Evaluating the Impact of Agricultural Cash Transfers to Maize Farmers: Experimental Evidence from Myanmar

Cracks are starting to form in Myanmar’s agri-food system as a result of the triple crises of COVID-19, military coup, and global price hikes in the aftermath of the Ukraine War. Rising transport costs and disruptions are widening gaps between producer and consumer prices, while early indicators of the 2022 monsoon harvest suggest likely declines in aggregate production, largely driven by decreased input (e.g., fertilizer) use among farmers following high global price increases resulting from the Ukraine War. Cash transfers to farmers have the potential to mitigate some of the impacts of rising input costs and increase production. Evidence from other contexts shows that cash transfers cause increases in crop incomes and increase market participation. Yet there remains a lot to learn about how to effectively design agricultural cash transfers, including what are relative benefits of large and small transfer amounts, and, perhaps most importantly, little research has been done to understand how to better design agricultural cash transfers in such highly uncertain contexts as is present in Myanmar now.

We propose to conduct a randomized controlled trial of an agricultural cash transfer program for maize farmers in Southern Shan where we will allocate cash to randomly selected farmers prior to the start of the planting season. Maize has been a remarkable story of resilience and growth despite widespread challenges since 2019. However, maize farmers use large quantities of purchased inputs (e.g., fertilizer, pesticides, and labor) with two thirds of them acquiring inputs on credit and are therefore exposed to rising global input prices. We will randomly assign farmers to either (1) a treatment arm receiving USD 100, or (2) a treatment arm receiving USD 400. The transfer will be made in equivalent local currency (Myanmar kyat). We will examine how the difference in the magnitude of cash transfer impact maize production and credit use as well as look at other (broader) impacts on food consumption, investment in productive assets and non-farm income. We will also understand the mechanisms through which any impacts on production are channeled by examining input use and expenditures, hired labor and services and hired-out labor.