Price behaviour of turmeric in India

Abstract

The present study on the "Price behaviour of turmeric in India" was undertaken with the specific objective of investigating the secular trend, seasonality, cyclical and irregular movements in the price of turmeric in India and to evolve a reliable price forecasting model for turmeric.' The study was conducted during the year 2010-11 with reference to three major markets in the country viz., Kochi, Nizamabad and Erode markets employing secondary data. With reference to CGR of area, production and productivity of turmeric at All- India level, compared to pre- WTO regime, the rate of growth in area and productivity of turmeric showed declining trend during post- WTO regime and hence, growth rate in production also showed declining trend. Both in Kerala and Andhra Pradesh, the crop has not received due attention during post- WTO regime compared to pre- WTO regime, as indicated by the declining trends in terms of area, production and productivity. However, in Tamil Nadu, the crop witnessed insignificant growth rates in terms of area, production and productivity of turmeric during both pre- WTO and post- WTO regimes. Despite slow growth in production of turmeric in the era of liberalized regime, India enjoyed favourable net trade position, as indicated by the significant positive growth rates in the exports of turmeric in terms of quantity, value and unit price compared to import scenario. Further, the instability in exports of turmeric declined during post- WTO regime compared to pre- WTO regime, as indicated by the fall in CV. However, there is much scope to increase the export prospects ofturmeric, as even today, India's export basket comprises of fresh produce only rather than processed products. This favourable net trade position is further confirmed by the low NPCsindicating that, India enjoys more export competitiveness for turmeric in the international market. Regarding price behaviour, the analysis based on single exponential method revealed that, in Kochi and Erode markets, turmeric prices showed greater degree of fluctuations up to September 2007 and the period beyond October, 2007 represents growth phase in turmeric prices. For turmeric (bulb) and turmeric (finger) in Nizamabad market, prices have not shown a specific trend, implying a greater degree of price volatality for these commodities. Market integration study was conducted considering the spot prices of turmeric at the selected markets by employing the Johansen multiple eo integration analysis. The two eo-integration equations were found to be significant at five per cent level, indicating that, the selected markets are having long run equilibrium relationship. Seasonal indices of turmeric prices computed through employing ratio to moving average method revealed that, the domestic prices of turmeric exhibited considerable seasonality in all the selected markets. The seasonal price behaviour further inferred that, it was almost similar among Kochi and Erode markets because of their proximity, while it was totally different for the Nizarnabad market, as it is distantly separated compared to the earlier two markets. Cyclical variations in turmeric prices are more pronounced in all the selected markets. In Kochi market, the length of the cycle lasted for about six years, seven years for turmeric bulb and finger prices in Nizamabad market and six to seven years in Erode market. Turmeric prices were subjected to considerable irregular variations and these are due to supply shocks on account of climatic variations or market shocks on account of demand shocks or high speculative factors. Different pnce forecasting methods were employed VlZ., double exponential smoothing (Nizamabad and Erode markets) and Winters' multiplicative method and Winters' additive method (Ko chi market) for price forecasting of turmeric during the months of March, April and May, 2011 and the findings revealed that, the modal prices of three months fall in the range of forecasted prices across all the markets indicating that, the price forecasts were reliable. The accuracy percentage of turmeric price forecast ranges from 90 to 99 per cent. The prices so forecasted across the markets are validated for the same period and the findings revealed that, the monthly modal prices of selected commodity fall within the range of predicted prices. The accuracy percentage of price forecast is above 90 for the reference commodity and this implies that the forecast is reliable in all the selected markets.

Considering the above findings with reference to production and trading scenarios of turmeric, it is essential to formulate multi-pronged strategy such as strengthening R&D to develop and release HYV of turmeric and fine tune the crop production strategies with reference to different agro-ecological situations, strengthening processing, storage and market information network, effective implementation of Market Intervention Scheme, improving the acces:; of farmers towards futures markets to overcome price risk, quality enhancement of turmeric on the lines of SPS standards fixed by the importing countries, price forecasting to regulate area and production of turmeric in tune of its export prospects etc., so as to enhance both domestic and export competitiveness and to gain due share in the international market.