Market-Oriented Farmer Collective Membership and Farm Income in Jammu & Kashmir: Evidence from Apple- and Vegetable-Growing Regions

Abstract

The land use features of Jammu and Kashmir are small and fragmented land holdings, high reliance on horticulture, challenging topography and limited market access. These may entail high transaction costs and restriction on bargaining power for farmers, especially within the apple and vegetable value chain. Farmer collectives such as Farmer Producer Organizations and others based on farmers’ organizations have been found to facilitate the aggregation of produce, provide better market access, reduce transaction costs and enhance farmers’ involvement in farmers’ value chains. The study aimed at finding out if there was any relationship between farmer collectives and increased farm income among visitors to apple and vegetable farmers in Jammu and Kashmir who belong to market-oriented farmer collectives. The analysis is based upon primary data from a cross-sectional survey of farmers, including 180 farmers and 180 non-farmers in market-oriented farmer collectives. Two kinds of treatment effects are estimated: the actual treatment effect and the counterfactual treatment effect, with the former considered in this paper as the exogenous treatment effect on average income of members, and the latter as the conditional treatment effect for those eligible for the collective but who wish to receive a payoff directly from the firm. The baseline approach used is Ordinary Least Squares estimation, while an Endogenous Switching Regression framework is used to account for potential self-selection effects both into collective membership and to estimate the actual treatment and potential counterfactual treatment effects on average income for members. The findings showed that collective members’ income from their farming activity is better than the non-members who are similar. At the time of testing, membership was estimated to lead to a substantial per capita income difference on the ATET, due to observable selection as well as unobservable selection at the time of the test, of INR 71,500 a year. The estimated effects also vary across the production systems with an estimate of INR 89,200 for apple growers and INR 46,800 for vegetable growers. Collective membership under market-oriented approach may be a factor to better farm income in geographically limited agricultural areas as it enables farmers’ participation in markets and boosts the farmers’ access to the collective economic services. The study emphasized improving market linkages, aggregation, institutional services, and value-chain integration in the farmer groups in J&K.