Integration of Major Potato Markets in India

This study has examined cointegration and price transmission and thereby the efficiency of major potato markets in India — Agra, Patna, Burdwan, Indore, Jalandhar and Ahmadabad. The cointegration between the futures market (MCX) and spot market (Agra) has also been analysed using cointegration and error correction model. The results of overall cointegration test have indicated that different wholesale potato markets in the country are well-integrated and have long-run price association across them, suggesting that these markets are competitive and efficient at the wholesale level. However, in the short-run, market prices do deviate from their equilibrium but converge in a few weeks. The market pair-wise cointegration test has confirmed that all the different market pairs considered had price association between them and Agra market was realized as the price leader as it influenced the prices of all other markets. The knowledge on market integration could be a guiding factor for understanding the efficiency of marketing system and the results could be of help to policy makers, producers and traders.