Integration of Cumin markets in Rajasthan

Abstract

The study investigated the integration between cumin (Cuminum cyminum) markets pairs in Rajasthan State using monthly cumin price series of five (5) markets from 2008-2015. The co-integration tests results indicate Nagaur and Pali; Nagaur and Jodhpur; Nagaur and Jalore markets are integrated in the long run at lag five (5). However, the rest of other market pairs are not integrated in the long run. The results from the error correction model showed that, the lowest speed of adjustment towards long run equilibrium was from Nagaur to Jalore market at rate of 37.4%. The highest speed of adjustment was 56.6%, running Nagaur to Pali market towards long run equilibrium. This is followed by a speed of adjustment of 45.1% running from Nagaur to Jodhpur market towards along run equilibrium in a period of at most one (1) month. The results further indicate bidirectional causality between Nagaur and Pali markets and also Naguar and Jalore markets. There is also a unidirectional causality of price change from Merta City market of Nagaur to Bhagat Ki Kothi market of Jodhpur but not vise versa. The results from the unrestricted vector autoregressive (VAR) model was run for market pairs that were not cointegrated that cumin price series between Ajmer and Jodhpur; Jodhpur and Pali and Jodhpur and Jalore Granger causes each other in the short run whereas Ajmer Granger causes Nagaur, Pali and Jalore in less than one month though in the long run they drift apart. The study further reveal that orthogonalized shock or unexpected shocks to Nagaur market will result in permanent effect on the prices of other selected markets within one year. In the same way, unexpected shock to market prices of Pali will result in permanent price effect on Nagaur cumin prices but temporary on prices in Jodhpur. On the other hand unexpected shock to prices of Ajmer will results in transitory or temporary price effect on prices in Pali, Nagaur, Jodhpur and Jalore markets.