Co-integration Analysis of Market Prices of Edible Oil in Rural and Urban Markets of Niger Delta Region in Nigeria

Co-integration technique was applied to determine the level of integration between rural and urban markets’ prices of edible oil in the Niger Delta region. It also established the price causality and transmission in edible oil marketing. Primary data were generated from 432 edible oil marketers composed of wholesalers and retailers from three States in the region. Secondary data on rural and urban markets prices of palm oil and vegetable oil were sourced from the Central Bank of Nigeria (CBN) bulletin. Results of the vector error correction model (VECM) applied to measure the short-run dynamics among rural and urban edible oil markets indicate that a 1% increase in rural price of vegetable oil would in the long run increase its urban price by 4% but not same with palm oil. Estimated short-run coefficients for edible oil rural and urban markets’ prices were negative and statistically significant at the 5% level. Adjustment towards the long-run equilibrium in the short-run also revealed that the price changes in the vegetable oil rural and urban markets were transmitted to other markets at a rate of 26% and 38% respectively within a week. The direction of causality between urban and rural prices of vegetable oil showed that urban prices of the vegetable oil manifested a two-way causation with its rural price at 5% while that of palm oil was at 1% level of significance. Capacity building workshops is recommended for marketers on strategies in marketing and business conduct to help equip them on how to access price and other related market information.