Abstract
PurposeThis paper aims to understand the significant farm and market-level factors that incentivize the adoption and marketing of pulses influencing its supply response to changing demand.Design/methodology/approachThe authors first use a modified Nerlovian supply response model using secondary data to identify the major price and non-price factors influencing the supply of pigeon pea, black and green gram in the major pulses growing states in India. Second, using primary qualitative data the authors map the pulses value chain from farm to retail to identify the how proportional and fixed transaction costs (FCTs) influence market participation of pulses growers and limit the transmission of price and quality information.FindingsThe supply response model shows some positive influence of price on area allocation for pigeon pea and black gram and some negative effects of yield and price increase of competing crops on pigeon pea acreage. However, for the most part, the area of Kharif pulses is inelastic to prices in the long run. Irrigation, rainfall and yields in the lag year are shown to have a significant influence on area allocation for pulses. The market study reveals that low yields, low landholding size and geographical disadvantages of high agro-climatic risk and poor connectivity hinder market access of pulses farmers relative to other crops. Market power in favor of buyers and poor price and quality information is a disadvantage to sellers, influencing their ability to participate in markets.Research limitations/implicationsA quantitative study would be required to identify the magnitude of farm and market-level transaction costs.Originality/valueThis study helps to understand the supply response of pulses and gives suggestions to direct policy to rectify this.
Highlights
Pulses are the most critical source of affordable dietary protein in India, where a significant portion of the population is poor
Using qualitative data gathered from mapping the value chain from farm to markets from six primary pulses growing states, we argue that transaction costs due to low economies of scale, poor connectivity to markets or high cost finding buyers, negotiating price and selling, influences whether farmers participate or limit their participation in markets
We find that lagged price has a significant effect on supply of pigeon pea and black gram and not for green gram
Summary
Pulses are the most critical source of affordable dietary protein in India, where a significant portion of the population is poor. India witnessed a rapid rise in per capita incomes, driven by increasing economic opportunities arising from a booming service sector and rural wage improvement due to welfare schemes such as MGNREGA. This coupled with demographic change characterized by increase in population, life expectancy and women’s participation in the workforce has led to an increasing demand for diverse food groups, away from staples, toward fruits and vegetables, dairy and meat and processed foods of higher value The full terms of this licence may be seen at http://creativecommons.org/licences/by/4.0/legalcode
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