Price integration of Nendran banana markets in Kerala

K.K. Shana, K. Jesy Thomas, Anil Kuruvila, Sachu Sara Sabu

Abstract


The study has investigated market integration across three major wholesale Nendran banana markets, viz., Kozhikode, Ernakulam, and Thiruvananthapuram of Kerala. Co-integration analysis of monthly wholesale Nendran banana prices in the above markets were carried out by adopting Johansen’s multivariate cointegration approach after confirming the stationarity of price series using Augmented Dickey Fuller (ADF) test. The study has confirmed the presence of cointegration, implying the price association among the markets. To get the additional evidence as to whether and in which direction price transmission is occurring between the market pairs, Granger causality test was used, which confirmed Thiruvananthapuram to be the price determining market. The existence of unidirectional causality from Kozhikode market to Ernakulam market and from Thiruvananthapuram market to Kozhikode and Ernakulam markets was proved. Bidirectional causality was absent between all the pairs. The study concluded that Nendran banana farmers were earning comparable prices at a particular point of time and market intervention or policy in one market would impact the price in other markets. The major implication of the study is the need for capacity building in market intelligence and designing of a network of agricultural wholesale markets for Nendran banana across the country to enhance market integration and better price transmission among them.


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A KAU publication [CODEN: JTAGEI; ISSN 0971-636X; eISSN 0973-5399]