TESTING MARKET INTEGRATION OF LEADING CROPS IN BANGLADESH

This is a study of functioning of selected commodity markets in terms of price relationship to each other. Spatial price integration has been assessed for crops viz. Aman (HYV), Boro (HYV), wheat, mustard and lentil in selected districts firstly, by one to one correlation matrix and secondly by the Augmented Dickey-Fuller co-integration test. District-wise market prices of the crops were collected from the Department of Agricultural Marketing (DAM) for the period of 1986-2005. Aman HYV markets were well integrated but the Boro HYV markets were not well integrated. Wheat markets were not all (48 percent) interdependent in price formations but peak prices season flour markets became largely integrated. Out of 21 paired markets, only 7 paired markets were integrated for unprocessed lentil and 10 paired markets were integrated after processing. Seventeen market pairs are significantly correlated during harvest season of mustard (whole). And all the correlation coefficients appeared significant for mustard oil. Markets were more inter-linked during the period of scarcity and more integrated for processed primary products. Level of market integration has improved than any time before the study period. Integrated markets in general imply policy formulation at macro level will be effective throughout all trading markets. But extent of market integration of the same commodity during harvest time and pre-harvest season and segmented any particular region has to be taken into consideration for fine tuning of agricultural policies attaining more success