in. ofAgri. Econ.

Vol. 53. No. 3. July-Sppt. 1998

Impacts of Co-operative on Market Structure and Prices:

The Case of Central Arecanut and Cocoa Marketing and
Processing Co-operative (CAMPCO) Ltd., Karnataka
T.N.Prakash,* Shrijay Devaraj Urst and Lalith Achotht

lisTIRODUCTION

Arecanut (Arecanut catechu L.) is a common masticator nut,

using which supari or beeda is
prepared in .India. Karnataka is a major producing state contt;b
uting to nearly 44 per cent of the
production in the country. The state has got a long history of
co-operative experimentation in the
field of arecanut when compared to other crops and other states
in India. The majority of the arecanut
growers are small and marginal farmers and their'farms are situate
d in isolated areas in the Western
Ghats regions of Karnataka. Storage of such a high valued produc
e like arecanut necessitated proper
security arrangements. The production of arecanut is concentrated
-in a few regions and the con-
sumption is spread all over the country. This situation gives scope
for the overplay of middlemen
and moneylenders. The arecanut farmers,especially those belong
ing to the upper castes, who felt the
dearth of resources for cultivation were disinclined to borrow money
from private sources as they
considered this as an insult to their prestige during earlier days.
/3.11 these problems compelled the
farmers to think of an institutional innovation in the form of a co-oper
ative in the field of arecanut
marketing. As a result, many co-operative arecanut marketing societies
were established at different
parts of the then old Mysore state to Supply credit, inputs, storage
and other market services to
arecanut farmers.
When there was a sudden crash in the prices of arecanut and the situati
on became worse during
the end of 1972, the Government of Karnataka in association with
the Government of Kerala ven-
tured to establish the Central Arecanut and Cocoa Marketing and Process
ing Co-operative(CAMPCO)
Ltd. The CAMPCO's headquarter is situated in Mangalore and it has
the mandate to reduce fluctua-
tions in arecanut prices and create a market condition which ensures
remunerative price for the
growers. Its main activities include procurement, sale and processing
of arecanut and cocoa, ad-
vancement of loan and essential inputs to the members, regulation of arecanu
t trade and promotion
of research in production, processing and marketing of arecanut.
The presence and performance of a marketing co-operative like CAMPCO
could exercise 'inter-
vention effecfs' of various-forms on the structure, conduct and performance
of the marketing system.
* Assistant Professor of Agricultural Economics, t Associate Professo
r of Dairy Economics. University of
Agricultural Sciences, Bangalore-560 065 and Professor of Agricult
ural Marketing, Institute of Development
Studies, University of Mysore, Mysore-570 006.
The paper forms part of the Ph.D. dissertation work of the first author entitled
An Evaluation of Arecanut Co-
operative Marketing System in Karnataka, submitted to University of Mysore
during 1997.
 INDIAN JOURNAL OF AGRICULTURAL ECONOMICS
334

alternative market
Helmberger(1964) made a theoretical analysis of co-operative marketing under
es in the determination
set-up and the interaction between the co-operatives and the private enterpris
dimensio n of market structure
of market performance. Recognition of co-operative enterprise as a
y worth analysing . Sexton
gives rise to a myriad of possible structural cases that are potentiall
will have a pre-competi tive
(1990), on the other hand, argues that the presence of a co-operative
'yardstic k of competiti ve effect'.
effect on the behaviour of other private firms, which he calls as the
effect depends on factors
He opines that the existence and the magnitude of the pre-competitive
ive membersh ip, pricing policy
such as the competitive relations among the other firms, co-operat
nd, the paper makes an attempt to
and the quantity handled by the co-operative. In this backgrou
arecanut market and on the growth and
analyse the impacts of the CAMPCO Ltd. on the structure of
structure is interprete d to mean all those
stability in the prices of arecanut in Karnataka. Market
to influence the composit ion, competi-
characteristics of the organisation of the market that seem
of the market was
tiveness and nature of pricing within the market(Bhide et al., 1981). The structure
concentra tion and o on.
studied indirectly through the behaviour of arrivals, prices,

II

MEITHODOLOGY AND DATABASE

in the country,
The Mangalore market, one of the major and oldest arecanut marketing centres
market handles almost 35 per cent of the total productio n in the
is considered for the study. This
direct purchase of arecanut mainly through the South Kanara
state. The CAMPCO Ltd. makes
Marketin g Society (SKACM S), another commissi on agent marketing
Agriculturists' Co-operative
the market take
co-operative society operating in Mangalore. Nearly 25 per cent of the total sales in
. Open auction, tender and open agreemen t systems are the main features
place through the SKACMS
main types of arecanut which come to Mangalor e market are choll, new supari
in the market. The
and koka.
below:
The data and analytical techniques employed in the study are briefly described
monthly data on
1. To study the impact of CAMPCO on the competitiveness in the market,
their share in the
arrival, prices and sale of arecanut along with the market intermediaries and
is used to measure the
SKACMS for the year 1993-94 are considered. The Hirschman's index (HI)
concentration in the market.

Quantity handled by the i-th intermediaries

Hirschman's Index = E pi where. Pi =

(HI) i=1 Total quantity handled by all intermediaries

n of a more
The values of HI would vary between 0 and 1; a value nearer to zero is an indicatio
equal purchasing pattern by the different categories of market intermediaries.
of arecanut
2. To study the presence of CAMPCO and its intervention effects on the growth
PCO decade (1964 to 1973),
prices, the analysis of data is done covering three periods: pre-CAM
 AGRICULTURAL MARKETING: ISSUES AND CHALLENGES 335

CAMPCO decade(1974 to 1983)and CAMPCO consolidation deca& (1984 to 1994). The growth
in the arrival and prices (both nominal and real) is analysed separately with the help of exponential
growth function of the form;Y = ab,Y = abt, where Y = the variable under study, a = constant, b =
regression coefficient, t= time(years or months).The 'b' value in the above function is used to derive
the compound growth rate(r)as r =(b-1)X 100. Annual 'real' price series was estimated by dividing
the nominal prices with the annual 'All India whole price index numbers'. For the analysis of
stability or otherwise in the economy, two measures of variability, namely, the standard deviation
(SD)and the coefficient of variation(cV)in the price series are used.
3. To study the impact of CAMPCO on structural change in arecanut prices, 30 years monthly
average prices of arecanut from 1964 is used. A change in the structure of prices is determined based
on a change in its direction due to time. Structural change is measured through a change in the.'b'
coefficient of the trend equation. To capture the change in the parameters and thus in the structure of
the market series, dummy variable technique has been used to capture the difference in growth
during different periods (decades). The dummy variable technique segregates the prices into three
periods, for which two dummy- variables for slope and two for intercept have been included. The
form of the model is:
Y = a + b,t + b2D1 + b3D2 + t Di + bst Dr where
Y is the series (average price/qtl) under study, t is trend (months 1, 2, 3, ..., n) variable.
D,is the dummy variable for intercept, as 1 = CAMPCO decade,0= otherwise.
D2 is another dummy variable for intercept, as 1 = CAMPCO consdlidation decade,0 = other-
wise.
t D,is dummy variable for slope during the CAMPCO decade, which is obtained by multiplying
the trend variable with the dummy variable Di.
t D2 is dummy variable for the slope for CAMPCO consolidation decade, which is obtained by
multiplying the trend variable with dummy variable D2.
The growth function for the three periods derived from the above function are as follows:
Pre-CAMPCO period:Y= a + bit
CAMPCO decade:Y=(a + b2)+(bi + b4)t
CAMPCO consolidation decade: Y=(a + b3)+(bi + b5)t
4. To study the possible type of relationship that may exist between CAMPCO's procurement
and market price of arecanut, one year daily data from May 1993 .to March 1994 was.used. The
proposed methodology is to estimate whether 'leader-follower' relationship between CAMPCO
price/quantity and market prices of arecanut exists by using the concept of 'Granger casualty'
(Granger 1969). The ARIMA model as developed by Box and Jenkin (1970) is used to 'filter' the
series to remove and make the series free from all the 'explainable variations' like trend, cycle and
seasonal Components. Three types of relationships were identified, viz., causation, price leadership
and independence.
5. Multiple regression model of the following type is employed to study the magnitude and
direction of the impacts of CAMPCO's procurement price as well as quantity and other factors on the
market prices of arecanut.
Y = a + biX,+ b2X2 + b3X3 + + bnXn, where Y is independent variable, i.e., market price of
arecanut,
336 INDIAN JOURNAL OF AGRICULTURAL ECONOMICS

are regression coeffi-

.... X., are explanatory variables such as CAMPCO price, and b and b,
cients.

III

RESULTS AND DISCUSSION

Ltd. on arecanut market

The results and discussion which highlight the_impacts of CAMPCO
structure and prices are presented below:

A. Impact ofthe CAMPCO on Competitiveness in the Market

concentration in the
Competitiveness in general is measured as the number of traders and their
the CAMPC O and the SKACM S, there are nearly
buying. In addition to two major co-operatives,
485 exporter s, 162 processo rs and 175 small
700 private arecanut buyers, 100 commission agents,
For the purpose of analysis , one year's(1993 -94)monthly
merchants operating in Mangalore market.
were consider ed. Monthwi se arrivals, prices and sale in
data on purchase, sale and prices of arecanut
to the competit iveness in the arecanut marketi ng are given in
SKACMS and the results pertaining
Table I.
, nearly 23 per cent of
Out of the total arrivals of 2.68 lakh quintals of arecanut during 1993-94
SKACM S. Around 50 per cent came during the first five
the market arrivals was so.ld through
arrivals that was sold at SKACM S was the highest during the
months. The proportion of market
and the lowest in the month of July (16 per cent). The CAMPCO's
month of April (34 per cent)
during 1993-94. This may
purchase of arecanut at SKACMS was around 15 per cent of the arrivals
(a) the CAMPCO stood first in
not be very substantial, but the important points to be noted are:
maximum purchase(24 per
purchase and as the largest buyer in nine out of 12 months.(b)It made the
(c) When the prices were
cent of the total arrivals) during the highest arrival month, i.e., March.
, when the market prices of
increasing, the CAMPCO was slowly reducing its purchase. For instance
CAMPCO's purchase was
arecanut was highest (Rs. 7,378 per quintal in the month of August), the
by CAMPCO in the direc-
the lowest. All these speak of the judicious procurement policy pursued
tion of stabilising the arecanut market in Karnataka.
in the market is the total
Another criterion normally employed to measure the concentration
50 per cent in 11 months during
purchase by the top five traders. This was well within the range of
on of competitiveness and not
1993-94 and 34 per cent for the whole year. This gives a broad indicati
of lowest arrival (i.e. November), total
concentration of purchase at SKACMS. During the month
per cent). Surprisi ngly, during the month of the
purchase by the top traders was the highest (46
O and the top five traders were below their
lowest price (i.e., July), purchases by both CAMPC
that other small category traders took the lead in purchase
respective annual averages. This indicates
and thus they were allowed to reap the benefits of de-
during the downward tendencies in prices
creased prices.
 TABLE I. COMPETITIVENESS IN MARKEIING OF ARECANUT AT SKACMS,MANGADORE

Months Total of
Sr. No.Particulars Jan. Feb. Mar. April May June July August Sept. Oct. Nov. Dec. 1994
(1) (2) (3) (4) (5) (6) (7) (8) (9) (10) (11) (12) (13) (14) (15)

NIJ2NJVLJ IVIlfIllf1D1110V
1. Arrivals(qt1) 28966 28648 31039 29775 25584 21849 21903 14510 18826 15357 13490 18061 268008
2. • %to annual arrival 10.81 10.69 -11.58 11.11 9.55 8.15 8.17 5.41 7.02 5.73 5.03 6.75 100
3. Price(Rs./qt1) 6122 5696 5938 5758 5556 5376 5092 7378 6078 6418 6018 6052 5957
4. Sales at 5283 7045 5792 10163 6317 5784 3518 3489 3534 3591 3280 3255 61051
SKACMS (qt1)
5. Per cent of sales
to arrivals 18.24 24.60 18.66 34.13 24.70 26.47 16.10 24.04 18.80 23.38 24.31 18.02 22.78
6. Purchase by 935 1080 1398 1775 883 889 406 96 200 403 701 701 9467
CAMPCO (qtl)

Sa0N2TIVHD GNV SgfISSI

(a)in % 18 15 24 18 14 15 12 3 6 11 22 22 15
(b)% to market 9.85 11.41 14.73 18.75 9.33 9.39 4.29 1.00 2.11 4.26 7.40 7.41 100
arrival
7.• By top 5 traders(%) 28 33 40 35 30 32 27 27 46 25 46 35 34
8. No. of purchasers 106 103 91 98 92 94 86 105 92 99 98 82 96
9. CAMPCO's position I I I I I I I. IX IV
10. Hirschman's index
(a)With
CAMPCO 0.237 0.217 • 0.337 0.245 0.211 0.222 0.195 0.161 0.26 0.184 0.37 0.288 0.244
(b)Without 0.156 0.171 0.248 0.179 0.169 0.173 0.162 0.159 0.255 0.152 .0.313 0.203 0.195
CAMPCO
338 INDIAN JOURNAL OF AGRICULTURAL ECONOMICS

B. Impact on Concentration in the Market

different
To measure the concentration of buyers at SKACMS,Hirschman's index (HI)during
e by CAMP CO varied from 0.16 to
months was calculated. The values of HI including the purchas
equitab le and competi tive buying
0.37 and this was 0.24 for the whole year. This implies near
of August the HI was the lowest,
pattern by the market intermediaries at SKACMS. In the month
a highest average monthly
implying more competitiveness in the market. This consequently led to
by CAMP CO as well as by top traders
price in 1993-94. As explained earlier, in August purchases
ng the purchas e of CAMPCO was 0.195
were the lowest. Hirschman's index calculated by excludi
traders in buying of arecanut at SKACMS.
which indicates further competitiveness among the private
Further details are given in Table I.

C. hnpact on Growth and Stability in Arecanut Prices

t prices, both in nominal
The impact of CAMPCO Ltd. on the growth and stability in arecanu
period into three decade s as: pre-CAMPCO(1964-
and real values, is analysed by dividing the total
CAMP CO consoli dation decade (1984-94). Average
73), CAMPCO decade (1974-83) and the
AMPCO decade was Rs. 629 per quintal and it was Rs.
nominal price of arecanut during the pre-C
have shown a declini ng trend, with a negativ e (but non-
403 per quintal in real terms. But, both
value during this decade. However,
significant) growth rate of-0.63 in nominal term and -6.88 in real
in the prices of arecanut.After the
the establishment ofCAMPCO had a marked impact on the growth
increasing trend. The average price
establishment of CAMPCO arecanut prices have shown an
increased to Rs. 1,097 per quintal
(nominal)of arecanut during the CAMPCO establishment decade
annum.The average !real' price of
with a positive and a significant growth rate of 10.15 per cent per
quintal) but registered a positive and
arecanut during the decade was much lower (Rs. 273 per
This implies an inflationary trend in the
significant growth rate of 2.93 per annum during the decade.
recent decade, the CAMPCO could consoli-
general price level during the CAMPCO decade. In the
t prices. The average price of arecanut
date its business and exercise a perceptible impact on arecanu
Rs. 3,663 per quintal with a high growth
during the CAMPCO consolidation decade increased to
nary effect, the real price of arecanut during
rate of 15.38 per cent. Even after removing the inflatio
growth of5.76 per cent per annum.(Table 2).
the consolidation decade has shown a good compound

D.Impact on the Structural Change in the Price Series

structural change in monthly average arecanut
The parameter values of the equation to study the
1964 is given below:
price in Mangalore market for a period of 30 years from
* -0.1121 T + 9.39 D T* + 47.19 D2T*
Price (Rs./qt1)= 589.94 -1270 D * -11508 D2
(625) (1.24) (1.89) (2.39)
(546) (296)
R2 = 0.85, * Significant at 5 per cent level.
but also a perceptible structural change in
Examination of the results indicates not only growth
of CAMPCO Ltd. There was an acceleration
the price of arecanut especially after the establishment
when compared to the first period in Mangalore
in the price of arecanut during the CAMPCO decade
 AGRICULTURAL MARKETING:ISSUES AND CHALLENGES 339

TABLE 2. GROWTH AND STABILITY IN PRICES(BOTH REAL AND NOMINAL)OF ARECANUT

DURING DIFFERENT PERIODS MANGAORE MARKET

Decade/Period Average Growth Standard Coefficient of

prices rate deviation variation
(Rs./qt1) (per cent) (Rs./qt1) (per cent)
(1) (2) (3) (4) (5)

Pre-CAMPCO (1964-73)
I. Nominal 629 -0.63 87.15 13.86
II. Real 403 -6.88* 97.55 24.21
CAMPCO (1974-83)
I. Nominal 1,097 10.15* 346.48 31.58
II. Real 273 2.93** 33.14 12.12
Consolidation(1984-94)
I. Nominal 3,663 15.38* 1,871.24 51.10
II. Real 393 5.76*** 110.57 28.14

Total period (1964-94)

I. Nominal 1,579 7.83* 768.29 32.18
II. Real 356 0.56 80.42 21.49
*, ** and *** Significant at 1, 5 and 10 per cent level respectively.

market. This was further increased during the CAMPCO consolidation decade. The increase in the
price was at the rate of Rs.9.39 per quintal per month during CAMPCO establishment decade which
rose sharply to Rs.47.19 per quintal per month during the consolidation decade. The 'b' coefficients
were highly significant and R2 values were also very high, indicating the adequacy of the models
fitted. These results have further reinforced the previous findings that the CAMPCO's market inter-
vention measures had a positive impact with a structural change on arecanut prices in Karnataka.

E. CAMPCO's Procurement and Market Prices

To study the possible type of relationship that may exist between CAMPCO's procurement and
market price of arecanut, one year daily data from May 1993 to April 1994 related to sales at
SKACMS were used. The proposed methodology is to estimate whether leader-follower relationship
between CAMPCO price/quantity and market prices of arecanut exists by employing ARIMA filter-
ing process and 'Granger casualty' test. The model fitted in this respect and the results are presented
below:
340 INDIAN JOURNAL OF AGRICULTURAL ECONOMICS

e,- 0.7319 ei.,

1. Cm = E1 - 0.1436 Co., ± 0.0682 Co.7 - 0.796
(1.375) (0.531) (14.746) (7.206)

2. Mpt= - 0.056 Mo., - 0.9046 Mpo - 0.754 e1.1 - 0.9 e1.7

(0.106) (0.093) (0.06) (0.046)

3. Cq1= E - 0.059 Cqt.., - 0.9046 e1.1 - 0.9238 e1.7

(0.6136) (29.036) (19.04)

= CAMPCO purchase quantity,

where Cpt = CAMPCO price, Mo = Market price, Cq,
, and figure s in parentheses are standard error values.
t = time periods(days),e = error terms
the moving average process, it is basically a
Since the coefficients are significant only for
term could be retained as it amounts to over-fit the
moving average_process. However,the remaining
model estimation. Cross correlation functions are
model which is an accepted procedure in ARIMA
between the series. The details are given below.
fitted in order to know the type of relationship
First, CAMPCO price and the market
CAMPCO price versus market price of arecanut:
the nature of relationship that exists between them.
prices of arecanut are cotrelated in order to know
by employing Box-Jenkins test. It indicated that
The results are examined for statistical significance
between the CAMPCO price and the market price of
there existed an 'interdependent' relationship
that CAMPCO price depends on market prices and
arecanut at SICACMS, Mangalore. This means
by taking the lead and lag periods separately for the
vice versa. Further, the same test was employed
significance between the lead (1 to 30) period as well
two series.- The test statistic has indicated the
the Box-Jenkins value was more at 18.45 for the lead
as for the lag (-1 to -30) periods. However,
d, suggesting a lead of small extent by CAMPCO price
period as compared to 16.85 for the lag perio
lore market.
over the market prices of arecanut in Manga
nut: A similar type of feedback relation-
CAMPCO quantity versus market price of areca
is between CAMPCO purchase quantity and the market
ship was noticed in cross-correlation analys
were significant for both the Jead and the lag periods, it
prices of arecanut. Though the test statistics
the CAMPCO's purchase quantity leads the market
was more for the lead period. This indicates that
ce or feedback or instantaneous relationship between
price of arecanut. This type of independen
ity) and the* market price of arecanut within the co-
CAMPCO's procurement price (and its quant
efficient relationship. This implies that both the
operative marketing structure is a healthy and
and employ the 'equivalent information' from each
CAMPCO and other private purchasers watch
expectations, so that a feedback relationship exists
other in forming the price or.quantity (purchase) in
has emerged as a price setter and guiding force
between them. In the process, the CAMPCO
arecanut marketing at Mangalore.
 AGRICULTURAL MARKETING: ISSUES AND CHALLENGES 341

E Impact of CAMPCO Procurement on Market Arecanut Prices

Some indications about the impact of CAMPCO's procurement on the market competitiveness
and prices of arecanut are given in the previous sections. In this section an attempt is made to
empirically measure the magnitude and direction of the impact of the above-mentioned factors on
the market prices of arecanut. For this purpose,daily market price of arecanut is taken as a dependent
variable and CAMPCO purchase price and quantity are taken as two major explanatory variables. In
addition, the number of traders, and the quantity handled per trader which represent the market
structure are also considered as other independent variables. Several models were tried to explain
the market prices of arecanut, and the results of the model which performed reasonably well are
reported in Table 3.

TABLE 3. FACTORS EXPLAINING THE MARKET PRICE OF ARECANUT

Dependent variable = Price of arecanut (Rs./quintal)
Sr. No. Explanatory variables 'b' values Standard error
(1) (2) (4)
(3)

Intercept term 2563.94 365.61

I. Total quantity marketed at SKACMS(in 65 kg bags) -0.2088 0.3877

at time 't'

2. CAMPCO's purchase price(Rs./quintal)at time t-1 0.0862* 0.0304

3. Quantity purchased (in bags) by CAMPCO at time t- 1 -2.0372* 0.82
4. Number of purchasers operated at SKACMs at time 't' 3.05 6.8947
5. Ratio of CAMPCO purchase to total marketed quantity -87.6596 167.18
at time t-1

6. Quantity purchased per trader at time 't' 2.023 6.4651

R'= 0.38
No. of observations = 192
* Significant at 1 per cent level.

The result confirms the positive impact of CAMPCO on arecanut market in Karnataka. The
CAMPCO's price lagged by one day has a significant and positive impact on the market prices of
arecanut at SKACMS,Mangalore. Every 100 rupees increase per quintal of arecanut in the purchase
price of CAMPCO on the previous day resulted in an increase of Rs. 9 in the market arecanut price
of the day. As noted in the previous section, the presence of a mutual feedback relationship between
the CAMPCO and other private traders and the leadership role played by CAMPCO in setting the
342 INDIAN JOURNAL OF AGRICULTURAL ECONOMICS

CAMPCO on the market prices

price of arecanut might have contributed for the positive impact of
of arecanut.
t but
Surprisingly, the lagged quantity of arecanut purchased by CAMPCQ had a significan
market price of arecanut. The magnitud e of decrease in market price was Rs.
negative impact on the
unit increase in CAMPCO 's previous day purchase. This indicates that
2 per quintal for every
of around 15 per cent of
CAMPCO enters the market to phase up the price through the bulk purchase
. When this objective is accompli shed the CAMPCO minimises the purchase
the arrivals at SKACMS
of prices to soften on the next day. In this backgrou nd it is necessary for the
resulting in a tendency
procurem ent policy carefully so that its bulk purchase must not have an
CAMPCO to execute its
adverse impact on the prices in the long run.
arrivals and withdrawing
At present the CAMPCO is purchasing more during the period of peak
This is evident from the data presented in Table
slowly during the off-season when arrivals are low.
d for nearly 54 per cent of the total annual
1. The first five high arrival months together accounte
prices show a declining trend during this period.
arrivals in the Mangalore market. Obviously, the
d heavily and has made almost 55 per cent
The CAMPCO,in order to stabilise the market,intervene
But when price was at the peak, i.e., during the
of its total annual purchase during these months.
its lowest purchase (just one per cent of its annual total). This
month of August, the CAMPCO made
policy followed by CAMPCO in the direction of stabilisin g the
speaks of the judicious procurement
for CAMPCO lies in its ability to take appropria te decisions
arecanut market. But the real test
its quantity intervention
regarding the 'extent' and proper period of its price interventions vis-a-vis
programme.
the expected
The other three explanatory variables.though non-significant have exhibited
s and the quantity handled per trader, which in a way represent the
signs. The number of purchaser
a positive impact on the market prices of arecanut. This is expected,
market structure, have exhibited
of these two variables implies increase in market competiti veness which
as the increase in the value
price positively . Finally, the ratio of CAMPCO purchase to total sales during
in turn influenced the
highlighting the
previous (lagged) period had a negative but non-significant impact on the price,
higher purchase by CAMPCO on market prices. The R2 value is moderate (0.38)
adverse impact of
and indicates the adequacy of the model fitted.

Iv
CONCWSIONS
could
Though the CAMPCO was not a dominant buyer in Mangalore market, its purchase
in the market. The presence and performa nce of CAMPCO could
induce a degree of competitiveness
e action' on the
prevent the concentration of buying among few dominant traders and any 'collusiv
number of
part of the market intermediaries. As per Lele (1971) and Bhide et al.(1981) the large
cent of the total registered traders in Mangalor e market) operating at
buyers (nearly 100 or 15 per
number of small and
SKACMS ruled out the possibility of any such collusive action. Similarly, large
the market (who purchase less than 20 bags per day and form nearly 42 per
medium purchasers in
market. Thus the co-
cent of the total buyers) reflects the condition of easy and free entry into the
competitive market. In
operative arecanut marketing system has fulfilled another vital feature.of a
a significant and positive
addition, it emerged as a 'leader' in the market and in turn could exercise
 AGRICULTURAL MARKETING:ISSUES AND CHALLENGES 343

impact on the'market prices. These results throw some evidence for Sexton's(1990)'pre-competitive
effects' ofCAMPCO in mitigating the potentially adverse implications of structural 'oligopsony' by
competing private purchasers.
The CAMPCO's performance in the market had a positive impact even in 'real' terms on the
prices of arecanut. This has resulted in higher incomes to the arecanut growers of Karnataka. In
addition, the CAMPCO could induce a structural change with an acceleration in the monthly prices
of arecanut. The CAMPCO's price influencing mechanism was effective in this regard compared to
its intervention through procurement quantity. In this respect the CAMPCO has to execute its
'procurement policy very carefully; it is like using a double edged knife. As an enterprise it has to
make sufficient transactions so as to run the business efficiently. While doing so, it is supposed to
give remunerative price and a fair deal to the grower members. On the other hand, as an integral part
of the entire marketing system, it has the responsibility to ensure the stability of the arecanut
economy. For this purpose, it has to intervene and influence the market through its procurement
programmes so as to assure high and stable prices of arecanut in the market. Again, here, it has to
make purchases in such a way that it should not have an unfavourable impact on the market prices
of arecanut.
The CAMPCO's procurement and market intervention, however, did not achieve significant
long-term stability in the economy. Arecanut prices witnessed high year-to-year fluctuations during
the post-CAMPCO period compared to he pre-CAMPCO period in the Mangalore market. This
highlight§ that growth and instability are not mutually exclusive in the arecanut economy of
Karnataka. The CAMPCO's procurement programmes,in this respect, should be aimed at moderat-
ing the annual fluctuations in the prices of arecanut and provide the 'inter-seasonal' stability in the
market. Stabilising the production of arecanut helps to achieve this objective to some extent. In
addition, provision of market intelligence services, long-term price trends and future projection of
the prices, supply and demand for arecanut on a regular basis will assist the growers to take appropri-
ate decisions regarding the stock, disposal of arecanut, new planting, expansion of area under
arecanut and so on. The CAMPCO can establish a separate market information cell, and bring out
periodicals to disseminate production as well as marketing information to the arecanut growers in,
Karnataka.
REFERENCES

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