Analysing Market Integration and Causality of Oilseed Crops: Key Insights and Challenges in Major Tamil Nadu Markets and Interstate Regions of India

Abstract

Oilseed crops like Sesame and Groundnut experience significant price fluctuations due to factors like seasonal production patterns, their perishable nature, and risk involved in production and marketing of output. The farmers are further complicated by a lack of information about market conditions, including the timing of arrivals and prices. Market integration, which helps stabilize prices and improve the efficiency of the marketing system. This study focuses on analysing the market integration of major oilseed crops— Sesame, and Groundnut in India from January 2013 to January 2024. Johansen's cointegration test and Granger Causality test were applied to examine how prices in different markets are influence one another. The stationarity of the prices tested using the Augmented Dickey-Fuller test. The results confirmed that the prices are cointegrated, showing a strong interdependence between them. The analysis also revealed causal relationships between regions, such as bidirectional causality in the case of Sesame and Groundnut. The findings underscore the importance of further research to address production challenges, improve technical methods, and develop informed policies to manage the issues faced by oilseed crop growing farmers. This will help overcome obstacles in production and ensure a more efficient marketing system.