Market arrival of apples under risk in Jammu & Kashmir, India: evidence from an ARDL application

Abstract

PurposeThe purpose of this paper is to examine the market response of apple growers to price and price risk along with weather factors and weather risk in the state of Jammu & Kashmir. In other words, it tries to find the both short-run and long-run price elasticities of apples' market arrival and also the elasticity with respect to price-risk and weather-risk variables.Design/methodology/approachThis paper uses the bound test approach of “auto-regressive distributed lag” (ARDL) model. Monthly data on market arrival of apples and respective prices along with other nonprice factors are used.FindingsThe bound test approach of ARDL confirms the existence of long-run relationship between the market arrival of apples and price and nonprice factors. The market response to price is found to be inelastic both in shortrun and longrun. The risk coefficients are negative indicating that apple growers are risk averse. However, they do respond strongly to weather risk than price risk.Research limitations/implicationsWeather insurance must be provided to the apple growers to safeguard their production loss due to weather risks. Proper infrastructure in the form of storage facilities, marketing information, transport and communication to local markets should be provided to them. Unavailability of data at the district level poses a great difficulty to have a panel data analysis. But future research can be initiated to bridge this gap.Originality/valueThis paper considers the market response of apple growers under both price risk and weather risk which is first in its nature. The authors have not found any other paper discussing this in the case of apple in India.