A study by two researchers at the London School of Economics (LSE) affirms Indian farmers바카라 fears that the entry of the private sector, and the dual private-state market mechanism, can diminish agriculture incomes and rural consumption.
Swati Dhingra and Silvana Tenreyro study in February 2020 on what happened in Kenya which, in 2004, introduced several laws and policies to shift from a state-led system to one where both the state and private sector operated to directly buy crops from the farmers.
Laws related to 18 crops, out of a total of 100, were changed to allow free entry of private businesses, just like India did with its three farm acts. In Kenya, the 18 crops 바카라made up about half of farm income among Kenyan households, on average바카라.
The paper finds that not all the farmers are able to engage on equal terms with the private entities. Only those with the 바카라highest comparative advantage in the policy-affected crops바카라 sell to the private sector because they have the social, economic, and political leverage to engage with the new market players.
However, the farmers with 바카라medium comparative advantage바카라 continue to sell their produce to the state-led entities, or to the middlemen, as they did earlier. Worse, those with the 바카라lowest comparative advantage바카라, or the poor and marginalized croppers, grow other crops that are not included in the policy-affected ones.
Farm incomes or the amounts paid by the private players in comparison to the state-owned ones depended on the competition. In areas, where there were a sufficient number of companies, 바카라the trade-off goes towards raising farm incomes owing to the greater entry of firms operating in the market for policy-affected crops바카라.
In cases, where the private firms emerged as a duopoly or oligopoly, and thus wielded 바카라increased market power바카라, farm incomes dropped. Hence, there are chances of the creation of inefficient markets that work against the interests of the farmers.
However, on an average in Kenya, the study concludes, 바카라Farm incomes from the policy-affected crops fell, and they fell much more than those from other crops.바카라 The drop in many instances was considerable, which affected the lifestyles of the farmers.
What is shocking is that as rural incomes dropped, the annual profits of the private companies that entered the agriculture market went up. 바카라Agri-business profit margins rose, and much more so for firms specialized in policy-affected crops, relative to other crops. In our setting, the shift to an agri-business model therefore reallocated the gains from trade from smallholder farmers to agri-businesses specialized in the policy-affected crops,바카라 says the study.
As expected, the welfare of the rural-farm households, which is measured in the study by the net annual incomes or ownership of key assets, suffers. Their state of living is worse than the period before the new Kenyan laws were introduced in 2004.
As the two researchers note, 바카라The findings validate concerns that commercialization of agriculture through monopolistic firms is not a panacea for lagging productivity and limited poverty reduction in rural areas.바카라
