Performance of Groundnut Markets in Karnataka, India: An Economic Analysis

Abstract

Spatial market integration refers to a situation in which the price of the commodity in spatially separated markets moves together and price signals and information are transmitted smoothly. The present study aimed to evaluate the spatial price linkages between groundnut markets in Karnataka using monthly price data of groundnut (2002- 2022). The required secondary data were collected from published reports of APMC’s, Krishimaratavahini etc. For the study top ten groundnut markets such as Yadgir, Laxmeshwar, Raichur, Ballari, Challakere, Hubbali, Gadag, Mundargi, Chitradurga and Kottur were selected based on groundnut arrivals. The study uses Augmented Dickey-Fuller, Johansen co-integration, Granger causality test and Vector error correction model (VECM) to fulfil the objectives of the study. The study revealed that all the price series of the groundnut market were found to be non-stationery at level and stationery at first difference except Kottur market. There is a bidirectional causation relationship in price transmission among all chosen groundnut markets except Yadgir-Raichur, Ballari-Raichur, Challakere-Raichur, Gadag-Raichur, Mundargi-Raichur, Kottur-Raichur, Challakere-Ballari where prices influenced unidirectional. Five out of the ten markets were cointegrated at a significance level of 5 per cent indicating that the chosen groundnut markets had long-run equilibrium relationships. The results revealed that the trace statistics values of groundnut markets viz, 361.49, 267.84, 196.54, 146.72 and 101.41 were found to be higher than compared to critical values indicating the existence of five co-integrating equations between selected groundnut markets. The error correction term of groundnut markets indicated that the Error Correction terms of Yadgir, Raichur, Ballari and Kottur markets were found to be significant and negative depicting that the change in the price of groundnut in Yadgir, Raichur, Ballari and Kottur market have influenced and have an impact on the price of other groundnut markets in the long run period.