Integration of Major Turmeric Markets in Andhra Pradesh, Karnataka and Maharashtra, India: A Co-integration Analysis

Abstract

Fluctuations in market arrivals contribute to price instability, and analysis of price and arrival behaviour over time is important for formulating agricultural price policy and supporting farmers' marketing decisions. The present study analysed the integration of major turmeric (Curcuma longa) markets using monthly modal price data for the period from January 2010 to December 2019. The analysis focused on selected markets, including Cuddapah, Duggirala, Chamarajanagar, Gundlupet, Basmat, Sangli, Erode and Nizamabad, and applied co-integration analysis, the Augmented Dickey-Fuller unit root test, Granger causality analysis and the vector error correction mechanism. The unit root results indicated that the price series were non-stationary at level and became stationary after first differencing. The co-integration results showed price linkages among the regional markets, indicating spatial integration. Granger causality results suggested that price transmission was not uniform across all market pairs. Basmat emerged as an important influencing market, with significant causal effects on Cuddapah, Chamarajanagar, Duggirala, Gundlupet, Sangli and Nizamabad. Bidirectional relationships were also observed between Basmat and Nizamabad and between Duggirala and Chamarajanagar at the reported significance levels. The vector error correction results indicated that one-month lagged prices in Cuddapah influenced the present price of Chamarajanagar by 48 per cent in a positive direction. Similarly, one-month lagged prices in Basmat influenced present prices in Duggirala and Nizamabad by 36 per cent and 43 per cent, respectively, in a positive direction. Overall, the findings indicate that turmeric prices in the selected markets are linked through short-run and long-run adjustment mechanisms. The evidence may assist interpretation of price movements across the studied markets.