Sugarcane Markets

Ah, no. Don’t get psyched by the title. This is not about agriculture, and will not be cross-posted on the Indian Economy Blog. This is more to do with the festival today. Sankranthi.

The basic activity during the festival is that you visit some N houses and give them a stick of sugarcane each (along with “side dishes” such as bananas, occasionally oranges, ellu (til i think it’s called; mixed with small cut pieces of coconut, jaggery, groundnuts, etc.) and figures made out of sugar). And you get back a stick of sugarcane in return (along with similar accompaniments).

Anyways, the point I’m trying to make is that there is very little chance that the sugarcane you buy will end up in your house. Unless of course you buy some “extra stuff” for yourself. And the market encourages recycling. Each piece of sugarcane usually changes hands at least four-five times. Thus, there is a very good chance that you don’t know at all the person who originally purchased the piece of sugarcane you are going to eat.

Another result of the high churn is that it’s difficult for people to keep track of the sugarcane pieces (they don’t have DHL stickers, do they?). There’s no way anyone can remember who gave them the sugarcane that they are now eating. And so there isn’t much of a reputational risk also, in giving poor sugarcane. The only thing is the size of the sugarcane stick. Since the “quality” on that measure can be measured easily. in one glance, as long as you don’t give too short a stick (you’ll definitely be classified as cheap then), you’re ok.

Ok, so, given that the nature of the market is such, what is the incentive to buy good quality sugarcane? What is the incentive to pay more to get better sugarcane? After all after you’ve given someone a piece of sugarcane it’s unlikely she checks for the quality of what you’ve given and then picks the stick to return to you based on that. So why should you even bother about buying good sugarcane?

The other day I’d been to the market, and most of the sugarcane on display seemed to be mediocre. And now, thinking about it, I’m not surprised. Unless you are highly ethical (and the proportion of such people is small, and falling) you’ll just buy whatever you can get cheapest. Simple. And the demand for good sugarcane is so low that the market itself doesn’t exist there, and so everyone is forced to buy mediocre sugarcane. Doesn’t this remind you in some way of the Tragedy of the Commons?

Our festivals should be better designed, I say!

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