In-Kind Transfers, Marketization Costs and Household Specialization: Evidence from Indian Farmers

Abstract

I examine the effect of in-kind staple transfers on agricultural production in a setting where transactions with markets are costly for households and result in interlinked consumption and production decisions. I leverage the expansion of India's Public Distribution system between 1993-2009 as a natural experiment generating variation in the quantity and value of staple grains transferred to households and districts. I find that larger PDS quantities are associated with modest decreases in staple production and farming and modest increases in market/comparative advantage oriented specialization, with larger effects for households and districts with higher market transaction costs or less market-oriented agriculture.

Pass-through of subsidies to prices under limited competition: Evidence from Canada’s Nutrition North program

“…The impact of cash transfers in our setting seems worth exploring as these address the same nutrition and food insecurity problems but may also be subject to similar capture by retailers. Policy interventions that increase competition -whether by increasing take-up of the subsidies by independent stores, subsidizing mail shipments from non-local retailers, or through in-kind transfers or government retail similar to India's Public Distribution System or Greenland's state-run stores (Li, 2023;Galloway, 2017) -may also be worth considering. Recent program enhancements requested by these communities are also worth evaluating as they provide more funds for local food harvesting and community food security initiatives that have the potential to enhance competition and buyer market-power.…”

“…1 Numerous studies have considered the effects of cash or cash-like (e.g. SNAP) transfers on prices in developed (Hastings and Washington, 2010;Goldin et al, 2022;Jones and Marinescu, 2022) and developing countries (Angelucci and Giorgi, 2009;Cunha et al, 2019;Filmer et al, 2022;Egger et al, 2022;Li, 2023) but generally find zero or small average price effects. However, studies that measure remoteness consistently find larger price effects in remote locations that are suggestively related to retail competition (Cunha et al, 2019).…”