Impact of Government Intervention in Procurement of Rice on Smallholder Farmers in Subtropics of Jammu

Abstract

The impact of procurement policy, introduced in the state of Jammu & Kashmir (J&K) in 2010 has been assessed on the rice growers’ income. For study, a sample of 100 farmers selling their rice produce at the procurement centres established by the government and a matching sample of 50 farmers selling their market surplus rice in the open market was selected. The difference-in-differences (DD) quasi-experimental design was used to find the impact. The results revealed that for the farmers who sold their produce at the procurement centres, the DD was of 175/q for the coarse rice variety and of 77/q for the semi-fine variety compared to the control group. The farmers who chose to sell their produce at the procurement centres had an additional income of 6725/farmer. The education has been found to be the only socioeconomic variable that affects the farmers’ decision to sell at of the government procurement centres (p < 0.05). The government intervention had thus ended the distress sale by the farmers, broken the monopoly of the private rice traders/millgroups, created market competition and even increased the prices of the Basmati varieties not procured by the government. The study has emphasized on the need of expanding education in the area so that farmers may take informed decisions on selling their produce.