DETERMINANTS OF MANGO EXPORT FROM PAKISTAN By ABDUL GHAFOOR M.Sc. (Hons.) Agricultural Economics A Thesis Submitted in Partial Fulfilment for the Degree of DOCTOR OF PHILOSOPHY IN AGRICULTURAL MARKETING Department of Marketing & Agribusiness, Faculty of Agricultural Economics & Rural Sociology, University of Agriculture, Faisalabad 2010 The Controller of Examinations, University of Agriculture, Faisalabad. We, the members of the Supervisory Committee, certify that the contents and format of the thesis submitted by Mr. Abdul Ghafoor, Registration Number, 92-ag-1209 have been found satisfactory and recommend that it be processed for the evaluation by the External Examiner(s) for the award of the degree. Supervisory Committee Chairman: ___________________________________ (Professor Dr. Khalid Mustafa) Member: ______________________________________ (Professor Dr. Muhammad Iqbal Zafar) Member: ______________________________________ (Dr. Khalid Mushtaq) Declaration I hereby declare that the contents of the thesis, “Determinants of Mango Export from Pakistan” are product of my own research and no part has been copied from any published source (except references, standard mathematical or genetic models/ equations/ formulae/ protocols etc.). I further declare that this work has not been submitted for award of any other diploma/ degree. The University may take action if the information provided is found inaccurate at any stage (In case of any default the scholar will be proceeded against as per HEC plagiarism policy). (Abdul Ghafoor) Table of Contents Contents Pages Chapter-1: Introduction 01 Chapter-2: Review of Literature 09 2.1 Findings of Major Studies-Pakistan 09 2.2 Findings of Major Studies-Other Countries 16 2.3 Conclusion 26 Chapter-3: Conceptual and Methodological Framework 28 3.1 Some Conceptual Issues 28 3.2 The Methodological Framework 31 3.2.1 Specification of variables (Survey Data) 32 3.2.1.1 Analytical Techniques 38 i Descriptive Statistics 38 ii Export Margin Analysis 38 iii The Empirical Model (Survey Data) 39 3.2.2 Specification of variables (Secondary Data) 41 3.2.2.1 The Empirical Model 44 3.2.2.2 Market Integration Analysis 44 3.2.2.3 Analytical Technique: Cointegration and Error 46 Correction Mechanism i Augmented Dickey Fuller Test 46 ii Cointegration 46 iii Approaches for Testing Cointegration 47 A The Johansen Approach 48 iv Error Correction Mechanism 50 Chapter-4: Results and Discussion 52 4.1 Socio-Economic and Business Characteristics of Mango Exporters 52 4.1.1 Age of Exporters 52 4.1.2 Professional Experience of Exporters 53 4.1.3 Education of Exporters 54 4.1.4 Quantity of Mango Exports 54 4.1.5 Mode of Buyer Search 55 4.1.6 Marketing Features of Mango 55 Contents Pages 4.1.7 Sources of Mango Purchases 56 4.1.8 Average Purchase Prices of Mangoes 57 4.1.9 Average Transportation Charges 60 4.1.10 Average Marketing Cost 61 4.1.11 Average Consignment Charges 64 4.1.12 Average Sale Price 65 4.1.13 Gross, Percent and Net Margins of Exporters 66 4.1.14 Favourite Markets of Exporters 67 4.1.15 Exporters’ Perceptions about Different Factors Affecting 68 Export of Mango 4.1.16 Exporters’ Views about Cooperation of Different 69 Institutions 4.1.17 Exporters’ Response about Performance of Different 70 Departments at Exit Points 4.1.18 Preferred Airline of the Exporters 71 4.1.19 Exporters’ Views regarding Change in Export Parameters 72 after WTO 4.2 Export Margin Analysis 73 4.2.1 Export Margin Analysis of Mango (Overall Average) 75 4.2.2 Export Margin Analysis for United Kingdom Market (Rs./ 77 Ton) 4.2.3 Export Margin Analysis for Dubai Market (Rs./ Ton) 79 4.2.4 Export Margin Analysis for Saudi Arabian Market (Rs./ 82 Ton) 4.2.5 Export Margin Analysis for Singapore Market (Rs./ Ton) 84 4.3 Determinants of Mango Exports (Survey Data) 85 4.3.1 Determinants of Mango Exports (All Markets) 86 4.3.2 Determinants of Mango Exports for United Kingdom 93 Market 4.3.3 Determinants of Mango Exports for Dubai Market 98 4.3.4 Determinants of Mango Exports for Saudi Arabian Market 102 4.3.5 Determinants of Mango Exports for Singapore Market 105 4.4 Determinants of Mango Exports (Secondary Data) 110 4.4.1 Tests of Stationarity 111 4.4.1.1 Graphical Presentation of the Variables 112 4.4.1.2 Unit Root Test 115 4.4.2 Cointegration and Error Correction Models 118 Contents Pages 4.4.2.1 Johansen’s Normalized Estimates and Error 120 Correction Model Estimates 4.4.3 Granger Causality Test 125 4.5 Mango Market Integration 127 4.5.1 Test of Stationarity 128 4.5.1.1 Graphical Presentation of the Variables 128 4.5.1.2 Unit Root Test 134 4.5.2 Cointegration and Error Correction Models 136 4.5.3 Granger Causality Test 142 Chapter-5: Conclusions and Suggestions 145 5.1 Future Research Areas 149 Literature Cited 150 List of Tables No. Title of Table Page 1.1 Area under Mango Cultivation (000 Hectares) 02 1.2 Production of Mango (000 Tons) 02 1.3 Global Production, Export and Import of Mango (000 Tons) 03 1.4 Major Markets for Pakistani Mango 06 4.1.1 Percentage Distribution of Exporters Regarding their Age 53 4.1.2 Percentage Distribution of Exporters Regarding their Experience 53 4.1.3 Percentage Distribution of Exporters Regarding their Education 54 Level 4.1.4 Percentage Distribution of Exporters Regarding Quantity of Mango 54 Exports 4.1.5 Percentage Distribution of Exporters Regarding their Mode of Buyer 55 Search 4.1.6 Percentage Distribution of Exporters Regarding their Perceptions 56 about Marketing Features of Mango 4.1.7 Percentage Distribution of Exporters Regarding their Sources of 57 Mango Purchases 4.1.8 Percentage Distribution of Exporters Regarding their Average 58 Purchase Prices for Mangoes 4.1.9 Percentage Distribution of Exporters Regarding their Average 59 Purchase Prices for Sindhri Mangoes 4.1.10 Percentage Distribution of Exporters Regarding their Average 59 Purchase Prices for Chounsa Mangoes 4.1.11 Percentage Distribution of Exporters Regarding their Average 61 Transportation Charges 4.1.12 Percentage Distribution of Exporters Regarding their Average 64 Marketing Charges 4.1.13 Percentage Distribution of Exporters Regarding their Average 65 Consignment Charges 4.1.14 Percentage Distribution of Exporters Regarding their Average Sale 66 Price 4.1.15 Percentage Distribution of Exporters Regarding their Average Gross, 67 Percent and Net Margins 4.1.16 Percentage Distribution of Exporters Regarding their Favourite 67 Market 4.1.17 Percentage Distribution of Exporters Regarding their Perceptions 68 about Different Factors Affecting Mango Export 4.1.18 Percentage Distribution of Exporters regarding their Views about 69 Cooperation of Different Institutions 4.1.19 Percentage Distribution of Exporters Regarding their Response about 71 Performance of Various Departments at Exit Point 4.1.20 Percentage Distribution of Exporters Regarding their Views about 71 Preferred Airlines No. Title of Table Page 4.1.21 Percentage Distribution of Exporters Regarding their Views about 72 Implications of WTO 4.2.1 Description of Data for Export Margin Analysis 75 4.2.2 Export Margin Analysis (Overall Average) 77 4.2.3 Export Margin Analysis for United Kingdom Market (Rs. / Ton) 78 4.2.4 Export Margin Analysis for Dubai Market (Rs./ Ton) 80 4.2.5 Export Margin Analysis for Saudi Arabian Market (Rs./ Ton) 83 4.2.6 Export Margin Analysis for Singapore Market (Rs./ Ton) 84 4.3.1 Description of Data for Micro Determinants of Mango Export 87 4.3.2 Summary of Mango Export Model 90 4.3.3 Description of Data for United Kingdom Market 94 4.3.4 Summary of Export Model for United Kingdom Market 95 4.3.5 Description of Data for Dubai Market 99 4.3.6 Summary of Export Model for Dubai Market 100 4.3.7 Description of Data for Saudi Arabian Market 103 4.3.8 Summary of Export Model for Saudi Arabian Market 104 4.3.9 Description of Data for Singapore Market 106 4.3.10 Summary of Export Model for Singapore Market 107 4.4.1 Description of Secondary Data for Determinants of Mango Export 111 4.4.2 Unit Root Test 116 4.4.3 Unit Root Test of First Difference Series 118 4.4.4 Selecting the Order of VAR 119 4.4.5 Cointegrating LR Test Based on Maximal Eigen values of the 120 Stochastic Matrix 4.4.6 Cointegrating LR Test Based on Trace of the Stochastic Matrix 120 4.4.7 Estimated Long & Short Run Elasticities 123 4.4.8 Granger Causality from Error Correction Model 126 4.5.1 Description of Data for Market Integration Analysis 128 4.5.2 Unit Root Test 134 4.5.3 Unit Root Test of First Difference Series 135 4.5.4 Selecting the Order of VAR for Mango Market Integration (Overall) 136 4.5.5 Cointegrating LR Test Based on Maximal Eigen values of the 137 Stochastic Matrix 4.5.6 Cointegrating LR Test Based on Trace of the Stochastic Matrix 137 No. Title of Table Page 4.5.7 Selecting the Order of VAR for Mango Market Integration (Pair 139 wise) 4.5.8 Cointegrating LR Test Based on Maximal Eigen values of the 140 Stochastic Matrix (Pair Wise) 4.5.9 Cointegrating LR Test Based on Trace of the Stochastic Matrix (Pair 141 Wise) 4.5.10 Adjustment Vectors 142 4.5.11 Granger Causality from Error Correction Model 144 List of Figures No. Title of Figure Page 1.1 Percent Share of Leading Producers of Mango in the World 03 1.2 Percent Share of Leading Exporters of Mango in the World 04 1.3 Percent Share of Leading Importers of Mango in the World 05 4.4.1 Mango Exports 112 4.4.2 First Difference of Mango Exports 112 4.4.3 Relative Price Index 113 4.4.4 First Difference of Relative Price Index 113 4.4.5 Mango Production 113 4.4.6 First Difference of Mango Production 113 4.4.7 Real Agricultural