Spatial integration and price transmission among major potato markets in India

Rajeev R Kumar; Girish K Jha; Kapil Choudhary; Dwijesh C Mishra

doi:10.56093/ijas.v90i3.101488

Authors

Rajeev R Kumar ICAR-Indian Agricultural Statistics Research Institute, New Delhi 110 012, India
Girish K Jha ICAR-Indian Agricultural Statistics Research Institute, New Delhi 110 012, India
Kapil Choudhary ICAR-Indian Agricultural Statistics Research Institute, New Delhi 110 012, India
Dwijesh C Mishra ICAR-Indian Agricultural Statistics Research Institute, New Delhi 110 012, India

https://doi.org/10.56093/ijas.v90i3.101488

Keywords:

Co-integration analysis, Causality, Market integration, Potato

Abstract

The present study examined the spatial market integration across four major potato markets, viz. Agra, Bengaluru, Delhi and Mumbai for the period January, 2005–March, 2018. Johansen’s multivariate co-integration approach has been applied to identify the possible market integration. The results of Johansen’s co-integration test for different markets revealed that all the six market pairs are co-integrated, demonstrating that the selected potato markets have long-run price linkage across them. To supplement the finding of Johansen’s co-integration analysis, we assessed the nature and extent of long run and short run causal relationship between the markets. The results of long run causality showed bidirectional causality for the market pairs: Agra ↔ Bengaluru, Agra ↔ Mumbai, Bengaluru ↔ Delhi and Bengaluru ↔ Mumbai, whereas for market pairs Agra→ Delhi and Mumbai→ Delhi have long-run unidirectional causality. To get the additional evidence as to whether and in which direction price transmission is occurring between the market pairs in short run, Wald test has been used.

Downloads

Download data is not yet available.

References

Basu J P and Dinda S. 2003. Market integration: An application of error correction model to potato market in Hooghly district, West Bengal. Indian Journal of Agricultural Economics 58: 742–51.

Beag F A and Singla N. 2014. Co-integration, causality and impulse response analysis in major apple markets of India. Agricultural Economics Research Review 27: 289–98. DOI: https://doi.org/10.5958/0974-0279.2014.00032.9

Choudhary K, Jha G K, Kumar R R and Mishra D C. 2019a. Agricultural commodity price analysis using ensemble empirical mode decomposition: A case study of daily potato price series. Indian Journal of Agricultural Sciences 85(5): 882–86.

Choudhary K, Jha G K, Das P and Chaturvedi K K. 2019b. Forecasting Potato Price using Ensemble Artificial Neural Networks. Indian Journal of Extension Education 55(1): 73–77.

Dhakre D S and Bhattacharya D. 2014. Price behavior of potato in Agra market -A statistical analysis. Indian Research Journal of Extension Education 14: 23–26.

Fackler P L and Tastan H. 2008. Estimating the degree of market integration, American Journal of Agricultural Economics 90(1): 69–85. DOI: https://doi.org/10.1111/j.1467-8276.2007.01058.x

Johansen S and Juselius K. 1990. Maximum likelihood estimation and inference on cointegration with application to demand for money. Oxford Bulletin of Economics and Statistics 52(2): 169–210. Kumar R R and Jha G K. 2017. Examining the co-movement between energy and agricultural commodity prices in India. Journal of the Indian Society of Agricultural Statistics 71(3): 241–52. DOI: https://doi.org/10.1111/j.1468-0084.1990.mp52002003.x

Lohano H D, Mari F M and Memon R A. 2005. Testing Onion Market Integration in Pakistan. Pakistan Development Review 44: 717–28. DOI: https://doi.org/10.30541/v44i4IIpp.717-728

Pavlista Alexander and Feuz Dillon. 2005. Potato prices as affected by demand and yearly production. American Journal of Potato Research 82: 339–43. 10.1007/BF02871964. DOI: https://doi.org/10.1007/BF02871964

Ravallion M. 1986. Testing market integration. American Journal of Agricultural Economics 68: 102–09. DOI: https://doi.org/10.2307/1241654

Reddy B S, Chandrashekhar S M, Dikshit A K and Manohar N S. 2012. Price trend and integration of wholesale markets for onion in metro cities of India. Journal of Economics and Sustainable Development 3(70): 120–30.

Serra T and Goodwin B K. 2003. Price transmission and asymmetric adjustment in the Spanish dairy sector. Applied Economics 35: 1889–99. DOI: https://doi.org/10.1080/00036840310001628774

Van-campenhout B. 2007. Modelling trends in food market integration: Method and an application to Tanzanian maize markets. Food Policy 32: 112–27. DOI: https://doi.org/10.1016/j.foodpol.2006.03.011

Vavra P and Goodwin B K. 2005. Analysis of price transmission along the food chain. OECD Food, Agriculture and Fisheries Working Paper 3, OECD Publishing, France.