The farm decision role of price information from commodity exchanges: An ex-ante evaluation using quasi-rational price expectations in Ethiopia
African Journal of Agricultural Research
Department of Agricultural Economics, Ambo University College, Ambo, Ethiopia; Department of Agricultural Economics, Ghent University, Coupure links 653, 9000 Ghent, Belgium
Farmers use different information to predict future returns upon which they base current decisions. In designing information systems, knowledge about the information set used by farmers is relevant to have insight into the necessary information that should be made available for farmers. Using quasirational forecasting regression analysis to represent producer price expectation formation, the usefulness of disseminating real time information about the central wholesale prices discovered by the Ethiopian commodity exchange was tested. The results showed that the information about central wholesale prices can help farmers to make unbiased price forecasts. Effective dissemination of real time price information discovered through the Ethiopian commodity exchange was fully supported by the empirical insights from this study. © 2011 Academic Journals.