Market Integration among Major Wheat Markets in India

Abstract

The study is based on secondary data which tests the price movement and integration between major national wheat markets i.e. Lakhimpur, Agra, Vidisha, Dewas, Kota and Baran markets. Monthly wheat prices data of 15 years from 2007-08 to 2021-22 which was collected from www.agmarknet.gov.in. To analyze the market integration among major wheat markets, the Augmented Dickey-Fuller test, Johansen Co-integration test and Granger Causality test were applied with the help of E-views statistical package. The results indicated the strong market integration in terms of price linkages among major wheat markets. The results revealed that the major markets of wheat have strong price linkages and thus are spatially integrated. It could be seen that existence of mostly (10) unidirectional causality with few (3) bidirectional causality among selected wheat markets.  It was further revealed from the analysis that, any disturbance in price will get corrected in about 5 days in Lakhimpur market, 3 days in Agra market and 3 days in Kota market in short-run equilibrium. The transfer of price signals from one market to another helps in stabilizing the prices over space and create a healthy competitive environment. This would also help to protect the interest of producer-sellers. In order to achieve the goal of integration, the government should strengthen the market intelligence and communication within markets. The following study recommendations were made: a) Government should subsidize provide is transportation. b) Government and stakeholder should advise commercial banks to give low interest long-term loans to farmers because many impoverished farmers can't afford crop mechanization. c) Government and other i.e, NGO advertising should be increased to raise knowledge about improved agricultural machinery. d) Government and other i.e, NGO should educate farmers. Farmers can employ technology if they are trained and educated. They should also be told how much fertilizer to use so it yields more.