Analysis of rural–urban vegetable market dynamics in Central Gondar Zone, Ethiopia

Abstract

Abstract Background Vegetable crops are among most perishable agricultural products which require efficient marketing system to reach them fresh to consumers. Weak market integration and sluggish price transmission of such perishable products can lead to suboptimal allocation of resources. This study was aimed to identify the degree of vegetable price integration and speed of price transmission between urban and rural vegetable markets. Methods Two rural markets (Maksegnit and Koladiba) and one central urban market (Gondar) were selected for the purpose of the analysis based on their strong relationship as supply and destination market for vegetable crops. Price data of vegetable crops were collected from September 2013 to December 2018 from each market areas trade and revenue department offices. Augmented Dickey-Fuller test, Granger causality test and error correction model were utilized in the process of the analysis. Results The result shows that both rural markets were integrated with urban market for garlic crop. In addition, the rural markets caused the urban market to change not in the reverse direction. Moreover, urban market is adjusted by about 30% per month when there were a 1% price shock in rural markets for garlic crop. This speed of price transmission is sluggish for perishable crops and seasonally flexible prices. Conclusion This study concluded that vegetable prices are determined from demand side and it should be the target for any planned policy modification.