Year: 2022 | Month: March | Volume 67 | Issue 2

Price Volatility and Transmission: A case study of paddy and redgram markets in Karnataka

Pavithra K.N. Gaddi G.M. Pooja


Price volatility of major agricultural commodities has attracted major attention in the last few years in India as well as in the world food markets. It is often observed that price changes of major staple food items have negative impact on the welfare of the producer farmers as well as consumers. This study tries to explore the nature and causes of the price changes of paddy and redgram in Karnataka. The secondary data of paddy and redgram prices from major markets were compiled and analysed using volatility index and co-integration techniques. Data from major markets by considering time series data for about two decades from2000-2018 were used to understand the trends, volatility and transmission. It was discovered that, prices were not particularly unpredictable, retail prices were more erratic than farm harvest prices, wholesale prices, and minimum support prices in Paddy whereas in redgram, farm harvest prices were comparatively erratic than other prices. The volatility may be related to agricultural production’s intrinsic instability as a result of unexpected and unpredictable exogenous shocks such as weather and poor price and income elasticities. And study on price transmission would help to know, how the prices have transmitted from one market to other market and reveals the relationship between prices over time between the markets considered.


  • The study revealed that retail prices were more volatile than farm harvest, wholesale and minimum support prices in paddy but in redgram, farm harvest prices were comparatively volatile than retail, wholesale and minimum support prices.
  • Gangavathi and Maddur markets are the major markets influencing prices in Bangalore market for Paddy whereas, prices ofredgram in both Bangalore and Hyderabad markets were influenced by prices in Mumbai market.

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Economic Affairs, Quarterly Journal of Economics| In Association with AESSRA

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