Author(s): Selamawit Mossie Mognihod and Tadele Kassahun Wudu
Oilseeds are the most important agricultural commodities in the world. Most of the Ethiopian economy depends on agriculture, especially oilseeds. This study was employed to model the production, export, and domestic price of oilseeds from the period of January 2002 to December 2016 monthly data obtained from CSA and NBE by using reviews software. The paper analysis used the Multivariate Time Series VAR model Analysis on the Production, Domestic, and Export Price of Oilseeds in Ethiopia. After the estimation of the VAR (P), normality, Granger Causality, Impulse response function, cross-correlation, and Forecast error decomposition are tested. There is a strong correlation among production, domestic, and export prices of oilseeds which gives good evidence to use the VAR model and there is a long-run relationship among them. The export price of Ethiopia's oilseeds is affected by its lags, GDP, lag of production of this crop, exchange rate, and price of fuel oil. Exchange rate, lag of the export price, and production of oilseeds and its lags affect the domestic price of oilseeds. Production of oilseeds affected by its own first two lags and GDP. The Granger causality test implies that the production of oilseeds provides important information to forecast the future value of the domestic price of oilseeds. From Impulse Response Function, one positive shock to production, export, and domestic price of oilseeds leads to a negative or positive response from production, export, and domestic price of oilseeds in lower lags but converge to zero in higher lags. While the shock of product from its production oilseeds continuous positive responses in lower and higher lags of the time horizons. The variance of production, domestic, and export price of oilseeds accounts for almost all fluctuation of its own in the short and long run. Thus, the concerned bodies should give attention to the factors that affect the domestic price, export of rice, and production of oilseeds in Ethiopia during policy formulation.