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Asian Journal of Agriculture and Development (AJAD) - Call for papers!

Analysis of spatial integration and price leadership of rice market in Myanmar, 2004-2013

(Myanmar), Master of Science in Agricultural Economics (University of the Philippines Los Baños)

Thesis Abstract:

This study investigated the spatial integration and price leadership of eight domestic rice markets in Myanmar using monthly wholesale price data of Pawsan, Emata, and Ngasein rice varieties for the period 2004–2013.

Pearson correlation result showed high degree of integration between markets, ranging from more than 0.6 to 0.9. However, the Johansen result revealed that six out of 28 market pairs had co-integration, while five market pairs were spatially segmented for all rice varieties. The rest of the 17 market pairs had co-integration for some varieties but had none for some varieties suggesting that overall degree of market integration was still low.

Vector Error Correction Model showed that most of the co-integrated market pairs for all rice varieties had considerable integration in the long run. In terms of speed of adjustment, disequilibrium condition between markets was fully adjusted within 2–11 months. On the other hand, only 25 percent of market pairs showed short-run causality.

Granger causality test showed that the deficit markets were price leader for Pawsan rice, while Ngasein variety had no leader market for rice price formation because most market pairs for Ngasein rice variety showed bi-directional relationship.

Deficit and transit markets were the main sources of price information for Emata andoverall rice.

In comparing the condition of spatial market integration between the term of old government and the new government, large progression of market integration was found in the latter period. Overall result of Piecewise Regression showed that there were no significant changes in the rice market at the estimated breakpoint in 2011. In detail, Pawsan rice price showed decreasing trend, while the other two varieties had increasing trend.

Transportation and telecommunication facilities, supply-demand, surplus- deficit, and consumer preferences were considered main factors of spatial integration in domestic rice markets. Therefore, the overall result suggests establishment of efficient market information broadcasting system, rice market liberalization, and implementing rice pricing policy. The government needs to prioritize the development of transportation and telecommunication infrastructures. Likewise, policy that will encourage the growing of more Emata rice, the main export rice variety in Myanmar, should be formulated by the government to develop the rice industry.