Abstract
PurposeConstraints associated with public agricultural extension services imply that farmers increasingly rely on input providers for agricultural innovations and knowledge. Yet such providers are typically commercial profit-making agents and may have an incentive to suggest relatively costly inputs and/or high rates. The purpose of this paper is to look into the case of Bangladesh and the role of fertilizer traders in terms of farmers’ decisions on which fertilizer to apply and at what rate. Using primary data, the authors examine farmers’ chemical fertilizer use and the associated rice production efficiency, based on different information sources (fertilizer traders, government extension agents or own/peer experience).Design/methodology/approachUsing primary data, the present study estimates an ordered probit model and production functions separately based on whether or not a farmer relied on information from fertilizer traders or own experience and government extension agents, and examines the efficiency score of each type of farmer.FindingsThe findings demonstrate that the resource-poor farmers rely more on traders’ suggestions for fertilizer application than public extension – but the actual fertilizer information source has no significant effect on the production efficiency of the rice farmers. This study, therefore, does not find exploitative behavior of fertilizer traders. Thus, this study concludes that small rural traders in Bangladesh are working as agricultural extension agents and provide necessary fertilizer application information to resource-poor farmers.Research limitations/implicationsThis is a case study based on Bangladesh – an emerging economy in South Asia. The findings of the study may not be generalized for other countries.Originality/valueTo the authors’ knowledge, this is the first study that confirms the role of agricultural input sellers as the extension agent in developing countries.
Highlights
The role of traders in reducing search and transaction costs and in disseminating useful market information is widely recognized, both in farm (e.g. Banerji and Meenakshi, 2004; Miyata et al, 2009) and non-farm sectors (e.g. Sonobe et al, 2002; Mottaleb and Sonobe, 2011)
In Bangladesh, most farmers still use their own/peer experience, but increasingly seek suggestions from traders when deciding on the amount and dose of fertilizer to be applied due to the constraints associated with public agricultural extension services
Social and human capital and remoteness increase the dependence on government extension agents for fertilizer use decisions, whereas traders increasingly prevail as information sources in the more accessible, intensive and commercially oriented boro rice production systems
Summary
The role of traders in reducing search and transaction costs and in disseminating useful market information is widely recognized, both in farm (e.g. Banerji and Meenakshi, 2004; Miyata et al, 2009) and non-farm sectors (e.g. Sonobe et al, 2002; Mottaleb and Sonobe, 2011). Using chemical fertilizer application by farm households in Bangladesh as a case, the present study examines the influence of traders as information source for farmers’ chemical fertilizer use and their production efficiency. The use of other fertilizers showed no significant difference among the three groups, nor were there significant differences in other input use or reported yields This suggests that the rural fertilizer traders in Bangladesh: are not cheating farmers by advising excessive use rates nor providing fake and adulterated products; and are providing an adequate substitute source of information to the farmers similar to the government extension agents. 50 percent of the sampled households reported that at least one of their family members was a member of 21 listed clubs, organization or groups (including farmers’ clubs, women’s unions, youth unions, NGOs providing micro-credit or agricultural extension services, any other NGOs, formal or informal credit groups, environmental groups, school and mosque committees, traders’ unions, labor unions and any other type of village association). To econometrically differentiate the factors associated with differences in fertilizer use among the sampled households based on the source of information they relied on, we developed a conceptual framework and empirical models
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