Smallerholder Agriculture in Sierra Leone: Results so far Rachel - - PowerPoint PPT Presentation

Rachel Glennerster (JPAL)

Smallerholder Agriculture in Sierra Leone: Results so far

Agriculture in Sierra Leone

• Mainly small holder farming. Land abundant, labor scarce
• Rice is the main staple, 87% of farmers grow rice
• Cash crops include cocoa (9% of exports) and palm oil
• Rice yields 484 kg/ha vs 800 kg/ha in Ghana, 1500 kg/ha for

Uganda and 2200 kg/ha for the Philippines (ATHS 2010):

• 2.6% use improved seeds
• 7% use fertilizer
• 7% irrigation
• 2% mechanization
• 25% crop failure (Nerica baseline)

2

Pronounced seasonality

3

Recent ag research in Sierra Leone

• Cocoa: Interlinked transactions (Casaburi and

Reed, 2014)

• Palm oil: Inventory credit (Casaburi, 2013)
• Rice: High yield short duration Nerica rice

(Glennerster and Suri, ongoing)

• Rural road rehabilitation (Casaburi, Glennerster,

and Suri, 2014)

4

Interlinked transactions

• Very little access to formal financial sector
• Traders provide loans before and during harvest
• Cocoa: Baseline 65% of farmers had received loans in past

12 months (Casaburi and Reed, 2014)

• Traders also use loans to “lock-in” supply

70% provide loans to farmers

Cocoa experiment

• Random traders given Le 150 per pound bonus for

grade A cocoa (60% of average baseline margin)

• No pass through of price to farmers
• 14ppt more likely to get credit from traders
• Treatment traders did not go into new villages but

invested more in farmers in same village

Cocoa experiment: implications

• Cocoa quality can be improved with more investment
• Let crop ripen fully and dry for longer
• Working through traders allows policy maker to reach many

farmers

• Trader/farmer relationships double edged sword
• Value of relationship provides some enforceability of informal

contract, allows traders to invest even with threat of side selling

• But also reduces competition between traders, potentially

causing inefficiency eg lower price

• Judging trader profits and competition on price margin

misleading

Seasonal price difference puzzle

• Around the world farmers sell low and buy high
• Hypotheses:
• Limited supply/monopoly on storage
• High rate of product deterioration in storage
• Lack access to credit/monopoly supply of credit
• High (exponential?) discount rate
• Casaburi studies credit and storage for palm oil
• No deterioration in product over time
• Seasonal price difference 30-60% depending on year
• Very limited (non-existent) previous exposure to banks

Inventory Credit and Storage

1850 Farmers 120 Communities Credit using Palm Oil as Collateral Control Storage Support

• Sensitization
• Free Containers
• Rehabilitated

Community Storage

• Rehabilitated

Community Storage

• Sensitization
• Double Locks

Banks – Community

• 70% advance on

Palm oil stored

• 22% Interest rate

3 Community Banks

Inventory credit results: Sierra Leone

• Both storage and credit+storage increased use of community storage

at the expense of individual storage

• Farmer profitability analysis
• Revenue increase: per extra batta stored: 24.7% (storage) and

10.2% (Banks)

• Profit: Over 40% increase per extra batta within IV program
• Bank Profitability Analysis
• Relatively low take-up and limited number of communities served in first

year  product not profitable for banks

• Was low take up from suspicion of banks? Hard to break existing

relationships with traders? High interest rates?

Inventory credit for maize, Kenya

• Loan for 100% of harvest price (vs 70% in SL)
• Interest rate 10% (vs 22% in SL)
• Many farmers had borrowed from bank previously
• Loan for High Take up > 70%
• Farmers offered the loans sold less at harvest season and more

in later months

• Prices rose much less than expected that year
• But even then, farmers’ revenues increased by 20% after interest

payment

• Burke et al 2014

New Rice for Africa and nutrition

• Nerica is high yield short duration cross between

African and Asian rice

• Low levels of food consumption and uneven food

consumption

• Children: 22% underweight, 44% stunted, 8%

wasting (UNICEF, 2010)

• 35% undernourished i.e. eat less than 1809

kcal/day (FAO, 2010)

• Little evidence on link between ag and nutrition

Research Project Design

• Study the yield of two upland rice varieties:
• NERICA3 – early maturation (90 days vs 120), high

yielding

• ROK16 – pest resistant, regular maturity, high yielding
• Study NERICA demand through random variation in the

price and complementarities with training

• Full price, half price and free treatments;
• cross randomized with training
• Impacts on yields and nutrition

Take Up

Nerica preliminary results

• Nerica free group:
• Earlier onset of harvest by about a month
• Reduction in imported rice purchased
• Higher yields (16%), but only with training (possibly

negative without training)

• Also 17% higher yields for ROK with training
• Possible training is helping even on nonNerica farms
• Training very expensive, next step testing cheap training

Child health

Feeder road rehabilitation

Casaburi, Glennerster, and Suri, 2013

Feeder road rehabilitation

• Major part of government expenditure on agriculture
• 4 districts selected roads, scored by external expert and ranked,

cut off number of miles to be funded by district

• Assessed whether jump at cutoff
• Improved roads saw reduced transport cost and shorter transport

time

• On average staple prices fell in local markets
• Far from town, market prices fell
• Close to town, market prices rose as lower transport cost

means more demand from town

• Results compatible with search costs for traders
• nly 10% farmers sell any rice so cant look at farmer outcomes

Combined implications

• Enormous potential to improve output (quality and quantity)
• 40% GDP and 60% labor force, could significantly impact

growth, and would be equitable growth

• Pronounced seasonality and lack of mechanisms to smooth
• Markets are thin and simple competitive model may not apply
• Those who can provide credit in lean season have

considerable leverage/market power

• Do we build on this or seek to weaken it?
• Relationships along supply chain are strong making it hard to

introduce innovations

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