Abstract
The majority of the vegetables moving through traditional supply chains pass via Dambulla Dedicated Economic Centre (DDEC), which is the main wholesale market in Sri Lanka, to the regional markets. With the COVID-19 pandemic, the Sri Lankan government implemented several measures to keep vegetable markets of the country integrated. The objective of this study was to examine the degree of market integration of nine regional wholesale vegetable markets with DDEC in Sri Lanka during the COVID-19 pandemic. Pairwise comparisons between vegetable prices at DDEC and regional markets were done using Engle- Granger Co-integration test to achieve this objective. The analysis was carried out in the first differenced form, which conformed to the Augmented Dickey-Fuller (ADF) tests of stationarity. Short-run price disequilibrium was tested using Vector Auto-Regression Model (VAR) and Vector Error Correction Model (VECM). Weekly wholesale prices of beans, carrot, tomato, and brinjal markets during 2018-2021 were used for the analysis. The results revealed that only bean markets in Dehiaththakandiya, Thambuttegama, Nuwara Eliya, Meegoda, and Colombo wholesale vegetable markets depicted cointegrated behaviour with DDEC during the COVID-19 period. None of the other vegetable markets were integrated spatially with DDEC during the COVID-19 period. Before the pandemic, except in Ampara, Colombo and Dehiaththakandiya regional markets, all the other regional markets for beans, carrot, tomato, and brinjal were spatially integrated with DDEC either long run or short run. In conclusion, despite various government interventions to keep the vegetable market channels smoothly and consistently, the COVID-19 has negatively affected on price transmission of the vegetable marketing system of the country.
Highlights
Agricultural markets play an essential role in economic development, especially income generation, alleviation of poverty, and ensuring food security in rural areas
The results from the Augmented Dickey-Fuller (ADF) tests for the four types of vegetables for the period of COVID-19 are presented in Supplementary Tables S1 – S2
Market integration peak periods and off-peak periods could be examined by running separate Vector Error Correction Model (VECM) models for a year for each vegetable
Summary
Agricultural markets play an essential role in economic development, especially income generation, alleviation of poverty, and ensuring food security in rural areas. Wholesale vegetable markets are places where primary producers, collectors, commission agents, vendors, and consumers meet each other to make market transactions. They serve as key distribution hubs for most of the agri-food supply chains. The Dambulla Dedicated Economic Centre (DDEC), the leading wholesale vegetable market of Sri Lanka, was disrupted owing to the health regulations imposed by the government of Sri Lanka during the pandemic. To mitigate disruptions in the food-supply chains caused by the health regulations imposed to combat COVID-19, the government took immediate actions to purchase vegetables from vulnerable farmers and allowed vegetable transportation all over the country (Rajeevan, 2021; IPS, 2021), intending to keep the vegetable markets integrated
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