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

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 co...

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Bibliographic Details
Main Authors:	Ashraf, Nava, Giné, Xavier, Karlan, Dean
Format:	Policy Research Working Paper
Language:	English
Published:	World Bank, Washington, DC 2012
Subjects:	ACCESS TO CREDIT ADMINISTRATIVE DATA AGRICULTURAL ECONOMICS AGRICULTURAL EXTENSION AGRICULTURAL INPUTS AGRICULTURAL LABOR AGRICULTURAL PRACTICES AGRICULTURAL TECHNOLOGY AGRICULTURAL TRADE AGRICULTURE ANIMALS AUDITS BANANAS BASE YEAR BEANS BORROWING BUSINESS PROFITABILITY BUSINESS SCHOOL BUYER BUYERS CASH CROPS CERTIFICATION COSTS CHECKS COFFEE COLLATERAL COMMERCIAL BANK COMMERCIAL BANKS COMMERCIALIZATION COMPETITIVE MARKETS CONSUMERS CONTRACT FARMING CONTRIBUTION COOPERATIVES CORN COST OF TRANSPORT CREDIT GROUP CREDIT GROUPS CREDIT PROGRAM CREDITS CROP CROP PRODUCTION CROP VARIETIES CROPS CULTIVATION DECISION MAKING DEPOSIT DEVELOPMENT ECONOMICS ECONOMIC DEVELOPMENT EXPECTED VALUE EXPENDITURE EXPENDITURES EXPORT CROP EXPORT CROPS EXTENSION SERVICES FAMILY MEMBERS FAO FARM FARM ACTIVITIES FARMER FARMERS FARMING FARMS FERTILIZER FINANCIAL INSTITUTIONS FISHERIES FLOWERS FOOD SAFETY FORMAL BANK FORMAL FINANCIAL INSTITUTIONS GREEN REVOLUTION HARVESTING HORTICULTURAL CROPS HORTICULTURAL EXPORTS HORTICULTURAL MARKETS HORTICULTURE HORTICULTURE DEVELOPMENT HORTICULTURE SECTOR HOUSEHOLD INCOME HOUSEHOLDS HUMAN CAPITAL IDS IFPRI INFORMED DECISION INSURANCE INTERNATIONAL BANK INTERNATIONAL PRICE LACK OF ACCESS LATRINES LINE OF CREDIT LITERACY LOAN LOAN REPAYMENT LOAN SIZE LOTTERIES LOW-INCOME MAINTENANCE COSTS MAIZE MARKETING MICRO-CREDIT NET LOSS OUTREACH PENSION PENSIONS PERSONAL SAVINGS PESTICIDE PESTICIDE RESIDUE PLANTATIONS PLANTING POLITICAL ECONOMY POTATOES POULTRY PRICE FLUCTUATIONS PRICE INDEX PROBABILITY PRODUCE PRODUCTIVITY PROFITABILITY PUBLIC TRANSPORT RECEIPTS RECORD KEEPING REMITTANCES REPAYMENT RESEARCH ASSISTANCE RISK TOLERANCE SALARIES SALE SAVINGS ACCOUNT SAVINGS ACCOUNTS SAVINGS SERVICES SEEDS SELF-EMPLOYMENT SMALL FARMERS SMALL FARMS SMALL-SCALE FARMERS SMALL-SCALE PRODUCERS SMALLHOLDER SMALLHOLDER FARMERS SMALLHOLDERS SOCIAL ASSISTANCE SOCIAL NETWORKS SOCIAL SERVICES SOIL ANALYSIS SOURCES OF INCOME STATE UNIVERSITY SUB-SAHARAN AFRICA TAKE-UP RATES TOMATOES TOTAL COST TOTAL SAVINGS TRANSACTION TRANSPORTATION SERVICES VALUABLE VEGETABLE TRADE VEGETABLES VILLAGE VILLAGES WAGES YIELDS
Online Access:	http://documents.worldbank.org/curated/en/2008/01/8943644/finding-missing-markets-disturbing-epilogue-evidence-export-crop-adoption-marketing-intervention-kenya http://hdl.handle.net/10986/6448

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Summary:	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.

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

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