Embed Size (px)
Citation preview
118
CHAPTER - VI
PATTERN AND SEASONALITY BEHAVIOUR OF
ARRIVALS AND PRICES
Introduction
The behaviour of prices (in terms of price level, trend and
fluctuation) is the most important factor in determining the
competitiveness of a commodity at the domestic and at international
level, to draw inferences for future prices and to formulate long term
strategy on trade (Chand, 2002). The instability in the prices of
agricultural commodities has been one of the major factors affecting the
income level of farmers as well as pace of agricultural production. This
instability in prices of agricultural commodities is influenced by a
number of factors such as annual variation in production, low price
elasticity of demand and seasonality of agricultural production (Kahlo
and Tyagi, 1989). Due to these factors the producer has no control over
price which leads to price uncertainty. Therefore, the analysis of price
behaviour would be useful to take decisions like, “when to grow and
when to sell” on the part of farmer and “when, where, how to store and
dispose of the produce” on the part of businessman.
Market price information with respect to fruits and vegetables is
important for the orchard owners to make decision regarding choice of
market and time and to maximize returns from the sale of their produce.
119
A well-informed orchardist can safeguard his interests better than the ill
informed one against the moves of the buyers to gain advantage in the
transaction. The increase in the level of production and marketable
surplus of fruits and vegetables has created a situation in which most of
the farmers have been confronted with a glut in the market and
consequent fall in prices. It is therefore, necessary to study farm prices.
On the basis of price studies, the farmers can make decisions for proper
allocation of the crop areas by anticipating future prices based on the
lagged prices. Fruits and vegetables are produced seasonally, but the
market requires these products throughout the year. For many decades,
the problem of matching the product availability with consumer demand
is solved in two ways: (i) selling fresh products during harvest and
shortly after harvest; and (ii) processing the rest of the produce to meet
the demand during the rest of the year. As technology improved and
consumer’s income increased, it has become possible to provide fresh
produce year-round. This chapter surveys crop seasons and analyzes
seasonality of market arrivals and prices of fruits (guava, ber and mango)
and vegetables (potato, tomato and peas).
Issues
From supply side, market arrivals represent the ultimate
destination of the producer’s activity with which they are generally
associated. Are market arrivals of fruits and vegetables homogeneously
distributed throughout the year like the supply of industrial products? If
120
not, what is the nature of their month-wise distribution? How do
product prices respond to month-wise arrivals and vice-versa? What is
the role of market expectations in directing the market supplies? Is the
existence of negative relation between market arrivals and prices
independent of market expectations? This chapter is devoted to the
examination of these types of related questions.
Crop Seasons
Different fruits and vegetables are grown in different seasons and
their harvesting time is also different. The proportion of the crop
marketed in the immediate post-harvest period has frequently been used
as an index of the holding power of the cultivator, on the assumption
that higher the holding power of the cultivator, the lower the proportion
marketed in the immediate post-harvest months, when the market price
is low. In this section, the sown and harvesting periods of selected fruit
and vegetable crops are discussed (Table 6.1).
Guava: Guava has two marketing seasons. The winter season is between
December–March and summer season is between August-November. The
arrivals of winter guava are less as compared to summer season. Small
cultivators are observed to have marketed their surplus earlier in the
season probably because of relatively low staying power.
Ber: Ber arrivals are harvested from the end of December to mid March.
The months of the least activity are August-November.
121
Mango: Market arrivals of mango increase in February, remain particular
heavy in May-July and taper off in August. Approximately, 95 per cent of
the arrivals are brought to the market between April-July.
Table 6.1 Peak, Mid and Lean Periods of different Fruits and Vegetables
Crop Peak Mid Lean
Guava August-
November
December-
March
April-July
Ber December-
March
April-July August-
November
Mango April-July August-November
December-March
Potato December-March
April-July August-November
Tomato January-April May-August September-December
Peas December-March
April-July August-November
Source: Field Survey, 2008-09.
For vegetables, the seasons are discussed below: (Table 6.1)
Potato: Potato arrivals increase in the month of November and
December, remain particularly heavy in January-March and taper off in
April month.
Tomato: Tomato arrivals are generally heavy between January-April.
Arrivals begin in January and usually heavy in March and April. Arrivals
of late maturing tomato begin in May and continue till August. After this
the tomato of cold stores comes to the market.
122
Peas: Market arrivals of peas are the highest during January-March.
Arrivals gradually diminish after April. The months of the least activity
are August-October.
Market Arrivals and Seasonality
Unlike industrial products, which have a steady supply throughout
the year, agricultural production is season specific. This phenomenon
creates higher gestation lag amongst agricultural products when they
tend to respond to exogenous changes in demand for products. The
season specificity of agriculture production also generates a unique
marketing response of agriculturist. The usual pattern is that a portion
of the produce moves to market during harvest season and a part goes
for storage either at producer’s level or at wholesaler’s/traders level. It
helps in the adjustment of the supply of these commodities in relation to
their demand in the market. Storage plays an important role in the
marketing of fruits and vegetables as these are perishable in nature. The
more a commodity is perishable, the higher is likely to be its storage cost
and vice-versa. Between the two crops, fruits are relatively more
perishable than vegetables. Consequently, the seasonal effect of arrivals
is expected to be more dominant in the case of fruit crops than in the
case of vegetable crops.
To capture the seasonality of market arrivals of fruits and
vegetables, the study has adopted two approaches. In approach one; the
month-wise average arrivals from the period 2004-05 to 2009-10 are
123
computed. The relatively monthly weights of arrivals have also been
computed. This approach has been supplemented by the standard
approach of seasonality index. The month-wise seasonality index has
been computed by eliminating the trend, cyclical as well as irregular
fluctuation’s effect on the month-wise market arrivals from the period
2004-05 to 2009-10 by using a multiplicative model.
Y= T S C I
Where,
Y= Time series data on arrivals/ prices of fruits and vegetables.
T= The time trend
S= The seasonal variations
C= The cyclical variations
I= The irregular fluctuations.
Month-wise market arrivals tend to represent positively skewed
distribution, its peak being in the harvesting month or following the
harvesting period. In the case of fruits, in Punjab, guava is divided into
two season crops, i.e., winter and summer. The summer crop is
harvested during August and winter crop during January-February. The
yield of guava varies due to different varieties, age of plant, fruiting
season and orchard management practices. It is observed that different
varieties of guava produce more yield in summer season (Allahabad,
Safeda, Sardar guava) as compared to winter season. But, the
quality of summer season crop is poor due to attack of fruitfly than
winter season crop. In the case of guava; the peak month is August, for
124
ber, the peak month is March and it is June in the case of Mango
(Table 6.2).
Table 6.2
Month-wise Market Arrivals of Fruits in Patiala District Markets, 2004-10
(Unit: Quintals)
Month Guava Ber Mango
January 6403 (12.80) 2135 (12.65) 83 (0.03)
February 4227 (8.45) 3449 (20.44) 167 (0.05)
March 3709 (7.41) 5866 (34.77) 1027 (0.33)
April 1941 (3.88) 3663 (21.71) 22344 (7.19)
May 335 (0.67) 247 (1.46) 66761 (21.48)
June 101 (0.20) _ 106802 (34.36)
July 1283 (2.56) _ 102631 (33.01)
August 12197 (24.38) _ 10470 (3.37)
September 6876 (13.74) _ 564 (0.18)
October 2529 (5.05) 50 (0.30) 13 (0.004)
November 4454 (8.90) 222 (1.32) 6 (0.002)
December 5979 (11.95) 1240 (7.35) -
Total 50034 16872 310868
Source: Calculated using month-wise arrival data obtained from Market
Committee of Patiala. Note: Figures in parenthesis are the percentage values of total arrivals.
In the case of vegetables, for potato; the peak month is February,
for tomato and peas each; the peak month is March (Table 6.3).
125
Table 6.3 Month-wise Market Arrivals of Vegetables in Patiala District
Markets, 2004-10 (Unit: Quintals)
Month Potato Tomato Peas
January 201148 (10.04) 23909 (6.89) 100911 (9.76)
February 301970 (15.07) 30257 (8.72) 316205 (30.58)
March 219047 (10.93) 45774 (13.19) 480636 (46.49)
April 153168 (7.65) 39946 (11.51) 28832 (2.79)
May 142053 (7.09) 38757 (11.17) 14673 (1.42)
June 127085 (6.34) 28643 (8.25) 8810 (0.85)
July 126153 (6.30) 24370 (7.02) 5111 (0.49)
August 124751 (6.23) 21473 (6.19) 6662 (0.64)
September 129030 (6.44) 24356 (7.02) 5428 (0.53)
October 137849 (6.88) 23526 (6.78) 8403 (0.81)
November 152460 (7.61) 20778 (5.99) 19945 (1.93)
December 188799 (9.42) 25283 (7.29) 38288 (3.70)
Total 2003513 347072 1033904
Source: Calculated using month-wise arrival data obtained from Market Committee of Patiala.
Note: Figures in parenthesis are the percentage values of total arrivals.
The seasonality index (S.I.) also revealed the maximum value of
market arrivals during these peak months. In the case of fruit crops, its
value is 256.6 for guava in the month of August, for ber its value is 417.3
in the peak month of March. In the case of mango, the peak month is
June and seasonality index is also the highest, i.e., 447.66 (Table 6.4).
126
Table 6.4 Month-wise Index of Seasonal Variations of Fruits Arrivals in Patiala
District Markets, 2004-10
Month Guava Ber Mango
January 150.6 133.4 0.40
February 105.9 210.5 1.08
March 87.8 417.3 1.47
April 54.4 272.3 91.43
May 8.16 42.5 247.55
June 0.51 - 447.66
July 32.5 - 374.65
August 256.6 - 38.12
September 173.7 - 0.20
October 69.9 15.4 0.09
November 114.7 21.9 0.06
December 144.1 89.9 -
Source: Calculated using month-wise arrival data obtained from Market
Committee of Patiala.
For vegetables, the value of seasonality index being 155.0 for
potato during February month and 144.3 for tomato and 506.4 for peas
during March month in Patiala district. (Table 6.5).
127
Table 6.5 Month-wise Index of Seasonal Variations of Vegetables Arrivals in
Patiala District Markets, 2004-10
Month Potato Tomato Peas
January 118.2 88.5 136.9
February 155.0 109.8 372.8
March 128.1 144.3 506.4
April 91.9 133.2 34.6
May 84.9 128.5 23.9
June 81.4 96.2 10.9
July 78.5 89.4 6.7
August 78.1 87.5 9.9
September 83.5 89.4 7.6
October 84.1 78.3 10.3
November 90.9 73.4 29.1
December 115.2 94.1 53.3
Source: Calculated using month-wise arrival data obtained from Market
Committee of Patiala.
It is assumed that more than 100 value of seasonality index
depicts the concentration of market arrivals, therefore the study found
that there are four months, which satisfy the criteria for both fruits and
vegetables under study. In the case of fruits, for guava, the arrivals
during the four months (August-November) accounted for more than half
of the total yearly arrivals. As far as other fruits are concerned, the
arrivals of ber during the four months (December-March) accounted for
three-fourth of the total arrivals and of mango during April-July
accounted for 96.04 per cent of the total yearly arrivals (Table 6.1). As
regards vegetables, the arrivals for potato accounted for 46 per cent of
128
the total yearly arrivals during the four months, i.e., December-March.
The arrivals of tomato during the four months, i.e., January-April
accounted for two-fifth of total yearly arrivals. The arrivals for peas
during the four months, i.e., December–March accounted for nine-tenth
of the total yearly arrivals.
Is the classification of the months into peak, mid and lean periods
in terms of market arrivals possible? If so, then the classification will
assume declining weights of arrivals during the three periods of the year.
The relative month-wise weights do not follow very systematic pattern
throughout the year. The changing month-wise relative weights appear
to be responding to seasonal spurts in demand. Nevertheless, the study
has classified the year into three periods, following broadly the behavior
of fruit and vegetable crops. However, the months included in the peak,
mid and lean periods differ for different crops, depending upon seasonal
specificities of each crop.
The study has computed, the relative weights of year-wise arrivals
for fruit and vegetable crops for peak, mid and lean periods (Table 6.6
and 6.7). Irrespective of the year and the crop, the relative weights of
arrivals showed a declining trend as moving from peak to mid to lean
periods.
When the year-wise data were examined, the weights of peak
periods were more in the case of mango than other fruits. (Table 6.6).
129
Whereas in the case of vegetables, the weights of peak periods of peas
were more than other vegetable crops (Table 6.7).
Table 6.6
Pattern of Arrivals of Fruits in Patiala District Markets, 2004-10
(Unit: Percentage Values)
Year Guava Ber Mango
Peak Mid Lean Peak Mid Lean Peak Mid Lean
2004-
05
55.90 37.13 6.97 73.76 25.24 1.00 96.13 3.56 0.32
2005-
06
48.90 44.19 6.90 70.27 28.97 0.76 95.17 4.71 0.12
2006-
07
51.98 38.07 9.95 69.87 28.67 1.47 98.46 1.41 0.13
2007-
08
52.54 44.59 2.87 80.07 17.86 2.07 94.14 5.51 0.35
2008-
09
54.82 34.59 10.59 79.89 14.21 5.90 94.96 4.18 0.87
2009-
10
45.29 43.43 11.27 75.02 17.63 7.36 97.67 1.71 0.62
Source: Calculated using month-wise arrival data obtained from Market Committee of Patiala. Note:
Guava: Peak period: August-November, Mid period: December-March and
Lean period: April-July.
Ber: Peak period: December-March, Mid period: April-July and Lean
period: August-November.
Mango: Peak period: April-July, Mid period: August-November and Lean
period: December-March.
130
Table 6.7 Pattern of Arrivals of Vegetables in Patiala District Markets, 2004-10
(Unit: Percentage Values)
Year Potato Tomato Peas
Peak Mid Lean Peak Mid Lean Peak Mid Lean
2004-
05
37.75 37.27 24.98 40.56 35.39 24.05 84.72 8.80 6.48
2005-
06
36.10 35.67 30.03 35.97 34.40 29.63 86.0 7.51 6.49
2006-
07
36.91 35.32 27.77 38.60 34.02 27.38 89.56 6.49 3.95
2007-
08
38.27 34.77 30.97 34.98 34.56 30.46 92.07 4.71 3.23
2008-
09
38.30 34.45 27.25 40.52 34.14 25.34 90.62 5.32 4.06
2009-
10
36.62 34.18 29.20 41.43 29.79 28.78 91.86 4.57 3.57
Source: Calculated using month-wise arrival data obtained from Market Committee of Patiala.
Note:
Potato: Peak period: December-March, Mid period: April-July and Lean
period: August-November.
Tomato: Peak period: January-April, Mid period: May-August and Lean
period: September-December.
Peas: Peak period: December-March, Mid period: April-July and Lean
period: August-November.
Market Prices and Seasonality
Stable prices play an important role in determining the farmer’s
income. Prices, in turn, depend upon the demand and supply (arrivals)
131
in the markets. Given a certain level of demand, variations in the
arrivals cause deep fluctuations in prices. Further, fluctuation in prices
is an important factor influencing, directly or indirectly, the level of
resource use and consequently the level of production. Unfortunately,
the structural arrangement of our marketing sector is so defective that
the pricing phenomenon cannot be properly identified. The variation in
price from time to time and from place to place is a very common
phenomenon in our country. During the same year in a particular
market and over different markets at a particular point of time wide
variations in prices are noticed. This violent fluctuation in prices over
time and space introduces an element of uncertainty and affects both the
producers and consumers in terms of low prices received by the farmers
and high prices paid by the latter. It is true in the case of fruits and
vegetables where farmers cannot retain the produce at the farm for
longer periods due to their perishable nature and non-availability of cold
stores. Also, the farmers need immediate cash to meet the financial
obligations for various purposes. They dispose of the produce
immediately after harvest. This gluts the markets during peak periods
and results in slump in prices. But, during the lean months, this leads
to the rise in price level. In other words, prices are at the lowest level
when arrivals are at the peak in the market and improve with the decline
of arrivals till the end of the crop season. The study results also support
the thesis. During the year 2004-05, as in the case of fruits, the
132
maximum price of guava was found in the month of October, i.e., Rs.690
per quintal when the arrivals were only of 231 quintals (Table 6.8). In
the case of ber, the maximum price was in the month of November, i.e.,
Rs.750 per quintal with the least arrivals (24 quintals) during the same
period whereas in the case of mango, the maximum price was found in
February (Rs.3023 per quintal) when arrivals were at their lowest level,
i.e., 12 quintals only. In the year 2009-10, in the case of guava, the
maximum price was noticed in the month of June (Rs.1130 per quintal)
when the arrivals were 96 quintals only. For ber, the prices were at their
highest level in October, i.e., Rs.2650 per quintal when arrivals were the
minimum, i.e., 20 quintals only. Lastly, in the case of mango the highest
price was found in January (Rs.10008 per quintal) when the arrivals
were only 1 quintal during the same period.
133
Table 6.8 Month-wise pattern of Fruits Arrivals and Prices in Patiala District Markets, 2004-05 to 2009-10
(Unit: Arrivals-Quintals, Prices: Rs. Per Quintal)
Month
Guava Ber Mango
2004-05 2009-10 2004-05 2009-10 2004-05 2009-10
Arrival Prices Arrival Prices Arrival Prices Arrival Prices Arrival Prices Arrival Prices
January 864
(12.53)
633 951
(14.04)
779 353
(12.38)
690 466
(5.95)
947 - - 1
(0.002)
10008
February 420
(6.09)
592 645
(9.52)
971 640
(22.44)
655 742
(25.40)
847 12
(0.05)
3023 2
(0.004)
8808
March 479
(6.95)
638 455
(6.72)
1017 975
(34.19)
650 1054
(36.08)
627 67
(0.27)
2767 335
(0.61)
6675
April 71
(1.03)
525 408
(6.02)
740 622
(21.8)
685 320
(10.96)
985 1846
(7.39)
1826 5912
(10.80)
2235
May 13
(0.19)
600 140
(2.07)
875 - - - - 6664
(26.68)
1329 14161
(25.86)
2019
June - - 96
(1.42)
1130 - - - - 1376
(5.51)
1074 15921
(29.07)
1816
July 260
(3.77)
633 288
(4.25)
1121 - - - - 14129
(56.56)
1222 17492
(31.94)
2432
August 2266
(32.87)
521 1235
(18.23)
729 - - - - 888
(3.56)
1956 920
(1.68)
3745
September 680
(9.86)
551 607
(8.96)
950 - - - - - - 8 (0.02) 5000
October 231 (3.35)
690 383 (5.65)
1121 - - 20 (0.69)
2650 - - 9 (0.02) 7500
November 759
(11.0)
470 757
(11.18)
980 24
(0.84)
750 113
(3.87)
2200 - - - -
December 851
(12.34)
651 809
(11.94)
1079 238
(8.35)
716 216
(7.05)
1125 - - - -
Total 6894 6774 2852 2921 24982 54761
Source: Calculated using month-wise arrival data obtained from Market Committee of Patiala.
Note: Figures in parentheses are the percentage of total arrivals.
134
Table 6.9
Month-wise pattern of Vegetables Arrivals and Prices in Patiala District Markets, 2004-05 to 2009-10
(Unit: Arrivals-Quintals, Prices: Rs. Per Quintal)
Month
Potato Tomato Peas
2004-05 2009-10 2004-05 2009-10 2004-05 2009-10
Arrival Prices Arrival Prices Arrival Prices Arrival Prices Arrival Prices Arrival Prices
January 26723
(8.92)
200 42556
(9.91)
511 3670
(6.72)
634 3956
(5.51)
1079 12385
(12.73)
647 11063
(4.39)
1276
February 34125 (11.40)
200 43713 (10.18)
366 5599 (10.25)
495 4542 (6.32)
795 28445 (29.24)
618 79001 (31.36)
730
March 54332
(18.28)
224 79032
(18.40)
314 6601
(12.09)
502 12525
(17.44)
789 35684
(36.68)
884 140443
(55.75)
1114
April 24734
(8.26)
222 25404
(5.92)
467 6903
(12.64)
284 8929
(12.43)
654 4048
(4.16)
1167 4842
(1.92)
2411
May 18672
(6.24)
281 35403
(8.24)
607 6446
(11.81)
306 7383
(10.28)
566 2210
(2.27)
1412 1977
(0.79)
2311
June 16690
(5.57)
358 28570
(6.65)
779 5023
(9.20)
694 5545
(7.72)
945 1958
(2.01)
1637 1412
(0.56)
3290
July 14390
(4.81)
390 23790
(5.54)
848 3156
(5.78)
842 4205
(5.86)
1604 919
(0.95)
1700 882
(0.35)
3720
August 13543 (4.52)
463 28210 (6.57)
733 3528 (6.46)
814 4164 (5.80)
1570 600 (0.62)
1554 1399 (0.56)
2932
September 21547
(7.20)
431 24355
(5.67)
1132 2954
(5.41)
1198 5080
(7.07)
942 632
(0.65)
1836 1396
(0.55)
3144
October 26094
(8.71)
436 28624
(6.67)
1076 3463
(6.34)
950 5827
(8.11)
1082 1002
(1.03)
1916 1977
(0.79)
3335
November 19188
(6.41)
393 32834
(7.65)
1066 3239
(5.93)
864 4297
(5.98)
1811 3280
(3.37)
994 2196
(0.87)
4326
December 29401
(9.82)
178 36997
(8.61)
677 4022
(7.37)
693 5372
(7.48)
1186 6127
(6.30)
723 5313
(2.11)
2085
Total 299439 429488 54604 71825 97290 251901
Source: Calculated using month-wise arrival data obtained from Market Committee of Patiala. Note: Figures in parentheses are the percentage of total arrivals
135
In the case of vegetables, (Table 6.9) as expected during the year
2004-05, for potato, the maximum price was observed in the month of
August, i.e., Rs.463 per quintal when arrivals were only 13543 quintals
whereas during the year 2009-10, the price was maximum in September
month, i.e., Rs.1132 per quintal when the arrivals were the least, i.e.,
24355 quintals. For tomato, during the year 2004-05, the maximum
price was observed in September month, i.e., Rs.1198 per quintal when
the arrivals were lowest, i.e., 2954 quintals. During the year 2009-10,
the price was at its peak level in November (Rs.1811 per quintal) and the
arrivals were 4297 quintals only. Lastly, in the case of peas, the
maximum price was noticed in the month of October (Rs.1916 per
quintal) when arrivals were only 1002 quintals during the year 2004-05.
But, during the year 2009-10, the price was at its peak in the month of
November, i.e., Rs.4326 per quintal when the arrivals were only 2196
quintals.
Like arrivals, prices also depict seasonality. If it is assumed that
arrivals depict supply and prices depict demand, then there should be a
negative correlation between them. If the above proposition is followed,
during the peak period where there is concentration of arrivals, prices
should be low and during the lean months when arrivals are scarce,
prices should be high. Our seasonality index of prices corroborates the
fact. It indicates the maximum price during the lean months and the
minimum price during the peak months. In the case of fruit crops,
136
(Table 6.10) as far as guava is concerned, the index of monthly prices
was low in the month of August (76.1) and its peak level (116.5) was in
the month of January.
Table 6.10 Month-wise Index of Seasonal Variations of Fruits Prices in Patiala
District Markets, 2004-10
Month Guava Ber Mango
January 116.5 152.9 168.6
February 113.2 135.9 156.5
March 116.4 107.6 133.2
April 110.9 140.2 89.9
May 104.5 127.2 69.4
June 79.9 - 51.8
July 90.5 - 65.1
August 76.1 - 81.2
September 82.6 - 108.6
October 105.7 189.7 132.2
November 97.1 180.4 150.1
December 111.7 172.2 -
Source: Calculated using month-wise price data obtained from Market
Committee of Patiala.
The price movement was characterized as less than average from
June to September when the price index was less than 100. For the rest
of year, except November, the index was higher than 100. In the case of
ber, the index of monthly prices was low in March month (107.6) and its
peak was in the month of October, i.e., 189.7. For mango, the index of
monthly prices was low in June month (51.8) and its peak level (168.6)
137
was in the month of January. The price movement was characterized as
less than average from April to August when the price index was less
than 100. For the rest of year, the index was higher than 100. The
producers can use such a seasonal index of fruit crops to market their
produce.
In the case of vegetable crops (Table 6.11), firstly for potato, its
peak reached in the month of September at 128.5 and its lowest level
reached in the month of February at 62.1.
Table 6.11 Month-wise Index of Seasonal Variations of Vegetable Crop Prices in
Patiala District Markets, 2004-10
Month Potato Tomato Peas
January 71.6 84.7 64.3
February 62.1 80.3 52.9
March 73.5 59.7 47.2
April 90.8 75.7 102.2
May 101.9 77.6 99.9
June 106.3 86.1 135.0
July 113.7 107.5 125.2
August 119.9 140.7 123.7
September 128.5 118.5 150.9
October 127.8 125.7 142.3
November 122.8 139.5 92.7
December 87.5 98.4 63.1
Source: Calculated using month-wise price data obtained from Market Committee of Patiala.
138
The price movement was characterized as less than average from
December to April when the price index was less than 100. For the rest
of year, the index was higher than 100. In the case of tomato, its peak
reached in the month of August at 140.7 and its lowest level reached in
the month of March at 59.7. The price movement was characterized as
less than average from January to June when the price index was less
than 100. For the rest of year, except for December, the index was
higher than 100. For peas, the index of monthly prices was low during
March month (47.2) and its peak level (150.9) was in the month of
September. The price movement was characterized as less than average
from December to March when the price index was less than 100. For
the rest of year, except for 1-2 months, the index was higher than 100.
Relationship between Production, Arrivals and Prices
There exists a dynamic relation between production, supply
(arrivals) and prices. A rising trend in prices may result in higher
production levels and in turn higher supplies in the future. But this
assumption may hold true for industrial sector and generally fails to hold
good in the case of agricultural products, the latter being, generally,
seasonal in nature and not produced throughout the year. The nature of
fruit and vegetable production reflects wide fluctuations in prices, supply
(arrivals) and demand throughout the year. Therefore, in the short run
analysis, it is not possible to relate production, market arrivals and
139
prices. In other words, only the relationship between market arrivals
and prices can be examined.
As already discussed, that arrivals are at peak when prices are low
and vice-versa, i.e., a negative relationship between prices and market
arrivals is indicated. Correlation analysis was adopted to verify the
relationship between month-wise prices and corresponding market
arrivals for each of the years between 2004-05 and 2009-10
(Table 6.12).
Table 6.12 Correlation Coefficients of Monthly Arrivals and Prices of Fruits and
Vegetables in Patiala District Markets, 2004-10
Year Fruits Vegetables
Guava Ber Mango Potato Tomato Peas
2004-05 -0.34 -0.50 -0.60 -0.59 -0.89 -0.66
2005-06 -0.74 -0.97 -0.74 -0.32 -0.42 -0.63
2006-07 -0.39 -0.87 -0.74 -0.71 -0.73 -0.57
2007-08 -0.05 -0.81 -0.77 -0.61 -0.58 -0.73
2008-09 -0.60 -0.81 -0.71 -0.89 -0.74 -0.69
2009-10 -0.51 -0.79 -0.78 -0.63 -0.58 -0.67
Source: Calculated using month-wise arrival and price data obtained
from Market committee of Patiala.
The negative values of the correlation coefficients computed
between the month-wise arrivals and corresponding market prices
confirm the existence of inverse relationship between market arrivals and
prices. This is generally true for each of fruit and vegetable crops. The
reason for the existence of inverse relationship between market arrivals
140
and prices is that the storage cost increases the cost of supplies and as a
result, there is a rise in the price as moving away from the harvest
period. The year-after-year existence of inverse relation between prices
and market arrivals implicitly assumes that prices are increasing over
time, i.e., there are positive price expectations. Thus, there prevails
inverse relationship between market arrivals and prices. These results
confirm our hypothesis.
Summing-up
From the analysis it has been found that the seasonal behaviour of
fruit and vegetable crops has created glut in the market during the post-
harvest season, which resulted in sharp fall in prices and affected the
producers adversely in Patiala district. It has also been found that the
major portion of the farmer’s produce was sold at the lower price in the
post-harvest period thereby lowering their incomes. The major reason is
the perishable nature of the produce and the non-availability of cold
stores and storage techniques. So, the government at the block and at
the district levels should develop cold storage facilities. Further,
emphasis should be given towards developing those varieties whose
ripening can be delayed which would streamline the supply of the
produce. Moreover, arrangements should be made for proper distribution
of the produce in different parts of the country or export to other
countries. The transportation of these perishables by providing
refrigerator van services to distant markets in the state and country and
141
air lifting will go in long way to avoid glut in the market. This will avoid
slump in prices in the peak season and also helps to tap those potential
markets, where prices are generally higher. This will ensure
remunerative prices to the farmers for their produce.
*******************************************************
