Empirical Investigation of Areca Nut Value Chain Performance: Marketing Practices, Price Transmission, and Structural Constraints

Raghavendra Prasad N; Savitha V

Empirical Investigation of Areca Nut Value Chain Performance: Marketing Practices, Price Transmission, and Structural Constraints

Author(s)	Mr. Raghavendra Prasad N, Ms. Savitha V
Country	India
Abstract	This study aims to empirically examine the performance of areca nut value chain, including the marketing practices, price transmission mechanism and the structural limitations affecting the market efficiency and welfare of the producers. The study is based on the Value Chain Theory, the Transaction Cost Economics and the Price Transmission Theory and focuses on the structural organization at various levels of the market and the role of the intermediary in determining the price and value distribution. The primary data was gathered from 445 actors—320 farmers, 85 intermediaries, and 40 wholesalers/exporters—from the key areca nut producer areas, along with secondary data on monthly prices for 2015–2025. Market integration and efficiency is measured using descriptive statistics, Johansen cointegration analysis, Vector Error Correction Models (VECM), Asymmetric Error Correction Models (AECM) and a Structural Constraint Index (SCI). The findings indicate that there is a very complex marketing structure with the majority of the produce (68%) being marketed through multi-layered channels. Price transmission analysis suggests market is integrated in the long run but, short run adjustments are partial and inefficient. Asymmetric price transmission is also noted, with positive price shocks being transmitted more quickly than negative price shocks, which means that there is market power in the hands of the intermediaries. The key constraints that affect performance of the markets and the price realization for farmers identified through structural constraint analysis are inadequate infrastructure, limited access to credit, weak market information systems and inefficiency in market institutions. The study shows that both structural fragmentation and behavioural market distortions are responsible for the inefficiencies in the areca nut value chain. Value chain efficiency and farmer welfare in agricultural commodity markets can be enhanced with the help of policy interventions related to transparency in the digital market, institutional strengthening and development of infrastructure.
Keywords	Areca nut, value chain efficiency, price transmission, marketing structure, structural constraints, VECM, asymmetric transmission, agricultural markets, transaction costs, market integration
Field	Business Administration
Published In	Volume 8, Issue 4, July-August 2026
Published On	2026-07-09

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CrossRef DOI prefix of IJFMR is 10.36948/ijfmr

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Empirical Investigation of Areca Nut Value Chain Performance: Marketing Practices, Price Transmission, and Structural Constraints

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