Finding Missing Markets (and a Disturbing Epilogue): Evidence from an Export Crop Adoption and Marketing Intervention in Kenya

By Nava Ashraf, X. Giné, Dean S. Karlan. 2008

288 citations recorded by the source corpus.

In much of the developing world, many farmers grow crops for local or personal consumption despite export options that appear to be more profitable. Thus many conjecture that one or several markets are missing. This paper reports on a randomized controlled trial conducted by DrumNet in Kenya that attempts to help farmers adopt and market export crops. DrumNet provides smallholder farmers with information about how to switch to export crops, makes in-kind loans for the purchase of the agricultural inputs, and provides marketing services by facilitating the transaction with exporters. The experimental evaluation design randomly assigns pre-existing farmer self-help groups to one of three groups: (1) a treatment group that receives all DrumNet services, (2) a treatment group that receives all DrumNet services except credit, or (3) a control group. After one year, DrumNet services led to an increase in production of export oriented crops and lower marketing costs; this translated into household income gains for new adopters. However, one year after the study ended, the exporter refused to continue buying the cash crops from the farmers because the conditions of the farms did not satisfy European export requirements. DrumNet collapsed in this region as farmers were forced to sell to middlemen and defaulted on their loans. The risk of such events may explain, at least partly, why many seemingly more profitable export crops are not adopted.

Subfields: Business and International Management, Economics and Econometrics, General Agricultural and Biological Sciences

View Paper: https://www.semanticscholar.org/paper/b6f60d05bf0f872d696606b67e90eba625261831

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Citations in the corpus

Small Farmers, NGOs, and a Walmart World: Welfare Effects of Supermarkets Operating in Nicaragua (2013, unknown): “This is similar to magnitude effects that have been estimated elsewhere (Rao and Qaim 2011; Ashraf, Giné, and Karlan 2009; Bellemare 2012).”
Technological Innovations, Downside Risk, and the Modernization of Agriculture (2016, background): “…preferences (Duflo, Kremer, and Robinson 2011), high transaction costs due to poor infrastructure (Suri 2011), lack of information and difficulties in learning (Ashraf, Giné, and Karlan 2009; Hanna, Mullainathan, and Schwartzstein 2014), and absence of formal insurance (Karlan et al. 2014).”
Seeing is Believing? Evidence from an Extension Network Experiment (2014, unknown): “Our training intervention encompasses seven(7) SLM techniques: Mulching, Crop Rotation, Strip Tillage, Micro-basins, Contour Farming, Row Planting, and Improved Fallowing.(8) Table 1 summarizes the functionality of each of these techniques (Liniger et al.”
Innovations to Make Markets More Inclusive for the Poor (2008, unknown): “However, the programme collapsed in 2006 when export firms which had bought farmers’ crops at the beginning of the programme ceased making purchases, due to the lack of compliance with European export requirements (EurepGap) (Ashraf et al., 2008).”
Smallholder participation in contract farming: Comparative evidence from five countries (2012, background): “…exploiting panel data designs, credible instrumental variables for participation in CFAs, and randomization of interventions to properly control for exogenous drivers of both welfare changes and CFA participation (Ashraf et al., 2009; Bellemare, 2010a; Michelson et al., in press; Narayanan, 2010a).”
Using agriculture for development: Supply- and demand-side approaches (2020, unknown): “As of yet, the closest to a randomized evaluation of getting smallholders access to high value markets through contract farming was done by Ashraf et al. (2009).”
Market inefficiencies and the adoption of agricultural technologies in developing countries 1 (2013, background): “For example, Ashraf et al. (2009) describe the failure of an export crop intermediary to assure the long-run viability of an export market before encouraging adoption by farmers in Kenya.”
The Impact of Microfinance in Sub-Saharan Africa: A Systematic Review of the Evidence (2012, background): “A study focused on a combined agricultural business development and credit program in Kenya showed increased farmers’ income from export crops, but this could not be attributed to the micro-credit element of the intervention (Ashraf et al., 2008).”