series closely follows world price series, while
farm gate price closely follows export in the long run. In addition, the source markets
are well integrated. The speed of adjustment towards long-run equilibrium, however,
varies with the position of the market along the supply chain.
Description
Keywords
Agricultural Policy, , Market Structure, , Cocoa, , Cointegration, , Nigeria