Volume 60, Issue 335, May - August 2024

Determining the nexus between world price and producer price of cocoa in Nigeria

Oginni OD^♦, Oguntade AE

Department of Agricultural and Resources Economics, Federal University of Technology, Akure, Nigeria

^♦Corresponding Author
Department of Agricultural and Resources Economics, Federal University of Technology, Akure, Nigeria

ABSTRACT

This study was designed to determine the nexus between the world price of cocoa and its producer price in Nigeria. Time series of cocoa annual data worldwide and its corresponding producer price in Nigeria covering 1980 to 2020 were collected for the study and analyzed using growth function analysis and Autoregressive Distributed Lag model. ARDL analysis confirmed that a long-run relationship exists between cocoa producer price and cocoa world price. Also, the long-run estimates revealed that the world price of cocoa had a positive significant influence on the producer price; At the same time, in the short run, there was a positive insignificant influence in the previous year. The growth function showed a growth rate of 18.76% and 13.99% for World Price and Producer Price with significant acceleration in both. The previous year's shock converges to 67.37% of disequilibria, and the long-run equilibrium in the current year is given at an ECM value of -0.673680. This reflects a relatively fast responsiveness of cocoa world price to deviations from its long-run path. The Granger causality test on WP and PP showed a bi-directional causation between the two variables. Based on the findings of the study, it is suggested that the government of Nigeria should introduce price-related reforms that will improve the transmission of world prices to farmers, which would ultimately encourage production and export.

Keywords: World price; Producer price; Cocoa; Nigeria

Discovery, 2024, 60, e23d1451

PDF

DOI: https://doi.org/10.54905/disssi.v60i335.e23d1451

Published: 31 July 2024