The impact of unifying agricultural wholesale markets on prices and farmers' profitability

As a leading effort to improve the welfare of smallholder farmers, several governments have led major reforms in improving market access for these farmers through online agricultural platforms. Leveraging collaboration with the state government of Karnataka, India, this paper provides an empirical assessment on the impact of such a reform-implementation of the Unified Market Platform (UMP)-on market prices and farmers' profitability. UMP was created in 2014 to unify all trades in the agricultural wholesale markets of the state to be carried out within a single platform. By November 2019, 62.8 million metric tons of commodities valued at $21.7 billion (USD) have been traded on UMP. Employing a difference-in-differences method, we demonstrate that the impact of UMP on modal prices varies substantially across commodities. In particular, the implementation of UMP has yielded an average 5.1%, 3.6%, and 3.5% increase in the modal prices of paddy, groundnut, and maize. Furthermore, UMP has generated a greater benefit for farmers who produce higher-quality commodities. Given low profit margins of smallholder farmers (2 to 9%), the range of profit improvement is significant (36 to 159%). In contrast, UMP has no statistically significant impact on the modal prices of cotton, green gram, or tur. Using detailed market data from UMP, we analyze how features related to logistical challenges, bidding efficiency, in-market concentration, and the price discovery process differ between commodities with and without a significant price increase due to UMP. These analyses lead to several policy insights regarding the design of similar agri-platforms in developing countries.

Medienart:

E-Artikel

Erscheinungsjahr:

2020

Erschienen:

2020

Enthalten in:

Zur Gesamtaufnahme - volume:117

Enthalten in:

Proceedings of the National Academy of Sciences of the United States of America - 117(2020), 5 vom: 04. Feb., Seite 2366-2371

Sprache:

Englisch

Beteiligte Personen:

Levi, Retsef [VerfasserIn]
Rajan, Manoj [VerfasserIn]
Singhvi, Somya [VerfasserIn]
Zheng, Yanchong [VerfasserIn]

Links:

Volltext

Themen:

Developing countries
Impact assessment
Journal Article
Market reform
Poverty reduction
Research Support, Non-U.S. Gov't
Smallholder farmers

Anmerkungen:

Date Completed 29.04.2020

Date Revised 21.07.2020

published: Print-Electronic

Citation Status PubMed-not-MEDLINE

doi:

10.1073/pnas.1906854117

funding:

Förderinstitution / Projekttitel:

PPN (Katalog-ID):

NLM30562184X