Price Trends and Volatility in Tea, Coffee and Sugar

Abstract

The present study has an attempt to examine the price trends and volatility in agricultural commodities mainly tea, coffee and sugar. International prices of agricultural commodities are characterized by high volatility, which is a crucial factor for trade policy and strategy. If the shocks due to high volatility in international prices are transmitted to domestic market, it would destabilize cropping pattern and supply. Such volatility would cause uncertainty in farmer’s income. Indian farmers are either small or marginal and they do not have resources and capability to move from one kind of cropping pattern to another kind year after year. As a conclusion, it has observed that international prices of agricultural commodities are highly volatile and are characterized by cyclical variations. While domestic producers should be subjected to compete with stable level of international prices to improve efficiency, they need to be protected against volatility.