• Exchange Rate, Crude Oil Price, and Volatility Transmission between International and Domestic Beef and Mutton Prices in Ghana: What Could Be Done?

    Author(s):

     Nanii Yenibehit1, Joseph Amikuzuno2, Isaac Gershon Kwodo Ansah3, Osman Tahidu Dambab4 and Razak Alhassan5


    yenibehitnanii@gmail.com
    2025-01-06 09:25:32

    8 Downloads 14 Views

    Abstract

    In the last two and a half decades, the volatility of agricultural commodity prices has become a significant concern for governments, policymakers, farmers, traders, and consumers. This issue gained prominence particularly during the episodic rises in prices from 2007 to 2011, and has been exacerbated by the Covid-19 pandemic and the Russia-Ukraine war. In this volatile global economy, Ghana has relied on imports of livestock and meat products, such as beef and mutton, to supplement its domestic supply. This dependence on foreign imports implies a trade flow between Ghana’s domestic meat markets and foreign markets, with the potential for volatility transmission across these markets. To investigate this issue, we employed multivariate GARCH models (DCC &CCC)to assess the nature of volatility transmission between foreign meat markets and domestic meat markets in Ghana. Additionally, we examined the influence of macroeconomic indicators such as crude oil price returns and exchange rates on the volatility of meat returns. Our study utilized monthly data from five countries that traded beef and mutton with Ghana from 2016 to 2020. The f indings indicate that the domestic and foreign meat markets are interdependent, particularly in the beef markets, where volatility in foreign markets is transmitted to Ghana’s domestic market. The study further reveals that, the instability of key macroeconomic variables, specifically crude oil price returns and exchange rates, significantly impacts the volatility transmission of meat price returns in Ghana. Based on these findings, we recommend that the government of Ghana adopt a coordinated approach to market regulation in the meat sector to help stabilize prices and reduce volatility. This could involve setting standards for quality, hygiene, and pricing among meat importers and traders, as well as monitoring imports to ensure that only certified and licensed traders are involved in the import and trade of foreign meat products. Such measures would help prevent market distortions and contribute to a more stable meat market in Ghana.

    Keywords
    COVID-19, Russian–Ukraine War, Multivariate GARCH, Meat Price Volatility, Exchange Rate, and Crude Oil Prices

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