In order to improve the welfare of smallholder farmers, multiple countries (e.g., Ethiopia and India) have launched digital agricultural platforms to transform traditional markets. However, there is still mixed evidence regarding the impact of these platforms and more generally how they can be leveraged to enable more efficient agricultural supply chains and markets. In this talk, we describe a body of work that provides the first rigorous impact analysis of such a platform and demonstrates how innovative price discovery mechanisms could be enabled by digital agri-platforms in resource-constrained environments. The work is focused on the Unified Market Platform (UMP) that connects all the agricultural wholesale markets in the state of Karnataka, India. Our impact assessment shows that the launch of the UMP has significantly increased the modal prices of certain commodities (2.6%-6.5%), while prices for other commodities have not changed. The analysis highlights operational and market factors that contribute to the variable impact of UMP on prices. Motivated by these insights, we collaborate closely with the Karnataka government to design, implement, and assess the impact of a new two-stage auction on the UMP.  To ensure implementability and protect farmers’ revenue, the design process is guided by practical operational considerations as well as semi-structured interviews with a majority of the traders in the field. A new behavioral auction model informed by the field insights is developed to determine when the proposed two-stage auction can generate a higher revenue for farmers than the traditional single-stage, first-price, sealed-bid auction. The new auction mechanism was implemented on the UMP for a major market of lentils in February 2019. By March 2020, commodities worth more than $19 million (USD) had been traded under the new auction. A difference-in-differences analysis demonstrates that the implementation has yielded a significant 3.6% price increase  (corresponding to a 55%-94% profit gain), benefiting over 20,000 farmers who traded in the treatment market.

This talk is based on joint work with Retsef Levi (MIT), Somya Singhvi (USC), Manoj Rajan (ReMS) and his team in Karnataka, India.

Papers: The talk will cover the following two papers with a focus on the second one:

The impact of unifying agricultural wholesale markets on prices and farmers’ profitability, with Levi, Rajan, Singhvi. PNAS, February 4, 2020, 117(5) 2366-2371. https://doi.org/10.1073/pnas.1906854117

Improving Farmers’ Income on Online Agri-platforms: Evidence from the Field, with Levi, Rajan, Singhvi. https://ssrn.com/abstract=3486623