Academic journal article International Journal of Education and Management Studies

Cocoa Products Exports of India: A Markov Chain Analysis

Academic journal article International Journal of Education and Management Studies

Cocoa Products Exports of India: A Markov Chain Analysis

Article excerpt

(ProQuest: ... denotes formulae omitted.)

Cocoa (Theobroma cacao L.) meaning "food of the gods", a native of Amazon base of South America got its entry into India in the early half of the 20th century by Europeans. More than 5, 000 years ago pre-Columbian civilizations first consumed it as a fermented alcoholic beverage and it functioned as a currency in later times. Cocoa, being a rich source of antioxidants such as pro-cyanidins and flavonoids, which impart anti-ageing properties, is becoming increasingly popular with time. Trade of cocoa products comprises of mainly cocoa beans, cocoa powder, and cocoa butter fat and oil. It grows in a limited geographical zone, of about 20° to the north and south ofthe equator. Therefore, most ofthe world's cocoa production is found in West Africa wherein, Cote d'Ivoire and Ghana both collectively account for 60% of the total tonnage Essoh (2014). Whereas, America, Asia and Oceania, account for 18% and 10%, respectively. In 1980-81 the area under cocoa started declining all throughout India and the world because of falling world prices F ialor (1985). World production of cocoa beans decreased by three per cent to 4.236 million tonnes in the 2014-15 cocoa season. However, the global demand has been increasing by 2.5 per cent annually from 1950's, downfall was being witnessed in terms of productivity. Also, there were growing concerns of fluctuating supply (ICCO Annual Report). When the global players, after tapping the developed countries markets are seen eyeing on emerging markets there stood a window open for India to make use of its 45 percent of geographical area falling in 20o N of equator to make for the growing demand in developing nations or at least reducing its import dependence. Seeing the current world cocoa products trade scenario, current study was undertaken to specifically know the direction, structural changes, prospects of Indian cocoa products exports.

Method

The study is based on time series data of cocoa products regarding area, production, productivity, and its export from India. Data pertaining to these heads was obtained for a period ranging from 2000-01 to 2016-17 from secondary sources such as exports data from online portal ofAPED A and for other heads from India-stat.

The compound growth rate analysis was carried out to ascertain the growth in area, production, productivity and exports of cocoa from India. The structural change and direction of change in the export of cocoa products was assessed using Markov chain analysis.

Yt = abtut

Where,

Yt = area/production/productivity/export of cocoa products in year t

t = year which takes value 1,2.n

ut = disturbance term

'a' and 'b' are regression parameters to be estimated.

Logarithmic transformation of provided the estimating equation was

lnYt = ln a + t ln b + ln ut

The equation was estimated by ordinary least square technique (OLS). Compound growth rate (g) was then estimated by the identity given in equation

g = (antilogb-l) 100

Where,

g = estimated compound growth rate in per cent per year and

b = regression coefficient

Annual export data for period 2000-01 to 2016-17 was used to analyze the direction of trade and changing pattern of Indian cocoa products export using Markov chain analysis. The major export destinations studied for Indian Cocoa products were based on averaging of imported quantity for the study period. USA, Nepal, China, Netherland and Singapore were found to be the top competitors among all.

Markov chain analysis was employed to analyse the structural change in any system whose progress through time can be measured in terms of single outcome variable (Dent, 1967). In the present study the dynamic nature of trade patterns that is the gains and losses in export of Indian cocoa products in major importing countries was examined using the Markov chain model. …

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