SPATIAL INTEGRATION FOR FRESH CASSAVA MARKETS IN CENTRAL MALAWI

Abstract

Over the past decade, there has been an increase in cassava production in Malawi. The overall objective of this study was to examine extent of spatial integration of fresh cassava market in central Malawi and its underlying hypothesis was that fresh cassava markets in central Malawi are not well integrated and not efficient in transmitting price information across spatially located markets. An analysis was conducted over 17 markets in central Malawi using a co integration approach (as developed by Engle and Granger, 1987) and a distributed-lag model (introduced by Ravallion, 1986). The study further employed the Granger Causality Error Correction Mechanism and an Index of Market Connectedness to examine the degree of market integration between integrated market links. Results indicate presence of market integration across spatially located market. However, it is observed that the market is not perfectly efficient in transmitting price information across spatially separated markets. It is further observed that the fresh cassava market within central Malawi is divided into 3 economic markets: [(Chimbiya, Thete, Mitundu, Lilongwe and Nanjiri), (Salima, Mtakataka, Sharpvalley), (Ntcheu and Lizulu)]. The study recommends promotion of farmer’ associations and specialisation in cassava production i.e. producers to specialise either in cassava stem production or root production in order to improve pricing efficiency and that future efforts to analyse efficiency of the marketing system should not isolate stems which would influence a lot in pricing and marketing decision making by producers handling both stems and fresh roots. The study also recommends that any price stabilisation policy interventions by government can be concentrated on one market in each of the economic markets and the effects would be transmitted in the long run to other markets within the same economic market.