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AAMP Training Materials. T.S . Jayne ( MSU ) [email protected] Module 4.3: Marketing Margins & Marketing Costs. Objectives. Understand relationships between food prices between countries Examine the relationships between food prices at different marketing levels.

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Aamp training materials l.jpg

AAMP Training Materials

T.S. Jayne (MSU)

[email protected]

Module 4.3: Marketing Margins & Marketing Costs


Objectives l.jpg
Objectives

  • Understand relationships between food prices between countries

  • Examine the relationships between food prices at different marketing levels






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Motivation

  • Why bother studying the relationship between food prices in one market and another?

  • Why bother studying the relationship between food prices at one level (e.g., farm-gate) and food prices at another level (e.g., retail)?


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Definitons

  • Spatial marketing margins

  • Spatial marketing costs

  • Vertical marketing margins

  • Vertical marketing costs


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Luchenza retail price and farmer-reported prices received in remote villages in Mulanje District, 2009/10 marketing year




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Determinants of marketing margins

  • Spatial margins:

    • 1

    • 2

    • 3

  • Vertical margins

    • 1

    • 2

    • 3


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Why might margins ≠ costs

  • Spatial margins:

    • 1

    • 2

    • 3

  • Vertical margins

    • 1

    • 2

    • 3


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What does it mean if:

  • Spatial margins < transfer costs

    • 1

    • 2

    • 3

  • Spatial margins > transfer costs

    • 1

    • 2

    • 3







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Exercises

  • Examine maize prices at

    • SAFEX

    • Blantyre, Malawi

    • & Transfer costs between them

  • Compute the spatial price spread

  • Compute import parity prices at Blantyre

  • On the basis of spatial margins vs. transfer costs, predict the months in which you would expect to see imports occurring

  • Compare this with actual trade flows

  • Explain the reasons for what you see


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