Institutional innovations for smallholder development: a case study of agri-franchising in Bihar

Abstract

The low crop yields, increasing costs of cultivation, and the low price realisation have been important concerns in smallholder agriculture like that of India. Institutional innovations are important for inclusive agricultural development in India as they go beyond products and technology and are about ways of doing things. Contract farming has been studied as an institutional innovation in agribusiness but not agri­ franchising though it is also an innovation in the field of agribusiness as it is about reaching farmers differently. This paper examines the effectiveness and inclusiveness of agri-franchising with the help of a case study from Bihar which is based on interviews with the franchisor (GAPL), its franchisees and a primary survey of its buying farmers and non-buying farmers in Bihar's two districts - Vaishali and Muzaffarpur - where it has substantial presence. It is found that the Dehaat (franchised outlet) farmers in general were larger than their non-Dehaat counterparts both in owned and operated land holdings. Very few farmers (9 per cent) reported that they could cut down the cost of cultivation due to the Dehaat based extension. But, more than 92 per cent farmers reported an increase in yields. The extension contribution of Dehaat is noteworthy as is its role in smallholder market linkage for output in the context of abolition of APMC Act in the state.The functioning of the Dehaat centres and the farmers uptake ofit shows that the new channels can lead to more informed farmer level input use and realisation of higher prices in the smallholder context.