A study on the integration of potato markets in South Africa

Simple item page
dc.contributor.advisorAlemu, Z. G.
dc.contributor.advisorGrové, B.
dc.contributor.authorDu Preez, Leandré
dc.date.accessioned2015-10-09T09:47:00Z
dc.date.available2015-10-09T09:47:00Z
dc.date.issued2011-11
dc.description.abstractPotatoes are the most important vegetable product in South Africa and the third most important food crop in the world. Potatoes are planted in all the regions and sold on all of the Fresh Produce Markets of South Africa. The markets serve as the price setter for the industry and producers are not sure about the movement and the fairness of prices they receive. Marketing strategies are based on price information and producers cannot accurately determine their strategy if price information is incorrect or unavailable. The study therefore investigated the integration of potato markets in South Africa based on price data. The primary objective of the study is to analyse market integration within the potato industry of South Africa. The existence of price relationships and spatial linkages between markets are determined by the study. Market integration was determined by applying the Threshold Vector Error Correction Model (TVECM). The TVECM is used more often in recent literature and is methodologically stronger than some of its predecessors. The method allows for nonstationarity of variables and considers the possibility of non-linear and asymmetric type of variables. The pivotal role played by transaction costs are incorporated into the model. The study also tested whether a two or three regime model would best fit the data, instead of imposing a specific regime. The data used in the study is weekly data ranging from January 1999 to June 2009. The study was done on eight selected Fresh Produce Markets (FPM) namely Johannesburg (JHB), Pretoria (PTA), Bloemfontein (BFN), Kimberley (KBY), Durban (DBN), Cape Town (CTN), Pietermaritzburg (PMB) and Port Elizabeth (PE). The following results were obtained. First, on the statistical properties of the variables - all price variables are non stationary. Based on co-integration analyses long run relationships between all market pairs considered were found. The market pairs are thus co-integrated or integrated in the long run. Second, after results suggested non-linearity, decisions were made to test for the presence of market integration in the short run by fitting TVECM. A set of two and three regime TVECM were estimated. Overall, results indicated that in the short run, the markets are not integrated. In addition, results from regime switching showed no discernible pattern on the time of switches between regimes. In conclusion the results from the direction of causality test indicated a one directional flow with Johannesburg FPM being the main destination market. Overall, results attest to a prior expectation that Johannesburg is the leading FPM in South Africa. Markets are integrated in the long run but are not integrated in the short run.en_ZA
dc.identifier.urihttp://hdl.handle.net/11660/1351
dc.language.isoenen_ZA
dc.publisherUniversity of the Free Stateen_ZA
dc.rights.holderUniversity of the Free Stateen_ZA
dc.subjectPotato industry -- South Africaen_ZA
dc.subjectPotatoes -- Prices -- South Africaen_ZA
dc.subjectPotatoes -- South Africa -- Marketingen_ZA
dc.subjectPotatoes -- South Africa -- Marketingen_ZA
dc.subjectPurchasing power parityen_ZA
dc.subjectMarkets -- South Africaen_ZA
dc.subjectArbitrageen_ZA
dc.subjectTVECMen_ZA
dc.subjectVector Autoregressive Modelsen_ZA
dc.subjectAsymmetryen_ZA
dc.subjectNon-linearityen_ZA
dc.subjectTransaction Costsen_ZA
dc.subjectCointegrationen_ZA
dc.subjectMarket Integrationen_ZA
dc.subjectLaw of One Price (LOP)en_ZA
dc.subjectMarketsen_ZA
dc.subjectPricesen_ZA
dc.subjectDissertation (M.Sc.Agric. (Agricultural Economics))--University of the Free State, 2011en_ZA
dc.titleA study on the integration of potato markets in South Africaen_ZA
dc.typeDissertationen_ZA
Files
Original bundle
Now showing 1 - 1 of 1
Thumbnail Image
Name:
DuPreezL.pdf
Size:
3.27 MB
Format:
Adobe Portable Document Format
Description:
Download
License bundle
Now showing 1 - 1 of 1
No Thumbnail Available
Name:
license.txt
Size:
1.71 KB
Format:
Item-specific license agreed upon to submission
Description:
Download
Collections
All Electronic Theses and Dissertations
Masters Degrees (Agricultural Economics)