Determinants of marketing channel selection by high-value natural rubber producers in India: evidence from a large-scale household survey

Purpose An attempt has been made in this paper to identify the determinants of marketing channel choice among the available options for high-value natural rubber producers. The impact of these choices on welfare indicators has also been assessed. Design/methodology/approach Multinomial logit regression has been applied for the unit-level data extracted from the 77th Round of the Situation Assessment Survey, conducted by the National Sample Survey Office (NSSO). A sample of 1085 households engaged in rubber production was used to analyse existing marketing channels for disposing of output and the socio-economic factors that determine producers' participation in these channels, followed by capturing the welfare outcomes across different channels. The welfare implications were analysed by addressing potential endogeneity concerns using the multivalued treatment effect framework. Findings Our investigation found that rubber producers (84%) preferred to sell their output in the local market, despite cluster-based organisations offering premium prices (7.7% higher) and increased household consumption (20.9%). Marketing channels involving private and government stakeholders provided lower prices and reduced welfare. Household heads' education, caste affiliation, extension advisories, holding size, participation in farmer-producer organisations and rural employment schemes were identified as the key determinants influencing the choice of marketing channel. Price dissatisfaction in local markets was the primary factor reported by the rubber producers, despite ease of product disposal. However, in cluster organisations, malpractices were minimal, offering higher benefits in terms of price realisation and household welfare. Research limitations/implications This study's findings are dependent exclusively on the cross-sectional data from the NSSO, which limits the data availability for important variables like transaction cost, farmers' attitude and quality differences. Being a cross-sectional study, temporal variations in prices, production and institutional developments were not captured. Further, rubber production is geographically concentrated in Kerala, which might limit the generalisability of the findings. Despite the robustness check, the validity of treatment comparisons might be affected by the unmeasured local institutional and infrastructural development. Originality/value This paper focuses on the choice of marketing channel selection for rubber, a high-value commodity that is often under-researched. It analyses the key socio-economic factors that determine the producer's participation in the preferred marketing channel. This study presents a new policy paradigm for understanding the nuances of disposing of the final high-value output that has a significant impact on household income and welfare. In addition, major constraints faced by rubber growers in their sale outcome were identified, complementing the findings.