A Study of Tomato Price Integration Across Key Indian Markets

The study used Johansen’s multivariate cointegration approach to investigate market integration in eight major wholesale tomato markets across the country, including Azadpur, Chomu, Ghaziabad, Gorakhpur, Kolar, Pimplagaon, Mulakalacheruvu, and Vyra. The study has confirmed the presence of cointegration, implying the long-run price association among the markets. To determine the direction of price transmission between market pairs, the Granger causality test was used, which confirmed Gorakhpur as the price-determining market. Ghaziabad and Gorakhpur had been found comparatively more efficient as they depicted most of the bidirectional causal relations with other markets. The pairs with the Chomu market have not shown any causal relation between them. The study conducted impulse response functions which confirmed the results of co-integration and Granger causality. However, the vector error correction method (VECM) revealed that the speed of price transmission was relatively low in certain market pairs that are spatially disintegrated. It was concluded that the direction and intensity of price changes may be affected by the dynamic linkages between the demand and supply of tomatoes. Despite having a good information system and communication, farmers were still at risk due to varying tomato prices in different markets across the country.