Formal vs. Informal Seeds: Adoption and Productivity Differences

While the literature on seeds is replete with the supply-side aspects of the market such as seed distribution, variety development, etc., there is hardly any rigorous study on the demand side of the seed market. This paper raises three important questions related to the development of the seed sector of Bangladesh. First, which crops are produced with more formal seeds? Second, who use formal seeds more? Is it the small farms or the large farms? Third, what is the output gain from using formal seeds? Based on a survey of 700 farming households from seven districts of Bangladesh, we have found that the spread of formal seeds is taking place predominantly from some non-rice crops such as vegetables, maize, wheat, etc. which are predominantly supplied by the private sector and the smaller farms are using more formal seeds. We have also found that there is an inverse relationship between farm-size and use of formal seeds for all crops but revenue and output per unit of land is higher for the larger farms. Finally, we have found that formal seed is more productive than the informal seeds – the productivity gain is about 10 per cent for rice but much higher for non-rice crops. Based on these findings we conclude that increasing use of formal seeds will increase output but the small farmers may gain less despite adopting more formal seeds.