Vulnerability of Small Farmers in Product Market: A Situation Analysis

Abstract

Despite a long tradition of research in agricultural economics that involved analysis of many problems, the issue of product pricing assumes critical importance due to market imperfections. The analysis on variations of agricultural output prices across regions and markets, largely relied on the average price information available from regulated markets. Every researcher knows that this information is truncated by extreme values. The available data on agricultural output prices from regulated markets for individual farmers cannot be segregated on the price received by farmers or traders (intermediaries). Often, petty traders purchase the product from farmers in the village markets and sell that in a regulated market. This type of transaction makes a large difference in the analytics of prices.

Studying the variation in agricultural output prices across regions and markets is important to understand the output price differentials at different location for the same product, differential consumer prices, and price spread between wholesale and retail markets. However, differential output prices received by farmers for the same product has been largely neglected in the academic debates on agricultural price policy. Studying such price heterogeneity across and within the same market or particularly in the village economy is crucial for understanding the nature and extent of discrimination faced by different categories of farmers in the product market.

There is good reason to believe that the small farmers may face lower farm harvest prices than the large farmers. The small farmers generally sell output in very small quantities, entrenched in informal credit or input market, have lower capacity of storage, are compelled to sell immediately after harvest and consequently remain at the receiving end due to the disadvantage of small-scale production. If the small farmers receive lesser price for the same product than the large farmers, they would be even worse-off in terms of their farm income levels because it is evident that per unit cost of cultivation of small farmers is higher than the large farmers. While there exists vast theoretical literature on price differentials across producers, the empirical literature available is not as extensive.

One reason why empirical studies of output price differentials at the farm household level are scarce is that such data are difficult to find due to conventional official surveys on crop statistics do not collect these. In this talk, I attempt to look at this by using two unique set of database. The main sources of secondary data are the Situation Assessment Survey (SAS) conducted by the National Sample Survey Organisation (NSSO). The main source of primary data are the censustype household surveys conducted by the Foundation for Agrarian Studies (FAS).

About the speaker

Biplab Sarkar is presently an Assistant Professor of Economics in the Centre for Development Studies (CDS) at PES University Bangalore. Prior to joining CDS, he was a senior research fellow at the Indian Statistical Institute, Bangalore.

Biplab did his Master in Economics from University of North Bengal, Darjeeling, and for his doctoral research he joined the Indian Statistical Institute, Bangalore in their Economics Analysis Unit. His primary research area is at the intersection between Agriculture and Development Economics and he extensively uses large survey data. Some of the topics he has investigated or is currently investigating are agricultural output and input prices, methodological issues in the calculation of cost of cultivation, economics of household farming etc. He has presented his research work in national and international conferences including the World Association for Political Economy (WAPE) Conference at the Federal University of Santa Catarina (UFSC), Florianopolis, Brazil, and the Association for Regional Agriculture and Forestry Economics (ARAE) conference at the Okayama University, Japan. Conference papers, published journal papers and book chapters in edited books can be seen in Google Scholar. Besides, he has also served as a Consultant to the Foundation for Agrarian Studies (FAS), leading research organisation on agrarian issues, M S Swaminathan Research Foundation (MSSRF) and World Food Programme (WFP), leading organization fighting hunger worldwide. He was also elected as a member of the Executive Committee of the Indian Society of Agricultural Economics (ISAE).