Trend and Volatility in Wheat, Rice and Cotton Prices

Abstract

The objective of the present study is to examine the price trends and volatility in agricultural commodities mainly wheat, rice and cotton. It has observed that international prices of agricultural commodities are highly volatile and are characterized by cyclical variations. Among these, prices of food grains and cotton have fluctuated around a static mean. However, due to WTO commitments, domestic produces can’t be protected from international price shocks. If such shocks are transmitted to farm level, it would destabilize the crop pattern and supply. Since vast majority of the Indian farmers is either small or marginal, they do not have resources and capabilities to change their cropping patterns in a short period as necessitated by the change in international prices. Since under WTO obligations, temporary imports and price shocks can’t be checked, there is need to develop mechanism to regulate the unwanted imports and exports.