Spatial Integration of Milk Markets in Uganda Report as inadecuate

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This paper examines whether milk prices within Kampala are cointegrated with those in other major towns of Uganda. Theperiod of estimation is from July 2005 to March 2015. We use retail monthly prices for raw milk. We obtained the datasetfrom Uganda Bureau of Statistics. Using Engel Granger’s two‐step error correction approach, we examine the relationshipthat exists between prices for raw milk in Kampala and the regional markets. Our analysis provides evidence of a long‐runcointegration relationship between Kampala and Gulu, Mbarara and Masaka milk markets. On the contrary, we failed toreject the null hypothesis of no cointegration between Kampala and Arua, Jinja and Mbale milk markets. Regarding theGranger causality tests, the results reveal that causality mainly originates from the milk supply towns. This implies that milkprices in Uganda are supply driven. The speed of adjustment of the model is 50%, i.e. half of the disequilibrium in thesystem is corrected in one month time period. These results have important implications for the dairy sector in Uganda. Thepaper discusses these implications.

Keywords: Error correction model ; inter‐market relationships ; dairy value chain ; milk price transmission ; speedof adjustment

Editor(s): Schiefer, Gerhard

Rickert, Ursula

Subject(s): Agribusiness

Agricultural Finance

Demand and Price Analysis

Issue Date: 2016-05

Publication Type: Conference Paper/ Presentation

DOI and Other Identifiers: ISSN 2194-511X (Other)

PURL Identifier: Page range: 57-63

Total Pages: 7

Record appears in: International European Forum on System Dynamics and Innovation in Food Networks > 2016 International European Forum (151st EAAE Seminar), February 15-19, 2016, Innsbruck-Igls, Austria

Author: Kabbiri, Ronald ; Dora, Manoj K. ; Alam, Mohammad J. ; Elepu, Gabriel ; Gellynck, Xavier


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