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. 118
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 119
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. 120
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- December- April-July November March 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. 121
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 122
computed. computed. The relatively monthly weights of arrivals have also been 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 123
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). 124
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). 125
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). 126
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 127
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). 128
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 05 06 07 08 09 2004-2005- 2006-2007- 2008-2009- 10 Peak Mid Lean Peak Mid Lean Peak Mid Lean 55.90 37.13 6.97 73.76 25.24 1.00 96.13 3.56 0.32 48.90 44.19 6.90 70.27 28.97 0.76 95.17 4.71 0.12 51.98 38.07 9.95 69.87 28.67 1.47 98.46 1.41 0.13 52.54 44.59 2.87 80.07 17.86 2.07 94.14 5.51 0.35 54.82 34.59 10.59 79.89 14.21 5.90 94.96 4.18 0.87 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. 129
Table 6.7 Pattern of Arrivals of Vegetables in Patiala District Markets, 2004-10 (Unit: Percentage Values) Year Potato Tomato Peas 05 06 07 08 09 2004-2005- 2006-2007- 2008-2009- 10 Peak Mid Lean Peak Mid Lean Peak Mid Lean 37.75 37.27 24.98 40.56 35.39 24.05 84.72 8.80 6.48 36.10 35.67 30.03 35.97 34.40 29.63 86.0 7.51 6.49 36.91 35.32 27.77 38.60 34.02 27.38 89.56 6.49 3.95 38.27 34.77 30.97 34.98 34.56 30.46 92.07 4.71 3.23 38.30 34.45 27.25 40.52 34.14 25.34 90.62 5.32 4.06 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) 130
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 131
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. 132
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) February 420 592 645 (6.09) (9.52) March 479 638 455 (6.95) (6.72) April 71 525 408 (1.03) (6.02) May 13 600 140 (0.19) (2.07) June - - 96 (1.42) July 260 633 288 (3.77) (4.25) August 2266 521 1235 (32.87) (18.23) September 680 551 607 (9.86) (8.96) October 231 690 383 (3.35) (5.65) November 759 470 757 (11.0) (11.18) December 851 651 809 (12.34) (11.94) 779 353 (12.38) 690 466 (5.95) 947 - - 1 (0.002) 10008 971 640 655 742 847 12 3023 2 8808 (22.44) (25.40) (0.05) (0.004) 1017 975 650 1054 627 67 2767 335 6675 (34.19) (36.08) (0.27) (0.61) 740 622 685 320 985 1846 1826 5912 2235 (21.8) (10.96) (7.39) (10.80) 875 - - - - 6664 1329 14161 2019 (26.68) (25.86) 1130 - - - - 1376 1074 15921 1816 (5.51) (29.07) 1121 - - - - 14129 1222 17492 2432 (56.56) (31.94) 729 - - - - 888 1956 920 3745 (3.56) (1.68) 950 - - - - - - 8 (0.02) 5000 1121 - - 20 (0.69) 980 24 750 113 (0.84) (3.87) 1079 238 716 216 (8.35) (7.05) 2650 - - 9 (0.02) 7500 2200 - - - - 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. 133
Month 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) January 26723 (8.92) February 34125 (11.40) March 54332 (18.28) April 24734 (8.26) May 18672 (6.24) June 16690 (5.57) July 14390 (4.81) August 13543 (4.52) September 21547 (7.20) October 26094 (8.71) November 19188 (6.41) December 29401 (9.82) 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 200 42556 (9.91) 200 43713 (10.18) 224 79032 (18.40) 222 25404 (5.92) 281 35403 (8.24) 358 28570 (6.65) 390 23790 (5.54) 463 28210 (6.57) 431 24355 (5.67) 436 28624 (6.67) 393 32834 (7.65) 178 36997 (8.61) 511 3670 (6.72) 366 5599 (10.25) 314 6601 (12.09) 467 6903 (12.64) 607 6446 (11.81) 779 5023 (9.20) 848 3156 (5.78) 733 3528 (6.46) 1132 2954 (5.41) 1076 3463 (6.34) 1066 3239 (5.93) 677 4022 (7.37) 634 3956 (5.51) 495 4542 (6.32) 502 12525 (17.44) 284 8929 (12.43) 306 7383 (10.28) 694 5545 (7.72) 842 4205 (5.86) 814 4164 (5.80) 1198 5080 (7.07) 950 5827 (8.11) 864 4297 (5.98) 693 5372 (7.48) 1079 12385 (12.73) 795 28445 (29.24) 789 35684 (36.68) 654 4048 (4.16) 566 2210 (2.27) 945 1958 (2.01) 1604 919 (0.95) 1570 600 (0.62) 942 632 (0.65) 1082 1002 (1.03) 1811 3280 (3.37) 1186 6127 (6.30) 647 11063 (4.39) 618 79001 (31.36) 884 140443 (55.75) 1167 4842 (1.92) 1412 1977 (0.79) 1637 1412 (0.56) 1700 882 (0.35) 1554 1399 (0.56) 1836 1396 (0.55) 1916 1977 (0.79) 994 2196 (0.87) 723 5313 (2.11) 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 1276 730 1114 2411 2311 3290 3720 2932 3144 3335 4326 2085 134
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, 135
(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) 136
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. 137
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 138
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 139
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 postharvest 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 140
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. ******************************************************* 141