Liberalising Domestic Agricultural Markets: Gains for India Select Indian Agricultural Markets: A Primary Survey (Work in Progress) February 10, 2006

Outline The issues The sample Some results

The Issues Small quantities to sell; urgent cash needs; poor infrastructure; Who will bring output to distant markets: cooperatives? Traders? Who will ensure fair trading? What marketing channels exist? What do the farmers say? What do the traders say? What are the marketing issues on the ground? And what are the alternatives?

The Sample

Sampling Strategy: A Spatial View of the Markets with focus on farmer-market linkage Market: in nearby town Farmers: in the village Consumers: more distant

Selection of the Sample Objective is to get an understanding of the working of the markets where farmers sell their produce To cover major crops grown and sold under a variety of agricultural conditions The sample covers farmers, traders and market officials

Selection of Sample: Crops Crops: Crops where market interventions prevail; marketing alternatives exist; –Kharif crops Paddy Cotton Tur Groundnut

Selection of Sample: States States: Important in production of selected crops; marketing alternatives exist –Paddy: West Bengal, UP, AP, Tami Nadu, Maharashtra –Tur/ Arhar: Maharashtra, UP –Cotton: Maharashtra, Gujarat, AP –Groundnut: Gujarat, AP

Selection of Sample: Paddy Markets: Important in the selected states for selected crops; contiguous with major markets in neighbouring states Paddy –AP: Guntur, Nellore –MT: Raigarh, Thane –UP: Pratapgarh, Jaunpur –WB: Burdwan, Birbhum –Tamil Nadu: Thanjavur, Thiruvallur

Selection of Sample: Cotton Markets: Important in the selected states for selected crops; contiguous with major markets in neighbouring states Cotton –AP: Adilabad, Guntur, Kurnool –MT:Yeotmal, Jalgaon –Gujarat: Bhavnagar, Amreli

Selection of Sample: Tur Markets: Important in the selected states for selected crops; contiguous with major markets in neighbouring states Tur/ Arhar –MT: Yeotmal, Wardha –UP: Pratapgarh, Jaunpur

Selection of Sample: Total Markets Total Markets Across States –AP: 5 –Gujarat: 2 –Maharashtra: 5 –UP: 2 –WB: 2 –Tamil Nadu: 2

The Sample of Markets: Total Markets Three villages per market: 3 distance ranges (0-10 kms; 11-20; >20 kms from market

The Sample of Farmers Paddy: 300 Tur/ Arhar: 100 Cotton: 175 Groundnut: 100 Total 675

The Sample Farms: Characteristics Operated Land Category Average Operated land (acres) Households % Operated land% Marginal Small Semi-medium Medium Large All

Some Patterns Across Farm Groups, Crops, States Preliminary results: Do not quote

Value of Output per Farm (Thousand Rupees) StatePaddyTurGroundnutCotton AP Gujarat MT TN55--- UP254-- WB61--- Avg output of the largest size group is about double the average size

Market Dependence: % of Output Sold by the Farmers AP= Andhra Pradesh, MT=Maharashtra, TN= Tamilnadu, UP=Uttar Pradesh, WB = West Bengal

How Big are the Sales?: Output in Rs per acre

Price Realised Rs/ Qtl: Paddy Operated Land Category APTNWB Marginal Small Semi-medium Medium Large 456 All

Price Realised Rs/ Qtl: Cotton Operated Land Category APGujaratMT Marginal Small Semi-medium Medium Large All

Average Market Distance for Sales (Kms): Paddy Operated Land Category APTNWB Marginal Small Semi-medium Medium Large -0- All

Average Market Distance for Sales (Kms): Tur Operated Land Category MTUP Marginal Small Semi-medium Medium Large All

Average Market Distance for Sales (Kms): Cotton Operated Land Category APGujaratMT Marginal Small Semi-medium Medium Large All

Major Marketing Problems (% of farmers): Paddy

Major Marketing Problems (% of farmers): Tur

Major Marketing Problems (% of farmers): Groundnut

Major Marketing Problems (% of farmers): Cotton

Major Reasons for not selling in APMC: Tamil Nadu

Satisfaction with the APMCs: Traders’ Response (No. of traders) StateYesNoTotal AP MT TN14620 UP21820 WB81220 No information collected in Gujarat

Traders in APMCs: What other alternatives may work? Out of those who felt that other channels offered a better deal –Only 9 out of 20 traders in AP said private markets would be better for the farmers

Traders in APMCs: Is there enough competition? When asked if there should be more traders in the market –Only in UP the traders were nearly unanimous saying no. They felt there were not many buyers in the market –In the other cases, about 50% of the traders said more traders would be fine.

Small lots to sell Differences in patterns of market requirements for crops like paddy and Tur vs Cotton and Groundnut (larger transactions) Smaller farms not able to bear higher marketing costs Many transactions within village or close to village Smaller farms growing better quality? Findings

Trader responses vary from commission agents to others Location of the markets important for traders and farmers

Moving forward Alternative channels of marketing for the farmers: understand reasons for choice How much do prices vary under alternative channels? What are the merits and weaknesses in APMCs?

Thank You

Major Reasons for not selling in APMC: Uttar Pradesh