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Spatial Price Transmission in the Retail Rice Markets of the Philippines

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  • Bathan, B.M.

Abstract

Rice markets in the Philippines recently experienced various policy shocks, including the implementation of the Rice Tariffication Law (RTL) in March 2019, and the imposition of price freeze during the COVID-19 pandemic in 2020, and mandated ceiling prices on milled rice in September 2023. This study aims to examine the spatial price transmission of regular milled rice across 17 regional retail markets. By analyzing monthly price data from January 2012 to December 2023, the study seeks to describe structural breaks in price series, assess the speed and magnitude of price adjustments, determine the nature and direction of price transmissions, and identify factors influencing spatial price transmissions. Various analytical techniques, such as descriptive analysis, unit root and structural break tests, Toda-Yamamoto causality tests, and the autoregressive distributed lag technique, are employed to analyze the price series. The findings reveal significant positive and negative structural breaks. Both Central Luzon, the top producer of paddy rice, and Eastern Visayas, the main consumer of regular milled rice, serve as reference markets. The National Capital Region also functions as a central market. The speed of price adjustments ranges from 1.18 to 3.60 months, while asymmetric price transmission is observed in two out of four spatially integrated regional markets. Cagayan Valley exhibits almost one-to-one price transmission, whereas the other reference markets have an elasticity of price transmission of less than 0.80. The study recommends monitoring prices, disseminating market information, investigating unfair trade practices, improving NFA inventory management, and developing targeted price and market policy measures.

Suggested Citation

  • Bathan, B.M., 2024. "Spatial Price Transmission in the Retail Rice Markets of the Philippines," ASEAN University for Sustainable Food System, Faculty of Economics, Kasetsart University, Bangkok, Thailand, April 18-19, 2024 344438, Association of Southeast Asian Nations (ASEAN).
    • Handle: RePEc:ags:asea24:344438
    DOI: 10.22004/ag.econ.344438
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    References listed on IDEAS

    as
    1. Intal, Ponciano Jr. S. & Garcia, Marissa C., 2005. "Rice and Philippine Politics," Discussion Papers DP 2005-13, Philippine Institute for Development Studies.
    2. Rachel Rose & Dimitrios Paparas, 2023. "Price Transmission: The Case of the UK Dairy Market," Commodities, MDPI, vol. 2(1), pages 1-21, March.
    3. M. Hashem Pesaran & Yongcheol Shin & Richard J. Smith, 2001. "Bounds testing approaches to the analysis of level relationships," Journal of Applied Econometrics, John Wiley & Sons, Ltd., vol. 16(3), pages 289-326.
    4. Jochen Meyer & Stephan von Cramon‐Taubadel, 2004. "Asymmetric Price Transmission: A Survey," Journal of Agricultural Economics, Wiley Blackwell, vol. 55(3), pages 581-611, November.
    5. Toda, Hiro Y. & Yamamoto, Taku, 1995. "Statistical inference in vector autoregressions with possibly integrated processes," Journal of Econometrics, Elsevier, vol. 66(1-2), pages 225-250.
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    Keywords

    Food Consumption/Nutrition/Food Safety; Food Security and Poverty; Sustainability;
    All these keywords.

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