Regulations, brokers, and interlinkages: The institutional organization of wholesale markets in India

Bart Minten (), Anneleen Vandeplas and Johan Swinnen

LICOS Discussion Papers from LICOS - Centre for Institutions and Economic Performance, KU Leuven

Abstract: There is a vigorous debate on the liberalization of heavily regulated agricultural markets in India. A crucial institutional characteristic is the role of state regulated brokers in wholesale markets. Relying on data from a unique survey in Uttarakhand, a state in North-India, we find that regulations on margins are ineffective as most brokers charge rates that significantly exceed the regulated ones. We also find that a majority of farmers self-select into long-term relationships with brokers. These relationships allow some of the farmers to interlink credit and insurance markets to the agricultural output market. This interlinkage does however not appear to be an instrument for farmer exploitation (as it does not lead to worse inputs, high interest rates, or lower implicit output prices), but is seemingly an extra service by brokers as to establish farmer loyalty to him and thus to ensure future supplies.

Keywords: India; agricultural marketing; brokers; interlinkages (search for similar items in EconPapers)
JEL-codes: L15 Q12 Q13 (search for similar items in EconPapers)
Date: 2011
New Economics Papers: this item is included in nep-agr and nep-reg
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (1)

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Journal Article: Regulations, Brokers, and Interlinkages: The Institutional Organization of Wholesale Markets in India (2011)
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Persistent link: https://EconPapers.repec.org/RePEc:lic:licosd:28811

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