An analysis of cassava price transmission in Thailand

Cassava is a major agricultural product in Thailand. Demands of cassava for industrialization are continuously increasing. However, the amount of raw materials is decreasing. Therefore, the costs of material for processing in factory is also increasing. The prices of roots, chips and tapioca starch at the different market levels are considered. The vector error correction model estimation is employed in this paper. The elasticity of price transmission showed that the price of cassava roots highly influencing the domestic and export pricing of tapioca starch. Likewise, the domestic price variation also affects export starch prices. The results of Granger causality test demonstrate that the short-run relationship of the series, the price of chips in wholesale Granger causes of the change of cassava roots price in local market as well as domestic prices and export prices of tapioca starch. Furthermore, the change of cassava roots prices are also the reason for the change of domestic prices of tapioca starch. These results can help market participants understand the vertical price integration in the cassava and the cassava products.