Linking Farms to Markets: Reducing Transaction Costs and Enhancing Bargaining Power

Market access determines the income of agricultural households and incentivizes the cultivation of diverse crops. Markets in India are mostly unorganized with limited infrastructure limiting their ability to cater to quality requirements and specifications demanded by urban consumers. Therefore, parallel to traditional markets, direct linkages with farms and alternative markets based on electronic sales platforms, new commodity futures and warehousing systems are needed. In this chapter, we discuss the scope of small farms to effectively link to value chains and new marketing platforms. We show that reducing transaction costs, developing and improving market infrastructure and limiting the influence of intermediaries are critical. Also, having producer organizations rectify scale disadvantages will enable better participation of smallholders in different marketing arrangements.