India's horticulture sector - A port- level analysis of onion export pricing

Abstract

Extending the traditional model of agricultural pricing behaviour and market structure with the constructed commodity specific export weighted exchange rates, this paper analyses the exchange rate induced market power, asymmetric effects of exchange rate, country specific discrimination as well as the impact of government’s minimum export price policy on the export prices of Indian onion exporters using port-level data. Onion price escalation has been seen to cause tears not only in the kitchen but tumble governments. Although this study observes a competitive market structure in majority of the destination market, however, the pricing-to-market behaviour was prevalent in three destination markets where the exporters were following local currency stabilization. Furthermore, minimum export price policy variable showed that even when the minimum export price requirement was in place, exporters were able to adjust their price downward and sell in those markets.