Facilitating Efficient Agricultural
Markets in India
An Assessment of
Competition and Regulatory Reform
Requirements
Funded by the Australian Centre for International Agricultural Research (ACIAR)
Scott Davenport
CUTS International Workshop Presentation
CREW Project, March 2013, Jaipur
Aim, Motivations & Principles
Aim
To ensure that the gains from international and domestic market reforms translate into
real income gains to Indian farmers by facilitating the development of pro-competition
policies.
Premise
India’s trade policy needs to be complemented by ‘behind-the-border’ domestic reforms if
government policy objectives of improved productivity, higher rural employment and
incomes and enhanced food security are to be met.
A Fundamental Principle
Within supply chains, regulatory reform enables farm level price signals to be more
directly linked to market demand - this drives productivity, growth and employment.
The Contemporary Public Policy Approach
(i) Policy objectives clearly linked to accepted forms of market failure.
(ii) Regulation to address the objective should be that which least restricts competition.
Project Components
The BRICs Report
R. Chadha & S. Davenport
The Food
Corporation of India
S. McCorriston & D. MacLaren
Negotiable Warehouse
Receipts
Original
Project
Elements
J. Gujral
The Application of Competition Law
to Agriculture
J. Gujral & P. Joshi & Anuradha R.V.
Additional
Project
Elements
New
Projects
Price and Competition Issues in
the Indian Onion Market
S. Jayasuriya R. Chadha, J. Gujral,
S. McCorriston, D. MacLaren, S. Davenport
Food Supply Chain
Case Studies
R. Chadha & A. Tandon
S. Jayasuriya & S. Davenport
Competition and Commodity Price Volatility
OECD Global Competition Forum 2012 - S. Davenport
Is There a Role for Carbon Offsets in
Indian Agriculture? New ACIAR Project
A Strategic Approach to Competition
Policy Reviews of Regulation
Step 1 - Assess whether the stated objectives of regulation align with accepted
forms of market failure - i.e. public goods, externalities, information asymmetry,
anti-competitive behaviour.
Step 2 – Assess whether the current regulatory approach is the most efficient
means of achieving the objective.
Step 3 – Assess on prima facie grounds whether the regulatory restriction on
competition is likely to be a source of significant resource - use distortion i.e.:
– are there significant concerns at Steps1 and 2?;
- is the competition restriction likely to have a significant sectoral effect?
Step 4 - If “yes” to Step 3, undertake quantitative social BCA.
If “no” to Step 3, undertake qualitative social BCA.
Price and Competition Issues in the
Indian Onion Market
 NCAER & IDFC Supply Chain Participant Surveys
Identification of impediments to supply chain competition & efficiency.
 EXETER & MONASH UNIVERSITY
Onion Market Model to assess the effects of the export ban on the level
and variability of consumer and farm gate prices.
Price and Competition Issues in the
Indian Onion Market
Reform of supply chain regulation which enables certain
intermediaries to earn above normal margins would not
only have lowered consumer prices and negated the need
for the export ban, but would have done so in a manner that
avoided lower prices being imposed on the farm sector with
consequent impacts on the sectors long term international
competitive advantage.
A more competitive onion supply chain with more
participants would reduce consumer prices by 44 - 58
percent and increase the farm gate price by 15 -19 percent.
What are the key ‘methodology’
lessons relevant to the CREW Project?
Define ‘methodology’
broadly in the first instance.
 1. Case study ‘balance’ - look at both regulatory
reform & competition law issues.
 2. Frame the problem in a market failure public
policy context - we are not promoting just another
form of regulation, but a different approach to the
overall regulatory framework.
 3. Strategically pick case studies relevant to
government - pre-empt and target current and
prospective problems confronting government.
 4. What benefits do we measure?
Promote consistent understanding of key concepts
- societal welfare
- consumer surplus benefits
- producer surplus benefits
These are what need to be measured.
The Benefits From Addressing Anti-Competitive Market
Behaviour or Reforming Regulation
Price
A
S1
Societal welfare
benefits increase from
ADE to ABC
P1
D
S2
Efficiency
benefits = DBF
P2
B
Consumer surplus (benefits)
increase from ADP1 to ABP2
E
F
Producer surplus
(benefits) increase
from P1DE to P2BC
C
0
Q1
Q2
D
Quantity
 5. Lift the ‘conversation’ about benefits above
vested interests - reform is sensitive - it involves
rent redistribution.
At the same time as you are focussing on a specific reform
issue or case study, promote a complimentary broader
public conversation about sectoral productivity, growth and
innovation (or lack thereof)?

The BRICS Report:
www.ncaer.org/popuppages/EventDetails/E16Feb2011/BRICs_Discu_Paper.pdf

The FCI:
www.ncaer.org/popuppages/EventDetails/E16Feb2011/Donald&Steve.pptx
www.ncaer.org/popuppages/EventDetails/E16Feb2011/Donald&Steve.doc

APMC Markets:
www.ncaer.org/popuppages/EventDetails/E16Feb2011/R_Chadha.ppt
http://www.ncaer.org/popuppages/EventDetails/E16Feb2011/R_Chadha_Competition Regulation.doc
www.ncaer.org/popuppages/EventDetails/E16Feb2011/Jyoti_Piyush_Anuradha.ppt

Warehouse Receipts:
www.ncaer.org/popuppages/EventDetails/E16Feb2011/Jyoti%20Gujral%20and%20Piyush.ppt

Onions:
http://www.ncaer.org/downloads/Reports/Onion%20Report%20Feb%202012.pdf

OECD Global Forum: Competition and Commodity Price Volatility
http://search.oecd.org/officialdocuments/displaydocumentpdf/?cote=DAF/COMP/GF(2012)1&docLang
uage=En