High transport costs, a lack of reliable price information, and an inability to verify the quality of produce leave many farmers who produce cash crops in developing countries subject to exploitation by the intermediaries with whom they do business. The... Voir la suite High transport costs, a lack of reliable price information, and an inability to verify the quality of produce leave many farmers who produce cash crops in developing countries subject to exploitation by the intermediaries with whom they do business. The effect this exploitation has on farmers' profits, and on their incentives to invest time and resources into quality control, leads to adverse impacts in terms of both equity and efficiency, and the costs associ-ated with these are a matter of growing recognition on the part of economists and policymaker). The auction begins when a government employee visually inspects the quality and sets the initial bid. From there, the traders bid upward until the crop is sold. Government regulated mandis were specifically established to protect farmer, and open auctions were considered the most effective safeguard against traders accumulating excessive influence. However, the ability to collude among a relatively small number of traders in each mandi led to the extraction of a significant share of profits leaving little for the farmer who had no alternative method of selling. Farmers often do not have access to information about market conditions prior to selling their produce. Processors are also unable to perfectly monitor the traders. Access to information as well as direct interactions between farmers and processors can therefore have a potentially important effect on the price received by rural producers and on their behavior. Knowledge of prevailing prices enables farmers to reap the gains from a broader market search. An increase in returns can induce farmers to re-optimize their decisions about how to allocate land between alternative crops. Réduire
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