IDinsight
IDinsight
Jul 11 · 5 min read

By Torben Fischer

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Growth in agricultural production in sub-Saharan African has been slower than population growth, causing an increase in food imports and high rates of undernutrition.[1] It has been difficult for farmers to adopt hybrid seeds and other improved agricultural inputs, such as fertilizer. There is compelling evidence that hybrid seeds can significantly improve agricultural production and reduce its variance, thereby increasing and smoothing farmers’ profit.[2] Thus, farmers’ low adoption rates seem puzzling.

Increasing smallholder farmers’ use of improved agricultural inputs has been a major focus of policy and research. Governments and international organization have spent significant portions of their budgets to subsidize fertilizer, seeds, and other inputs.[3]

As part of a wide body of research, Duflo, Kremer and Robinson (2011) (DKR), have shown that smallholder farmers might not purchase improved inputs because they disproportionately value the dollar they spend now more than the dollar they spend in the future (also known as time-inconsistency) — even if purchasing a more expensive input now will lead to long-term profits. DKR find that providing a small subsidy to purchase fertilizer at the time of harvest, when farmers will potentially have more funds on hand, can lead to dramatic increases in fertilizer usage.

To establish this finding, DKR designed a program that offers smallholders access to fertilizer at the time of harvest. Since fertilizer is generally available in their local market, during harvest time, farmers are offered free fertilizer delivery at the date specified by the farmer. The subsidy both helps farmers commit to using fertilizer and helps them avoid the future cost of traveling to the market. As a result, smallholders’ propensity to apply fertilizer in the next planting season increases.

Given the potential gains to smallholders’ productivity and income vis-à-vis more effective use of limited government resources, one might wonder why these results have not been replicated more often or even led to drastic change in policy.

One hypothesis is that it might be prohibitively costly for any NGO, government, or private extension agent to deliver agricultural inputs to smallholders’ doorstep for free.

In a recently published paper (ungated version here), the IDinsight team evaluates a randomized study of a low-cost and easily scalable intervention to increase farmers’ uptake of another improved input: hybrid seeds. The intervention is designed to jointly mitigate the barriers keeping smallholder farmers from buying improved inputs, including issues related to time-inconsistency.

In cooperation with the Gulu Agricultural Development Company (GADC), an agribusiness operating in Northern Uganda, we randomly offer smallholder farmers the opportunity to purchase a fixed quantity of certified hybrid maize seed when they sell their crops from a previous harvest. This offer is made at stores run by the agribusiness to farmers who are visiting the store to sell crops, resulting in little change in the company’s operational cost.

Although hybrid seed is available for purchase at local markets, offering certified hybrid seeds at the point of harvest sale is expected to help farmers overcome several barriers to uptake. In our context, a majority of farmers report only limited information about where to purchase improved seeds. Providing certified seeds from a renowned supplier allows farmers to overcome trust issues related to counterfeit seeds regularly found in local markets. Receiving an offer at the time when selling harvest allows farmers to both overcome liquidity constraints — the fact that farmers do not have sufficient money to spend later in the season — and problems of time-inconsistency discussed above.

We find that 16 percent of farmers who are offered hybrid maize seed decide to purchase it. Farmers are more likely to accept this offer if the revenue they make from their post-harvest sale is larger, suggesting that liquidity constraints play a particularly important role. In the following maize season, we find that farmers offered hybrid maize seed are 8 percentage points (95 percent confidence interval [.03,.13]) more likely to plant a non-zero amount of hybrid maize compared to an average of 20 percent of farmers planting hybrid seeds in the control group. Those farmers accepting the offer at baseline increase hybrid maize planting by 50 percentage points.[4]

While these effect sizes are somewhat lower than expected, we believe that in other contexts they could be much larger. Our results show that people who are less likely to be liquidity constrained (have more money from post-harvest sales) at the time of the offer are more likely to take up the offer. The average amount of famers’ harvest sale in our study was lower than expected, at less than five times the price of the bag of seeds. If conducted at times of larger sales, the intervention would likely be even more effective.

Moreover, GADC offered hybrid seeds for sale for the first time in this study so that many potential buyers likely did not know about this opportunity. In a context where all farmers were informed one might expect higher purchasing rates. That said, our findings also suggest that farmers face multiple constraints to adoption of improved inputs that are not easily overcome, even when addressed simultaneously.

Overall, we think this research shows that in certain circumstances it is possible to design effective, low-cost interventions that address multiple barriers to hybrid seed adoption, driving increases in farmer productivity.

References

Duflo, Esther, Michael Kremer, and Jonathan Robinson. 2011. “Nudging Farmers to Use Fertilizer: Theory and Experimental Evidence from Kenya.American Economic Review 101 (6): 2350–90.

Mathenge, Mary K., Melinda Smale, and John Olwande. “The impacts of hybrid maize seed on the welfare of farming households in Kenya.Food Policy 44 (2014): 262–271.

Harou, Aurélie P., Yanyan Liu, Christopher B. Barrett, and Liangzhi You. Variable Returns to Fertiliser Use and the Geography of Poverty: Experimental and Simulation Evidence from Malawi, Journal of African Economies 26:3(2017): 342–371. https://doi.org/10.1093/jae/ejx002

Suri, Tavneet. “SELECTION AND COMPARATIVE ADVANTAGE IN TECHNOLOGY ADOPTION.Econometrica 79:1(2011):159–209. JSTOR

World Bank. 2007. World Development Report 2008 : Agriculture for Development. Washington, DC. © World Bank. https://openknowledge.worldbank.org/handle/10986/5990 License: CC BY 3.0 IGO

[1] https://www.un.org/en/africa/osaa/pdf/pubs/2013africanagricultures.pdf

[2] Among others refer to Suri 2011; Mathenge et al. 2014; Harou, et al., 2017

[3] Refer to the World Development Report 2008

[4] This work was part of the author’s dissertation research.

IDinsight Blog

Using data and evidence to improve lives

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IDinsight Blog

Using data and evidence to improve lives

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