Agricultural Research Management Information System

Home
Research Summary
Search
About Us
- ARMIS
- Brochure
Contact Us
Report
User Request
Data Input
Help
- Operation Manual
  - PDF
  - Video
- Program Area & Commodity
We have reached 37600 number of research entries at this moment.

- Logout

Research Detail

Home
Research
Detail

Relationship Between Production and Price of Garlic in Bangladesh: an Analysis by Using Distributed Lag Model

Md. K. Hasan
Senior Scientific Officer
Spices Research Centre, Bangladesh Agricultural Research Institute, Shibgonj, Bogura, Bangladesh

K. M. Khalequzzaman
Principal Scientific Officer (Plant Pathology)
Spices Research Centre (SRC), Bangladesh Agricultural Research Institute (BARI), Shibganj, Bogura, Bangladesh

Abstract/ Executive Summary:

The study was conducted to aim at the relationship between production and price of garlic in Bangladesh. The experiment was carried out by using garlic production and prices data from Bangladesh Bureau of Statistics (during 1974-2011). The Koyck model of distributed lag models was used. According to the results, garlic production in Bangladesh has been influenced by the lag value of average price formed in the market. The most striking result of the study is the time required for the changes in the garlic prices in Bangladesh to an effect on garlic production of 32.33 years. This result also shows that the farmers are very enthusiastic for growing this crop, which is largely grown as a major spice crop. The value of coefficient indicated that the changes in lag values of the prices had a positive influence on production, but this influence was getting smaller. To reduce the risk and uncertainty of the price of garlic, sustainable garlic farming and establishment of an efficient marketing organization is necessary.

Keywords: Garlic, Garlic prices, Distributed lag model, Koyck model

Location: The experiment was carried out by using garlic production and prices data from Bangladesh Bureau of Statistics (during 1974-2011) and Spices Research Centre, BARI, Shibganj, Bogura.

Start Date: 00-00-2010

End Date: 00-00-2011

Program Area: Socio-economic and Policy

Non-commodity: Cost of production

Objectives:

To study the relationship between production amount and price of garlic which is a staple spices to a large extent in Bangladesh by using Koyck model.

Methodology:

Distributed lag models has a special place in literature of economics in that they can allow the analyzing the behaviors of economical units (consumer, producers, etc.) based on appropriate dynamic models. This model is studied and used for the first time by Irving Fisher (Isyar, 1999), taking the distributed lag models into account not only the present year value but also the previous year values of defining variable. If how far back into the past will be gone for defining variable is not described, this is called an “infinite lag model”. Unknown parameters in distributed lag models (α, α0, …, α k) can be estimated using the classical least squares method (Alt, 1942; Tinbergen, 1949). Model-specific estimates in distributed lag models have certain drawbacks (Gujarati, 2005). One is the lack of a pre-information in the model about the length of lag period. Another is a data set that can estimate the lag period is not set up, degree of freedom is increasingly decreased in statistical significance tests of parameters. Yet another, but the most significant, drawback variables decided as defining variables are in a multiple linear relationships. In order to overcome the above mentioned drawbacks, we used the distributed lag model developed by Koyck (1954). Based on the assumption that lags in independent variable affect the dependent variable to some extent and the weight of these lags decrease geometrically, model is reduced and thus made to estimate the regression equation (Dikmen, 2005). In the Koyck model, a sensible range for λ would be the interval between 0 and 1. One possibility, involving the entire distribution over λconsider the class of “sup test statistics”, corresponding to the highest value of the original test statistic within the range for α. This approach is advocated by Davies (1987), Hansen (1996) and Carrasco (2002). βk is the lag coefficient. Lag coefficient βk varies by λ as well as by β0. The closer λ to 1, the less the decrease in βk. On the other hand, the closer λ to zero, the greater the decrease in βk (Gujarati, 2005). In other words, λ values close to 1 mean that values of defining variables in remote past have a significant effect on dependent variable, and λ values close to zero mean that values of the defining variable in the remote past rapidly lose their effects of dependent variable. Mean lag number is the weighted average of all lags and is calculated for Koyck model.

The procedure explained above is known as Koyck transformation. Equation (9) is described as Koyck model. In Koyck model, variables that consist of lag values of defining variables are not defined. Thus, multiple relationship problems are in a sense solved. On the other hand, while infinitely distributed lag model is necessary to predict infinite number of β using α, Koyck model distributed lag model can be resolved only through estimating α, β0 and λ.

Source of Information: Bull. Inst. Trop. Agr., Kyushu Univ. 38: 31-38, 2015

Article Link (Online Journal):

Funding Source:

1. Government

Budget:

Total Budget (Tk.) :

Achievement/Findings:

For the garlic crop, it is necessary to conduct a contract based production system. Policies are needed to be developed for efficient, profitable and sustainable garlic farming. Thus, price uncertainties that the producers face can be overcome, and contribution of this major spice crop to national economy can be increased.

Knowledge Management: Journal