Supply Response of Horticultural Crops: The Case of Apple and Pear in Jammu & Kashmir

Abstract

The apple and pear have a significant place in the horticulture sector of Jammu & Kashmir. The planted areas have been expanding quiet significantly since 1990s. Advanced technologies for these crops have been rationalized and adopted by the growers; however, seasonal and annual variations of the fruit supplies continue to characterize prices at both wholesale and consumption levels. In this study, Nerlovian model has been used to estimate supply response, Engle-Granger test and Vector Error Correction Model have been used to estimate the long-run and short-run dynamics. The study has revealed that the price of apple has more variation compared to price of pear. The existence of correlation between the prices of apple and pear suggests that there exist both long-run and short-run relationships between the prices of these commodities. The results have exhibited a high value of R 2 (95%) and estimated own price elasticities of 0.32 and 0.33 in apple and 0.03 and 0.28 in pear, respectively in short-and long-run. The results have further revealed that the price of pear has a positive and significant impact on price of apple, as demonstrated by their respective coefficients. The study has concluded that if price of apple increases, people can opt for pear which has turned out to be an alternative crop.

Market arrival of apples under risk in Jammu & Kashmir, India: evidence from an ARDL application

“…An increase in price renders less than proportionate increase in market arrival of apples. This price inelasticity is also reported by earlier studies of Wani et al (2015) and many other international supply response studies like Rude and Surry (2014), Rezitis and Stavropoulos (2009). Again, the competitive fruit price elasticity of market arrival of apples in both long-run and short-run is statistically insignificant.…”

“…In this study, the estimated long-run and short-run price elasticities of supply of apple reveal that the long-run elasticities are greater in magnitude than the short-run elasticities indicating that the apple growers strongly respond to price and form their expectations over long-run. This result contradicts that of Wani et al (2015) but is supported by earlier results of Chembezi (1991), Holt and Moschini (1992) and many other studies that report a greater magnitude of long-run elasticities over short-run price elasticities. Wani et al (2015) reported the same degree of elasticity in both long-run and short-run.…”

“…This result contradicts that of Wani et al (2015) but is supported by earlier results of Chembezi (1991), Holt and Moschini (1992) and many other studies that report a greater magnitude of long-run elasticities over short-run price elasticities. Wani et al (2015) reported the same degree of elasticity in both long-run and short-run. The order of magnitude of shortrun and long-run elasticities reported in this study suggests that the price elasticity of market arrival of apples is inelastic.…”

“…But, when it comes to supply response of fresh fruits like apple and others to price risk and climatic risk, there is a relative dearth of research both in India and also in the rest of the world. To our knowledge, we come across one study by Wani et al (2015) analyzing the supply response of apples and pears in India and in other parts of the world we got few studies like Matthews (1971), French et al (1985), Kalaitzandonakes and Shonkwiler (1992), Laajimi et al (2007) and Devadoss and Luckstead (2010). These studies analyzed the supply response of various perennial crops/fruits like apple, coffee, etc.…”

Price and non-price decision making factors of groundnut production in Karnataka: evidence from vector error correction model

“…The alternative approach to study the supply response of crops was the use of co-integration analysis and VECM (Haq and Arshad, 2010;McKay, 1999;Thiele, 2000;Wani et al, 2015). Hence, VECM were applied to estimate the supply response elasticity for groundnut crop in Karnataka state.…”