Analysis of Price Transmission along the Cambodian Rice Value Chain

A threshold specification of the asymmetric error correction model is applied to estimate and test the threshold cointegrating relationship between the wholesale paddy price (farm price) and wholesale rice price, and the wholesale and retail price of rice in Cambodia. Based on our analysis, the threshold cointegration test suggests in favor of asymmetric cointegration. Further, the test of the symmetric adjustment process advocates the presence of asymmetric price transmission in both the short run and long run. The Granger causality test revealed a unidirectional causality from wholesale price to farm price, and a bidirectional causality between wholesale and retail price. Finally, we found that decreases in wholesale price are more quickly transmitted to farmers than price increases. Conversely, increases in wholesale price are more quickly transmitted to consumers than price decreases. For faster price transmission, improved market infrastructure, better market integration, and dispersion of marketing information are suggested. Acknowledgement : We thank the Global Rice Science Partnership (GRiSP) project of the CGIAR for supporting this study. The contents and opinions expressed herein are those of the authors and do not necessarily reflect the views of the authors institution, and shall not be used for advertising or product endorsement purposes. The usual disclaimer applies