Downside Risk in Tomato Markets in Karnataka: A Tail-Risk Analysis: 26225
Price: ₹ 1000
https://doi.org/10.35716/IJED-26225
Author: Suman, L., M. N. Venkataramana, G.M. Gaddi, M. N. Thimmegowda and G. Basavaraj
Author Address: University of Agricultural Sciences, GKVK, Bengaluru-560 065 (Karnataka)
Abstract
Agricultural price
risk for perishable commodities remains largely underexplored, despite farmers'
exposure to adverse market conditions. This study estimated downside risk for
weekly tomato prices and arrivals across major markets in Karnataka using value-at-risk
methodologies, at a 95 per cent confidence level. Actual returns distribution parameters
were plugged into risk estimation to improve model accuracy. Kupiec's
Proportion-of-Failure test for model evaluation indicated that Monte Carlo VaR
performed best across all markets, with actual breach rates of 5.43 and 6.09 per
cent in Kolar and Chintamani, both close to the theoretical 5 per cent threshold.
CVaR breach rates ranged from 2.66 (Kolar) to 3.96 per cent (Bagepalli), well
below the expected rate, confirming its reliability in capturing extreme tail
risk. By applying financial risk measurement tools to agricultural markets,
this study provided empirical evidence to inform the design of price
stabilisation measures, early warning systems, and risk-informed governance
frameworks for Karnataka's tomato sector.
Keywords
Downside price risk, expected shortfall,
Monte Carlo, tomato price, value-at-risk.
JEL Codes
C53, C58, Q13, Q14.