Linkages and Impacts of Cross-Border Informal Trade in Agricultural Inputs in Eastern South Asia (LITA)

With an objective to understand the dynamics of informal trade in agricultural inputs across the border of India-Bangladesh and India-Nepal, and its impact on livelihoods of farmers, including the gender dimension of those impacts, CUTS International has undertaken a project titled “Linkages and Impacts of Cross-Border Informal Trade in Agricultural Inputs in Eastern South Asia”, with support from Australian Centre for International Agricultural Research (ACIAR).

Eastern South Asia shares deep-rooted history, culture and economic ties, but the political boundaries between India, Bangladesh and Nepal, have divided the region into different countries. Though, these political boundaries have created hurdles to transact, they, don’t not affect the flow of resources and people across the borders. Due to these hurdles, for easy flow of resources, informal channels to trade are adopted. This informal sector or grey economy is that part of economy that is neither taxed, nor monitored by the government. Thus, it is important to understand the informal nature of cross-border trade, its extent and its impact on the local economy of the region.

In the past studies undertaken to quantify informal trade along India-Bangladesh and India-Nepal borders, it has been claimed that either through formal channel or informal channel, trade in food/agricultural products constitute a major proportion. Also because agriculture is a major source of livelihood in Eastern South Asia region, CUTS study will focus mainly on informal trade in agricultural input commodities, at specific locations between India-Bangladesh and India-Nepal.

This project will be implemented by CUTS, with assistance from project partners, Unnayan Shamannay (UnSn), Bangladesh, and South Asia Watch on Trade, Economics and Environment (SAWTEE), Nepal. Duration of this project is of 12 months, from July 2016 – June 2017.

Goals and Objectives

The overall objective of the project is to understand the drivers of informal trade in agricultural inputs across specific locations of the India-Bangladesh and the India-Nepal border, quantification of such informal trade and understanding of its impacts on livelihoods of small and marginalised farmers with particular focus on women led/managed farms

The specific objectives are as follows:

To understand the drivers and estimate the quantum of informal trade in agriculture inputs (seeds, fertilizers, agro-chemicals, implements, etc.) across specific locations (selected SRFSI locations) along the India-Bangladesh and the India-Nepal border and to understand the impacts of such informal trade in agricultural inputs on livelihoods of farmers in specific border areas including gender dimensions of those impacts.
To provide policy recommendations on benefits and challenges of formalisation of such informal trade in agricultural inputs across India-Bangladesh and India-Nepal border.
Based on the findings and recommendations of the study, to organise national level dissemination meeting in three capital cities with the relevant policy-makers from among trade and agriculture community to discuss benefits and challenges of formalisation of informal trade in agricultural inputs.
To print and widely disseminate the study to trade and agriculture policy community in India, Bangladesh and Nepal.

Approach and Activities

Primary data collection, through various field visits would form the backbone of the study, as informal trade is never quantified officially. The specifics of border points where fieldwork will be held along the West Bengal (India)-Bangladesh border and the Bihar (India)-Nepal border have been determined as per the locations of activities of the CIMMYT (International Maize and Wheat Improvement Center) entitled ‘Sustainable and Resilient Farming Systems Intensification in the Eastern Gangetic Plains (SRFSI) project’, which is funded by the Australian Centre for International Agricultural Research and by incorporating views of the relevant stakeholders in those border areas.

These locations are: Malda-Rajshahi and Coochbihar-Rangpur interfaces on Indo-Bangla border; and Jainagar-Dhanusha and Aradiya-Sunsari interfaces on Indo-Nepal border. Specific products will be identified at each of the mentioned locations under the broad categories of seed, fertilizers and machineries. Along with the identified products, formal and informal trade in diesel will also be studied, as it is a major component of agricultural input.

The following set of activities will be conducted:

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Review of Literature on formal and informal trade in agriculture inputs along India’s border with Bangladesh and Nepal, visit to specific SRFSI locations in border areas including discussions with SRFSI project partners, collection of secondary data from the SRFSI project and its partners, and listing of the existing dealers/retailers of those inputs in selected locations
In consultation with SRFSI project partners, fieldwork, including key informant interviews and focused group discussions in eight selected SRFSI locations to collect primary data on informal trade and those on other variables to estimate the quantum of informal trade in agricultural inputs and its impacts on livelihoods of farmers through a structured questionnaire survey (there will be four locations in India – two in West Bengal and two in Bihar, and corresponding locations in Bangladesh (two bordering West Bengal) and in Nepal (two bordering Bihar) those locations will be determined in consultation with local partners of the SRFSI project).
The magnitude of India-Bangladesh and India-Nepal informal trade in agricultural inputs will be estimated by using the Delphi technique, which is a set of procedures for eliciting and refining the opinions of a group over successive rounds of interviews.
Three feedback collections and dissemination meetings in India, Bangladesh and Nepal targeting the relevant policy-makers from among trade and agriculture community to discuss the benefits and challenges of formalisation of such informal trade.
Printing and dissemination of the report to the wider trade and agriculture policy community in India, Bangladesh and Nepal

So as to get feedback and proper guidance on the project work, CUTS will establish Project Reference Committee, a committee of five or more policy experts and virtuous academic researchers, who have meticulously worked on informal trade. Project Reference Committee will be involved in the project from time to time, as when required.

Unnayan Shamannay, Dhaka

South Asia Watch on Trade, Economics and Environment, Nepal

Stakeholder Consultation on Understanding the Dynamics of Informal Cross-border Trade in Agricultural Products in Eastern South Asia
August 4, 2017, New Delhi, India
Stakeholder Consultation Understanding the Dynamics of Cross-border Informal Trade of Agricultural Inputs between India and Bangladesh
May 16, 2017, Dhaka, Bangladesh
Stakeholder Consultation Linkages and Impacts of Cross-Border Informal Trade in Agricultural Inputs in Eastern South Asia
May 2, 2017, Kathmandu, Nepal

Awareness generation among the relevant policy-makers about benefits and challenges of the formalisation of informal trade in agricultural inputs along the India-Bangladesh and the India-Nepal border.