Middlemen on Coconut Price Behavior in Sri Lanka

Abstract

This research studies producer and retail's behaviour towards coconut price, and assesses middlemen's impact and the influence of inflation on it. Coconut contributes 0.6 % to the total GDP. Though researches attributed the recent price hike to droughts, the consumers view middlemen influence it. The influence was analysed considering the market margin of middlemen. Secondary data were on nominal market price (NMP), producer's prices (PP), retail prices (RP) of coconut, and Colombo consumer price index for 25 years from 1993-2017. The impact of Middle men on coconut price was analysed by considering the market margin of middlemen mainly focussing the Agents and Brokers, Merchant Wholesalers, Distributors and retailers. The analysis revealed that the nominal market price of coconut had increased by 828% and increased by 10% per annum. The producer's price showed a positive specular trend, increasing by 851% and by 10 % per annum. The retail and producer prices varied largely during the study period 74% and 76% respectively; the real retail price and real producer price over the time behaved with no significant increase. The Coefficient of Variation (CV) of real retail and real producer prices were 23% and 25% respectively revealed the absence of drastic growth or decay. Further, a decreasing tendency of Marketing Margin (MM) with time for real prices expressed a negative variation of 76% of CV. The market margin of middlemen was not influencing the retail price of coconut. The increase in retail price in the market during the recent past was due to the increased inflation by 8%. However, the growth rate of the MM of coconut was less than 1%, and it was to manage the fluctuations in inflation. Though there is criticism against middlemen, they are the risk takers and entrepreneurs in the market ever. Further the market middlemen are not an unwanted market elements nor exploiters of consumers and producers as people view.