Tropentag, October 5 - 7, 2004 in Berlin "Rural Poverty Reduction through Research for Development and Transformation"

Market Efficiency of Fruits and Vegetables in Northern Thailand

University of Hohenheim, Agricultural Economics and Social Sciences in the Tropics and Subtropics, Germany

Abstract

In mountainous areas of Northern Thailand the commercial production of fruits and vegetables has become commonplace for many farmers over the past two decades. Fruits and vegetables often fetch higher prices than staple crops but also are subject too higher production and marketing risks. Market prices for fruits and vegetables fluctuate due to the characteristics of the product such as quality, variety and shelf life as well as seasonality but also due to market inefficiencies. The objective of this study is to determine factors of market efficiencies and inefficiencies in the fruit and vegetable markets based on a case study in Northern Thailand. It is hypothesised that fruit and vegetable crops are diverse in their market efficiency due to the characteristics of the markets (i.e. market size), location of markets (i.e. income structure) and distance between markets. Weekly prices for mango, lychee, cabbage and carrot were collected for the year 2001 at one wholesale and ten retail markets in and outside of Chiang Mai City. In addition weekly Chiang Mai farm-gate prices and Bangkok wholesale prices were acquired for the same period of time from the Office of Agricultural Economics and Talat Thai Market respectively. In addition other quantitative and qualitative information was collected from interviews with 32 vendors, 30 traders and 11 market owners or administrators. Correlation coefficients by Pearson are used to analyse market efficiency by measuring the pricing efficiency and degree of integration between markets. In addition qualitative and quantitative data obtained from traders and market managers are included in the analysis to further determine the factors of market efficiency. The results show that market size and income structure have a significant impact on market prices. However, the impact distance between markets has on pricing showed mixed results. There is a correlation between the various markets for cabbage, but a lack in correlation for carrot, lychee and mango. Overall this study gives insight on fruit and vegetable markets, which are often neglected in research, and delivers answers on efficiencies and inefficiencies within these markets.

Keywords: Correlation coefficients, fruit and vegetable markets, market efficiency

Contact Address: Angela Maria Hau, University of Hohenheim, Agricultural Economics and Social Sciences in the Tropics and Subtropics, Institut 490B, Südostflügel, 70593 Stuttgart, Germany, e-mail: hauuni-hohenheim.de