Thomas Reardon

The rapid global rise of agricultural drones: Evidence, drivers, impacts and an agenda for future research

Commercial small scale vegetable producers and inclusive agricultural transformation in Odisha: An introduction to the methods and hypotheses of the INCATA project

The research project “Tracking commercial small-scale producers for inclusive agricultural transformation” (INCATA) studied the relationships between commercial small-scale producers (farmers) and micro, small, and medium enterprises (MSMEs) in horticulture value chains in Odisha, India. The goal was to understand whether and how these relationships could contribute to inclusive agricultural trans-formation. The project was designed to address several questions. This was based on the assumption that im-proved understanding of these dynamics will inform more effective policy design and implementation in support of inclusive agricultural transformation: 1)What factors kickstart agricultural commercialization? How do small-scale producers become commercial, how do MSMEs upstream and downstream of the farm get started, and how do these two sets of actors co-develop together? 2)To what degree does the co-development of commercial small-scale farms and supporting MSMEs translate into poverty reduction and women’s economic empowerment? Who is included, and who is excluded, or gets stuck at low levels of inclusion, or slips backward? What are the economic opportunities available for youth in the transformation process? 3)What policies and investments have the potential to accelerate the symbiotic co-development of commercial small-scale producers and MSMEs, and the inclusive effects of their co-development? To address these questions, INCATA focused on the value chain associated with commercial small-scale horticulture (vegetable cultivation) in Odisha. The vegetable value chain was selected because of the high level of participation and commercial orientation among small-scale vegetable producers, the high value of vegetable crops relative to staples, and the importance of vegetables for nutrition.

Are the relationships between actors in Odisha’s vegetable value chains parasitic or symbiotic?

This project note identifies the following key findings in answer to the question of whether the relationships between off-farm micro, small and medium enterprises (MSMEs) and commercial small-scale vegetable farmers in Odisha’s vegetable value chains are parasitic or symbiotic: Relationships between MSMEs and farms in vegetable value chains in Odisha are predominantly symbiotic, not exploitative. Contrary to common assumptions, we find little evidence for the existence of parasitic credit relations between traders, input suppliers and smallholder vegetable farmers. Relationships between MSMEs and farms in vegetable value chains in Odisha are predominantly symbiotic, not exploitative. Contrary to common assumptions, we find little evidence for the existence of parasitic credit relations between traders, input suppliers and smallholder vegetable farmers. Value chain credit is relatively uncommon. More than 90 percent of input suppliers and retailers provide no credit of any kind, and fewer than 2 percent of surveyed enterprises impose exclusive tied-credit obligations on buyers or sellers. Trade credit functions primarily as short-term working capital, not a means of control. Wholesalers allowed buyers to delay payments for vegetables for several days in almost 40 percent of their most recent sales transactions. Farmers are not heavily credit constrained. Half of vegetable farmers borrowed money to fund agriculture within the past year, and only 5 percent of non-borrowing vegetable farmers reported that they wished to access agricultural credit but were unable to. Most farmers borrowed from family and friends or self-help groups. Less than 2 percent of loans originated from wholesalers or input suppliers. Input suppliers are an important source of advisory services for farmers. Nearly half of farmers sought advice from input suppliers during their most recent purchase, and over half received it, largely free of charge. Wholesalers and retailers often provide transport services when sourcing or supplying vegetables. These services are usually costed into the price of goods received or sold, but are convenient for time- or mobility-constrained farmers and other trading partners. Much of the transport organized by traders is supplied by third-party service providers (transport businesses). Provision of other types of service by wholesalers, retailers, and input suppliers to their suppliers and customers are quite limited, indicative of an intermediate level of value chain transformation. Farmers undertake more product upgrading and value addition activities than wholesalers or retailers. Many farmers grade, wash, and remove damaged produce prior to sale, enhancing value capture and simultaneously reducing transaction costs for buyers. Market “thickness” and competition moderate exploitative behavior. Improvements in infrastructure, mobility, communications, and the spatial clustering of farms and MSMEs may limit the ability of marketing intermediaries to create dependencies among farmers, and improve access to information and markets, lowering barriers to entry and giving rise to outcomes that are more symbiotic than exploitative.