A study on the price instability and price behaviour of rice in Andhra Pradesh

Remunerative and stable price for any agricultural produce plays a crucial role in increasing its production. India has the largest area under rice crop and ranks second in production next to China. Among the states, Andhra Pradesh is known as the “Rice Bowl of India”. Price fluctuations in rice are thus a major concern, particularly in a state like Andhra Pradesh where rice occupies a prominent place under total cropped area and is the major staple foodgrain crop. Therefore, the present study has been undertaken with the objective of examining the price behavior of rice in Andhra Pradesh in order to provide valuable information about the different components of the price and their interplay. Data were collected on annual and monthly average wholesale prices for a period of 20 years from 1990–91 to 2009–10. Price instability was determined using Coppock's Instability Index and was found to be11.96 per cent during the study period. The analysis of trend in the prices was determined using ordinary least squares (OLS) method and shows a significant rise in the price of rice during the period of study. The seasonal pattern in prices was analyzed using percentage centered 12-months moving average method. The highest seasonal price indices were observed from October to December and the lowest during January. The cyclical and irregular components in the prices were worked out using moving average method. Three year price cycle was observed for rice.