Rice Importation in Northern Region of Ghana; Its Impact on Domestic Rice Production and Some Policy Measures

Abstract

The paper assessed the volume of imported rice in Northern region of Ghana, its effects on domestic rice production and the essential policy measures needed to improve the production of rice in the region. The Johansen method of cointegration was used to test the long run co-movement of prices of imported rice at the central market (Tamale) and that of domestic rice is selected districts markets. Granger causality and Vector Error Correction Models (VECM) were used to detect the price leadership direction and the extend of prices response to the re-establishment of long run equilibrium when there is distortion in the market respectively. Statistical figures served as evident that Ghana and for that matter Northern experienced a flooding of imported rice leading to its share of the market stood at 76% against 24% share of domestic rice.  The results reflect a strong long run relationship between prices of imported rice in the Tamale market (central market) and prices of domestic rice in the districts markets. Also, the causality results indicate no price leadership except in the case of Saboba where there is bilateral causality. Analysis from the VECM shows that, domestic rice prices in the various districts markets respond to price shock when there is disequilibrium in the long run. Based on the findings, there is the need to implement appropriate government policies to improve domestic rice production in the region – imposing higher tariff to reduce rice importation, improvement in domestic rice standard to enable it compete effectively and effective and efficient dissemination of information (advertisement) to the target group to create their awareness about the quantity and quality of domestic rice in the local market.