Managing Quantity, Quality, and Timing in Indian Cane Sugar Production : Ex Post Marketing Permits or Ex Ante Production Contracts?

Private sugar processors in Andhra Pradesh, India use an unusual form of vertical coordination. They issue 'permits' to selected cane growers a few weeks before harvest. These permits specify the amount of cane to be delivered during a na...

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Main Authors:	Patlolla, Sandhyarani, Goodhue, Rachael E., Sexton, Richard J.
Format:	Policy Research Working Paper
Language:	English en_US
Published:	World Bank Group, Washington, DC 2014
Subjects:	AGRIBUSINESS AGRICULTURAL ECONOMICS AGRICULTURAL LABOR AGRICULTURAL LABORERS AGRICULTURAL MARKETING AGRICULTURAL PROBLEMS AGRICULTURE CANE SUGAR COMMERCIAL CROPS CONTRACT FARMING COOPERATIVES CROP CROPPING CROPPING SEASONS CROPS CULTIVATION DISEASES DISTRIBUTION OF LAND FAMILY MEMBERS FAO FARM FARM LABOR FARM SECTOR FARM SIZE FARMER FARMER MEMBERS FARMERS FARMS FERTILIZER FLOOR PRICE FOOD MARKETS FOOD POLICY FOOD POLICY RESEARCH FOOD PROCESSING FOOD SUPPLY HARVESTING HAZARD INTEGRATION INTERNATIONAL FOOD POLICY RESEARCH INSTITUTE LAND PREPARATION LIVESTOCK LONG-TERM CONTRACTS MAJORITY OF FARMERS MILLS PACKING PESTICIDES PESTS PLANTING PRICE PREMIUM PRODUCE PRODUCT QUALITY PRODUCTION COST PRODUCTION COSTS PRODUCTION FUNCTION PRODUCTION METHODS REGIONAL DUMMIES REGIONAL EFFECTS RICE CULTIVATION RICE PRODUCTION RURAL DEVELOPMENT RURAL POPULATION SEED SMALL FARMERS SOIL QUALITY SUCROSE SUGAR CANE SUGAR FACTORIES SUGAR INDUSTRY SUGARCANE SWEETENERS TRANSFER OF TECHNOLOGY UNREGULATED MARKETS VILLAGE LEADERS VILLAGE LEVEL YIELDS
Online Access:	http://documents.worldbank.org/curated/en/2014/07/19878480/managing-quantity-quality-timing-indian-cane-sugar-production-ex-post-marketing-permits-or-ex-ante-production-contracts http://hdl.handle.net/10986/19348

id	okr-10986-19348
recordtype	oai_dc
spelling	okr-10986-193482021-04-23T14:03:51Z Managing Quantity, Quality, and Timing in Indian Cane Sugar Production : Ex Post Marketing Permits or Ex Ante Production Contracts? Patlolla, Sandhyarani Goodhue, Rachael E. Sexton, Richard J. AGRIBUSINESS AGRICULTURAL ECONOMICS AGRICULTURAL LABOR AGRICULTURAL LABORERS AGRICULTURAL MARKETING AGRICULTURAL PROBLEMS AGRICULTURE CANE SUGAR COMMERCIAL CROPS CONTRACT FARMING COOPERATIVES CROP CROPPING CROPPING SEASONS CROPS CULTIVATION DISEASES DISTRIBUTION OF LAND FAMILY MEMBERS FAO FARM FARM LABOR FARM SECTOR FARM SIZE FARMER FARMER MEMBERS FARMERS FARMS FERTILIZER FLOOR PRICE FOOD MARKETS FOOD POLICY FOOD POLICY RESEARCH FOOD PROCESSING FOOD SUPPLY HARVESTING HAZARD INTEGRATION INTERNATIONAL FOOD POLICY RESEARCH INSTITUTE LAND PREPARATION LIVESTOCK LONG-TERM CONTRACTS MAJORITY OF FARMERS MILLS PACKING PESTICIDES PESTS PLANTING PRICE PREMIUM PRODUCE PRODUCT QUALITY PRODUCTION COST PRODUCTION COSTS PRODUCTION FUNCTION PRODUCTION METHODS REGIONAL DUMMIES REGIONAL EFFECTS RICE CULTIVATION RICE PRODUCTION RURAL DEVELOPMENT RURAL POPULATION SEED SMALL FARMERS SOIL QUALITY SUCROSE SUGAR CANE SUGAR FACTORIES SUGAR INDUSTRY SUGARCANE SWEETENERS TRANSFER OF TECHNOLOGY UNREGULATED MARKETS VILLAGE LEADERS VILLAGE LEVEL YIELDS Private sugar processors in Andhra Pradesh, India use an unusual form of vertical coordination. They issue 'permits' to selected cane growers a few weeks before harvest. These permits specify the amount of cane to be delivered during a narrow time period. This article investigates why processors create uncertainty among farmers using ex post permits instead of ex ante production contracts. The theoretical model predicts that ex post permits are more profitable than ex ante contracts or the spot market under existing government regulations in the sugar sector, which include a binding price floor for cane and the designation of a reserve area for each processor wherein it has a legal monopsony for cane. The use of ex post permits creates competition among farmers to increase cane quality, which increases processor profits and farmer costs. Empirical analysis supports the hypothesis that farmers operating in private factory areas have higher unit production costs than do their counterparts who patronize cooperatives. 2014-08-15T14:38:34Z 2014-08-15T14:38:34Z 2014-07 http://documents.worldbank.org/curated/en/2014/07/19878480/managing-quantity-quality-timing-indian-cane-sugar-production-ex-post-marketing-permits-or-ex-ante-production-contracts http://hdl.handle.net/10986/19348 English en_US Policy Research Working Paper;No. 6975 CC BY 3.0 IGO http://creativecommons.org/licenses/by/3.0/igo/ World Bank Group, Washington, DC Publications & Research :: Policy Research Working Paper Publications & Research South Asia India
repository_type	Digital Repository
institution_category	Foreign Institution
institution	Digital Repositories
building	World Bank Open Knowledge Repository
collection	World Bank
language	English en_US
topic	AGRIBUSINESS AGRICULTURAL ECONOMICS AGRICULTURAL LABOR AGRICULTURAL LABORERS AGRICULTURAL MARKETING AGRICULTURAL PROBLEMS AGRICULTURE CANE SUGAR COMMERCIAL CROPS CONTRACT FARMING COOPERATIVES CROP CROPPING CROPPING SEASONS CROPS CULTIVATION DISEASES DISTRIBUTION OF LAND FAMILY MEMBERS FAO FARM FARM LABOR FARM SECTOR FARM SIZE FARMER FARMER MEMBERS FARMERS FARMS FERTILIZER FLOOR PRICE FOOD MARKETS FOOD POLICY FOOD POLICY RESEARCH FOOD PROCESSING FOOD SUPPLY HARVESTING HAZARD INTEGRATION INTERNATIONAL FOOD POLICY RESEARCH INSTITUTE LAND PREPARATION LIVESTOCK LONG-TERM CONTRACTS MAJORITY OF FARMERS MILLS PACKING PESTICIDES PESTS PLANTING PRICE PREMIUM PRODUCE PRODUCT QUALITY PRODUCTION COST PRODUCTION COSTS PRODUCTION FUNCTION PRODUCTION METHODS REGIONAL DUMMIES REGIONAL EFFECTS RICE CULTIVATION RICE PRODUCTION RURAL DEVELOPMENT RURAL POPULATION SEED SMALL FARMERS SOIL QUALITY SUCROSE SUGAR CANE SUGAR FACTORIES SUGAR INDUSTRY SUGARCANE SWEETENERS TRANSFER OF TECHNOLOGY UNREGULATED MARKETS VILLAGE LEADERS VILLAGE LEVEL YIELDS
spellingShingle	AGRIBUSINESS AGRICULTURAL ECONOMICS AGRICULTURAL LABOR AGRICULTURAL LABORERS AGRICULTURAL MARKETING AGRICULTURAL PROBLEMS AGRICULTURE CANE SUGAR COMMERCIAL CROPS CONTRACT FARMING COOPERATIVES CROP CROPPING CROPPING SEASONS CROPS CULTIVATION DISEASES DISTRIBUTION OF LAND FAMILY MEMBERS FAO FARM FARM LABOR FARM SECTOR FARM SIZE FARMER FARMER MEMBERS FARMERS FARMS FERTILIZER FLOOR PRICE FOOD MARKETS FOOD POLICY FOOD POLICY RESEARCH FOOD PROCESSING FOOD SUPPLY HARVESTING HAZARD INTEGRATION INTERNATIONAL FOOD POLICY RESEARCH INSTITUTE LAND PREPARATION LIVESTOCK LONG-TERM CONTRACTS MAJORITY OF FARMERS MILLS PACKING PESTICIDES PESTS PLANTING PRICE PREMIUM PRODUCE PRODUCT QUALITY PRODUCTION COST PRODUCTION COSTS PRODUCTION FUNCTION PRODUCTION METHODS REGIONAL DUMMIES REGIONAL EFFECTS RICE CULTIVATION RICE PRODUCTION RURAL DEVELOPMENT RURAL POPULATION SEED SMALL FARMERS SOIL QUALITY SUCROSE SUGAR CANE SUGAR FACTORIES SUGAR INDUSTRY SUGARCANE SWEETENERS TRANSFER OF TECHNOLOGY UNREGULATED MARKETS VILLAGE LEADERS VILLAGE LEVEL YIELDS Patlolla, Sandhyarani Goodhue, Rachael E. Sexton, Richard J. Managing Quantity, Quality, and Timing in Indian Cane Sugar Production : Ex Post Marketing Permits or Ex Ante Production Contracts?
geographic_facet	South Asia India
relation	Policy Research Working Paper;No. 6975
description	Private sugar processors in Andhra Pradesh, India use an unusual form of vertical coordination. They issue 'permits' to selected cane growers a few weeks before harvest. These permits specify the amount of cane to be delivered during a narrow time period. This article investigates why processors create uncertainty among farmers using ex post permits instead of ex ante production contracts. The theoretical model predicts that ex post permits are more profitable than ex ante contracts or the spot market under existing government regulations in the sugar sector, which include a binding price floor for cane and the designation of a reserve area for each processor wherein it has a legal monopsony for cane. The use of ex post permits creates competition among farmers to increase cane quality, which increases processor profits and farmer costs. Empirical analysis supports the hypothesis that farmers operating in private factory areas have higher unit production costs than do their counterparts who patronize cooperatives.
format	Publications & Research :: Policy Research Working Paper
author	Patlolla, Sandhyarani Goodhue, Rachael E. Sexton, Richard J.
author_facet	Patlolla, Sandhyarani Goodhue, Rachael E. Sexton, Richard J.
author_sort	Patlolla, Sandhyarani
title	Managing Quantity, Quality, and Timing in Indian Cane Sugar Production : Ex Post Marketing Permits or Ex Ante Production Contracts?
title_short	Managing Quantity, Quality, and Timing in Indian Cane Sugar Production : Ex Post Marketing Permits or Ex Ante Production Contracts?
title_full	Managing Quantity, Quality, and Timing in Indian Cane Sugar Production : Ex Post Marketing Permits or Ex Ante Production Contracts?
title_fullStr	Managing Quantity, Quality, and Timing in Indian Cane Sugar Production : Ex Post Marketing Permits or Ex Ante Production Contracts?
title_full_unstemmed	Managing Quantity, Quality, and Timing in Indian Cane Sugar Production : Ex Post Marketing Permits or Ex Ante Production Contracts?
title_sort	managing quantity, quality, and timing in indian cane sugar production : ex post marketing permits or ex ante production contracts?
publisher	World Bank Group, Washington, DC
publishDate	2014
url	http://documents.worldbank.org/curated/en/2014/07/19878480/managing-quantity-quality-timing-indian-cane-sugar-production-ex-post-marketing-permits-or-ex-ante-production-contracts http://hdl.handle.net/10986/19348
_version_	1764443794098356224

Managing Quantity, Quality, and Timing in Indian Cane Sugar Production : Ex Post Marketing Permits or Ex Ante Production Contracts?

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