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Decomposition of Time-series Components of Wheat Prices in Major Growing Areas of Bangladesh

M.A. Matin
SSO
Agricultural Economics Division, Bangladesh Agricultural Research Institute, Gazipur-170 I, Bangladesh

Md. Ali Akbar
Professor
Dept. of Cooperation and Marketing, Bangladesh Agricultural University, Mymensingh-2202, Bangladesh

M.R. Karim
SSO
Agricultural Economics Division, Bangladesh Agricultural Research Institute, Gazipur-1701, Bangladesh

M.A.Monayem Miah
SO
Agricultural Economics Division, Bangladesh Agricultural Research Institute, Gazipur-170 l , Bangladesh

Abstract/ Executive Summary:

The study was conducted to assess the trend, cyclical, irregular and seasonal components of wheat prices in selected areas of Bangladesh during the last decades. The trend of real prices of wheat in the study areas was moving upward during the study period. The analysis showed that there was no cycle of uniform period in wheat price in Bangladesh due to continuous price fluctuation in every year. The extent of cyclical fluctuations of prices was the highest for Rajshahi followed by Rangpur, Pabna and Dinajpur. In the case of irregular fluctuations, the highest peak prices were observed in 1997/98 and the second highest peak prices in 1983/84. In 1984/85, the costs of fertilizer and irrigation were increased for gradual withdrawal of subsides resulting higher fluctuation in wheat areas. The extent of irregular fluctuations was highest for Dinajpur followed by Rangpur, Pabna and Rajshahi. The coefficient of variation of seasonal price indices ranged from 5.735% to 7.263%. This variation was the lowest in Rajshahi and the highest in Pabna. The lowest variation was attributed to the continuous supply of wheat from home and abroad that kept the price more stable compared to other areas.

Keywords: Decomposition, Components, Wheat, Major gorwing areas.

Location: Rangpur, Dinajpur, Rajshahi and Pabna.

Start Date: 00-01-1992

End Date: 00-12-1999

Program Area: Socio-economic and Policy

Commodity: Wheat

Objectives:

To store their produces for a longer time for accruing fair prices.
To study farm level price behavior to judge the economic feasibility of wheat in Bangladesh.
To analyse the price behaviour (i.e. trend, seasonal, and irregular), and the existence of wheat price cycles in Bangladesh.

Methodology:

In the present study harvest prices of wheat was taken for analysis. Harvest prices were farm gate prices of the farmers during harvest time which were taken into consideration for the reason that wholesale and retail prices would not reflect what the farmers actually received, because they were set at a considerably higher level (covering cost of storage and risk) than what the farmer's would get. Moreover, bulk of the agricultural products was marketed during the harvest or post harvest period. So, harvest prices were thought to be the most relevant prices for the producer farmer's. Harvest prices of wheat have been deflated. Boro harvest prices to get the prices in real terms (disentangling inflationary price increases). hypothesis, the components are assumed to be linked in an additive fashion. In this work, multiplicative hypothesis was chosen for greater acceptance. Three year moving average of wheat price was calculated by the following formula which contained both trend and irregular components (i,e,. MAt = T x I). Three-year moving average equals sum of first, second, and third year's wheat prices divided by three and so running for the next observations. market relation (moving in the same direction) in product price movements, but also provides a measure of extent of linkage in price movements, explained by high magnitude of correlation coefficients. The correlation coefficients among monthly prices of secondary markets for the year January 1982 to December 1999 were computed. During the period wheat (flour) prices are linked in Dinajpur- Pabna, Dinajpur- Rajshahi, and Dinajpur- Rangpur markets appear highly linked, i.e the coefficient values are more than 0.80. Therefore Dinajpur, Pabna, Rajshshi and Rangpur markets are integrated to each other.

Source of Information: Bangladesh Journal of Agriculture, pp: 77-90, Vol: (29 & 30), (2004 & 2005), ISSN: 0253-5408

Article Link (Online Journal):

Funding Source:

1.

Budget:

Total Budget (Tk.) :

Achievement/Findings:

Storage is necessary, at the village site to check the tendency of immediate post-harvest sale by the farmers, and at the market level. So that the various marketing functions may be performed and advantage may be taken of for any price rise. Thus development of storage facilities can be a great help in preventing violent seasonal variation in price in the short run as well as in the long run. The analysis shows instability of wheat price which leads to income instability for the producer. For stabilizing price, the government may announce some support price programme under which may be purchased at the previously announced fixed prices directly from the producers. Unwanted price fluctuation of wheat/flour should be reduced by the Government. Generally, at the harvesting period there prevailed lowest prices of wheat. So the government should increase direct purchase from farmers and as well as from temporary purchasing centre. Storage facility should be opened at rural areas during the harvesting period. Development of storage facility can be of great help in preventing unwanted price fluctuation of wheat.

Knowledge Management: Journal