Market participation, market impact and marketing efficiency: an integrated market research on smallholder paddy farmers from Eastern India

Abstract

PurposeThe study aims to analyze the impact of market participation on small paddy farmers' income and consumption expenditure. The study also estimates various determinants affecting the market participation of smallholders. Further, the study computes the efficiency of different paddy marketing channels and identifies the determinants that impact the marketing channel selection of paddy growers in Eastern India.Design/methodology/approachThe study used the propensity score matching (PSM) approach to measure the impact of market participation on farm income and per capita consumption. Further, the study employed Acharya and Aggarwal's composite index approach to estimate the marketing efficiency of various paddy marketing channels. Further, a multinomial logit model was used to determine the marketing channel selection constraints.FindingsThe outcomes indicate that market participation positively impacts farm income and consumption expenditure. Education, membership in farmers' organizations, price information and distance to the marketplace significantly affect farmers' market participation. The results show that the producer–retailer marketing channel is the most efficient compared to others. However, most paddy farmers sell paddy to farmgate collectors due to a lack of market information, vehicle ownership, storage system, and inability to take the risk of venturing out of the farmgate into markets.Research limitations/implicationsThe study uses primary data and captures only farmers' perspectives to measure the impact of market participation, marketing channel efficiency and determinants for market channel selection. The other stakeholder's perceptions can be included in future studies.Originality/valueRarely does any study identifies the efficiency of different marketing channels for paddy farmers in India and includes cognitive factors like risk perception and trust in buyers as constraints for market channel selection.