Bharat Ramaswami

Production Risk and Optimal Input Decisions

The paper examines the impact of production risk on a producers optimal input decisions. Whether producers use more or fewer inputs in a yield-risky environment depends on the sign of the marginal risk premium, which is determined by risk preferences and technology. I present the weakest condition on technology that is sufficient to sign the marginal risk premium for all risk-averse preferences. If this condition fails to hold, the marginal risk premium is not of the same sign for all risk averters. Results are used to explore the properties of an estimated technology.

The impact of economic reforms on R&D by the Indian seed industry

Abstract Declining support for public research and advances in technology and new forms of legal protection have induced more private agricultural research. In developing countries, this has sparked a debate about appropriate policies regarding private research. In this context, we examine empirically the consequences of reforms in India’s seed policies which loosened various restrictions on the private sector. The period since the reforms has shown a remarkable increase in R & D effort and an increase in the number of private technology suppliers . We argue these changes were largely due to policy reforms.

Costs and enforcement of biosafety regulations in India and China

This paper examines the cost of compliance and the enforcement of biosafety regulations in China. Costs were higher in India, and enforcement of regulations was more effective in China. Lower costs in China may be because national companies, government research institutes and foreign firms were all pressing for less costly regulation, while in India there was less pressure by these groups to reduce regulatory costs. Enforcement of regulations was less

Food prices and the efficiency of public intervention: the case of the public distribution system in India

Abstract As public intervention is a pervasive influence on food prices, this paper asks whether and how the inefficiency of state institutions matters to food prices. In the context of the wheat subsidy scheme in India, the paper models the implications of quality differences between public and private grain supply. As both are procured at similar prices, the lower quality of public grain marks the inefficiency of government operations. The paper proposes and empirically validates a method to test for demand switches that occur as a result of quality preference. As a result, a reduction in food subsidies increases food prices and hurts the poor even when they are not major recipients of the subsidy. This seeming paradox is contingent on the inefficiency of public interventions. Thus, the outcome will be different if the reduction in food subsidy were to be accompanied by reforms in the associated state agencies.

Status, Caste, and the Time Allocation of Women in Rural India

We argue that women may be disinclined to participate in market work in the rural areas of India because of family status concerns in a culture that stigmatizes market work by married women. We set out a theoretical framework that offers predictions regarding the effects of caste-based status concerns on the time allocation of women. We then use the all-India National Sample Survey data for the year 2004–5 and the Time Use Survey for six states of India for the year 1998–99 to empirically test these hypotheses. After controlling for a host of correlates, we find that the ratio of women’s market work to men’s declines as we move up the caste hierarchy. This ratio falls as family wealth rises, and the decline is steeper for the higher castes. Finally, the effect on women’s market work of higher education is weaker for the higher castes. These findings lend support to our theory and to the view that, through its emphasis on family status, caste plays a pivotal role in undermining the autonomy of women. Our article has implications for how culture impinges on the rate at which poverty in developing countries can be reduced.

Aggregation in Area-Yield Crop Insurance: The Linear Additive Model

Earlier analyses of area yield crop insurance schemes used a linear additive model (LAM) to express the relationship between individual and area yield. Although similar to the capital asset pricing model used in finance, the theoretical foundations of the LAM are unknown. A contribution of this paper is the derivation of the precise conditions under which area aggregation results in a LAM, thus establishing a link between micro variables and LAM parameters. The conditions are two-fold. They relate to the interaction of risks in individual technologies and on the extent of aggregation. We show that if systemic and individual risks are additive in individual yields and if the aggregation is such that the law of large numbers hold then the LAM obtains. The paper also shows how departures from these conditions affect the results derived from a LAM analysis.

How can Food Subsidies Work Better? Answers from India and the Philippines

This study explores the outcomes of food subsidies to the poor in the case of India and the Philippines. Both countries operate in-kind food subsidy programs with similar mandates, commonalities in functioning, and substantial budgetary outlays. The goal of the study is to quantify the gains to the poor from an additional unit of public spending on food subsidies. We find the expected income impacts on the poor are not more than 5% of incremental spending in either country. Part of the reason for such a low impact is poor participation in the program. But equally, it is also the case that the share of the poor in the total food subsidy is small. The reason why the poor receive such small shares is not just poor targeting. The main factor is program waste (due to fraud and excess costs). Such waste accounts for as much as 71% of the total public spending.

Grower heterogeneity and the gains from contract farming: The case of Indian poultry

Purpose - The purpose of this paper is to offer an empirical analysis of contract farming (CF) for poultry in the southern state of Andhra Pradesh in India. Design/methodology/approach - Through a probit equation, the factors that matter to their participation in contracting are evaluated. The estimation of income gains is considered within a treatment effects model. The risk benefits from contracting are estimated by simulating the variability of returns if the contract farmers were to be independent growers. Findings - This paper shows that the poultry integrators in Andhra Pradesh are able to appropriate almost the entire efficiency gains from contracting. Yet, the contract growers are better off with the contract. This outcome is because of grower heterogeneity and the way it is employed in the selection of contract growers. The paper also finds that contract growers do gain substantially in terms of risk reduction. Research limitations/implications - The CF literature reminds us that these arrangements often fail because of opportunistic behavior. The poultry example shows that contracting is a useful institution when processor interests are closely aligned to that of the grower. This paper describes the circumstances under which this alignment is obtained. Originality/value - First, it adds to the small and growing body of work that estimates the income gains to contract growers. Second and going beyond existing work on developing countries, this paper also addresses the risk benefits from contracting. Thirdly, this paper estimates the income gains from contracting to the processing firms.

Labor income and risky investments: can part-time farmers compete?

Abstract In the developed countries, a majority of farm households receive at least as much income from nonfarm sources as from the farm. Such part-time farms have survived inspite of lower returns than full-time farms. This paper considers when lower returns to part-time farming could be compensated by risk-reduction due to diversification of income sources. The paper uses a dynamic portfolio choice model with labor income. The model and results could be applied in other contexts as well.

Benefits and Costs of Biosafety Regulation in India and China

Developing countries are rushing to build effective biosafely regulatory systems in response to the spread of genetically modified organisms. So far, few of them have considered the costs and benefits of building and implementing such a system. This chapter takes a modest step in that direction by listing some of the possible costs and benefits of regulation and then giving some examples of costs and benefits to regulation in India and China. It finds that private firms’ costs of complying with biosafety regulations for Bt cotton have been substantial in India but much less in China. On the benefits side the paper provides a detailed example of economic benefits from restricting unapproved genes in China and evidence that a transparent regulatory system might increase the demand for GM products.