Volatility and Co‑movement of Food Commodity Prices in Nigeria

What is it about?

This study explains volatility as a measure and interaction of the possible movement in a particular economic variable. Prices change rapidly in adjustment to market circumstances. The experienced increase in food prices over years has resulted in widespread menace which led to increase in food price volatility. However, volatility and co-movement had generally been lower for the past two decades than for the previous ones. Wide price movements over a short period of time connote high volatility, rendering the producers and consumers vulnerable. Excess volatility can be subjected to sector ineffectiveness and is commodity specific. Producers and processors are mostly concerned about increased price volatility, which greatly exposed them to unpredictable risks and uncertainty associated with price changes.

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Why is it important?

Up to this recent time, many researches have been conducted on volatility and co‑movement of food commodity prices in the world and even in Sub‑Saharan Africa. These research works have revealed diverse measurement of volatility, but little was done in Nigeria to find out the ripple effect of volatility and co‑movement on the agricultural commodity prices. This work bridged the gap and contribute to this area in measuring the volatility of the selected food commodity prices in Nigeria. Also, the majority of the studies reviewed focused primarily on food grains like rice, maize, sorghum, wheat and so on which are the main staple food grains in their area of research. Although they claimed that crops like yam, cassava and other root and tuber crops are also important staples, but they are of interest due to the fact that they cannot be stored long after harvest. On the contrary, this research focused on both food grains (rice, maize and sorghum) and root and tuber crops (yam and cassava) to check if the shelve life of these food crops contribute immensely to the variation or instability in their prices.

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