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Abstract
Market access for smallholders is a key policy issue in developing economies. However, smallholders often face barriers in accessing remunerative marketing channels. Combining the theoretical framework drawn from resource-based view, social exchange, and transaction cost theory, we jointly estimate the determinants of marketing channel choice and the impact of channel choice in a joint framework. Results show that households’ resource endowments and social capital influence channel selection decision. Paddy sales through government agencies help farmers realize higher prices because of the higher government support prices and proximity to farms, whereas sales through licensed traders operating in the regulated markets (APMC) results in reduced paddy prices due to high transportation costs. Furthermore, smallholders preferring government agencies, processors, and licensed traders over village traders realize greater farm income. Reasons for such findings can be deduced to be the result of low marketable surplus for smallholders selling to village traders.
Disclosure statement
No potential conflict of interest was reported by the author(s). The authors have no affiliation with any organization with a direct or indirect financial interest in the subject matter discussed in the manuscript.
Data availability statement
The data that support the findings of this study are available from the authors upon reasonable request.
Notes
1 At present there are 2,477 principal regulated markets and 4843 sub-market yards regulated by respective APMCs in India (GoI, Citation2022).
2 The Minimum Support Prices (MSPs) are decided based on the recommendations provided by the Commission for Agricultural Costs and Prices (CACP) to the government for two crop seasons.–kharif and rabi. The calculation of MSP is primarily based on the cost of production, demand and supply, price trend in both domestic and international markets, inter-crop price parity and the likely implications of the support price on consumers (Varma, Citation2022).
3 We define quantum of information as the number of information sources used by the smallholders in making paddy marketing related decision. In the study region, smallholders access marketing information through mass media sources (television, newspaper, radio, internet), traders, friends, and fellow farmers. Extension agents are not included because the information provided by them is limited to production related activities.