Price Dynamics and Integration in India’s Staple Food Commodities—Evidence from Wholesale and Retail Rice and Wheat Markets
Uncertain price movement in staple food commodities puts agrarian economies at risk if not monitored and managed consistently. Hence, an attempt has been made to analyze the price behavior and integration across major wholesale and retail markets for rice and wheat in India. Monthly data (July 2000...
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| Format: | Article |
| Language: | English |
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MDPI AG
2023-02-01
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| Series: | Commodities |
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| Online Access: | https://www.mdpi.com/2813-2432/2/1/3 |
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| author | Ramadas Sendhil Kashish Arora Sunny Kumar Priyanka Lal Arnab Roy Ramalingam Jayakumara Varadan Sivasankar Vedi Anandan Pouchepparadjou |
| author_facet | Ramadas Sendhil Kashish Arora Sunny Kumar Priyanka Lal Arnab Roy Ramalingam Jayakumara Varadan Sivasankar Vedi Anandan Pouchepparadjou |
| author_sort | Ramadas Sendhil |
| collection | DOAJ |
| description | Uncertain price movement in staple food commodities puts agrarian economies at risk if not monitored and managed consistently. Hence, an attempt has been made to analyze the price behavior and integration across major wholesale and retail markets for rice and wheat in India. Monthly data (July 2000 to June 2022) on prices viz. wholesale and retail were sourced from the Food and Agriculture Organization and analyzed using growth rate, instability index, seasonal price index, Bai-Perron’s test for structural breaks, Johansen’s test on cointegration, Granger causality test, and impulse response function. Findings indicated strong evidence of price dynamics in the selected markets in terms of spatial and temporal variation, clear-cut seasonality linking to production, and price divergence between wholesale and retail markets. Johansen’s test indicated a strong cointegration between wholesale and retail prices after accounting for structural breaks, exhibiting unidirectional-, bidirectional- and no causality. Impulse response analysis revealed that the selected wheat and rice markets are efficient in terms of ‘price discovery’ which takes place initially in the wholesale market, and is then transmitted to the retail market. The study advocates decision-making information to the producers, traders, and consumers who are interested in taking advantage of the price movement. It is concluded that strengthening the market intelligence and reducing the distortion in markets will improve the existing overall performance. |
| first_indexed | 2024-03-11T06:43:24Z |
| format | Article |
| id | doaj.art-0b2eeceace91437b955e18de93d260b0 |
| institution | Directory Open Access Journal |
| issn | 2813-2432 |
| language | English |
| last_indexed | 2024-03-11T06:43:24Z |
| publishDate | 2023-02-01 |
| publisher | MDPI AG |
| record_format | Article |
| series | Commodities |
| spelling | doaj.art-0b2eeceace91437b955e18de93d260b02023-11-17T10:25:37ZengMDPI AGCommodities2813-24322023-02-0121527210.3390/commodities2010003Price Dynamics and Integration in India’s Staple Food Commodities—Evidence from Wholesale and Retail Rice and Wheat MarketsRamadas Sendhil0Kashish Arora1Sunny Kumar2Priyanka Lal3Arnab Roy4Ramalingam Jayakumara Varadan5Sivasankar Vedi6Anandan Pouchepparadjou7Department of Economics, Pondicherry University (A Central University), Kalapet 605014, Puducherry, IndiaDepartment of Economics and Sociology, Punjab Agricultural University, Ludhiana 141027, Punjab, IndiaDepartment of Economics and Sociology, Punjab Agricultural University, Ludhiana 141027, Punjab, IndiaDepartment of Agricultural Economics & Extension, Lovely Professional University, Phagwara 144001, Punjab, IndiaDepartment of Social Science, Birsa Agricultural University, Ranchi 834006, Jharkhand, IndiaICAR-Central Island Agricultural Research Institute, Port Blair 744101, Andaman & Nicobar Islands, IndiaDepartment of Economics, Pondicherry University (A Central University), Kalapet 605014, Puducherry, IndiaPandit Jawaharlal Nehru College of Agriculture and Research Institute, Karaikal 609603, Puducherry, IndiaUncertain price movement in staple food commodities puts agrarian economies at risk if not monitored and managed consistently. Hence, an attempt has been made to analyze the price behavior and integration across major wholesale and retail markets for rice and wheat in India. Monthly data (July 2000 to June 2022) on prices viz. wholesale and retail were sourced from the Food and Agriculture Organization and analyzed using growth rate, instability index, seasonal price index, Bai-Perron’s test for structural breaks, Johansen’s test on cointegration, Granger causality test, and impulse response function. Findings indicated strong evidence of price dynamics in the selected markets in terms of spatial and temporal variation, clear-cut seasonality linking to production, and price divergence between wholesale and retail markets. Johansen’s test indicated a strong cointegration between wholesale and retail prices after accounting for structural breaks, exhibiting unidirectional-, bidirectional- and no causality. Impulse response analysis revealed that the selected wheat and rice markets are efficient in terms of ‘price discovery’ which takes place initially in the wholesale market, and is then transmitted to the retail market. The study advocates decision-making information to the producers, traders, and consumers who are interested in taking advantage of the price movement. It is concluded that strengthening the market intelligence and reducing the distortion in markets will improve the existing overall performance.https://www.mdpi.com/2813-2432/2/1/3commodity marketprice integrationseasonal price indexstructural breakscointegrationrice and wheat |
| spellingShingle | Ramadas Sendhil Kashish Arora Sunny Kumar Priyanka Lal Arnab Roy Ramalingam Jayakumara Varadan Sivasankar Vedi Anandan Pouchepparadjou Price Dynamics and Integration in India’s Staple Food Commodities—Evidence from Wholesale and Retail Rice and Wheat Markets Commodities commodity market price integration seasonal price index structural breaks cointegration rice and wheat |
| title | Price Dynamics and Integration in India’s Staple Food Commodities—Evidence from Wholesale and Retail Rice and Wheat Markets |
| title_full | Price Dynamics and Integration in India’s Staple Food Commodities—Evidence from Wholesale and Retail Rice and Wheat Markets |
| title_fullStr | Price Dynamics and Integration in India’s Staple Food Commodities—Evidence from Wholesale and Retail Rice and Wheat Markets |
| title_full_unstemmed | Price Dynamics and Integration in India’s Staple Food Commodities—Evidence from Wholesale and Retail Rice and Wheat Markets |
| title_short | Price Dynamics and Integration in India’s Staple Food Commodities—Evidence from Wholesale and Retail Rice and Wheat Markets |
| title_sort | price dynamics and integration in india s staple food commodities evidence from wholesale and retail rice and wheat markets |
| topic | commodity market price integration seasonal price index structural breaks cointegration rice and wheat |
| url | https://www.mdpi.com/2813-2432/2/1/3 |
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