Market Integration among Major Maize Markets in India

The study is based on secondary data which tests the price movement and integration between major national maize markets i.e. Hoshiarpur, S.B.S. Nagar, Nizamabad, Bangalore, Etah and international maize markets i.e. USA and Argentina. Weekly time series data on maize prices covering the period from 2012 to 2014 has been used for the study. To analyze the market integration among major maize markets, the Augmented Dickey-Fuller test, Johansen Co-integration test, and Granger Causality test were applied with the help of E-views statistical package. The results indicated the strong market integration in terms of price linkages among major maize markets. Out of the seven markets, six markets were found to be co-integrated. The results revealed that the national markets of maize have strong price linkages and thus are spatially integrated. It was further revealed from the analysis that, any disturbance in price will get corrected in about 8 hours in Argentina and 6 hours in USA markets, around 12 hours in Hoshiarpur market, 16 hours in S.B.S. Nagar market, 13 hours in Nizamabad market, 14 hours in Bangalore market and 12 hours in Etah market in short-run equilibrium. Hoshiarpur market prices influence the prices of S.B.S. Nagar and Nizamabad markets. Nizamabad and Bangalore market prices have a bidirectional influence. Similarly, Nizamabad and Etah market prices have a bidirectional influence. The transfer of price signals from one market to another helps in stabilizing the prices over space and create a healthy competitive environment. This would also help to protect the interest of producer-sellers. In order to achieve the goal of integration, the government should strengthen the market intelligence and communication within markets.