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Effects of government maize Marketing trade Policies on maize Market Prices in Kenya
Author(s): Jayne,Thomas;Meyers,Robert;Nyoro,James
Introduction
The objectives of this paper are to determine the effects of NCPB maize trading activity and the maize import tariff on wholesale maize market price levels and volatility. The analysis uses monthly maize price and trade data covering the period January 1990 to September 2004. Results are based on a vector autoregression (VAR) approach that allows estimation of a counterfactual set of maize prices that would have occurred over the 1990-2004 period had the NCPB not existed and trade restrictions been removed. We assess the separate impacts of policy on wholesale prices in Kitale, a major surplus-producing area, and Nairobi, the major urban demand center in the country. Results indicate that the NCPB’s activities have indeed had a marked impact on both maize price levels and volatility, but the direction of the effect differed by period. During the 1993/94 drought period, for example, the NCPB appears to have reduced market prices through selling maize at steep discounts to the market. By contrast, since the 1995/96 season, the NCPB’s operations have raised wholesale maize price levels in Kitale and Nairobi by 16.4 and 15.7 percent, respectively, implying a transfer of income from maize purchasing rural and urban households to relatively large farmers. The NCPB’s activities have also reduced the standard deviation and coefficient of variation of prices as well, consistent with its stated mandate of price stabilization. Whether or not this reduction in price instability has introduced greater or lesser price risk for farmers cannot be inferred from this analysis and is the subject of further research.
Language: English
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 Effects of government maize Marketing trade Policies on maize Market Prices in Kenya - Pdf
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