Agricultural Reforms for Small Farmers in India

Last registered on March 06, 2024

Pre-Trial

Trial Information

General Information

Title
Agricultural Reforms for Small Farmers in India
RCT ID
AEARCTR-0013102
Initial registration date
February 28, 2024

Initial registration date is when the trial was registered.

It corresponds to when the registration was submitted to the Registry to be reviewed for publication.

First published
March 06, 2024, 3:37 PM EST

First published corresponds to when the trial was first made public on the Registry after being reviewed.

Locations

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Primary Investigator

Affiliation
Jakhotiya & Associates

Other Primary Investigator(s)

Additional Trial Information

Status
On going
Start date
2022-07-02
End date
2024-08-21
Secondary IDs
Prior work
This trial does not extend or rely on any prior RCTs.
Abstract
Majority of the Indian farmers are very small in terms of their land holding. Neither they are united nor educated. The heinous Indian caste system has divided these farmers into hundreds of castes and subcastes therefore they do not come together easily to conduct large size farming. As a result, they do not attain any economy of scale, which is essential for sustainable growth. Most of the small farmers follow unscientific rituals, which consume their resources, energy and time. Farmers do not pursue scientific research to improve their farming processes and programs. Most of them are unaware of the growth opportunities available from the participation in the global trade of agriculture produce. As they are financially illiterate, they do not really know the mechanism of costing and pricing of their produce. The Indian education system does not provide practical training related to agricultural processes and products. As a result, the children of farmers do not take enough interest in farming. On the other side, their traditional degrees are not found to be suitable for the manufacturing and service sectors. Hence, the young agrarian generation is stuck with useless competencies and are gradually becoming a burden for the economy.

Indian agriculture universities and research centers are not capable of guiding the small innocent farmers about weather & soil studies, selection of appropriate crops, application of fertilizers & pesticides, development of new seeds etc. Therefore, small farmers always get confused and do not really respond to the market profitably.

The distribution logistic needed for the agriculture produce is dominated by big merchants and government bureaucrats. Only a few politically connected big farmers have been exploiting the government's institutional support and subsidies. The small farmers are routinely harassed and exploited at most of the distribution centers. The Indian banking system does not support small farmers as it finds the recovery of loans a herculean task.

The government does not prepare a proactive and integrated plan, which should guide the farmers about domestic and export markets. Hence, most of the farmers do not understand the supply and demand mechanism of the market. This obviously results in over supply of their agriculture produce and under-cutting of prices in the market. Small farmers do not understand the government's economic policies and hence cannot have any long-term vision for their farm management. In India, agricultural insurance is in a pathetic condition. Farmers do not understand crop insurance well and therefore cannot use it to their advantage. As the Indian politicians and bureaucrats are not very keen about guarantying the financial viability of small size farming, Indian farmers have no clue about the future of their basic livelihood.

Around 500 small farmers from Maharashtra were personally visited and detailed one to one interactions were held. This exercise revealed the harsh realities these small farmers are facing. On the other side, both the federal and state governments have been working on only piecemeal solutions and neglecting any sustainable structural reforms. Hence, small farmers are stuck in a vicious cycle of perpetual poverty. There are numerous reports on Indian agriculture published by the government, agricultural research institutes & universities and social organizations. Unfortunately, these reports do not address the deep-rooted problems which can be solved only through structural reforms.

This research is basically focused to find out sustainable solution to the agony of the small farmers. The solutions are difficult because there are many interdependent factors, which complicate the research process. Yet, an attempt has been made to design a comprehensive model, which should consider all these factors amicably and provide a sustainable solution. This four-stage reform model has been named as 'Collective Social Entrepreneurship Model'. This model thoroughly describes the stages of structural reforms, which should pull-out the small farmers from the vicious cycle of perpetual poverty.
External Link(s)

Registration Citation

Citation
Jakhotiya, Girish. 2024. "Agricultural Reforms for Small Farmers in India." AEA RCT Registry. March 06. https://doi.org/10.1257/rct.13102-1.0
Experimental Details

Interventions

Intervention(s)
I interacted with 500 small farmers from different parts of Maharashtra, India. Initially they hesitated to open up because they thought it might be another unproductive intervention carried out by the government agencies or some social organizations. Therefore, it was very difficult to break the ice. I could connect with a few farmers through some common friends and social organizations locally active in the field of agriculture. Some of the small farmers wanted to study the questionnaire in advance so that they would prepare to talk to me. Meanwhile, the interactions were also conducted with the members of agriculture marketing centers, merchants, agents and consumer groups. Owners of a few grocery shops who were very active in the retail sale of agriculture produce were also interviewed to understand the distribution network.

The representatives of the consumer groups and retail grocery shops revealed that the major chunk of profit margin was swallowed by big merchants and agents in the distribution chain. On an average, a small farmer would get only 30% of the final price of an agriculture produce. Obviously, in most of the cases the net price received by a farmer could hardly meet the cost incurred by him. It was also observed that almost 95% of the farmers were not aware of the pricing formulae developed by the Prof. Swaminathan Committee to offer a reasonable price to a farmer. The primary study of these formulae revealed a few deficiencies in the calculations. A farmer was not at all aware about the technical process of treating his farm land as a business asset. Obviously, most of them didn't know how to calculate an ROI (Return Of Investment) on their farm land. Most of them were also not aware of a minimum monthly income needed to feed their families. The official definition of poverty prescribed by the government is also very faulty. As per my latest research, a minimum monthly income should be INR 30,000 (USD 333 approximately) to pull out a farmer from poverty. In other words, an ROI on the farm land and a minimum monthly income should together decide a reasonable price and revenue to be earned by a farmer from the sale of his agriculture produce.

In almost all the cases, it was observed that the innocent farmers were misguided and also led by their local political leaders. All the political parties from Maharashtra didn't bother to carry out any sustainable structural reforms to improve the economic condition of the farmers. During every famine or flood and during every recession the government offered only piecemeal support to the affected farmers. Even the insurance companies would deny paying them full compensation using some technical excuse. Partially this was also a result of farmers' ignorance of the insurance schemes and relevant calculations. In all, it was clearly observed that 95% of the farmers did not possess any financial literacy. A micro observation about the negotiation skills of the farmers at the sales centers pointed out that the innocence of the farmers gave an upper hand to the merchants and agents. Individually a small farmer can never win a commercial battle against the mighty network of merchants and agents. It was my obvious conclusion that the farmers must unite and this needs a big intervention by many concerned stakeholders.

During these interventions another sad reality was found that individual farmers did not cooperate with their neighbors as they belonged to different castes. Therefore, in many cases of interventions, I had to seek the support of the respective leaders of the different castes and communities of farmers. In a few cases, the interactive intervention was facilitated by the local political leaders. In all, my experience was bringing farmers together and attempting to carry out the real intervention of uniting them through a formal structure was going to be very difficult.

Another sad reality was found about the technical knowledge of the farmers. They do not possess adequate technical expertise of their farming processes. Most of them are reluctant to improve the traditional processes for want of any assured results and financial support. Almost all of them indulge in senseless yet costly religious rituals. They blindly feel that these rituals would end their financial and other miseries. Quite a few of them borrow to spend on these rituals and get indebted perpetually. Many Indian researchers have repeatedly concluded that an Indian farmer is born in poverty, lives in poverty and dies in poverty. The innocent farmers religiously blame their own destiny as a cause of their poverty. Very few of them understand and therefore try to combat the 'system' that exploits them. They also agree that their formal unity can only give them strength to change the present unfortunate situation.

The overall intervention revealed that multiple and simultaneous solutions were to be carried out to end the perpetual poverty of the farmers.
Intervention Start Date
2023-01-10
Intervention End Date
2023-10-01

Primary Outcomes

Primary Outcomes (end points)
1. Formation of 'Cooperative Collective Farming' is the only sustainable solution to end the perpetual poverty of small Indian farmers.
2. Farmers must understand the process of managing agriculture as a business and therefore they need to know the various components of agricultural entrepreneurship.
3. Financial literacy is very necessary for the farmers to fix reasonable prices of their agriculture produce. This is also essential for them to conduct successful commercial negotiations with the merchants and agents.
4. Small farmers should establish a direct network with the consumer groups and associations of small grocery shops. This direct relationship should eliminate the bad elements in the entire agriculture chain.
5. Farmers should not depend on the selfish politicians and arrogant bureaucrats to carry out their reform process. They should refer to the government agenda of agricultural reform and put pressure on the government to correct these reforms to yield sustainable solutions.
6. Economy of scale is the ground reality, which the farmers must understand and execute.
Primary Outcomes (explanation)

Secondary Outcomes

Secondary Outcomes (end points)
Secondary Outcomes (explanation)

Experimental Design

Experimental Design
1. Five hundred small farmers were interviewed in Marathi, local language of Maharashtra. Most of them were given the questionnaire in advance so that they could gather data and get ready for the interview.
2. Representatives of the consumer groups and groups of grocers were also interviewed using a suitable questionnaire.
3. The prevalent poverty among the small farmers was quantitatively described considering their primary survival needs and relevant expenditure.
4. Merchants and agents from the marketing centers were interviewed. The administrative structure of the marketing centers in Maharashtra and in other states was thoroughly studied before interviewing the merchants and agents. Physical visits were made to these centers to understand their live processes.
5. Spouses of the farmers who committed suicide were also interviewed taking care of certain psychological issues of their present state of affairs. These interviews were facilitated by the local leaders of certain self-help groups of women.
6. Senior executives from the government departments and independent institutions like Agriculture Finance Corporation, Zilla Parishad i.e. district councils were interviewed after studying the literature available on government regulations, schemes and plans.
Experimental Design Details
Not available
Randomization Method
Randomly the small individual farmers were selected from the five different zones of Maharashtra using the parameters of choice of agriculture produce, land holding, level of irrigation, type of distribution network, allied businesses to support the agriculture income etc.
Randomization Unit
Individual
Was the treatment clustered?
No

Experiment Characteristics

Sample size: planned number of clusters
Five regions of Maharashtra state.
Sample size: planned number of observations
500 small farmers
Sample size (or number of clusters) by treatment arms
500 small farmers
Minimum detectable effect size for main outcomes (accounting for sample design and clustering)
IRB

Institutional Review Boards (IRBs)

IRB Name
IRB Approval Date
IRB Approval Number