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

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  • Ashraf, Nava
  • Giné, Xavier
  • Karlan, Dean S.

Abstract

In much of the developing world, many farmers grow crops for local or personal consumption despite export options which appear to be more profitable. Thus many conjecture that one or several markets are missing. We report here 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.

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Paper provided by C.E.P.R. Discussion Papers in its series CEPR Discussion Papers with number 7133.

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Date of creation: Jan 2009
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Handle: RePEc:cpr:ceprdp:7133

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Keywords: Export Crop; Field Experiment; Food safety standards;

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Cited by:
  1. Msuya, E. E & Isinika, A. C., 2011. "Addressing food self-sufficiency in Tanzania: a balancing act of policy coordination," MPRA Paper 30886, University Library of Munich, Germany.
  2. Mullally, Conner, 2011. "Development in the Midst of Drought: Evaluating an Agricultural Extension and Credit Program in Nicaragua," 2011 Annual Meeting, July 24-26, 2011, Pittsburgh, Pennsylvania 108723, Agricultural and Applied Economics Association.
  3. Michelson, Hope C., 2012. "Small farmers, NGOs, and a Walmart World: Welfare effects of supermarkets operating in Nicaragua," MPRA Paper 42458, University Library of Munich, Germany.
  4. Quisumbing, Agnes R. & Pandolfelli, Lauren, 2010. "Promising Approaches to Address the Needs of Poor Female Farmers: Resources, Constraints, and Interventions," World Development, Elsevier, vol. 38(4), pages 581-592, April.
  5. Mullally, Conner, 2011. "Development in the Midst of Drought: Evaluating an Agricultural Extension and Credit Program in Nicaragua," 2011 Annual Meeting, July 24-26, 2011, Pittsburgh, Pennsylvania 108498, Agricultural and Applied Economics Association.
  6. Mullally, Conner, 2011. "Development in the Midst of Drought: Evaluating an Agricultural Extension and Credit Program in Nicaragua," 2011 Annual Meeting, July 24-26, 2011, Pittsburgh, Pennsylvania 109664, Agricultural and Applied Economics Association.
  7. Jorge Balat & Irene Brambilla & Guido Porto, 2007. "Realizing the Gains From Trade: Export Crops, Marketing Costs, and Poverty," NBER Working Papers 13395, National Bureau of Economic Research, Inc.
  8. Bignebat, C. & Vagneron, I., 2011. "Cross-border coordination in the Madagascar-EU lychee chain: the role of GlobalGAP," Working Papers MOISA 201106, UMR MOISA : Marchés, Organisations, Institutions et Stratégies d'Acteurs : CIHEAM-IAMM, CIRAD, INRA, Montpellier SupAgro, IRD - Montpellier, France.
  9. Kijima, Yoko & Otsuka, Keijiro & Sserunkuuma, Dick, 2011. "An Inquiry into Constraints on a Green Revolution in Sub-Saharan Africa: The Case of NERICA Rice in Uganda," World Development, Elsevier, vol. 39(1), pages 77-86, January.

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