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Locking Crops to Unlock Investment : Experimental Evidence on Warrantage in Burkina Faso

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  • Delavallade,Clara Anne
  • Godlonton,Susan

Abstract

Financial market imperfections remain pervasive in developing countries, constraining potentially profitable investment decisions, especially for rural smallholder farmers. Warrantage is an innovative model of rural finance with the potential to overcome credit, storage, and commitment constraints through a localized inventory credit scheme. Exploiting random variations in household access to warrantage and intensity of access across villages, this paper studies the direct impact of this scheme on beneficiaries as well as its spillover effects. Take-up of storage is high (94 percent), while credit take-up is moderate (38 percent). Households with access to warrantage primarily store sorghum and maize and sell their production over an extended period of time, earning higher average prices and resulting in higher sales revenue ($248, or 33 percent, on average). Increased incomes are spent on long-term investments, including human capital expenditures (education), livestock purchases, and investment in agricultural inputs for the subsequent year.

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  • Delavallade,Clara Anne & Godlonton,Susan, 2020. "Locking Crops to Unlock Investment : Experimental Evidence on Warrantage in Burkina Faso," Policy Research Working Paper Series 9248, The World Bank.
    • Handle: RePEc:wbk:wbrwps:9248
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    Cited by:

    1. Le Cotty, Tristan & Maître d’Hôtel, Elodie & Subervie, Julie, 2023. "Inventory credit to enhance food security in Burkina Faso," World Development, Elsevier, vol. 161(C).
    2. Premand, Patrick & Stoeffler, Quentin, 2022. "Cash transfers, climatic shocks and resilience in the Sahel," Journal of Environmental Economics and Management, Elsevier, vol. 116(C).
    3. Peterson-Wilhelm, Bailey & Schwab, Benjamin, 2023. "Analyzing Food Price Movements Using Crowdsourced Data," 2023 Annual Meeting, July 23-25, Washington D.C. 335716, Agricultural and Applied Economics Association.
    4. 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).
    5. 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.

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    Keywords

    Crops and Crop Management Systems; Climate Change and Agriculture; Livestock and Animal Husbandry; Educational Sciences; Nutrition; Food Security;
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