How effective is e-NAM in integrating food commodity prices in India? Evidence from Onion Market
Publication dateApr, 2021
DetailsNIPFP Working Paper No. 336
AuthorsRudrani Bhattacharya and Sabarni Chowdhury
A series of market distortionary rules and regulations hinder development of an integrated agricultural market in India. In order to ensure greater transparency and uniformity of food commodity prices across states, various reform measures have to be undertaken to develop agriculture marketing. These measures concentrate on the numerous areas, specifically infrastructure development, information provision, improving the role of private sector and decreasing government sector intervention, training of farmers and traders in marketing and post-harvest issues, and most importantly creating a competitive national market for food commodities. The Indian government established e-NAM as a first step toward inducing competition in the agricultural market in 2016. The e-NAM or the National Agriculture Market, is a pan-India electronic trading portal which integrates the existing APMC mandis to create a unified national market for agricultural commodities. In this backdrop, this paper examines whether the introduction of e-NAM by the government has improved the spatial integration of onion markets in India. Using the maximum likelihood method of cointegration, it investigates onion market price integration of Maharashtra , Karnataka , Rajasthan , West-Bengal with the average wholesale onion price of India for the period 2010-2016 (before e-NAM ) and 2016-2019 ( after e-NAM ). It provides evidence in favour of market integration for the period 2016-2019, while multiple relations are found to govern onion prices across states during 2010-2016. The evidence in effect suggests that introduction of e-NAM in 2016 has improved market integration for onion market prices in India.
Keywords: Unit root, Cointegration, Spatial Market Integration, Onion market, e-NAM, India
JEL Classification: C22, C32, O53, Q11.