Seeds, Soil and Machines: India's Farm Inputs
The Village Input Dealer
How local input dealers act as sellers, advisers and lenders to farmers, and the conflicts of interest this creates.
In many villages, the input dealer is one of the most important people for farmers.
Many roles
- Seller of seeds, fertilisers and pesticides.
- Adviser on what to use and when.
- Lender, selling inputs on credit to be repaid after harvest.
- Sometimes a buyer of the crop.
Interlinked markets
When the same person provides credit and inputs and sometimes buys the output, economists call these interlinked markets. The farmer may have little bargaining power.
Conflicts of interest
- Dealers may recommend more or costlier products.
- Credit prices are often hidden in higher input prices.
Why farmers rely on them
- Trust and personal relationships.
- Convenience and credit when banks won’t lend.
- Advice when extension workers are scarce.
Improving the system
- Training dealers: the DAESI diploma programme trains input dealers in agronomy.
- PM Kisan Samriddhi Kendras: fertiliser shops converted into one-stop centres (2022).
- Digital advice to farmers.
The credit in the price
A dealer sells fertiliser on credit until harvest. The price is higher than cash price, hiding an interest rate the farmer doesn't see.
Thinking dealers only sell products
They also advise and lend, creating both help and conflicts of interest.
Key takeaways
- Input dealers sell, advise and lend to farmers.
- Interlinked markets can reduce farmers' bargaining power.
- Conflicts of interest can push more or costlier products.
- Dealer training and one-stop centres aim to improve advice.
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