Exploring the role of pesticide traders in protecting farmers' benefit

Owing to the inadequacy of the public extension services, farmers in developing countries often rely on the suggestions of agricultural input traders. As profit‐making agents, these traders, in their turn, may have an incentive to exploit farmers by suggesting relatively expensive inputs. In this st...

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Bibliographic Details
Published in:Review of development economics 2023-11, Vol.27 (4), p.2248-2270
Main Authors: Mottaleb, Khondoker A., Rahut, Dil Bahadur, Shakur, Shamim
Format: Article
Language:English
Subjects:
Agricultural extension
Agriculture
Developing countries
Endogenous
Expenditures
Farmers
LDCs
Pesticides
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Summary:Owing to the inadequacy of the public extension services, farmers in developing countries often rely on the suggestions of agricultural input traders. As profit‐making agents, these traders, in their turn, may have an incentive to exploit farmers by suggesting relatively expensive inputs. In this study, the Endogenous Switching Regression (ESR) estimation method is applied to demonstrate that input traders in many ways play the substitute role of the public extension agents in a developing country. In the process, this study relied on primary information collected from 379 farmers in Bangladesh in two seasons ( N  = 758). Then the ESR estimation procedure is applied to predict farmer's expenditure on pesticides, conditional on whether or not they rely on traders' advice. Findings of this study suggest that pesticide expenditures are not statistically different between the farmers that rely on traders' suggestions and those that do not. The study thus concludes that by providing unbiased, useful information to the client farmers, profit‐maximizing agricultural input traders render the services of public extension workers, which corrects possible market failures.
ISSN:1363-6669
1467-9361
DOI:10.1111/rode.13019