Estimating seed demand in the presence of market frictions: Evidence from an auction experiment in Nigeria.

This paper measures the effect of seed quality misperceptions on bidding behavior and demand for high-quality seed using an information-provision experiment within an incentive-compatible Vickery Second Price (SPA) auction mechanism that mimics seed purchasing decisions in the presence of seed market frictions. We find that most individuals are prone to quality misperception and revise their bids upwards (downwards) in response to positive (negative) quality signals. In addition, by exploiting random variation in the timing of cash grants, we show that imperfect information influences farmer seed valuation, even in the presence of potentially binding liquidity constraints. We also demonstrate that the provision of quality information does not fully resolve quality misperceptions. We then show that unresolved or persistent misperception is severe enough to distort bidding behavior, and ignoring it could lead to biased willingness-to-pay estimates. Our findings have important implications both for improving inference related to the identification and estimation of willingness to pay for quality seed in the presence of market frictions, and for the design of seed sector polices in developing countries.

Accelerating technical change through ICT: Evidence from a video-mediated extension experiment in Ethiopia.

Despite enthusiasm around applications of information and communications technologies (ICTs) to smallholder agriculture in many lower-income countries, there are still many questions on the effectiveness of ICT-based approaches. This study assesses the impacts of video-mediated agricultural extension service provision on farmers' adoption of improved agricultural technologies and practices in Ethiopia using data from a two-year randomized experiment. Our results show that the video-mediated extension approach significantly increases uptake of recommended technologies and practices by improving extension access and farmer knowledge. Specifically, we find that video-mediated extension reaches a wider audience than the government's conventional extension approach and leads to higher levels of farmer understanding and uptake of the subject technologies in those locations randomly assigned to the program. While our results also point to greater extension access and greater knowledge among female spouses in locations where both male and female spouses were targeted by the program, we do not find clear evidence that a more inclusive approach translates into higher uptake of the subject technologies. Finally, we find that the video-mediated approach becomes less costly as the scale of operation increases.

Drought-tolerant rice, weather index insurance, and comprehensive risk management for smallholders: evidence from a multi-year field experiment in India.

In rainfed production systems throughout India, agricultural activities are dependent upon the summer monsoon, and any aberration in monsoon rainfall patterns can have severe consequences for rice production. There is considerable policy interest in designing programs to lower small-scale farmers' exposure to these types of risk given the regularity with which adverse monsoon events occur. This paper introduces a field experiment conducted with two risk management options in the state of Odisha: a drought-tolerant rice cultivar; and a weather index insurance product designed to complement the performance of the cultivar. Uptake rates for the cultivar itself and for the joint product are compared across two years alongside an analysis of factors that predict uptake. Results indicate high levels of demand for both the products, albeit with a significant degree of price sensitivity. But this sensitivity is agnostic to the nature of price reductions, suggesting that public investments that lower the costs of risk management may be sufficient to encourage broad uptake, without necessarily relying upon distortionary subsidies as is so often done. Sustained demand between years one and two is primarily explained where individuals were indemnified in year one and had a large number of peers also purchasing the product.

Transgenic cotton and farmers' health in Pakistan.

Despite substantial research on the economic effects of transgenic insect-resistant Bacillus thuringiensis (Bt) cotton, there is still limited work on this technology's impacts on human health. Due to the inbuilt insect resistance, Bt cotton requires fewer pesticide sprays than conventional cotton, which is not only advantageous from economic and environmental perspectives, but may also result in health benefits for farmers. Using socioeconomic and biophysical data from Pakistan, we provide the first evidence of a direct association between Bt gene expression in the plant and health benefits. A key feature of this study is that Bt cotton cultivation in Pakistan occurs in a poorly regulated market: farmers are often mistaken in their beliefs about whether they have planted Bt cotton or conventional cotton, which may affect their pesticide-use strategies and thus their pesticide exposure. We employ a cost-of-illness approach and variations in the measurement of Bt adoption to estimate the relationship between Bt cotton and farmers' health. Bt adoption based on farmers' beliefs does not reduce the pesticide-induced cost of illness. However, adoption based on measuring Bt gene expression is associated with significant health cost savings. Extrapolating the estimates for true Bt seeds to Pakistan's entire Bt cotton area results in annual health cost savings of around US$ 7 million. These findings have important implications for the regulation of seed markets in Pakistan and beyond: improved regulations that ensure claimed crop traits are really expressed can increase the benefits for farmers and society at large.

Ex ante and ex post effects of hybrid index insurance in Bangladesh.

This study assesses both the demand for and effectiveness of an index insurance product designed to help smallholder farmers in Bangladesh manage crop production risk during the monsoon season. Villages were randomized into either an insurance treatment or a comparison group, and discounts and rebates were randomly allocated across treatment villages to encourage insurance take-up and to allow for the estimation of the price-elasticity of insurance demand. Among those offered insurance, we find demand to be fairly price elastic, with discounts significantly more successful in stimulating demand than rebates. Purchasing insurance yields both ex ante risk management effects as well as ex post income effects on agricultural production practices. The risk management effects lead to an expansion of cultivated area with concomitant increases in agricultural input expenditures during the monsoon season. The income effects lead to more intensive rice production during the subsequent dry season, with more intensive use of both irrigation and fertilizers, resulting in higher yields and higher total rice production.

What are farmers really planting? Measuring the presence and effectiveness of Bt cotton in Pakistan.

Genetically modified, insect-resistant Bacillus thuringiensis (Bt) cotton is cultivated extensively in Pakistan. Past studies, however, have raised concerns about the prevalence of Bt cotton varieties possessing weak or nonperforming insect-resistance traits conferred by the cry gene. We examine this issue using data drawn from a representative sample of cotton-growing households that were surveyed in six agroclimatic zones spanning 28 districts in Pakistan in 2013, as well as measurements of Cry protein levels in cotton tissue samples collected from the sampled households' main fields. The resultant dataset combines information from 593 sampled households with corresponding plant tissue diagnostics from 70 days after sowing, as well as information from 589 sampled households with corresponding diagnostics from 120 days after sowing. Our analysis indicates that 11 percent of farmers believed they were cultivating Bt cotton when, in fact, the Cry toxin was not present in the tested tissue at 70 days after sowing (i.e., a Type I error). The analysis further indicates that 5 percent of farmers believed they were cultivating non-Bt cotton when, in fact, the Cry toxin was present in the tested tissue (i.e., a Type II error). In addition, 17 percent of all sampled farmers were uncertain whether or not they were cultivating Bt cotton. Overall, 33 percent of farmers either did not know or were mistaken in their beliefs about the presence of the cry gene in the cotton they cultivated. Results also indicate that toxic protein levels in the plant tissue samples occurred below threshold levels for lethality in a significant percentage of cases, although these measurements may also be affected by factors related to tissue sample collection, handling, storage, and testing procedures. Nonetheless, results strongly suggest wide variability both in farmers' beliefs and in gene expression. Such variability has implications for policy and regulation in Pakistan's transgenic cotton seed market.

Towards better metrics and policymaking for seed system development: Insights from Asia's seed industry.

Since the 1980s, many developing countries have introduced policies to promote seed industry growth and improve the delivery of modern science to farmers, often with a long-term goal of increasing agricultural productivity in smallholder farming systems. Public, private, and civil society actors involved in shaping policy designs have, in turn, developed competing narratives around how best to build an innovative and sustainable seed system, each with varying goals, values, and levels of influence. Efforts to strike a balance between these narratives have often played out in passionate discourses surrounding seed rules and regulations. As a result, however, policymakers in many countries have expressed impatience with the slow progress on enhancing the contribution of a modern seed industry to the overarching goal of increasing agricultural productivity growth. One reason for this slow progress may be that policymakers are insufficiently cognizant of the trade-offs associated with rules and regulations required to effectively govern a modern seed industry. This suggests the need for new data and analysis to improve the understanding of how seed systems function. This paper explores these issues in the context of Asia's rapidly growing seed industry, with illustrations from seed markets for maize and several other crops, to highlight current gaps in the metrics used to analyze performance, competition, and innovation. The paper provides a finite set of indicators to inform policymaking on seed system design and monitoring, and explores how these indicators can be used to inform current policy debates in the region.