Overcoming institutional voids in the agricultural product market: analysing the role of farmer organizations

Abstract

"In this thesis, we analyse the ability of farmer organizations to overcome institutional voids in the agricultural product markets. We further look at the impact of membership to one such farmer organization i.e., farmer producer company (FPC) on its member farmer’s pre- and post-harvest decisions. In the first essay, we develop the idea of organizational autonomy among farmer organizations to explain the heterogeneity among them with respect to their ability to overcome institutional voids in the agricultural product markets. We define organizational autonomy among farmer organizations as their ability to undertake the role of intermediation in the markets to foster efficient transactions. It is of greater relevance in the context of emerging economies where institutions are poorly developed. We illustrate our arguments using the examples of farmer organizations in Telangana, India that have used this autonomy to adopt an organizational structure that best allowed them to reduce their transaction costs and navigate through institutional voids they encounter in the agricultural product market. In the second essay, we empirically analyse the impact of membership to a farmer producer company (FPC) on certain pre and post-harvest decisions of its members using cross sectional data from farmer surveys in rural Telangana, India. We employ different matching techniques to assess the average treatment effect on treated (ATT) of FPC membership and compare it to non-member farmers. Along with OLS specifications, our results are robust to alternative matching estimators. We also use non-parametric tests for the control and treatment group to analyse their ability to remediate for institutional voids they encounter in agricultural product markets. We find a significant positive impact on the farmer welfare indicated through his agri-intensification activities, choice of sale channel and price realization indicators. We also find evidence that producer companies provide timely price and market information on agricultural schemes, access to pre and post-harvest facilities and access to modern methods of payments to participating farmers thereby overcoming institutional gaps like information asymmetry, aggregator activities, and transaction facilitator. Through application of an institutional voids framework that helps identify market linkage mechanisms in emerging economies, we seek to contribute to a deeper understanding of agricultural product markets and farmer organization efficiency in such conditions."