CARDAMOM MARKET DYNAMICS: AN EMPIRICAL ANALYSIS

Abstract

The study undertakes an econometric investigation of small cardamom export price behaviour across the three major producing and exporting countries which are India, Guatemala and Indonesia. The study period is from January 2010 to December 2024 covering 180 monthly observations per market. The analysis was conducted using a structured methodological framework of Cuddy-Della Valle Instability Index (CDVI), Augmented Dickey Fuller test, Johansen cointegration, Vector Error Correction (VECM), Granger causality, and ARCH-GARCH. The study structurally characterizes the long-run equilibrium relationships, short-run price adjustment dynamics, price transmission, and volatility persistence in the global cardamom markets. The CDVI showed Indonesia as the most price-unstable market at 70.21%, followed by Guatemala at 41.96% and India at 22.97%.  The ADF test confirms I(1) integration for all the three series. The Johansen cointegration identifies one significant cointegrating vector, establishing the existence of long-run price relationship. The VECM results showed that presence of short run relationships, with Indonesia having the fastest correction at 17.86 % and India and Guatemala adjusting at 7.41 % and 6.14 % respectively. The Granger causality results indicate unidirectional price leadership from Guatemala to India, confirming the dominant role of Guatemala in global price discovery. ARCH-GARCH revealed high and persistent volatility in all the three markets across countries. These findings provide valuable insights for policymakers in developing price risk management frameworks, strengthening market infrastructure, and enhancing market stabilization policies in the global cardamom industry.