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

The Unsupportable Support Price: The Government in Paddy Auctions of Northern India

In most developing countries, there is an active debate on the changing role of the government in mediating market outcomes. In grain markets in India, this debate assumes a renewed significance, given the excessive accumulation of food stocks in recent years. For example, the wisdom of maintaining a 'high' Minimum Support Price has been called to question. Auction theory provides a powerful and hitherto unused tool not only for analysing the structure of grain markets and the process of price formation, but also for analysing implications of alternative government policies. Our results for a small, regulated market for parmal paddy in Northern India, where grain sales occur through the open ascending auction, suggest that (a) the government's inability to support the minimum price in the market has less to do with the poor quality of grain offered for sale, and more to do with a reluctance to accumulate stocks. (b) a lower but credibly-enforced minimum support price will not have the desired effect on government purchases. (c) a lowering of the percentage that millers are required to sell as levy to the government is consistent with a credible support price and effective management of stocks.

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,

Potential Impacts of Iron Biofortification in India

Iron deficiency is a widespread nutritional problem in developing countries, causing impaired physical activity and cognitive development, as well as maternal mortality. Although food fortification and supplementation programmes have been effective in some countries, their overall success remains limited. Biofortification, that is, breeding crops for higher micronutrient content, is a relatively new approach. We propose a methodology for ex-ante impact assessment of iron biofortification, which builds on disability-adjusted life years (DALYs) and a large household data set. Our analysis of iron-rich rice and wheat in India indicates sizeable potential health benefits. The cost-effectiveness of iron biofortification compares favourably with other interventions.biofortification, plant breeding, iron deficiency anaemia, health benefits, DALYs, cost-effectiveness, cost-benefit analysis, India, Research and Development/Tech Change/Emerging Technologies, I120, I180, I310, O150, O220, O330, Q180.,

Health benefits of biofortification - an ex-ante analysis of iron-rich rice and wheat in India

Hunger is acknowledged to impose a heavy burden on humankind with severe negative health consequences. Micronutrient malnutrition, or "hidden hunger", is an even more widespread problem, to which economic development and income growth alone are not expected to provide a solution any time soon. Existing micronutrient interventions like pharmaceutical supplementation or industrial fortification have their limitations and can be complemented by a new approach: breeding food crops for higher micronutrient densities. Knowledge about the cost-effectiveness of this new tool, also termed biofortification, is scarce. In this study, a framework for economic impact analysis is developed, which is then used for evaluation of iron-rich rice and wheat in India. Health benefits are measured and quantified using "disability-adjusted life years" (DALYs). The impact of biofortification is based on a representative data set of food consumption at the household level. Juxtaposing imputed health benefits with research and development costs proves the cost-effectiveness of the intervention; under pessimistic assumptions saving one healthy life year through biofortification only costs US$ 1.90, a cost which even declines to 36 Cents under optimistic assumptions. Extending the study to include a cost-benefit analysis shows that iron biofortification, with an internal rate of return of 74-152%, can also be a worthwhile public investment.Food Consumption/Nutrition/Food Safety,

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

Bargaining power and biofortification: The role of gender in adoption of orange sweet potato in Uganda

We examine the role of gender in adoption and diffusion of orange sweet potato, a biofortified staple food crop being promoted as a strategy to increase dietary intakes of vitamin A among young children and adult women in Uganda. As an agricultural intervention with nutrition objectives, intrahousehold gender dynamics regarding decisions about crop choice and child feeding practices may play a role in adoption decisions. Also, most households access sweet potato vines through informal exchange, suggesting again that gender dimensions of networks may be important to diffusion of the crop. We use data from an experimental impact evaluation of the introduction of OSP in Uganda to study how female bargaining power, measured by share of land and nonland assets controlled by women, affect adoption and diffusion decisions. We find that the share of assets controlled by women does not affect the probability of adopting OSP at the household level. In examining adoption decisions within households, plots of land exclusively controlled by women are not more likely to contain OSP, but plots under joint control of men and women, in which a woman has primary control over decisionmaking are significantly more likely to contain OSP. Plots exclusively controlled by men are the least likely to contain OSP. Also, we find that the share of nonland assets controlled by women increases dietary intakes of vitamin A, but this measure of female bargaining power does not increase the impact of the OSP project on vitamin A, suggesting that the project had similar impacts across households with different levels of female bargaining power

Ground water irrigation and sustainability : water markets, institutions and power supply in Northern India

This policy brief is based on SANDEE working paper no. 19-06, "Groundwater irrigation in North India : institutions and markets"In South Asia concerns about water scarcity have been mounting for some time, particularly in rural areas where food productivity critically depends on irrigation. Sustainable water consumption is therefore a key development goal, otherwise any strategy that aims to guarantee food security or tackle rural poverty will ultimately fail. This is, however, a particularly big challenge as there are many factors that influence water supply and demand; this means that it is often difficult to decide what strategic approach should be taken to make sure that water sources are used efficiently and sustainably