Competition and Collusion in Grain Markets: Basmati Auctions in North India

Many small wholesale grain markets in India are characterized by large numbers of sellers, and a relatively small number of buyers, thereby lending the price formation process open to manipulation through collusion. Government intervention limits the extent of such manipulation by instituting regulated markets where the rules of exchange are clearly spelled out. The key institutional features of these markets are (a) sales through open ascending auctions; (b) the presence of "commission agents" representing both buyers and sellers. We present simple models of noncooperative and collusive behavior in auctions incorporating the above, and some more market specific, assumptions. We exploit data from a primary survey of a market for basmati paddy in North India. The main findings are (i) the collusive model explains the data better; (ii) the incentives of sellers and a subset of the large buyers are aligned; (iii) this, along with a Principal-Agent slack between millers and commission agents who buy for them, facilitates the form that collusion takes, and (iv) due to (ii) and (iii), the impact of collusion on market prices is not necessarily adverse. Insofar as the features of the market we study are common to grain markets in North India, we believe that these findings may be of much wider significance.

The Changing Pattern of Undernutrition in India: A Comparative Analysis across Regions

calories, consumption, poverty, India

MARKETS, INSTITUTIONS AND EFFICIENCY GROUNDWATER IRRIGATION IN NORTH INDIA

This paper analyzes the institutions and markets that govern groundwater allocation in the sugarcane belt of Uttar Pradesh, India, using primary, plot-level data from a village which shares the typical features of this region. Electricity powers tubewell pumps, and its erratic supply translates into randomness in irrigation volumes. The paper finds that plots are water-rationed, owing to inadequate supply of power. A simple model shows that a combination of such rationing and the village-level mechanism of water sales can lead to great misallocation of water across plots, and result in large crop losses for plots that irrigate using purchased water. We infer the existence of a social contract that mitigates these potential losses in the study area to a remarkable extent; in its absence, average yields are estimated to be 18% lower. The finding that the water allocation is close to efficient (given the power supply) marks a sharp contrast with much of the existing literature. Notwithstanding the social contract, the random and inadequate supply of power, and therefore water, is inefficient. The dysfunctional power supply is part of a larger system of poor incentives to produce reliable and adequate power. In simulations we find that such reliability can improve yields by up to 10 %, and pay for a system of electricity pricing that gives incentives to the power supplier to actually provide adequate power. However, even at reasonably high power prices, irrigation volumes are large enough to continue to seriously deplete the water table. The problem is that traditional rights of water use do not take into account the shadow price of the groundwater. We provide a rough first analysis to suggest that a 15% markup on the economic unit cost of providing electricity would make for intertemporally efficient water use.Water markets, water tables, water production function, water pricing.

Economics of Biofortification

Micronutrient malnutrition affects billions of people world-wide, causing serious health problems. Different micronutrient interventions are currently being used, but their overall coverage is relatively limited. Biofortification that is, breeding staple food crops for higher micronutrient contents has been proposed as a new agriculture-based approach. Yet, as biofortified crops are still under development, relatively little is known about their economic impacts and wider ramifications. In this article, the main factors that will influence their future success are discussed, and a methodology for economic impact assessment is presented, combining agricultural, nutrition, and health aspects. Ex ante studies from India and other developing countries suggest that biofortified crops can reduce the problem of micronutrient malnutrition in a cost-effective way, when they are targeted to specific situations. Projected social returns on research investments are high and competitive with productivity-enhancing agricultural technologies. These promising results notwithstanding, biofortification should be seen as a complement rather than a substitute for existing micronutrient interventions, since the magnitude and complexity of the problem necessitate a multiplicity of approaches. Further research is needed to corroborate these findings and to address certain issues still unresolved at this stage.micronutrient malnutrition, public health, biofortification, agricultural technology, impact analysis, developing countries, Food Consumption/Nutrition/Food Safety, I1, I3, O1, O3, Q1,

Who decides to grow orange sweet potatoes? Bargaining power and adoption of biofortified crops in Uganda.

The goal of the HarvestPlus reaching end users (REU) orange sweet potato (OSP) project is to increase vitamin A intake and improve vitamin status among Vulnerable populations (women and children) in rural Uganda by introducing beta-carotene-rich OSP, as well as related messages concerning agronomy, nutrition, and marketing. Most households obtain planting material for these crops through interaction with other households. This raises a number of important questions about the roles of social interaction, intrahousehold division of labor, and gender in determining the rates at which these biofortified crops are adopted and spread. As part of the Gender, Agriculture, and Assets Project (GAAP), this study examines the effect of women’s bargaining power, as revealed in gender¬‐based patterns of ownership and control of land and assets, on adoption ofOSP and vitamin A intake among children

Assessing rural consumers’ WTP for orange, biofortified maize in Ghana with experimental auctions and a simulated radio message

Deficiencies of micronutrients such as vitamin A are widespread, expecially in Africa. Biofortified crops such as maize, bred for high levels of provitamin A might offer a solution, but these crops are often bright orange, and African maize consumers prefer white. To estimate the consumers interest in orange biofortified maize, sensory evaluations were organized in rural Ghana with white, yellow and orange maize. The effect of information on willingness to pay for biofortification was estimated using a simulated radio message. Results indicate that color preferences are highly regional, wide variation exist within regions, and the provision of information is able to change these preferences. The color of biofortified maize should therefore not be seen as major impediment, but proper information messages should be targeted at the right channels such as rural radio.maize, biofortification, consumers, experimental auction, sensory evaluation, Crop Production/Industries, Demand and Price Analysis,

Consumer acceptance of provitamin A orange maize in rural Zambia (HarvestPlus Working Paper No.4)

This study analyzes consumer acceptance of biofortified orange maize in rural Zambia by eliciting consumers’ willingness to pay. It attempts to examine the impact of nutrition information, comparing the use of simulated radio versus community leaders in transmitting the nutrition message, on consumer acceptance. Finally, it assesses whether product experience in a home-use setting influences the magnitude of premiums or discounts. The results suggest that (a) the negative perception of yellow maize does not affect orange maize which is well liked, (b) there is a premium for orange maize with nutrition information, (c) the mode of nutritional-message dissemination does not have a large impact on consumer acceptance, and (d) product experience does not translate into lower willingness to pay for orange maize

Using elicitation mechanisms to estimate the demand for nutritious maize: evidence from experiments in rural Ghana (HarvestPlus Working Paper No. 10)

In this paper we assess (a) consumers’ willingness to pay (WTP) for a recently developed variety of maize that is high in provitamin A in the context of a public health intervention and (b) the performance of three elicitation mechanisms in estimating WTP in a field experiment in Ghana. The mechanisms that we used for elicitation are the Becker-DeGroot-Marschak (BDM) mechanism, kth price auction, and choice experiment. The basic design of the experiment involved random allocation of consumers to one of three elicitation methods. This was augmented to include treatment arms to address the effect of (1) participation fees and (2) nutrition information on WTP. Estimation of BDM and kth price auction models that account for censoring of bids at the market price for maize (kenkey) and estimation of a conditional logit (CLM) model for the choice experiment that accounts for lexicographic references yield estimates of average WTP that are similar in magnitude across the three elicitation mechanisms. Variation in participation fee has no effect on estimated WTP in the two mechanisms that varied participation fee, suggesting that people did not have a higher propensity to spend out of windfall income. In the absence of information on the nutrient density of the new maize variety, subjects are willing to pay less for it than the existing varieties; however, nutrition information transforms this discount into a substantial premium