We analyze whether Pakistan has become one domestically integrated rice market and whether Pakistan's rice markets are integrated with the international markets, using monthly data from 1994 to 2011. During this period, major policy shifts took place. In 2002, Pakistan terminated the price support policy; in 2002-2004 export subsidies were introduced, and in 2008, a minimum export price policy was adopted. We compare the degree of integration before and after 2002. We find that most of the regional rice markets in Pakistan are integrated domestically. Pakistan's rice markets are also integrated with the international markets, using prices in Thailand and Vietnam as benchmarks. The price support policy abolition seems to have contributed to greater domestic integration, while the subsequent export policies seem to have decreased the extent of Pakistan's integration with the international markets. However, although Pakistan's rice markets generally are domestically integrated as well as integrated with the international market, price adjustments are quite slow. Thus, only 3% to 11% of deviations from long-run equilibrium are adjusted on a monthly basis, indicating that a shock in international markets takes several months to be fully transferred to prices in Pakistan.
Prices of agricultural commodities tend to be more volatile in comparison to other commodities. Volatility can result in inefficient allocation of the resources by the farmers, traders and consumers. Rice is the second major staple and export item of Pakistan. This study presents the trends in volatility of regional rice markets of Pakistan and analyses spatial differences in volatility across regional rice markets in Pakistan from 1994 to 2011, and also draws comparison of volatility with the international market. ARCH-LM tests are applied to check the presence of volatility and volatility clustering is found in all the markets. Tests for equality of variance and dynamic conditional correlations (DCC) GARCH model are employed to analyse the spatial differences across the regional rice markets of Pakistan. The results indicate the presence of spatial differences in volatility. Positive conditional correlations in the dynamic conditional correlations (DCC) GARCH model are found which indicate positive association of volatility across markets. Spatial differences in volatility and its persistence reflect the differences in market forces, infrastructure and information flow which leads to varying degree of risk across markets and some regions are exposed to higher risk. The study found out that Hyderabad and Sukkur are the most volatile markets and their volatility levels are highly persistent and require highest time to return to its long-term mean which makes them the riskiest rice markets. Investments in infrastructure, particularly in transportation and controlling the market power of middlemen may reduce price risk across markets particularly in the most risky markets. JEL Classification: C22, C32, Q11, Q13, Q18 Keywords: Rice Prices Volatility, Regional Markets, Pakistan. DCC-GARCH-models
Pulses are rich source of protein and linked to countless positive impacts on human health as well as plant health because these are the nitrogen fixing crops. Likewise, pulses centric meal are widely adopted as better source to overcome severe acute malnutrition. In Pakistan, decreasing trend in production and continuous rise in pulses prices reduced the economic access of the people particularly of people falling under poverty to pulses. Pulses are grown in the rain-fed areas in Pakistan. The unusual rainfall highly affects pulses crop and climatic conditions; therefore, farmers have a high risk of getting attractive prices consistently. Marketing of Pulses is mainly in private hands and farmers usually sell to village dealer without any value addition after harvesting. This research is designed to identify the constraints and opportunities for enhancing pulses production and value chain development in Pakistan through employing Delphi Approach. The results revealed that lack of availability of improved varieties/good quality seeds of pulses is identified as the most critical barrier in increasing the production and cropped area under the pulses. In addition, no policy support from the government, poor marketing, and no value chain existence resulting in low prices received by the farmer are also considered a source of the decline farmers' interest in the pulses. The findings of this study highlighted that development of pest, disease, and climate change-resistant varieties and development of competitive pulses value chains could play vital role in making Pakistan self-sufficient in the pulses. The findings identified here the important set of barriers and opportunities for the industry and policymakers. Hence these indicators should help farmers and relevant stakeholders to monitor pulses production sustainability and guide decision makers to make appropriate policies for pulses sector in Pakistan.
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