Connecting Smallholders’ Marketplace Decisions to Agricultural Market Reform Policy in India – An Empirical Exploration

Abstract

Governments in developing countries have attempted to reform inefficient agricultural markets through direct interventions, market-oriented approaches, and institutional mechanisms, with one of the aims being improving the lot of smallholder farmers. However, such interventions often fell short of yielding desired results, perhaps because broad macro objectives failed to take into account micro-level processes. This study examines smallholder farmers’ market selection decisions and attempts to establish if these have a bearing on legislative goals of agricultural marketing reforms. Analysis of survey data using binary logistic regression, reveals that farmers choose between two prominent marketplaces – APMC and farm gate – on the basis of factors such as perishability of produce, quality testing infrastructure at the marketplace, and services provided by buyers such as grading and sorting or transportation. Findings are reinforced by an extended part of the study where farmers ranked assumptive marketplace scenarios developed by incorporating different marketplace features. Results demonstrate the possibility of enabling systemic changes in agricultural markets by catering to grassroots decision mechanisms. Implications for policy and relevant players engaged in agricultural markets are discussed.