Grain Today, Gain Tomorrow: Evidence from a Storage Experiment with Savings Clubs in Kenya

Abstract

We are grateful to Ashwini Chhatre, Maitreesh Ghatak and Dahyeon Jeong for useful discussions, and to 2 anonymous referees and seminar participants at IIM Bangalore, the Indian School of Business, and the Naval Postgraduate School for helpful comments. We thank Claudia Casarotto for research support. We thank ATAI and the University of California, Santa Cruz for funding, and IPA Kenya for administrative support. We thank Michael Dalious, Kathryn Dutile, Maira Reimao, and Dario Sidhu of Evidence Action for their collaboration. ABSTRACTMany farmers in the developing world lack access to effective savings and storage devices. Such devices might be particularly valuable for farmers since income is received as a lump sum at harvest but expenditures are incurred throughout the year, and because grain prices are low at harvest but rise over the year. We experimentally provided two saving schemes to 132 ROSCAs in Kenya, one designed around communally storing maize and the other around saving cash for inputs. About 56% of respondents took up the products. Respondents in the maize storage intervention were 23 percentage points more likely to store maize (on a base of 69%), 37 percentage points more likely to sell maize (on a base of 36%) and (conditional on selling) sold later and at higher prices. We find no effects of the individual input savings intervention on input usage, likely because baseline input adoption was higher than expected.

Locking Crops to Unlock Investment: Experimental Evidence on Warrantage in Burkina Faso

“…Dupas and Robinson, 2013) that have highlighted the important role that social commitments play in saving collectively. Our experiment complements the findings in the Aggarwal et al (2018) study in several ways. We find that a household savings mechanism coupled with a credit offer can also increase storage and sales and result in productive investments and input adoption in the subsequent season.…”

“…In rural Timor-Leste, Basu and Wong (2015) find that the offer of storage drums and sacks improves consumption and income indices. In Busia, Kenya, Aggarwal et al (2018) find that offering ROSCAs a communal storage mechanism that included the provision of PICS bags and a subsidized stand to elevate bags off the ground increased storage, sales, and sales prices. They also tested an individual storage saving mechanism using a labeled savings account for inputs and found no impact on increased input usage.…”

“…We find that a household savings mechanism coupled with a credit offer can also increase storage and sales and result in productive investments and input adoption in the subsequent season. Importantly, the storage restricts farmers' access to stored crops, which may function in a similar way as the social commitment aspect of the group savings mechanism in Aggarwal et al (2018). 4 Much of the previous literature focused on understanding the role of credit and liquidity constraints on intertemporal arbitrage opportunities (e.g.…”

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