Fair Trade, Unfair Competition: The Effect of Reducing Sales Uncertainty on Farmers’ Welfare

Last registered on January 03, 2023
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Pre-Trial

Trial Information

General Information

Title
Fair Trade, Unfair Competition: The Effect of Reducing Sales Uncertainty on Farmers’ Welfare
RCT ID
AEARCTR-0010636
Initial registration date
December 23, 2022

Initial registration date is when the trial was registered.

It corresponds to when the registration was submitted to the Registry to be reviewed for publication.

First published
January 03, 2023, 4:53 PM EST

First published corresponds to when the trial was first made public on the Registry after being reviewed.

Locations

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Primary Investigator

Name
Claude Raisaro
Affiliation
University of Zurich Econ Dep
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Other Primary Investigator(s)

PI Name
Francesco Loiacono
PI Affiliation
IIES, Stockholm university
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Additional Trial Information

Status
On going
Start date
2022-12-12
End date
2023-08-30
Keywords
Agriculture, Behavior, Environment & Energy, Firms & Productivity
Additional Keywords
monopsonist, agrobusiness, farmers, production
JEL code(s)
Secondary IDs
Prior work
This trial does not extend or rely on any prior RCTs.
Abstract
This project studies the effect of reducing sales uncertainty on farmers’ earnings and competition among purchasers. We partner with the largest purchaser of vanilla in Uganda in 10 districts. Our partner agribusiness (henceforth Partner) promotes organic farming and fair trade and represents the best buyer for vanilla farmers. Yet, the presence of several middle-men and the uncertainty around the international market usually press farmers into selling their products at a lower price. In particular, we collected anecdotal evidence that middle-men are systematically purchasing vanilla before the date set by the Ugandan government, sometimes spreading misleading information about the Partner not showing up in the upcoming vanilla season.
We design text messages to reduce uncertainty faced by the vanilla farmers about (1) the Partner agribusiness's commitment to purchase from the farmer in the upcoming vanilla season and (2) the unit price ensured by Partner. In this experiment, we randomize farmers at sub-county level into three groups: farmers in the control group receive no text message; farmers in the treatment group 'market participation' receive a message that states commitment from our partner to purchase the farmers' product; farmers in the third group 'market participation + price' receive the same message together with a clear indication on the minimum price paid.
External Link(s)

Registration Citation

Citation
Loiacono , Francesco and Claude Raisaro. 2023. "Fair Trade, Unfair Competition: The Effect of Reducing Sales Uncertainty on Farmers’ Welfare." AEA RCT Registry. January 03. https://doi.org/10.1257/rct.10636-1.0
Sponsors & Partners
Experimental Details

Interventions

Intervention(s)
Intervention Start Date
2022-12-12
Intervention End Date
2022-12-13

Primary Outcomes

Primary Outcomes (end points)
(1) farmer's earnings (total) in the next season
(2) farmer's sales to agribusiness Partner in the next season
(3) farmer's sales to other purchasers ("middle-men") in the next season
Primary Outcomes (explanation)
Outcomes for the upcoming vanilla season in 1,2,3.

Secondary Outcomes

Secondary Outcomes (end points)
(1) price dispersion
(2) risk preferences
(3) trust in main purchaser (our partner)
(4) farmer's quality of produce (only in second season after treatment)
Secondary Outcomes (explanation)
Outcomes for the upcoming vanilla season.

Price dispersion:
Difference of price of Partner and other competitors purchasing from farmer (farmer-level measure

Trust:
On a scale from 1 to 4 where one is not at all and 4 is very much, how sure were you that Partner was buying from you THIS season?
On a scale from 1 to 4 where one is not at all and 4 is very much, how sure are you that Partner is going to buy from you NEXT season?

Risk preferences:
Global preference survey. "Please indicate your answer on a scale from 0 to 10. A 0 means “completely unwilling to do so,” and a 10 means “very willing to do so.” You can also use any number between 0 and 10 to indicate where you fall on the scale, using 0, 1, 2, 3, 4, 5, 6, 7, 8, 9, or 10. In general, how willing are you to take risks?"

Farmer's quality of produce:
size of vanilla beans, according to screening by Partner

Experimental Design

Experimental Design
We are implementing the randomized controlled trial in the 2022-2023 vanilla seasons in Uganda, reaching out to 3,594 farmers. We randomize text messages to farmers in 48 sub-counties regarding the agribusiness commitment to be in the market. We randomly assign farmers into three groups: (1) Control group. No messages are sent; (2) Market participation. Farmers in this treatment group receive a text message that states com- mitment from the agribusiness (main vanilla buyer) to purchase the farmers’ product; (3) Market participation + price. Farmers in this group receive a text message with the same content of (2), plus information on the minimum price the agribusiness is committed to pay in the upcoming vanilla season.
Experimental Design Details
Not available
Randomization Method
In office by computer
Randomization Unit
Randomization unit: sub-counties.
Individual unit: farmers
Was the treatment clustered?
Yes

Experiment Characteristics

Sample size: planned number of clusters
48 clusters
Sample size: planned number of observations
3,594 farmers
Sample size (or number of clusters) by treatment arms
control group: 21 (1,398 farmers)
treatment market participation: 16 (1,212 farmers)
treatment market participation + price: 11 (984 farmers)


Minimum detectable effect size for main outcomes (accounting for sample design and clustering)
Supporting Documents and Materials
IRB

Institutional Review Boards (IRBs)

IRB Name
IRB Approval Date
IRB Approval Number
Analysis Plan