Market integration of chickpea crop: an evidence of India

Abstract

PurposeThe purpose of this paper is to examine the market integration and direction of causality of wholesale and retail prices for the chickpea legume in major chickpea markets in India.Design/methodology/approachIn this paper, the authors employ the Johansen co-integration test, Granger causality test, vector autoregression (VAR), and vector error correction model (VECM) to examine the integration of markets. The authors use monthly wholesale and retail price data of the chickpea crop from select markets in India spanning January 2003–December 2020.FindingsThe results of this study strongly confirm the co-integration and interdependency of the selected chickpea markets in India. However, the speed of adjustment of prices in the wholesale market is weakest in Bikaner, followed by Daryapur and Narsinghpur; it is relatively moderate in Gulbarga. In contrast, the speed of adjustment is negative for Bhopal and Delhi, weak for Nasik, and moderate for retail market prices in Bangalore. The results of the causality test show that the Narsinghpur, Daryapur, and Gulbarga markets are the most influential, with bidirectional relations in the case of wholesale market prices. Meanwhile, the Bangalore market is the most connected and effective retail market among the selected retail markets. It has bidirectional price transmission with two other markets, i.e. Bhopal and Nasik.Research limitations/implicationsThis paper calls for forthcoming studies to investigate the impact of external and internal factors, such as market infrastructure; government policy regarding self-reliant production; product physical characteristics; and rate of utilization indicating market integration. They should also focus on strengthening information technology for the regular flow of market information to help farmers increase their incomes.Originality/valueVery few studies have explored market efficiency and direction of causality using both linear and nonlinear techniques for wholesale and retail prices of chickpea in India.