Patrick Ward

Evaluating the gendered credit constraints and uptake of an insurance-linked credit product among smallholder farmers in Kenya

Confidence and information usage: Evidence from soil testing in India

Informational barriers are often considered to be a major constraint to the adoption of improved farming practices, inputs, and technologies by smallholder farmers. In the Indian context, it is widely believed that farmers misapply chemical fertilizers because they lack scientific information on soil conditions and corresponding fertilizer recommendations, thus resulting in imbalanced and potentially detrimental fertilizer application. Policymakers are frequently interested in providing farmers with various streams of information to overcome these informational barriers to optimize farming activities. However, such informational interventions frequently fail either because generic recommendations may be ill-suited for decision makers in highly heterogeneous agricultural environments or because farmers’ beliefs may be so entrenched as to make them unresponsive to new information. We implemented a field experiment in Bihar, India to test whether plot-specific fertilizer recommendations affect farmers’ fertilizer use. We find little evidence for sizable impacts on fertilizer use in general, though impacts are more apparent for low cost or costless recommendations such as increasing the use of highly subsidized fertilizers or shifting the timing of application. Despite modest evidence of such effects, even those fall short of their potential magnitude. We show that treated farmers who are less confident in their subjective beliefs about optimal fertilizer application rates (i.e., with more disperse priors) are more responsive to the recommendations and have a higher ex ante willingness to pay for soil testing. These results suggest that heterogeneity in beliefs may constrain the overall effectiveness of information provision, even when the information is tailored to individual farms. JEL Classification: D83, O13

Impact of risk-contingent credit and traditional credit on smallholders’ agricultural investment and productivity: Experimental evidence from Kenya

We use a multiyear, multi-arm randomized controlled trial implemented among 1,053 smallholders in Kenya to evaluate ex-ante investment and ex-post productivity and welfare benefits of two competing lending models: risk-contingent credit (RCC)—which embeds crop insurance with a loan product—and traditional credit (TC). We rely on local average treatment effects to demonstrate the effects of these alternative credit products on borrowers but report the intention-to-treat effects for their broader policy significance. Uptake of RCC increased treated households’ farm investments—specifically, adoption of chemical fertilizers—by up to 14 percent along the extensive margins and by more than 100 percent along the intensive margins, while TC’s effects were less in both magnitude and statistical significance. Neither type of credit product had a significant effect on the overall area cultivated under maize, hence enhancing agricultural intensification but not extensification. Ex-post, neither type of credit product had a strong direct effect on households’ productivity. We conclude that access to credit has potential to increase investment and productivity among smallholders, although improved productivity needs better measurement and extended intervention to be realized. To scale the potential effects of credit, derisking access to credit should be considered to expand access to credit.