| Abstract: |
In much of the developing world, many farmers grow crops for local or personal
consumption despite export options which appear to be more profitable. Thus
many conjecture that one or several markets are missing. We report here on a
randomized controlled trial conducted by DrumNet in Kenya that attempts to
help farmers adopt and market export crops. DrumNet provides smallholder
farmers with information about how to switch to export crops, makes in-kind
loans for the purchase of the agricultural inputs, and provides marketing
services by facilitating the transaction with exporters. The experimental
evaluation design randomly assigns pre-existing farmer self-help groups to one
of three groups: (1) a treatment group that receives all DrumNet services, (2)
a treatment group that receives all DrumNet services except credit, or (3) a
control group. After one year, DrumNet services led to an increase in
production of export oriented crops and lower marketing costs; this translated
into household income gains for new adopters. However, one year after the
study ended, the exporter refused to continue buying the cash crops from the
farmers because the conditions of the farms did not satisfy European export
requirements. DrumNet collapsed in this region as farmers were forced to sell
to middlemen and defaulted on their loans. The risk of such events may
explain, at least partly, why many seemingly more profitable export crops are
not adopted. |