Vertical price transmission dynamics in the fresh tomato value chain in Burkina Faso: an application of the BVAR and TVAR models

Abstract

Abstract

This study investigates the nature of vertical price transmission between farm-gate and retail markets for fresh tomatoes in Burkina Faso.  Bayesian Vector Autoregression (BVAR) model and  Threshold Vector Autoregression (TVAR) model were applied to annual farm-gate and retail price data obtained from FAOSTAT and the National Institute of Statistics and Demography (INSD), respectively. The findings reveal that price transmission along the fresh tomato value chain is asymmetric. The TVAR results indicate that price transmission is stronger during periods of stable or increasing prices, whereas it is weaker when prices decline. This asymmetry may reflect market imperfections, including the exercise of market power and the highly perishable nature of fresh tomatoes. These findings suggest that improving market transparency, strengthening price information systems, and promoting greater market competition could enhance the efficiency of price transmission throughout the value chain.

Keywords: price transmission, price asymmetry, Bayesian Vector Autoregression, Threshold Vector Autoregression, fresh tomato, value chain, Burkina Faso.