An Evaluation Of The Transmission Of International Wheat Prices Into Kenya’S Domestic Market
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Date
2019Author
Kipruto, Kirui Patrick
Type
ThesisLanguage
enMetadata
Show full item recordAbstract
The prices of most food commodities in the international market have increased in the recent past.
Thus, there is need to understand, the extent to which the increase in food prices is transmitted to
the domestic market from the world market. Little information is available on the degree of
transmission of world wheat prices into the domestic market in Kenya. The study seeked to
evaluate the transmission of international wheat prices to the Kenyan domestic market. The
purpose of the study was to evaluate the transmission of international wheat price into domestic
markets in Kenya.
The study employed an Error Correlation Model (ECM) on monthly wholesale prices for the
period 2002-2014 to evaluate the transmission of international wheat prices into Kenya’s domestic
market. The international wheat price data was obtained from FAO GIEWS, while domestic wheat
prices in Kenya was collected from the Ministry of Agriculture, Livestock and Fisheries. The study
found out that there exist a long-run steady state equilibrium between the Ukrainian and the
Kenyan wheat prices. The long-run elasticity of price transmission is estimated at 0.78 to show
that 78 percent of the changes in the Ukrainian wheat prices are transmitted to the Kenyan domestic
market. The speed of adjustment is estimated at -0.08 which implies that it takes about 13 months
for the wheat price changes in Ukraine to be fully transmitted to the Kenyan market.
The Kenyan government should improve infrastructure in the rural areas to allow for easy
movement of goods and services. The government should create conducive environment for local
production of wheat. It should also promote production of other staple foods to supplement wheat
in case of higher prices. The study also recommends that the government should create competition
in grain handling in order to reduce cost and time of handling.
Publisher
UoN
Rights
Attribution-NonCommercial-NoDerivs 3.0 United StatesUsage Rights
http://creativecommons.org/licenses/by-nc-nd/3.0/us/Collections
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