preprints.org > business, economics and management > economics > doi: 10.20944/preprints202211.0117.v1

Preprint Article Version 1 Preserved in Portico This version is not peer-reviewed

Version 1 : Received: 4 November 2022 / Approved: 7 November 2022 / Online: 7 November 2022 (10:58:26 CET)

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, 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 integration between wholesale and retail markets 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 then transmitted to the retail market. The study advocates decision-making information to the producers, traders, and consumers who have a potential interest in getting advantage of the price movement. It is concluded that strengthening market intelligence and reducing the distortion in markets will improve the existing overall performance.

commodity market; price integration; seasonal price index; cointegration; rice and wheat; impulse response function; wholesale and retail

Business, Economics and Management, Economics

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