Price Transmission and Market Integration of Copra in India

The agricultural commodity markets are rapidly shrinking due to trade liberalization and advancements in information and communication technologies. However, there is a significant concern regarding the imbalance of knowledge about commodity prices among all parties involved, particularly among farmers. This knowledge asymmetry can have detrimental effects on the participants in the value chain, including delays in price transmission, increased transaction costs, pricing distortions, and their subsequent impacts. For the majority of the past century, copra exports have been the primary source of foreign exchange gains, and they continue to hold this esteemed position. Additionally, coconuts play a vital role in the national diet and serve as a crucial source of revenue for the government through copra exports. Therefore, a comprehensive study has been conducted to examine the price transmission, price variability, and causation among Indian copra marketplaces, as well as the level of correlation between them. To gather data, local copra markets have provided secondary information on commodity prices with a monthly frequency. Among the various oilseeds considered for this study, copra has been selected as one of the most significant ones and subjected to rigorous time series econometric analysis. By addressing the challenges posed by trade liberalization and technological advancements, this study attempts to clarify the workings of copra markets and offer insightful information to all parties concerned.