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ICAR-IISR, Indore
Price transmission in pulse to split (dal) value chain
in Delhi, India
Dr. Purushottam Sharma
Sr. Scient...
ICAR-IISR, Indore
Introduction
2
• Pulses are an important source of protein for vegetarian
people in India,
• Low per cap...
ICAR-IISR, Indore
Importance
3
• Prices are the primary mechanism through which various
levels in the value chain are link...
ICAR-IISR, Indore
Data and Methodology
4
• Monthly wholesale price of two major pulses, chickpea
(Gram) and pigeonpea (Tur...
ICAR-IISR, Indore
Data and Methodology
5
• Unit root tests are conducted using the augmented Dickey-
Fuller (ADF) test and...
ICAR-IISR, Indore
Plot of prices and price wedge: Chickpea
6
2000
3000
4000
5000
6000
7000
8000
Jan.2009
Apr.2009
Jul.2009...
ICAR-IISR, Indore
Plot of prices and price wedge: Pigeonpea
7
0
2000
4000
6000
8000
10000
12000
14000
16000
18000
Jan.2009...
ICAR-IISR, Indore
Results of stationarity test for chickpea and pigeonpea
prices
8
Pulses Price
variable
Model ADF Test PP...
ICAR-IISR, Indore
Multivariate Johansen cointegration test for pulses
value chain
9
H0 rank=p Trace Statistics 5% critical...
ICAR-IISR, Indore
Pairwise Granger Causality Tests of pulses in Delhi
10
Pulses Null Hypothesis: N F-Stat Prob. Direction
...
ICAR-IISR, Indore
Wald test for block exogeneity test
11
Dependent → Retail Price Dal Wholesale price Dal Wholesale price
...
ICAR-IISR, Indore
Autoregressive distributed lag model estimates
12
Variables
Chickpea (Gram) Pigeon pea (Tur)
∆WPGrW ∆WPG...
ICAR-IISR, Indore
Conclusions
13
• Prices of selected pulses along the value chain in Delhi market
behave independent of e...
ICAR-IISR, Indore
Conclusions
14
• There is positive and significant relationship in the retail
price and wholesale price ...
ICAR-IISR, Indore
Thank you for your kind
attention…….
15
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Price transmission in pulse to split (dal) value chain in delhi, india

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Price transmission in pulse to split (dal) value chain in delhi, india

  1. 1. ICAR-IISR, Indore Price transmission in pulse to split (dal) value chain in Delhi, India Dr. Purushottam Sharma Sr. Scientist (Agril. Econ.) ICAR- Indian Institute of Soybean Research Khandwa Road, Indore- 452 001 (M.P.) purushottamji@gmail.com
  2. 2. ICAR-IISR, Indore Introduction 2 • Pulses are an important source of protein for vegetarian people in India, • Low per capita availability, • Increasing demand- supply gap, • Increasing import dependence, • Spike in prices along the value chain, higher volatility, • High prices affect the buying ability of the consumers, • Protein malnutrition.
  3. 3. ICAR-IISR, Indore Importance 3 • Prices are the primary mechanism through which various levels in the value chain are linked, • Pattern of price transmission provides an insight into the structure of the supply chain and the conduct of the market participants at different stages, • Important in the context of changing market structure, increasing concentration of processing and retail, and existence of market power within the commodity verticals, • The paper aims to analyze the direction and extent of price transmission along the value chain of major pulses in Delhi.
  4. 4. ICAR-IISR, Indore Data and Methodology 4 • Monthly wholesale price of two major pulses, chickpea (Gram) and pigeonpea (Tur) whole and dal (split) and retail price of chickpea and pigeonpea dal in Delhi were used in the analysis, • Monthly data for the period of 87 months from January 1999 to March 2016 were used for analysis, • The data were sourced from published sources/ website of Directorate of Economics and Statistics, Ministry of Agriculture and Farmers Welfare, GOI.
  5. 5. ICAR-IISR, Indore Data and Methodology 5 • Unit root tests are conducted using the augmented Dickey- Fuller (ADF) test and Phillips and Perron (PP) test to identify whether the data are stationary or non-stationary, • Johansen multivariate approach used to identify the number of co-integrating vectors in the system, • Granger causality test applied to evaluate the possible direction of the price transmission, • The autoregressive distributed-lags (ADL) model specified to estimate immediate and dynamic effects of one price on another.
  6. 6. ICAR-IISR, Indore Plot of prices and price wedge: Chickpea 6 2000 3000 4000 5000 6000 7000 8000 Jan.2009 Apr.2009 Jul.2009 Oct.2009 Jan.2010 Apr.2010 Jul.2010 Oct.2010 Jan.2011 Apr.2011 Jul.2011 Oct.2011 Jan.2012 Apr.2012 Jul.2012 Oct.2012 Jan.2013 Apr.2013 Jul.2013 Oct.2013 Jan.2014 Apr.2014 Jul.2014 Oct.2014 Jan.2015 Apr.2015 Jul.2015 Oct.2015 Jan.2016 Rs./qt WPGrD WPGdD RPGdD -10.0 0.0 10.0 20.0 30.0 40.0 50.0 60.0 70.0 80.0 90.0 Jan.2009 Apr.2009 Jul.2009 Oct.2009 Jan.2010 Apr.2010 Jul.2010 Oct.2010 Jan.2011 Apr.2011 Jul.2011 Oct.2011 Jan.2012 Apr.2012 Jul.2012 Oct.2012 Jan.2013 Apr.2013 Jul.2013 Oct.2013 Jan.2014 Apr.2014 Jul.2014 Oct.2014 Jan.2015 Apr.2015 Jul.2015 Oct.2015 Jan.2016 Percent Gr_WgD_WP Gr_D_WPRP Gr_WgWP_DRP
  7. 7. ICAR-IISR, Indore Plot of prices and price wedge: Pigeonpea 7 0 2000 4000 6000 8000 10000 12000 14000 16000 18000 Jan.2009 Apr.2009 Jul.2009 Oct.2009 Jan.2010 Apr.2010 Jul.2010 Oct.2010 Jan.2011 Apr.2011 Jul.2011 Oct.2011 Jan.2012 Apr.2012 Jul.2012 Oct.2012 Jan.2013 Apr.2013 Jul.2013 Oct.2013 Jan.2014 Apr.2014 Jul.2014 Oct.2014 Jan.2015 Apr.2015 Jul.2015 Oct.2015 Jan.2016 Rs./qt WPTwD WPTdD RPTdD 0.0 20.0 40.0 60.0 80.0 100.0 120.0 140.0 160.0 180.0 Jan.2009 Apr.2009 Jul.2009 Oct.2009 Jan.2010 Apr.2010 Jul.2010 Oct.2010 Jan.2011 Apr.2011 Jul.2011 Oct.2011 Jan.2012 Apr.2012 Jul.2012 Oct.2012 Jan.2013 Apr.2013 Jul.2013 Oct.2013 Jan.2014 Apr.2014 Jul.2014 Oct.2014 Jan.2015 Apr.2015 Jul.2015 Oct.2015 Jan.2016 Percent Tu_WgD_WP Tu_D_WPRP Tu_WgWP_DRP
  8. 8. ICAR-IISR, Indore Results of stationarity test for chickpea and pigeonpea prices 8 Pulses Price variable Model ADF Test PP Test Level 1st Diff. Level 1st Diff. Gram Whole WP Intercept -1.1438 -8.4034* -1.3237 -8.4545* Intercept &Trend -1.8953 -8.3568* -2.2020 -8.3839* Dal WP Intercept -1.2462 -6.0644* -1.1509 -6.1013* Intercept &Trend -2.0503 -6.0330* -1.8396 -6.0712* Dal RP Intercept -1.2578 -5.6954* -0.9131 -5.5298* Intercept &Trend -2.3361 -5.6330* -1.9037 -5.4950* Tur Whole WP Intercept -1.7828 -6.3599* -1.8121 -9.4930* Intercept &Trend -2.2729 -6.3447* -2.3985 -9.4524* Dal WP Intercept -0.8858 -4.7366* -1.1081 -6.1712* Intercept &Trend -1.8239 -4.7499* -1.7954 -6.1363* Dal RP Intercept -1.2786 -5.8819* -0.9898 -5.8890* Intercept &Trend -1.9311 -5.8514* -1.6110 -5.8577* WP- Wholesale Price, RP- Retail Price. Test critical values for significance are -3.509 at 1%, -2.895 at 5% for ADF test with intercept, -4.068 at 1%, -3.463 at 5% for ADF and PP test with intercept and trend, respectively.
  9. 9. ICAR-IISR, Indore Multivariate Johansen cointegration test for pulses value chain 9 H0 rank=p Trace Statistics 5% critical value Max-Eigen Statistics 5% critical value Chickpea 0 24.7203 29.797 17.6428 21.1316 1 7.0775 15.495 5.5129 14.2646 2 1.5645 3.841 1.5645 3.841 Pigeonpea 0 23.905 29.797 12.5398 21.1316 1 11.3651 15.4947 8.8232 14.2646 2 2.5419 3.8415 2.5419 3.8415 Trace test indicates no cointegration at the 0.05 level, Max-eigenvalue test indicates no cointegration at the 0.05 level
  10. 10. ICAR-IISR, Indore Pairwise Granger Causality Tests of pulses in Delhi 10 Pulses Null Hypothesis: N F-Stat Prob. Direction Chickpea WPGrD does not Granger Cause WPGrW 85 0.4598 0.6331 No Causality WPGrW does not Granger Cause WPGrD 8.7583 0.0004 Unidirectional RPGrD does not Granger Cause WPGrW 85 0.7592 0.4714 No Causality WPGrW does not Granger Cause RPGrD 13.772 7.E-06 Unidirectional RPGrD does not Granger Cause WPGrD 85 0.8550 0.4291 No Causality WPGrD does not Granger Cause RPGrD 2.9636 0.0573 Unidirectional Pigeon pea WPTuD does not Granger Cause WPTuW 85 5.8257 0.0043 Unidirectional WPTuW does not Granger Cause WPTuD 0.2485 0.7806 No Causality RPTuD does not Granger Cause WPTuW 85 4.0017 0.0221 Unidirectional WPTuW does not Granger Cause RPTuD 0.9404 0.3947 No Causality RPTuD does not Granger Cause WPTuD 85 0.6939 0.5026 No Causality WPTuD does not Granger Cause RPTuD 15.8420 2.E-06 Unidirectional
  11. 11. ICAR-IISR, Indore Wald test for block exogeneity test 11 Dependent → Retail Price Dal Wholesale price Dal Wholesale price whole grain Independent ↓ Chi-sq Prob Chi-sq Prob Chi-sq Prob Chickpea WPGrW 24.6695 0.000 15.2423 0.0005 - - WPGrD 4.0331 0.1331 - - 0.0838 0.9590 RPGrD - - 0.1285 0.9377 0.6619 0.7184 All 32.2764 0.000 17.2354 0.0017 1.5658 0.8149 Pigeonpea WPTuW 0.4999 0.7788 0.3994 0.8190 - - WPTuD 29.0725 0.000 - - 0.7239 0.6963 RPTuD - - 1.2670 0.5307 3.9872 0.1362 All 31.5898 0.000 1.7595 0.7799 12.1894 0.0160
  12. 12. ICAR-IISR, Indore Autoregressive distributed lag model estimates 12 Variables Chickpea (Gram) Pigeon pea (Tur) ∆WPGrW ∆WPGrD ∆RPGrD ∆WPTuW ∆WPTuD ∆RPTuD ∆WP_Whole grain - 0.0865 (1.7659) 0.0128 (0.334) - 0.0500 (1.433) 0.0044 (0.1458) ∆WP_Whole grain (-1) 0.9596 (33.9494) -0.092 (-1.6844) 0.1451 (3.6827) -0.137 (-1.2202) -0.0064 (-0.1833) 0.0241 (0.8033) ∆WP_Dal 0.4641 (1.928) - 0.6319 (12.9035) 0.5071 (1.433) - 0.6908 (12.5714) ∆WP_Dal (-1) -0.0966 (-0.3898) -0.0628 (-0.5620) 0.1239 (1.4625) -0.3764 (0.9504) -0.2684 (-2.2124) 0.4238 (4.4885) ∆RP_Dal 0.0459 (0.1522) 1.0733 (12.9035) - 0.0618 (0.1458) 0.9651 (12.572) - ∆RP_Dal (-1) 0.0423 (0.1527) 0.0341 (0.2715) -0.0142 (-0.1471) -0.1288 (-0.3634) 0.0785 (0.7075) -0.1484 (-1.6002) Constant 0.3306 (1.4443) -0.0022 (-0.7147) 0.0026 (1.1171) 0.0008 (0.0764) 0.0005 (0.1674) 0.0016 (0.6207) R-squared 0.9399 0.7833 0.8233 0.1558 0.7417 0.8058 Adj. R-squared 0.9362 0.7696 0.8121 0.1024 0.7254 0.7935
  13. 13. ICAR-IISR, Indore Conclusions 13 • Prices of selected pulses along the value chain in Delhi market behave independent of each other in the short-run • Casualty analysis established unidirectional casualty from whole grain wholesale to dal wholesale and retail in case of chickpea value chain, while from dal wholesale to grain wholesale, and dal retail in case of pigeon pea value chain, • Wholesale price of chickpea grain and dal and pigeonpea dal seemed to be exogenous which was validated using the Wald test for weak exogenity • Wholesale price of chickpea whole and pigeonpea dal follow an autoregressive pattern
  14. 14. ICAR-IISR, Indore Conclusions 14 • There is positive and significant relationship in the retail price and wholesale price of chickpea dal as well as pigeonpea dal. • But no significant relationship was found in wholesale price of whole chickpea and pigeon pea with wholesale price and retail price of dal. • Pulses markets are characterized with imperfect competition and large traders with oligopoly (Rahman, 2015).
  15. 15. ICAR-IISR, Indore Thank you for your kind attention……. 15

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