Impacts of Export Bans and Seasonality on Maize Price Transmission Between Selected Deficit and Surplus Markets in Tanzania: Evidence from Sumbawanga Market

Abstract

Using maize prices data from Tanzania’s National Bureau of Statistics from 2002
through 2017, this paper analyses the impacts of export bans and seasonality on
spatial domestic price transmission between deficit markets and the surplus
Sumbawanga market; using a vector error correction (VEC) model with export ban
and seasonality dummy variables. Results show that 45% of deficit markets converged
in the long-run with the Sumbawanga market, with a significant negative sign at 10%
level. Moreover, 64% of market pairs negatively impacted spatial domestic price
transmission, while seasonality had significant impacts on the same between market
pairs. A Granger causality suggests that 63%, 27%, and 10% of market pairs were bidirectional, unidirectional and no causality, respectively. Thus, government policies
should incline towards increaseing maize production rather than imposing ad-hoc
export bans, improving storage facilities, and mitigating climate changes to insulate
seasonality: all of which will—through market mechanism—moderate consumer
prices and ensure profitability among maize sellers.
JEL Classification: Q17, M38