Price behavior and market integration amongst the major potato markets of India

Potato is one of the most important food crops in India. Variation in output of potato leads to wide fluctuation in its price exposing the growers to a high risk situation. To cope with this, information on potential markets and prices of potato in different months is necessary for the farmers. The present study was undertaken to analyze the price behavior of potato producing (Lucknow, Kolkata and Patna) and consuming (Mumbai, Ahmedabad, Delhi and Ludhiana) markets using monthly wholesale price data from January 2012 to December 2019. Correlation analysis, Johansen co-integration test, Vector Error Correction Model and Granger causality were used for the analysis. Instability in the price series was measured by Cuddy Della-Valle index. The maximum instability in potato prices was different for different markets ranging from September to February and seasonality index showed that farmer received more than average price between June to December. This information on price behavior could be useful to farmers to make their marketing decisions. Johansen co-integration test revealed that all the selected markets were well integrated in the long run. The speed of adjustment was highest in Patna market (80%) followed by Mumbai market (13%). Majority of the states have shown unidirectional price transmission and Patna is the only state which has indicated bidirectional flow of potato prices with Kolkata market. Delhi market was found to be the key market which influenced the price of all other markets by Granger Causality test.