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Interlinked Transactions, Saving Constraints, and Market Structure in Kenya Dairy Farming
Last registered on July 02, 2017

Pre-Trial

Trial Information
General Information
Title
Interlinked Transactions, Saving Constraints, and Market Structure in Kenya Dairy Farming
RCT ID
AEARCTR-0000521
Initial registration date
October 06, 2014
Last updated
July 02, 2017 2:52 PM EDT
Location(s)
Region
Primary Investigator
Affiliation
University of Warwick
Other Primary Investigator(s)
PI Affiliation
University of Zurich
Additional Trial Information
Status
On going
Start date
2014-10-06
End date
2017-08-31
Secondary IDs
Abstract
In the dairy market in Kenya, the same farmer often sell to small traders alongside a larger, more established player, typically a Cooperative. These two marketing channels are radically different from the point of view of the farmers: small traders pay prices higher than the larger buyers and pay farmers in cash (rather than through consolidated transfers at the end of the month). We work in partnership with a large dairy cooperative in Kenya and propose a set of experiments to understand how interlinked transactions explain this prevailing market structure.

Using a comprehensive baseline survey, we hypothesize farmers face saving constraints and have a demand for deferred and bulky payments. Only large organizations, with enough reputation, can provide saving service through deferred payments. On the other hand, farmers do not trust small traders to hold their money. We propose several experiments to test this hypothesis.

We offer selected members of the coop the option to be paid more frequently than the coop currently does. In a first treatment, we ask farmers to chose whether they want to be paid daily for their milk deliveries to the coop - as opposed to continue being paid monthly as the coop currently does. We offer a price increase to those farmers that switch.

In a second treatment, we offer farmers the choice between continue being paid monthly versus having the flexibility to chose, every day, whether they prefer their deliveries to be paid in cash or at the end of the month. In both cases, we increase prices paid for a subset of their deliveries deliveries.

In a third experiment in which farmers are assigned to a short-run bonus for a subset of their milk deliveries with either monthly or flexible payments (as in the second choice experiment described above) for short periods of three days each.

We also hypothesize that farmers adopt a rule of thumb rule where they use their morning milk for savings and their afternoon milk for liquidity and consumption. In order to test with hypothesis, we plan to elicit preferences for monthly vs. daily payments for morning and afternoon.

Finally, we conduce lab-in-the-field experiments to test whether buyer credibility affects farmers' preferences for daily/monthly payments. We also test whether buyer's saving constraints matter.

The main outcomes of interest are take-up of more frequent/flexible payments in the choice experiments, intertemporal choices in the am vs. pm, and milk deliveries to the coop in the bonus experiment.
External Link(s)
Registration Citation
Citation
Casaburi, Lorenzo and Rocco Macchiavello. 2017. "Interlinked Transactions, Saving Constraints, and Market Structure in Kenya Dairy Farming." AEA RCT Registry. July 02. https://doi.org/10.1257/rct.521-3.0.
Former Citation
Casaburi, Lorenzo and Rocco Macchiavello. 2017. "Interlinked Transactions, Saving Constraints, and Market Structure in Kenya Dairy Farming." AEA RCT Registry. July 02. https://www.socialscienceregistry.org/trials/521/history/19108.
Experimental Details
Interventions
Intervention(s)
The interventions consist of 2 choice experiments and 1 incentive experiment.

CHOICE EXPERIMENT 1:
Approx. 100 farmers currently delivering milk to the cooperative are asked to chose between two different modes of payment from the coop for milk deliveries during October: Monthly on an account (status quo) and Daily in cash (with an additional bonus on the top of the regular price). The experiment is incentivized: farmers become eligible to receive the daily payment in cash if and only if they select into it.

CHOICE EXPERIMENT 2:
Approx. 100 farmers currently delivering milk to the cooperative are asked to chose between two different modes of payment from the coop for milk deliveries during October: Monthly on an account (status quo) and Flexible Cash, in which farmers keep the choice, every day, whether they are paid cash or with a transfer on the account at the end of the month. Both options also yield an additional amount per litre for the first three litres delivered in the afternoon. The experiment is incentivized: farmers become eligible to receive the flexible payment in cash if and only if they select into it.

INCENTIVE EXPERIMENT
300 farmers receive the incentive experiment. According to a predetermined scheduled, farmers are contacted and offered one of two treatments.
Treatment 1: a bonus for milk delivered in the afternoon of the following three days, paid at the end of the month.
Treatment 2: a bonus for milk delivered in the afternoon of the following three days, with the daily choice of whether the milk delivery should be paid in cash or at the end of the month.
.
LAB-IN-THE-FIELD EXPERIMENT (Start on Jul 3, 2017)
Approx 60 farmers are matched to a trader operating in the same village. In each of several incentivized games, farmers sell milk to the trader and choose between two offers the trader makes. The experimenters then purchase the milk from the trader. Offers vary in prices, frequency (daily/monthly), guarantee (whether the payment is guaranteed or not), and in whether the trader receives the money daily or all at once.
Intervention Start Date
2014-10-06
Intervention End Date
2017-07-31
Primary Outcomes
Primary Outcomes (end points)
The key outcomes are:

1. Take up of the daily (choice experiment 1) and flexible (choice experiment 2) mode of payment.

2. Afternoon milk deliveries to the coop (extensive and intensive margin). We will also look at morning deliveries to detect any substitution effect within day.

3. Intertemporal preferences for daily vs. monthly payment for AM vs. PM deliveries

4. Type of payment chosen in the lab-in-the-field experiment

Finally, we will include several descriptive statistics from the farmer baseline survey.
Primary Outcomes (explanation)
N/A
Secondary Outcomes
Secondary Outcomes (end points)
Secondary Outcomes (explanation)
Experimental Design
Experimental Design
The interventions consist of 2 choice experiments and 1 incentive experiment.

CHOICE EXPERIMENT 1:
Approx. 100 farmers currently delivering milk to the cooperative are asked to chose between two different modes of payment from the coop for milk deliveries during October: Monthly on an account (status quo) and Daily in cash (with an additional bonus on the top of the regular price). The experiment is incentivized: farmers become eligible to receive the daily payment in cash if and only if they select into it.

CHOICE EXPERIMENT 2:
Approx. 100 farmers currently delivering milk to the cooperative are asked to chose between two different modes of payment from the coop for milk deliveries during October: Monthly on an account (status quo) and Flexible Cash, in which farmers keep the choice, every day, whether they are paid cash or with a transfer on the account at the end of the month. Both options also yield an additional amount per litre for the first three litres delivered in the afternoon. The experiment is incentivized: farmers become eligible to receive the flexible payment in cash if and only if they select into it.

INCENTIVE EXPERIMENT
300 farmers receive the incentive experiment. According to a predetermined scheduled, farmers are contacted and offered one of two treatments.
Treatment 1: a bonus for milk delivered in the afternoon of the following three days, paid at the end of the month.
Treatment 2: a bonus for milk delivered in the afternoon of the following three days, with the daily choice of whether the milk delivery should be paid in cash or at the end of the month.

LAB IN THE FIELD EXPERIMENT (Start Jul 3, 2017)
Approx 60 farmers matched to approx. 10 traders. Each farmers plays 7 games. In each game, the farmer can choose between a daily and a monthly payment option. Across games, offers vary in prices, frequency (daily/monthly), guarantee (whether the payment is guaranteed or not), and in whether the trader receives the money daily or all at once.
Experimental Design Details
Randomization Method
Randomization done in office by a computer
Randomization Unit
Individual level.

Assignment to the choice experiments are stratified according to location of the farmer (zone, depending on the experiment), size (deliveries in the month before the intervention) and sales in the afternoon reported in the baseline (for the sub sample of farmers for which we have baseline info).

Assignment to the order of treatment in the experimental bonus is stratified according to collection centre where the farmer delivers, size (deliveries in the month before the intervention) and sales in the afternoon reported in the baseline.
Was the treatment clustered?
No
Experiment Characteristics
Sample size: planned number of clusters
NA
Sample size: planned number of observations
In the choice experiments there will be approx. 100 farmers in each experiment (with non-overlapping, but identically constructed samples). 400 Farmers (2 treatment groups and control group )in the incentive experiment (deliveries for 3 days). 60 farmers *7 games in the lab in the field experiments.
Sample size (or number of clusters) by treatment arms
In the choice experiments there will be approx. 100 farmers in each experiment (with non-overlapping, but identically constructed samples). 300 Farmers per 2 treatment spells in the incentive experiment+100 controls.
60 farmers and 10 traders in the lab in the field experiments. Each farmer plays all the 7 games
Minimum detectable effect size for main outcomes (accounting for sample design and clustering)
IRB
INSTITUTIONAL REVIEW BOARDS (IRBs)
IRB Name
Human Subjects Research Stanford University
IRB Approval Date
2013-12-01
IRB Approval Number
29407
IRB Name
University of Zurich
IRB Approval Date
2017-06-12
IRB Approval Number
N/A
Post-Trial
Post Trial Information
Study Withdrawal
Intervention
Is the intervention completed?
No
Is data collection complete?
Data Publication
Data Publication
Is public data available?
No
Program Files
Program Files
Reports and Papers
Preliminary Reports
Relevant Papers