Time-series analyses of food commodity prices in Maharashtra (July 2019 - June 2020)

Abstract

The outbreak of Covid-19 in March and subsequent draconian lockdowns that resulted in disruption of supply of most commodities except "essential commodities and services", widespread closure of factories, marginal, small and medium enterprises, massive unemployment and return migration, and deceleration of economic growth are intensely debated. Even though agriculture's share of GDP has declined, it continues to be the largest employer in India. Analyses of the impact of the Covid pandemic on this sector-especially food supply chains-are still few and far between. Views range from resilience of this sector to substantial losses of output and livelihoods. Focusing on an important aspect of food supply chains in Maharashtra, which witnessed highest severity of the Covid pandemic, we conduct a detailed empirical analysis of movements of wholesale and retail food commodities' prices, the gaps between them (or the price wedge) and market integration in this state during July, 2019-June 2020. One section of this study is devoted to deterministic means and standard deviations that throw light on these movements during different phases of lockdowns. This in itself goes well beyond what we know from the extant literature. Another significant contribution is the time-series analyses of the food commodities' price series and price wedges in which the focus shifts to the stochastic process, with a structure that can be characterised and described. Some of the issues addressed are whether the wholesale and retail food prices are cointegrated, whether their wedges have narrowed, whether volatilities have accentuated and whether markets are spatially integrated. The insights are useful for policy purposes.