1. Tomgouani LANIE University of Kara (Togo)
Spatial and Vertical Price Transmission and Asymmetric Adjustment The Case of Local and Imported Rice in Togo
Tomgouani LANIE
University of Kara (Togo)

2. Outline Price transmission analysis (widespread but still relevant!)
The recent global food crisis: Vulnerability of households (increased concern)
What shall we do? (address problems facing small scale farmers and those related to the functionning markets in the short-run).
Unknown pass-through great source of food insecurity (Barrett & Maxwell, 2005).
Commodity prices behaviour not well understood (Dillon & Barrett, 2015 ; Deaton,1999).
Variations in the extent of price transmission between countries, commodity and context specific (Abbott (2009; Baltzer, 2013; DFID, 2014)  Country-case studies to guide policy implementation.

3. Context of Togo
Vulnerability of households to food prices shocks (Kamgnia, 2011).
The importance of cereals in food security (RNA, 2013; FAO, 2011).
Rice imports dependency :52%
Costs of imports: 4 billion CFA/year
Rice marketing characteristics:
Price control policies
Transaction costs (Koffi-Tessio et al., 2007);
Farmers do not have access to finance (Glé, 2006; Hodjo & Hacharya, 2015);
Market structure (Adjognon, 2012).
The extent & and the adjustment of domestic markets are not known in Togo

4. Objectives In this paper, we have two objectives:
First, we have investigated the extent and the short-run speed of adjustment of six domestic markets of imported rice and the local market of processed rice to changes in the prices of rice on the global market and how the local market of paddy adjust to prices change on the local market of processed rice
Second, test for asymmetry in the adjustment process for different markets pairings.

5. Materials and methods (1/3)
FAO/GIEWS : Monthly retail prices of Imported rice
North (Cinkassé, Korbongou & Kara)
South (Anié, Lomé & Amégnran)
World market prices
DSID: Monthly retail prices (paddy and processed rice).
Prices in FCFA/Kg

6. Materials and methods (2/3)
Statistic properties of series (ADF tests)
Engle & Granger (1987) and Johansen (1988) cointegration tests
Threshold cointegration (Enders & Granger, 1998)

7. Materials and methods (3/3)
Granger causality tests
Estimation of symmetric error correction models
Estimations of asymmetric error correction models (Sun, 2011)
AIC & Ljung Box

8. Results (1/3) Unit root tests Engle & Granger cointegration test
Johansen cointegration test
Long-run relationship
Prices pairs
Paddy & Processed
Processed rice
Cinkassé
Korbongou
Kara
Anié
Lomé
Amégnran
Extent
0,89
0,34
0,38
0,35
0,28
0,30
0,63

9. Results (2/3) Threshold cointegration Prices pairings
Paddy & Processed
Processed Rice
Cinkassé
Korbongou
Kara
Anié
Lomé
Amégnran
Threshold cointegration tests
Yes No
Asymmetric adjustment tests
(73%) vs
(32%)
(12%)
(71%)

10. Cinkassé – International
Results (3/3)
Estimations of asymmetric error correction models
Prices
Pairs
Processed rice & Paddy
Cinkassé – International
Anié – International
Lomé – International
Asymmetric adjustment
(Own Prices) No
Yes
Asymmetric adjustment (short-run)
Asymmetric adjustment (Speed of adjustment)

11. Summary & Conclusion Low price transmission elasticities
The extent
Low price transmission elasticities
Sharma (2003) vs Baltzer (2013)
Asymmetric price transmission
Adjognon (2012)
Koffi-Tessio et al (2008)
Policy implications

12. THANK YOU FOR YOUR ATTENTION