Price volatility of black pepper and its implications in Kerala
| dc.contributor.advisor | Anil, Kuruvila | |
| dc.contributor.author | Sachu, Sara Sabu | |
| dc.contributor.author | KAU | |
| dc.date.accessioned | 2017-08-31T11:11:18Z | |
| dc.date.available | 2017-08-31T11:11:18Z | |
| dc.date.issued | 2015 | |
| dc.description.abstract | Black pepper, the "King of spices", is one of the oldest and best known spices in the world. India, with an area of 1.23 lakh ha and a production of 65,000 tonnes in 2012-13, is one among the leading producers of pepper. The area under pepper in Kerala has declined from 1.08 lakh ha in 1980-81 to 0.85 lakh ha in 2013-14, while the corresponding decline in production was from 36,670 tonnes to 28,519 tonnes. As an internationally traded commodity, black pepper is highly prone to price fluctuations. The study entitled “Price volatility of black pepper and its implications in Kerala” aimed at assessing the magnitude and determinants of volatility in prices of black pepper in the pre-WTO and post-WTO periods. The transmission of volatility between Indian and international markets as well as spot and future markets of black pepper were studied. The implications of price volatility on input use, production, employment and income of farmers, who were members of Peermedu Development Society (PDS), an NGO organising organic pepper farmers, with a contractual agreement for purchase and non-PDS farmers, were also studied on a comparative framework. The study was based on both secondary and primary data. The main observations were annual, monthly, weekly and daily prices in domestic and international markets of black pepper from 1980 to 2014. The micro-level study was undertaken in Idukki district. 40 farmers each were randomly selected from the PDS and non-PDS categories, making the total sample size to 80. For the assessment of implications of price volatility, data was collected from the same 80 farm households at two points of time at an interval of ten months, using a pretested interview schedule. The intra-annual volatility of monthly nominal prices in rupee as well as dollar declined marginally in the post-WTO period. In the case of international prices, the decline in intra-annual volatility was comparatively more when compared to the Indian prices. The magnitudes of the estimated intra-annual ii volatility indices for weekly black pepper prices were larger in comparison with those computed for the monthly prices indicating that the weekly prices were more volatile. The intra-annual volatility for weekly international nominal prices was comparatively lower than that for the domestic prices in pre-WTO and post-WTO periods. While the inter-annual volatility for monthly prices increased for Malabar Garbled Cochin prices that of Cochin Ungarbled decreased for both nominal and real monthly prices in the post-WTO period. In the international markets, the year to year variability in real and nominal rupee and dollar prices decreased in the post-WTO period. The results of the analysis of instability in annual prices showed that the magnitude of the volatility indices of nominal as well as real prices in both rupee and dollar increased in the post-WTO period. The determinants of price volatility identified were, (i) variations in US dollar-rupee exchange rate (ii) behaviour of black pepper prices including the seasonal and cyclical components (iii) changes in international trade (iv) futures trading, and (v) variations in domestic and world production as well as consumption. The nature and extent of price transmission between the domestic and international markets of black pepper for the pre-WTO and post-WTO periods were analysed using both pair-wise and multiple cointegration analyses. The markets were found to be cointegrated and hence, it could be established that the Indian prices moved in unison with the international prices even before liberalization and liberalization per se has not much improved or affected the co-movement of prices between the domestic and international markets. The Granger causality tests carried out on monthly prices proved that there was unidirectional causality from domestic to international market in pre-WTO period and it developed into bidirectional causality in the post-WTO period. In the case of weekly prices, the existence of bidirectional causality between domestic and international markets was found in both the periods. The spot and future markets prices were also found to be cointegrated and bidirectional causality could be established between them in the long-run. The implications of price volatility of black pepper on producer households was studied by comparing the price, production, employment, income and number of plants replanted in two years (2014 and 2015) for PDS and non- PDS farmers. The results showed that there was slight reduction in price in 2015 when compared to 2014 for both PDS and non-PDS farmers. Even though the average production of black pepper has increased in PDS as well as non-PDS farms, the growth in production was slightly high in the case of PDS farms. Hence, the non-PDS farms experienced a higher decline in income between 2014 and 2015 when compared to the PDS farmers. Consequent to the reduction in price, when the replanting of black pepper per hectare was considered, it was found that the number of plants replanted increased in the case of PDS members, whereas it decreased in non-PDS farms. The cost incurred on labour and inputs also showed a similar nature of increasing pattern in PDS farms and a decreasing pattern in non-PDS farms. The vulnerability of farmers to price volatility was studied and it was found that age, education and experience in farming reduced the vulnerability, while the family size and share of income from pepper were found to increase the effect of price volatility. It was found that a contractual agreement alone could not protect the farmers from price variations. The policy recommendations include proper implementation of warehouse receipt system so as to enable the farmers to borrow from banks to meet their immediate needs and prevent distress sales, dissemination of timely market intelligence and training the farmers on suitable selling decisions based on price movements, an implementable black pepper price stabilization mechanism which could adjust for changes in the cost of cultivation as well as ensure a stable income for the farmers and ensuring participation of small and marginal farmers in futures markets. | en_US |
| dc.identifier.uri | http://krishikosh.egranth.ac.in/handle/1/5810030123 | |
| dc.keywords | Agricultural economics | en_US |
| dc.language.iso | en | en_US |
| dc.publisher | College of Horticulture, Vellanikkara | en_US |
| dc.sub | Agricultural Economics | en_US |
| dc.subject | null | en_US |
| dc.theme | black pepper and its implications in Kerala | en_US |
| dc.these.type | M.Sc | en_US |
| dc.title | Price volatility of black pepper and its implications in Kerala | en_US |
| dc.type | Thesis | en_US |