Economic analysis of domestic and international food prices during WTO regime: Effects on Indian crop planning, production, poverty, inflation, and trade

Abstract

Prices can distress small and marginal farmers adversely by affecting their farm returns and affordability in agriculture. Price, a competitive weapon, helps to exploit opportunities and decides the profit of all business in the market. This study is a domestic and foreign market-based research study. The study period is from 1990–91 to 2017–18. Compound annual growth rate (CAGR), instability index, Terms of Trade (TOT), price elasticity, and regression analysis were employed to estimate the results of the study. The study found that the area and production of cereals, pulses, and oilseeds have been increasing except sorghum, groundnut, and sunflower since 1990–91 to 2017–18. TOT was favored for Indian wheat, sorghum, gram, groundnut, soybean, and sunflower with other nations. Export quantity of rice, groundnut, and sunflower; export price of rice and sunflower; import quantity of arhar; and import price of sorghum were found to be stable. The rice, wheat, gram, groundnut, soybean, and sunflower export price elasticities were marginally greater than their imports. In case of agricultural commodities, area would be increased by increasing minimum support price (MSP) of arhar and moong; domestic price of sunflower; export price of groundnut and sunflower; and import price of sunflower and soybean. But the same was increased by decreasing the MSP of soybean; sorghum export price; and domestic price and import price of groundnut. Production was increased by increasing MSP of rice, wheat, maize, arhar, and moong; export and import quantity of gram; export price of wheat and soybean; and import price of sunflower and soybean. But the same was increased by decreasing the MSP of sunflower and export price of sorghum. Total agricultural exports were increased by increasing the rice, wheat, maize, moong, and soybean production; export quantity of gram and sunflower; export price of rice, sorghum, gram, groundnut, sunflower, and soybean; and trade balance of sunflower. The same was increased by lessening the sorghum and sunflower production; export quantity of arhar and groundnut; and trade balance of arhar and groundnut. Total agricultural imports increased by increasing the rice, wheat, maize, arhar, moong, and soybean production; import quantity of gram, sunflower, and soybean; import price of gram and moong; and trade balance of rice, gram, groundnut, sunflower, and soybean. The same was reduced by reducing the sunflower production. Poverty would be reduced by increasing the rice, wheat, maize, gram, and soybean production; export price of rice, sorghum, gram, sunflower, and soybean; and trade balance of sunflower and soybean. The same was reduced by decreasing the sunflower production and trade balance of maize, sorghum, and arhar. Inflation would be increased by increasing the production of gram; export price of rice, wheat, moong, and groundnut; import price of arhar; and trade balance of gram and also by reducing the maize production and MSP of rice, gram, and groundnut. Consumer price general index would be increased by increasing the domestic prices of wheat, maize, sorghum, moong, groundnut, and soybean; and MSP of wheat, maize, sorghum, arhar, moong, groundnut, and sunflower. The same was increased by diminishing the international prices except maize; import price of sorghum and sunflower; and producer price index of sorghum and soybean. Consumer price food index would be improved by raising the domestic price of groundnut and by diminishing the international prices; MSP and import price of soybean; and producer price index of groundnut. The study findings have important inferences to be considered in designing agricultural price policies and schemes to protect domestic producers, to boost exports and foreign earnings of agricultural commodities in India. The study guides producers, exporters, and importers for price signals of agricultural commodities in the market.