📖 ABSTRACT/OVERVIEW
The increasing financialisation of global commodity markets through speculative derivative trading has been hypothesised to amplify price volatility in agricultural commodities, with potentially negative welfare consequences for net buyer smallholder households. In Nigeria, where domestic food prices are partially integrated with global commodity markets for maize, rice, and soybeans, empirical investigation of these financialisation-volatility-welfare linkages represents an important but unaddressed research question. This study conducted a structural empirical investigation of the effects of commodity market financialisation on domestic price volatility and smallholder farmer welfare in Nigeria using monthly commodity price series from 2010 to 2024 supplemented by household welfare data from two rounds of the Nigeria Living Standards Survey. A structural vector autoregression model capturing global speculative positioning, global commodity prices, exchange rates, and domestic Nigerian prices was estimated to identify financialisation-induced volatility transmission. Household welfare simulation was conducted using a dual welfare measure decomposing income and consumption effects. Results demonstrated significant transmission of speculative position changes in global markets to domestic Nigerian maize and rice prices with a lag of two to four months. Net-seller households in maize-surplus states experienced welfare gains from volatility episodes, while urban and peri-urban net-buyer households faced systematic welfare losses. The study makes an original empirical contribution to the commodity market-household welfare nexus in Nigeria, recommending strategic reserve and price stabilisation policy designs. Keywords: financialisation, commodity markets, price volatility, smallholder welfare, Nigeria.
Need Complete Chapters of the Above Topic?
Get high-quality, Zero-AI research materials with current citations.
Request via WhatsApp 💬