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Adverse selection in informal maize markets in Benin

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  • Kadjo, Didier
  • Ricker-Gilbert, Jacob
  • Tahirou, Abdoulaye
  • Shively, Gerald
  • Baco, Nasser

Abstract

We use panel data from Benin to investigate potential adverse selection in informal maize markets by matching farmers’ maize sales with their knowledge, practices and perception of maize quality. Evidence suggests that rural households market a lower share of their grain stocks when they have better knowledge about quality issues and also invest in improving quality. This is most likely because there is no quality control and the price premium received for higher quality maize is not sufficient to incentivize improvements or investments in storage. We also find that farmers who sell a larger share of their maize stocks into markets might perceive that their storage practices impair quality. This behaviour is observed in the use of chemical protectant for which knowledge and information are limited in rural areas. Our findings highlight the need to develop long term grades and standards in African grain markets to ensure product differentiation and therefore develop rural markets through improved sale transactions. There is also need to provide rural sellers with better access to information about quality issues along with appropriate storage practices and technologies.

Suggested Citation

  • Kadjo, Didier & Ricker-Gilbert, Jacob & Tahirou, Abdoulaye & Shively, Gerald & Baco, Nasser, 2016. "Adverse selection in informal maize markets in Benin," 2016 Fifth International Conference, September 23-26, 2016, Addis Ababa, Ethiopia 249289, African Association of Agricultural Economists (AAAE).
    • Handle: RePEc:ags:aaae16:249289
    DOI: 10.22004/ag.econ.249289
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    Keywords

    Crop Production/Industries; Marketing; Production Economics;
    All these keywords.

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