Structure of Markets and Prices in Agriculture

Abstract

Using primary household survey data, this paper attempts to study the market structure and price behaviour for major crops in Punjab and Bihar. As expected, Punjab farmers were highly commercial, producing more than four-fifth of their output for the market. Bihar farmers, on the other hand, were still subsistence-oriented producing more than half their output for self-consumption. The price index, however, ruled out any discrimination against marginal or small farmers in both states. Significant variables determining marketed surplus in the regression analysis were output, farm and family size, market channels, etc. The factors determining farm price were marketed surplus/value of output, prevalence of credit and availability of formal market channels. The findings of the study present a contrasting picture of two states whereby agricultural marketing in Punjab is in an advanced stage while Bihar’s agricultural marketing set-up is still evolving.