Seasonal Asymmetric Price Transmission in Ghanaian Tomato Markets: Adapting Johansen’s Estimation Method

We assess market integration and price transmission of perishableagricultural produce in Sub-Saharan Africa by studying Ghanaian tomato marketswhich are characterized by pronounced seasonality in production and trade flows.We analyse the tomato markets of Ghana by simultaneously regarding its fivemost important markets, Navrongo, Techiman, Kumasi, Tamale and Accra, in amultivariate asymmetric price transmission framework. The estimation of themodel is based on a unique dataset and on a modified version of the Johansenestimation procedure which is suitable for estimating such multivariate models.We estimate the price transmission parameters for four regimes which are acombination of the seasonal patterns in trade flows and asymmetries in the longrunprice equilibrium between the most important production region (Techiman)and the most important consumption centre for tomatoes (Accra). We find strongevidence for integration of the five markets. In general, price transmission appearsto be fast. Disequilibria mainly trigger price responses in the two productionregions of Navrongo and Techiman. The regimes are found to matter for thewhole system of tomato markets. Disequilibrium is shown to spillover betweenthe price relationships. Consequently, tomato markets in Ghana appear to beintegrated and function very well since price signals are rapidly passed throughthe country.