28.01.2015 Views

The Future of Smallholder Farming in Eastern Africa - Uganda ...

The Future of Smallholder Farming in Eastern Africa - Uganda ...

The Future of Smallholder Farming in Eastern Africa - Uganda ...

SHOW MORE
SHOW LESS

Create successful ePaper yourself

Turn your PDF publications into a flip-book with our unique Google optimized e-Paper software.

Table 5.10: Summary <strong>of</strong> Granger causality tests<br />

P wit does not Granger<br />

cause P rit<br />

Crop type<br />

1. Teff<br />

Adda teff 0.42 0.29<br />

(0.66) (0.75)<br />

Wollenkomi teff 0.35 0.33<br />

(0.71) (0.72)<br />

Bechena teff 0.84 14.40***<br />

(0.43) (0.00)<br />

2. Wheat<br />

Wheat first 11.64*** 2.56*<br />

(0.00) (0.08)<br />

Wheat second 16.37*** 5.24***<br />

(0.00) (0.01)<br />

Wheat third 29.77*** 0.01<br />

(0.00) (0.99)<br />

3. Maize<br />

White maize 10.32*** 0.97<br />

(0.00) (0.98)<br />

Mixed maize 11.75*** 1.78<br />

(0.00) (0.17)<br />

P rit does not Granger cause<br />

P wit<br />

Note: <strong>The</strong> unparenthesized figures are F-statistics, while the figures <strong>in</strong> parentheses are p-<br />

values.<br />

*** Significant at 1% or less.<br />

* Significant at 10%.<br />

Table 5.10 reveals <strong>in</strong>terest<strong>in</strong>g <strong>in</strong>formation about the direction <strong>of</strong> causality between the two<br />

markets. <strong>The</strong> causality directions are from wholesale to retail for both white and mixed<br />

maize. Thus, the wholesale markets lead the retail markets for maize. With regard to wheat,<br />

there is a two-way <strong>in</strong>teraction or causation between the two series.<strong>The</strong> <strong>in</strong>fluence <strong>of</strong> the<br />

wholesale market is stronger, however, than that <strong>of</strong> the retail market <strong>in</strong> all grades <strong>of</strong> wheat.<br />

This shows that wholesale markets do not receive adequate feedback from the retail markets,<br />

especially <strong>in</strong> the case <strong>of</strong> maize.<br />

<strong>The</strong> results pa<strong>in</strong>t a different picture for teff, where there is a weak causality relationship (not<br />

statistically significant) virtually <strong>in</strong> all types. <strong>The</strong> only exception is Bechena teff <strong>in</strong> which the<br />

retail market leads the wholesale market. Teff markets do not appear to have strong causal<br />

relationships.

Hooray! Your file is uploaded and ready to be published.

Saved successfully!

Ooh no, something went wrong!