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8/8/2019 Constraints of Small and Maginal Farmers and Institutional Options
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Yogesh BandhuGiri Institute of Development Studies, Lucknow
Constraints ofSmall & Marginal Farmers
and
Institutional OptionsOctober 22nd, 2010
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Institutions may be deliberately created, or they simply evolveover time via changes, adaptation, and adjustment to changing
circumstances and growing social needs (North, 1990).
Institutional change is a continuous transformation process in
societies, which means change in the principles of regulation and
organizations, behaviour and interaction patterns (Manig, 1991).
Institutions affect performance of the economy by their effect
on the costs of exchange (transaction costs) and cost of production
(transformation costs) (North, 1990 &Bardhan,1999).
In the absence of efficient institutions the agrarian economy
continues to struggle at a very low-level income, production and
consumption equilibriums (Ruttan,1985).
The Institutions
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Small and marginal farmers are unable to adopt capital goods and HYV
technology during the mid sixties and seventies because of difficulties and
inadequacy of institutions, cumbersome institutional procedures and
network (Parthasarthy & Prasad, 1978)
Small and marginal farmers are practicing traditional methods of
cultivation since research and scientific advice and extension services arelimited. Most of time sometimes farmers depend on the informal
information providers like input dealers and comparatively progressive
farmers.
Small and marginal farmers become less competitive and more vulnerable
in open market economy compared to those in other countries. The post-independence period marks a turning point in the history of Indian
Agriculture (Bhalla 1999) but farmers failed to respond to the opportunities
provided new developments.
The Institutions
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0.0
5.0
10.0
15.0
20.0
25.0
FiguresinPerce
ntage
Percentage of Holdings Using Hybrid Seeds
Marginal Small
Medium Large
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0.0
10.0
20.0
30.0
40.0
50.0
60.0
70.0
80.0
90.0
100.0
FiguresinPercentage
Percentage of Holdings Using Certified Seeds
Marginal Small
Medium Large
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0.0
10.0
20.0
30.0
40.0
50.0
60.0
70.0
80.0
90.0
MAH MP UP WB RAJ GUJ TN PUN ORISSA HAR AP KAR
FiguresinPerc
entage
Percentage of Holdings Taken Foundation Programme
Marginal Small
Medium Large
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0.0
20.0
40.0
60.0
80.0
100.0
120.0
FiguresinPercentage
Percntage of Area Treated with Fertilizers
Marginal Farmers Small Farmers
Medium Farmers Large Farmers
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0
50
100
150
200
250
300
350
400
450
ORISSA MP RAJ GUJ UP MAH ALL
INDIA
HAR PUN WB AP KAR TAN
FigureinNum
bers
Average Quantity of Fertilizers Applied (Kg. Per Hectare)
Marginal Small Medium Large
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0.0
20.0
40.0
60.0
80.0
100.0
120.0
FiguresinPercentage
Percentage of Operational Holdings Using Pest Control
Methods
Marginal Farmers Small Medium Large
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0.0
1.0
2.0
3.0
4.0
5.0
6.0
7.0
8.0
FiguresinNumbers
Average Number of Animal Operated Implements
Marginal Small
Medium Large
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0.00
1.00
2.00
3.00
4.00
5.00
6.00
7.00
8.00
9.00
10.00
Figuresin
Number
Average Number of Power Operated Implements
Marginal Small Medium Large
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0.00
0.50
1.00
1.50
2.00
2.50
3.00
3.50
FiguresinN
umber
Average Number of Power Operated other
Implements/Equipments
Marginal Small
Medium Large
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0.0
2.0
4.0
6.0
8.0
10.0
12.0
14.0
TN AP WB ORISSA KAR MAH ALL
INDIA
UP GUJ MP PUN HAR RAJ
Average Number of Milch Animal
Marginal Small Medium Large
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0.0
2.0
4.0
6.0
8.0
10.0
12.0
FigureinNumbers
Ownership of Other Livestock
Marginal Small
Medium Large
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0.0
10.0
20.0
30.0
40.0
50.0
60.0
70.0
FigureinP
ercentage
Percentage of Operational Holdings that took Institutional
Credit
Marginal Small
Medium Large
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0
10000
20000
30000
40000
50000
60000
Marginal Small
Medium Large
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Pre-Harvest
Poor crop selection
and diversification
Low SeedReplacement Rate
Low quality seeds
Extinction of
traditional variety
Poor and
unbalanced use of
chemicals
Harvest & Post-Harvest
Poor and
inadequate
mechanization Poor packaging,
sorting, grading &
processing
Poor logistics,
storage and cold
storage
infrastructure Inadequate basic
infrastructure such
as Power, Roads,
Water
Marketing
Inaccessible,
incomplete and
delayed marketinginformation
Presence of too
many
Intermediaries
Soft Infrastructure
Inadequate returns
on investment in
research anddevelopment
Lack of trained
human resources
Lack of efficient
rural support
infrastructure
Reasons for Poor Performance
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Reasons for Poor Performance
agriculture not being market-driven;
distorted incentive structures;
a multiplicity of laws, regulations, and taxes;
inadequate backward and forward linkages;
poor infrastructure, especially for marketing;
the poor state of markets and the way they transact;
inadequate outreach of services and credit to farmers;
lack of modernization in storage techniques and transportation methods;
inadequate information on and linkage with standards
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Emerging Challenges for Marginal and Small Farmers
Liberalization of markets
Reduction of market protection and subsidies
Stringent consumers demands (quality, safety, convenience,
CSR)
Tight legislation on food quality and food safety
Changes in technology (ICT, biotechnology, logistics)
Global agro-food grades and standards
Consumer driven market
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Public Sector Revision
Subsidiarity
Partnership
Decentralisation
Dual System
Privatization
Cost Recovery
Deconcentration
Institutional Options
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Public Revision of public
sector extension viadownsizing & some
cost recovery
(Canada, Israel, USA)
Private Cost recovery
(fee-based) systems
(OECD countries,
previously in Mexico)
Private Pluralism, partnerships,
power sharing
(Chile, Estonia,
Hungary, Venezuela,S. Korea, Taiwan)
Public Transfer (delegation) of
responsibility to other
entities
(Chile, Estonia,Hungary, Venezuela, S.
Korea, Taiwan)
MARKET REFORMS
FUNDING
DELIVERY
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Public Decentralization to lower
tiers of government
(Colombia, Indonesia,
Mexico, The Philippines,Uganda & others)
P
rivate Transfer (delegation) of
responsibility to other
entities
(Bolivia, to farmerorganizations;
Ecuador, mixed with
farmer-led NGO prog;
Peru, extensiondevolved to NGOs)
Non Market Reforms
Political, Fiscal and Administrative Issues
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linking horizontally institutions to vertical supply
chains
organizational reforms for reducing internal
transaction costs
creating financial structures capable of mobilizingventure and equity capital
reinforcing (extra-)regional forms of cooperation
introducing mixed remuneration systems
professionalization of the management.
The institutional initiatives call for:
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The institutional initiatives call for:
pluralism of extension providers, involving coordinated
partnerships with non-profit non-governmental organizations,
partnerships involving farmers and farmers organizations, and
other private sector extension-providers,
cost recovery options,
decentralization to lower tiers of government,
subsidiarity at the grassroots level.
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Thank you
Yogesh Bandhu