Determinants of cattle market price volatility in Maasailand: a GARCH-M application
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Date
2009Author
Irungu, P
Bett, B
Mbogoh, S.G
Randolph, T.F
Nyamwaro, S.O
Murilla, G
Type
PresentationLanguage
enMetadata
Show full item recordAbstract
Livestock marketing provides an avenue to improving pastoral livelihoods and food security.
However, little is known regarding the factors that influence livestock market prices particularly
in Maasailand in Kenya. Knowledge of those factors could assist in designing market-based
incentives to promote cattle trade among the Maasai whose livelihood is solely dependent on livestock. Cattle prices were collected in Oldonyonyokie, Olkiramatian, Shompole, and Ewaso
Ngiro livestock markets once weekly for 12 months between 2004 and 2005. The aim was to
assess the factors that influence cattle market prices in Maasailand. A generalized autoregressive
conditionally heteroscedastic-in-mean (GARCH-M) estimator was used because of
autocorrelation and heteroscedasticity problems inherent in such data sets. Four separate models
were fitted to the data, one for each market. The results indicate that animals with good to
excellent body condition fetched a premium price in all the four markets. Relative to crossbreeds,
Maasai zebu fetched significantly lower prices in Ewaso Ngiro and Oldonyonyokie
markets. The period when school fees are due in May was associated with significantly higher
prices in all the four markets (p<0.05). The Easter holiday put upward pressure on cattle prices
in all the four markets. Trekked cattle sold at a discount relative to trucked ones. Rainfall was
significantly associated with higher cattle prices in Ewaso Ngiro market. The time trend had no
relationship with cattle market prices. In order to take advantage of high market prices, the
Maasai pastoralists should time their offtake to coincide with reopening of schools and public
holidays especially Easter. Supportive marketing infrastructure as well as introduction of cattle
auctions could go a long way to improving cattle marketing in Maasailand.