Vulnerability of the Indian cashew market to global price shocks

Abstract

The Indian cashew sector is grappling with a severe crisis as numerous processing industries have closed down due to losses and heightened global competition. In this context, we assess the vulnerability of the sector to global price shocks by examining the direction and dynamics of price transmission among import price, domestic price and export price of cashew in India, based on 15 years of data, employing the vector autoregressive model. Results indicate that the import price had positive and immediate effects on both the domestic price and export price of Indian cashew and the relationship was unidirectional, revealing the vulnerability of Indian cashew markets to global price fluctuations.