Spatial Market Integration of Major Copra Markets in India

Abstract

Aim: The main aim of the study is to estimate the degree of market integration among the selected major Copra markets in India. Place and Duration of Study: The study was carried out using the secondary data of average monthly prices of copra obtained from the AGMARKNET website from the period of 2014-2021 for Tamil Nadu and Karnataka. Copra price series data of Tamil Nadu (Anaimalai, Avalpoondurai, and Vellakoil markets) and Karnataka (Tiptur market) has been utilized for the study. Methodology: The time-series econometric tools including the Augmented Dickey-Fuller (ADF) test, Johansen cointegration test, and Granger causality test were used for analyzing the level of market integration. E-views software has been utilized to perform the entire analysis. Results: The unit root effects were applied to the price series for copra in the selected markets, and they were stationary at their first difference. The long-run equilibrium relationship among the copra markets revealed that the selected markets were integrated with each other. Tiptur market exhibited a bidirectional causational relationship with Anaimalai, Avalpoondurai, and Vellakoil markets. The Granger Causality test revealed the Tiptur market as the lead market, as it influenced the prices of Anaimalai, Avalpoondurai, and Vellakoil Copra markets. Conclusion: India's coconut market is prone to volatility and uncertainty due to frequent price fluctuations. Price changes typically result from altered market conditions brought on by seasonal and annual variations in output, in addition to competition from other edible oils. The government can put measures into place to lessen price fluctuations with the aid of integrated market information and the information would also benefit the Copra producers and other market players to select the most effective market.