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Storage infrastructure and agricultural yield: Evidence from a capital investment subsidy scheme

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  • Chatterjee, Somdeep

Abstract

In a developing economy, the availability of storage infrastructure is considered essential for two purposes; the reduction of post-harvest losses resulting in food shortage, and allowing for gains from inter-temporal trade due to potential arbitrage opportunities arising out of volatility in food grain prices. This paper provides empirical evidence on a lesser studied impact of storage infrastructure, viz, agricultural yield. The author exploits potentially exogenous variation generated by the intensity of access to a capital investment subsidy program for construction and renovation of rural godowns in India to identify causal effects of better storage on yield. He finds that the program led to an increase in rice yield by 0.3 tons per hectare, approximately a 20% increase compared to the baseline. A potential mediating channel for such an effect would be reduced storage costs facilitating better investments in productive inputs. As supportive evidence, the author finds that fertilizer consumption increased by 21% in response to the intervention.

Suggested Citation

  • Chatterjee, Somdeep, 2018. "Storage infrastructure and agricultural yield: Evidence from a capital investment subsidy scheme," Economics Discussion Papers 2018-56, Kiel Institute for the World Economy (IfW).
  • Handle: RePEc:zbw:ifwedp:201856
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    References listed on IDEAS

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    1. Aggarwal, Shilpa & Francis, Eilin & Robinson, Jonathan, 2018. "Grain today, gain tomorrow: Evidence from a storage experiment with savings clubs in Kenya," Journal of Development Economics, Elsevier, vol. 134(C), pages 1-15.
    2. Atanu Saha & Janice Stroud, 1994. "A Household Model of On-Farm Storage Under Price Risk," American Journal of Agricultural Economics, Agricultural and Applied Economics Association, vol. 76(3), pages 522-534.
    3. Fabienne Femenia, 2015. "The effects of direct storage subsidies under limited rationality: a general equilibrium analysis," Agricultural Economics, International Association of Agricultural Economists, vol. 46(6), pages 715-728, November.
    4. Basu, Karna & Wong, Maisy, 2015. "Evaluating seasonal food storage and credit programs in east Indonesia," Journal of Development Economics, Elsevier, vol. 115(C), pages 200-216.
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    1. Śmiech, Sławomir & Papież, Monika & Fijorek, Kamil & Dąbrowski, Marek A., 2019. "What drives food price volatility? Evidence based on a generalized VAR approach applied to the food, financial and energy markets," Economics - The Open-Access, Open-Assessment E-Journal, Kiel Institute for the World Economy (IfW), vol. 13, pages 1-32.

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    More about this item

    Keywords

    storage; yield; fertilizer consumption; Grameen Bhandaran Yojana;
    All these keywords.

    JEL classification:

    • Q12 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Agriculture - - - Micro Analysis of Farm Firms, Farm Households, and Farm Input Markets
    • Q18 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Agriculture - - - Agricultural Policy; Food Policy
    • O12 - Economic Development, Innovation, Technological Change, and Growth - - Economic Development - - - Microeconomic Analyses of Economic Development
    • O13 - Economic Development, Innovation, Technological Change, and Growth - - Economic Development - - - Agriculture; Natural Resources; Environment; Other Primary Products

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