Increasing Rural Incomes by Expanding Access to Agricultural Price Information

Principal Investigators: William Jack
Research Team: ParulAgarwal and Rupika Singh
LEAD Centre: Centre for Microfinance (CMF)
Focus Area: Livelihoods
Project Geography: Karnataka, India
Partner: Intuit Inc.
Status: Ongoing

Background:

For many of India’s 850 million rural inhabitants, 40% of whom live in poverty, accessing agricultural output markets in a timely manner is a challenge. Poor infrastructure, lack of scale economies (70 percent of landholdings are less than one hectare, or 2.5 acres), and costly transportation mean smallholders routinely sell their output to traders.

However, this potentially efficient division of labor suffers from limited competition among these middlemen, who are able to exploit their bargaining power to extract surplus. Farmers who instead sell their produce directly to end consumers face difficult timing and/or locational decisions, uncertain about prevailing market prices and unable to visit every market every day.

The study intends to rigorously evaluate the “success or failure” of Fasal (a cell-phone based service that provides current price information on a variety of agricultural outputs at a range of markets on demand) within the context of an RCT with an encouragement design.

Observational analysis of the service, which has been implemented in two Indian states so far, suggests increases in incomes of the order of 15-20 percent. The first purpose of the project is thus to confirm these effects within the context of an RCT. But the longer term objective is to assess the impact of improved information on planting choices, and in particular the adoption of more profitable crops.

The Study was planned to be conducted in three phases with specified objectives:

  • Base Line: To understand current agricultural practices, timing of harvest, current incomeand price expectations for the crops. Intervention in the treatment was provided after the Base line
  • Mid Line: To estimate usage and usefulness of the service
  • End Line: To record change in timing of harvest, credit dependency, crop storage, planting decision andfuture income

Methodology and Research Design
180 villages were identified from three districts of Karnataka: Gadag , Dharwad and Davangere, and a random sample of 15 farmers from each of these villages was drawn for the study. Of 2,700 farmers thus selected, half of them were assigned to the control and the other half to the treatment group. The treatment group farmers were introduced to the ‘Fasal’ service at the time of Baseline. There was a follow up at the time of Midline to track the usage pattern and to further push the service in the Treatment villages. A dedicated software application was designed in order to track the take up and the usage pattern of the registered farmers

Study Status
The Endline data collection is over and the data from all the three rounds is being analyzed. Researchers are also looking at the administrative data on the utilization of the service and historical price data from the past two years to match it with the data from all three rounds and understand the effect of receiving the spot price information on the selling and storing decisions.
The short-term outcome of this research will be to provide initial evidence on the impact of real-time price information on the level of and variation in returns to different crops. This will form the basis of a longer-term study of the effects on farmers’ choices of crops, timing of harvest and sowing, storing pattern etc.