Market Integration and Price Transmission Analysis of Onion in Wholesale Markets of India

Abstract

The present study was done in seven major onion wholesale markets in India, namely Pimpalgaon, Lasalgaon, Solapur, Pune, Bangalore, Hyderabad and Indore to explore the interdependence of wholesale prices amongst Indian onion markets. The study was conducted in all India perspective and the study period involves the seventeen years data of onion wholesale prices (January 2004 to December 2020). The study was majorly based on the prices of onion obtained through secondary source. These data were collected from various portals such as FAO, NHRDF, Agmarknet and NHB. The current study employs co-integration analysis of wholesale monthly onion prices in selected marketplaces to determine the degree of market integration. The Trace and Maximum Eigen-value tests results showed that the onion prices in India moves together in the long run equilibrium. As a result, it may be stated that India's onion markets are well-functioning. The direction of information flow was determined by using Granger Causality test. It was found that in few markets pairs, price transmissions were bi-directional whereas between Bangalore and Pune market, no transmission was found. The study reveals that Lasalgaon market is dominating in terms of price determination. The empirical study also recommends keeping a careful eye on diverse market behavioural patterns, since "news" in one market might have an influence on other markets due to the numerous interdependencies.

Spatial price transmission in the onion markets of Bangladesh: An application of NARDL approach

“…In the long run, the study suggests that the retail price of imported onion is not transmitted equally to the retail price of local onion, although in the short run, the transmission is equal. No prior similar study between import and local product market was found but the most relevant study revealed equal price transmission is possible between the wholesale and retail market [ 26 ] which align with this study result. The findings of the study imply that policymakers in Bangladesh must take into account the diverse dynamics of market adjustment when establishing policies to manage onion prices.…”

“…From the empirical results show that both the F statistics and t statistics value is greater than the upper bound value, indicating a long-term relationship between variables ( Table 3 ). The results of both the tests confirm that the variables in all three models are cointegrated, and for market asymmetry determination the variables should be cointegrated as suggested in prior research [ 7 – 9 , 11 , 24 , 26 ]. In addition, NARDL F-statistic [ 49 ] confirms that all the variables have long-run asymmetric association in the onion supply chain of Bangladesh.…”

“…This means that a fall in the price of imported onion results in a rise in the price of local onion. The asymmetric price transmission was also observed by Mgale [10], Rajendran [24], and Kumar [26] in the both long and short run in Tanzanian and Indian onion market, respectively. Overall, the link between the wholesale price of imported onion and the wholesale price of local onion shows that policies focused at stabilizing the price of imported onion could also contribute to stabilizing the price of local onion.…”

“…Price asymmetry is also common in European and French fish market, Chinese pork and pig market, Thailand dairy market, Turkish milk and meat market, Brazilian commercial rice market [19][20][21][22][23]. In onion market, several studies were found in India depicted an active integration among the wholesale and retail markets either bi-directional or unidirectional [24][25][26] along with positive and negative price distortion between these vertical markets [26]. Theoretically, farm supply, consumer demand, and buyer-seller power of controlling market causes asymmetry in the price transmission from farm market to retail market [12].…”

Beyond Borders: A Review of Food Market Integration and Sustaiable Develomnet Goals

“…The Asian Bulletin of Green Management and Circular Economy SDGs 4(1),18-52 transmission and volatility are a valuable instrument for evaluating market integration, stability, and the prospect of disruptions. It additionally advises decision-makers about infrastructure needs and regulations to improve stability (Kumar et al, 2022;Muharam et al, 2019). Since fragmented food markets have little potential to allocate resources and respond to crises, they pose serious risks of inefficiency, less consumer preference, price volatility, and increased food insecurity (Baulch, 1997a).…”