Farmers may grow crops for local consumption despite more profitable export options. DrumNet, a Kenyan NGO that helps small farmers adopt and market export crops, conducted a randomized trial to evaluate its impact. DrumNet services increased production of export crops and lowered marketing costs, leading to a 32% income gain for new adopters. The services collapsed one year later when the exporter stopped buying from DrumNet because farmers could not meet new EU production requirements. Farmers sold to other middlemen and defaulted on their loans from DrumNet. Such experiences may explain why farmers are less likely to adopt export crops.
Ashraf, Nava, Xavier Gine and Dean Karlan. 2016. "Finding Missing Markets: An Agricultural Brokerage Intervention in Kenya." AEA RCT Registry. December 12. https://doi.org/10.1257/rct.1812-1.0.
All individuals in the treatment groups received a four-week orientation course, which explained the financing and selling process, and good agricultural practices. In addition, all treatment individuals opened a personal savings account with a local commercial bank to accommodate possible future business transactions. Individuals in the "Treatment-Credit" group also contributed the equivalent of a week's labor wages to an insurance fund, which would serve as partial collateral for a line of credit. After being organized into groups of five, which were jointly liable for individual loans taken out, individuals in the Treatment-Credit group received an in-kind loan from a local agriculture supply store. Individuals in a "Treatment-NoCredit" group received the same DrumNet package, only without the opportunity for credit. At harvest time, for individuals in both treatment groups, DrumNet negotiated prices with an exporter and arranged a produce pickup. Once the produce was delivered to the exporter, the exporter payed DrumNet who, after deducting any loan repayments, credited the remainder to the individual savings accounts that each farmer opened when they registered.
Intervention Start Date
2004-06-01
Intervention End Date
2004-09-30
Primary Outcomes (end points)
Decision to participate in DrumNet, Growing of an export crop, Income, Participation in the formal financial sector, Profitability of DrumNet
Primary Outcomes (explanation)
Secondary Outcomes (end points)
Secondary Outcomes (explanation)
Experimental Design
We conduct a clustered randomized control trial with DrumNet, a project of Pride Africa, to evaluate whether a package of services can help farmers adopt, finance and market export crops, and thus make more income. DrumNet tries to convince both farmers and exporters that the other party will honor their commitment. The intervention is a package of services. Our research design allows us to distinguish the causal effect from providing agricultural credit along with the package, versus simply providing extension and marketing services without credit. Thus, the experimental design includes two treatments, one with credit and one without, and a control group. In addition to evaluating the impact of these packages, we examine whether there are heterogeneous treatment effects on the basis of prior experience growing export crops.
Experimental Design Details
Randomization Method
STATA
Randomization Unit
Self-help group (SHG)
Was the treatment clustered?
Yes
Sample size: planned number of clusters
36 SHGs
Sample size: planned number of observations
1,117 farmers
Sample size (or number of clusters) by treatment arms