IDEAS home Printed from https://ideas.repec.org/p/tin/wpaper/20220091.html
   My bibliography  Save this paper

Two Birds with One Stone: Technology Adoption and Market Participation through Protection against Crop Failure

Author

Listed:
  • Wouter Zant

    (Vrije Universiteit Amsterdam)

Abstract

Most sub-Sahara African agriculture is rainfed and the key production risk is crop failure due to drought or insufficient rains. Major strategies for households to protect against the risk of crop failure are livestock rearing and storage of home produced food. Next to drought, SSA agriculture is characterized by low productivity and limited market participation, issues commonly addressed by promoting use of fertilizer and high-yielding varieties, and cultivation of high-return crops. For several reasons it is likely that protection against crop failure supports adoption of technology and cultivation of high-return crops. Against this background we explore empirically the relationship between technology adoption and market participation on the one hand and start-of-season stocks of staple food and livestock on the other hand, on the basis of 3 rounds of LSMS-ISA household survey data for Malawi (IHS-3, 4 and 5), and a panel version of these data (IHPS). We find statistically significant positive coefficients of maize stocks and livestock on technology adoption and market participation. Data and estimations support a model of developing country agriculture with seasonality, shocks and savings. In terms of policy the results suggest that supporting livestock rearing and food storage at the household level increases labour productivity in agriculture.

Suggested Citation

  • Wouter Zant, 2022. "Two Birds with One Stone: Technology Adoption and Market Participation through Protection against Crop Failure," Tinbergen Institute Discussion Papers 22-091/V, Tinbergen Institute.
    • Handle: RePEc:tin:wpaper:20220091
    as

    Download full text from publisher

    File URL: https://papers.tinbergen.nl/22091.pdf
    Download Restriction: no
    ---><---

    References listed on IDEAS

    as
    1. Pascaline Dupas & Dean Karlan & Jonathan Robinson & Diego Ubfal, 2018. "Banking the Unbanked? Evidence from Three Countries," American Economic Journal: Applied Economics, American Economic Association, vol. 10(2), pages 257-297, April.
    2. Esther Duflo & Michael Kremer & Jonathan Robinson, 2011. "Nudging Farmers to Use Fertilizer: Theory and Experimental Evidence from Kenya," American Economic Review, American Economic Association, vol. 101(6), pages 2350-2390, October.
    3. Dominik Naeher & Matthias Schündeln, 2022. "The Demand for Advice: Theory and Empirical Evidence from Farmers in Sub-Saharan Africa," The World Bank Economic Review, World Bank, vol. 36(1), pages 91-113.
    4. Jayne, Thomas S. & Mason, Nicole M. & Burke, William J. & Ariga, Joshua, 2018. "Review: Taking stock of Africa’s second-generation agricultural input subsidy programs," Food Policy, Elsevier, vol. 75(C), pages 1-14.
    5. Renkow, Mitch & Hallstrom, Daniel G. & Karanja, Daniel D., 2004. "Rural infrastructure, transactions costs and market participation in Kenya," Journal of Development Economics, Elsevier, vol. 73(1), pages 349-367, February.
    6. Nigel Key & Elisabeth Sadoulet & Alain De Janvry, 2000. "Transactions Costs and Agricultural Household Supply Response," American Journal of Agricultural Economics, Agricultural and Applied Economics Association, vol. 82(2), pages 245-259.
    7. Marshall Burke & Lauren Falcao Bergquist & Edward Miguel, 2019. "Sell Low and Buy High: Arbitrage and Local Price Effects in Kenyan Markets," The Quarterly Journal of Economics, President and Fellows of Harvard College, vol. 134(2), pages 785-842.
    8. Fink, Günther & Jack, Kelsey & Masiye, Felix, 2014. "Seasonal Credit Constraints and Agricultural Labor Supply: Evidence from Zambia," IZA Discussion Papers 8657, Institute of Labor Economics (IZA).
    9. Jeremy Foltz & Ursula Aldana & Paul Laris, 2014. "The Sahel's Silent Maize Revolution: Analyzing Maize Productivity in Mali at the Farm Level," NBER Chapters, in: African Successes, Volume IV: Sustainable Growth, pages 111-136, National Bureau of Economic Research, Inc.
    10. Jenny C. Aker & Marcel Fafchamps, 2015. "Mobile Phone Coverage and Producer Markets: Evidence from West Africa," The World Bank Economic Review, World Bank, vol. 29(2), pages 262-292.
    11. Shawn Cole & Xavier Gine & Jeremy Tobacman & Petia Topalova & Robert Townsend & James Vickery, 2013. "Barriers to Household Risk Management: Evidence from India," American Economic Journal: Applied Economics, American Economic Association, vol. 5(1), pages 104-135, January.
    12. Nathaniel D. Jensen & Christopher B. Barrett & Andrew G. Mude, 2016. "Index Insurance Quality and Basis Risk: Evidence from Northern Kenya," American Journal of Agricultural Economics, Agricultural and Applied Economics Association, vol. 98(5), pages 1450-1469.
    13. Tavneet Suri, 2011. "Selection and Comparative Advantage in Technology Adoption," Econometrica, Econometric Society, vol. 79(1), pages 159-209, January.
    14. Dercon, Stefan, 2004. "Growth and shocks: evidence from rural Ethiopia," Journal of Development Economics, Elsevier, vol. 74(2), pages 309-329, August.
    15. Dean Karlan & Robert Osei & Isaac Osei-Akoto & Christopher Udry, 2014. "Agricultural Decisions after Relaxing Credit and Risk Constraints," The Quarterly Journal of Economics, President and Fellows of Harvard College, vol. 129(2), pages 597-652.
    16. Sam Asher & Paul Novosad, 2020. "Rural Roads and Local Economic Development," American Economic Review, American Economic Association, vol. 110(3), pages 797-823, March.
    17. Lasse Brune & Xavier Giné & Jessica Goldberg & Dean Yang, 2016. "Facilitating Savings for Agriculture: Field Experimental Evidence from Malawi," Economic Development and Cultural Change, University of Chicago Press, vol. 64(2), pages 187-220.
    18. Jayne, T.S. & Mason, Nicole M. & Burke, William J. & Ariga, Joshua, 2016. "Agricultural Input Subsidy Programs In Africa: An Assessment Of Recent Evidence," Feed the Future Innovation Lab for Food Security Policy Research Papers 259509, Michigan State University, Department of Agricultural, Food, and Resource Economics, Feed the Future Innovation Lab for Food Security (FSP).
    19. Tessa Bold & Kayuki C. Kaizzi & Jakob Svensson & David Yanagizawa-Drott, 2017. "Lemon Technologies and Adoption: Measurement, Theory and Evidence from Agricultural Markets in Uganda," The Quarterly Journal of Economics, President and Fellows of Harvard College, vol. 132(3), pages 1055-1100.
    20. Aggarwal, Shilpa, 2018. "Do rural roads create pathways out of poverty? Evidence from India," Journal of Development Economics, Elsevier, vol. 133(C), pages 375-395.
    21. Michelson, Hope & Fairbairn, Anna & Ellison, Brenna & Maertens, Annemie & Manyong, Victor, 2021. "Misperceived quality: Fertilizer in Tanzania," Journal of Development Economics, Elsevier, vol. 148(C).
    22. Sebastian Sotelo, 2020. "Domestic Trade Frictions and Agriculture," Journal of Political Economy, University of Chicago Press, vol. 128(7), pages 2690-2738.
    23. Tesfaye, Wondimagegn & Tirivayi, Nyasha, 2018. "The impacts of postharvest storage innovations on food security and welfare in Ethiopia," Food Policy, Elsevier, vol. 75(C), pages 52-67.
    24. Gin, Xavier & Yang, Dean, 2009. "Insurance, credit, and technology adoption: Field experimental evidencefrom Malawi," Journal of Development Economics, Elsevier, vol. 89(1), pages 1-11, May.
    25. Marcel Fafchamps, 1992. "Cash Crop Production, Food Price Volatility, and Rural Market Integration in the Third World," American Journal of Agricultural Economics, Agricultural and Applied Economics Association, vol. 74(1), pages 90-99.
    26. Aggarwal, Shilpa & Francis, Eilin & Robinson, Jonathan, 2018. "Grain today, gain tomorrow: Evidence from a storage experiment with savings clubs in Kenya," Journal of Development Economics, Elsevier, vol. 134(C), pages 1-15.
    27. Dercon, Stefan & Hill, Ruth Vargas & Clarke, Daniel & Outes-Leon, Ingo & Seyoum Taffesse, Alemayehu, 2014. "Offering rainfall insurance to informal insurance groups: Evidence from a field experiment in Ethiopia," Journal of Development Economics, Elsevier, vol. 106(C), pages 132-143.
    28. Minten, Bart & Kyle, Steven, 1999. "The effect of distance and road quality on food collection, marketing margins, and traders' wages: evidence from the former Zaire," Journal of Development Economics, Elsevier, vol. 60(2), pages 467-495, December.
    29. Denise Hörner & Adrien Bouguen & Markus Frölich & Meike Wollni, 2022. "Knowledge and Adoption of Complex Agricultural Technologies: Evidence from an Extension Experiment," The World Bank Economic Review, World Bank, vol. 36(1), pages 68-90.
    30. Gilbert, Christopher L. & Christiaensen, Luc & Kaminski, Jonathan, 2017. "Food price seasonality in Africa: Measurement and extent," Food Policy, Elsevier, vol. 67(C), pages 119-132.
    31. Shilpa Aggarwal & Brian Giera & Dahyeon Jeong & Jonathan Robinson & Alan Spearot, 2018. "Market Access, Trade Costs, and Technology Adoption: Evidence from Northern Tanzania," NBER Working Papers 25253, National Bureau of Economic Research, Inc.
    32. Shukri Ahmed & Craig McIntosh & Alexandros Sarris, 2020. "The Impact of Commercial Rainfall Index Insurance: Experimental Evidence from Ethiopia," American Journal of Agricultural Economics, John Wiley & Sons, vol. 102(4), pages 1154-1176, August.
    33. Olivier Mahul & Charles J. Stutley, 2010. "Government Support to Agricultural Insurance : Challenges and Options for Developing Countries," World Bank Publications - Books, The World Bank Group, number 2432, December.
    34. Delavallade, Clara & Godlonton, Susan, 2023. "Locking crops to unlock investment: Experimental evidence on warrantage in Burkina Faso," Journal of Development Economics, Elsevier, vol. 160(C).
    35. Jenny C. Aker, 2010. "Information from Markets Near and Far: Mobile Phones and Agricultural Markets in Niger," American Economic Journal: Applied Economics, American Economic Association, vol. 2(3), pages 46-59, July.
    36. Jeremy R. Magruder, 2018. "An Assessment of Experimental Evidence on Agricultural Technology Adoption in Developing Countries," Annual Review of Resource Economics, Annual Reviews, vol. 10(1), pages 299-316, October.
    37. Tessa Bold & Selene Ghisolfi & Frances Nsonzi & Jakob Svensson, 2022. "Market Access and Quality Upgrading: Evidence from Four Field Experiments," American Economic Review, American Economic Association, vol. 112(8), pages 2518-2552, August.
    38. Mario J. Miranda & Katie Farrin, 2012. "Index Insurance for Developing Countries," Applied Economic Perspectives and Policy, Agricultural and Applied Economics Association, vol. 34(3), pages 391-427.
    39. Steven Were Omamo, 1998. "Transport Costs and Smallholder Cropping Choices: An Application to Siaya District, Kenya," American Journal of Agricultural Economics, Agricultural and Applied Economics Association, vol. 80(1), pages 116-123.
    40. Kazianga, Harounan & Udry, Christopher, 2006. "Consumption smoothing? Livestock, insurance and drought in rural Burkina Faso," Journal of Development Economics, Elsevier, vol. 79(2), pages 413-446, April.
    41. Omotilewa, Oluwatoba J. & Ricker-Gilbert, Jacob & Ainembabazi, John Herbert & Shively, Gerald E., 2018. "Does improved storage technology promote modern input use and food security? Evidence from a randomized trial in Uganda," Journal of Development Economics, Elsevier, vol. 135(C), pages 176-198.
    42. Basu, Karna & Wong, Maisy, 2015. "Evaluating seasonal food storage and credit programs in east Indonesia," Journal of Development Economics, Elsevier, vol. 115(C), pages 200-216.
    43. Ricker-Gilbert, Jacob & Jones, Michael, 2015. "Does storage technology affect adoption of improved maize varieties in Africa? Insights from Malawi’s input subsidy program," Food Policy, Elsevier, vol. 50(C), pages 92-105.
    44. Matsumoto, Tomoya & Yamano, Takashi, 2009. "Soil fertility, fertilizer, and the maize green revolution in East Africa," Policy Research Working Paper Series 5158, The World Bank.
    45. T.S. Jayne & Shahidur Rashid, 2013. "Input subsidy programs in sub-Saharan Africa: a synthesis of recent evidence," Agricultural Economics, International Association of Agricultural Economists, vol. 44(6), pages 547-562, November.
    Full references (including those not matched with items on IDEAS)

    Most related items

    These are the items that most often cite the same works as this one and are cited by the same works as this one.
    1. Wouter Zant, 2023. "How costly is using livestock as a savings device?," Food Security: The Science, Sociology and Economics of Food Production and Access to Food, Springer;The International Society for Plant Pathology, vol. 15(1), pages 77-110, February.
    2. Jacopo Bonan & Harounan Kazianga & Mariapia Mendola, 2019. "Agricultural Transformation and Farmers' Expectations: Experimental Evidence from Uganda," Development Working Papers 458, Centro Studi Luca d'Agliano, University of Milano.
    3. Alain de Janvry & Elisabeth Sadoulet, 2019. "Transforming developing country agriculture: Removing adoption constraints and promoting inclusive value chain development," Working Papers hal-02287668, HAL.
    4. de Janvry, Alain & Sadoulet, Elisabeth, 2020. "Using agriculture for development: Supply- and demand-side approaches," World Development, Elsevier, vol. 133(C).
    5. Porteous, Obie, 2020. "Trade and agricultural technology adoption: Evidence from Africa," Journal of Development Economics, Elsevier, vol. 144(C).
    6. Aggarwal, Shilpa & Francis, Eilin & Robinson, Jonathan, 2018. "Grain today, gain tomorrow: Evidence from a storage experiment with savings clubs in Kenya," Journal of Development Economics, Elsevier, vol. 134(C), pages 1-15.
    7. Kazushi Takahashi & Rie Muraoka & Keijiro Otsuka, 2020. "Technology adoption, impact, and extension in developing countries’ agriculture: A review of the recent literature," Agricultural Economics, International Association of Agricultural Economists, vol. 51(1), pages 31-45, January.
    8. Gross, Jeremie & Guirkinger, Catherine & Platteau, Jean-Philippe, 2020. "Buy as you need: Nutrition and food storage imperfections," Journal of Development Economics, Elsevier, vol. 144(C).
    9. Paola Mallia, 2022. "You reap what (you think) you sow? Evidence on farmers’behavioral adjustments in the case of correct crop varietal identification," PSE Working Papers hal-03597332, HAL.
    10. Wong, Ho Lun & Wei, Xiangdong & Kahsay, Haftom Bayray & Gebreegziabher, Zenebe & Gardebroek, Cornelis & Osgood, Daniel E. & Diro, Rahel, 2020. "Effects of input vouchers and rainfall insurance on agricultural production and household welfare: Experimental evidence from northern Ethiopia," World Development, Elsevier, vol. 135(C).
    11. Bloem, Jeffrey R. & Liverpool-Tasie, Saweda & Adjognon, Serge G. & Dillon, Andrew, 2022. "Private Sector Promotion of Climate-Smart Technologies: Experimental Evidence from Nigeria," 2022 Annual Meeting, July 31-August 2, Anaheim, California 322152, Agricultural and Applied Economics Association.
    12. Channa, Hira & Ricker-Gilbert, Jacob & Feleke, Shiferaw & Abdoulaye, Tahirou, 2022. "Overcoming smallholder farmers’ post-harvest constraints through harvest loans and storage technology: Insights from a randomized controlled trial in Tanzania," Journal of Development Economics, Elsevier, vol. 157(C).
    13. Daniel Agness & Travis Baseler & Sylvain Chassang & Pascaline Dupas & Erik Snowberg, 2022. "Valuing the Time of the Self-Employed," Working Papers 2022-2, Princeton University. Economics Department..
    14. Mekdim D. Regassa & Mohammed B. Degnet & Mequanint B. Melesse, 2023. "Access to credit and heterogeneous effects on agricultural technology adoption: Evidence from large rural surveys in Ethiopia," Canadian Journal of Agricultural Economics/Revue canadienne d'agroeconomie, Canadian Agricultural Economics Society/Societe canadienne d'agroeconomie, vol. 71(2), pages 231-253, June.
    15. Delavallade, Clara & Godlonton, Susan, 2023. "Locking crops to unlock investment: Experimental evidence on warrantage in Burkina Faso," Journal of Development Economics, Elsevier, vol. 160(C).
    16. María Adelaida Ortega, 2018. "Conectando mercados: vías rurales y producción agrícola en el contexto de una economía dual," Documentos CEDE 16818, Universidad de los Andes, Facultad de Economía, CEDE.
    17. Michael King & Anuj Pratab Singh, 2018. "Understanding farmers' valuation of agricultural insurance: Evidence from Vietnam," WIDER Working Paper Series wp-2018-93, World Institute for Development Economic Research (UNU-WIDER).
    18. Jensen, Nathaniel D. & Mude, Andrew G. & Barrett, Christopher B., 2018. "How basis risk and spatiotemporal adverse selection influence demand for index insurance: Evidence from northern Kenya," Food Policy, Elsevier, vol. 74(C), pages 172-198.
    19. Anuj Singh & Michael King, 2018. "Understanding farmers’ valuation of agricultural insurance: Evidence from Vietnam," WIDER Working Paper Series 93, World Institute for Development Economic Research (UNU-WIDER).
    20. Belissa, Temesgen & Bulte, Erwin & Cecchi, Francesco & Gangopadhyay, Shubhashis & Lensink, Robert, 2019. "Liquidity constraints, informal institutions, and the adoption of weather insurance: A randomized controlled Trial in Ethiopia," Journal of Development Economics, Elsevier, vol. 140(C), pages 269-278.

    More about this item

    Keywords

    risk; savings; technology adoption; market participation; sub-Sahara Africa;
    All these keywords.

    JEL classification:

    • O13 - Economic Development, Innovation, Technological Change, and Growth - - Economic Development - - - Agriculture; Natural Resources; Environment; Other Primary Products
    • O16 - Economic Development, Innovation, Technological Change, and Growth - - Economic Development - - - Financial Markets; Saving and Capital Investment; Corporate Finance and Governance
    • O33 - Economic Development, Innovation, Technological Change, and Growth - - Innovation; Research and Development; Technological Change; Intellectual Property Rights - - - Technological Change: Choices and Consequences; Diffusion Processes
    • Q12 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Agriculture - - - Micro Analysis of Farm Firms, Farm Households, and Farm Input Markets
    • Q16 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Agriculture - - - R&D; Agricultural Technology; Biofuels; Agricultural Extension Services

    NEP fields

    This paper has been announced in the following NEP Reports:

    Statistics

    Access and download statistics

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:tin:wpaper:20220091. See general information about how to correct material in RePEc.

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    If CitEc recognized a bibliographic reference but did not link an item in RePEc to it, you can help with this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: Tinbergen Office +31 (0)10-4088900 (email available below). General contact details of provider: https://edirc.repec.org/data/tinbenl.html .

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service. RePEc uses bibliographic data supplied by the respective publishers.