IDEAS home Printed from https://ideas.repec.org/a/eee/jfpoli/v85y2019icp64-71.html
   My bibliography  Save this article

What drives smallholder farmers’ willingness to pay for a new farm technology? Evidence from an experimental auction in Kenya

Author

Listed:
  • Channa, Hira
  • Chen, Amy Z.
  • Pina, Patricia
  • Ricker-Gilbert, Jacob
  • Stein, Daniel

Abstract

We use an incentive compatible experimental auction to measure demand for a new agricultural technology, a triple layered hermetic storage bag. When used properly, the bag creates an airtight seal that reduces storage loss from insect pests and neutralizes aflatoxin contamination in stored grain. We find that demand for this new technology is highly elastic (4.3) and that the wholesaler could increase profit by lowering the price. We also find that farmers’ valuation for the bag is not significantly different based on the medium through which information about it is communicated to them, either text, audio or video messages. This suggests that practitioners should use the cheapest option for disseminating information, which is text messaging in this context. In addition, we find that farmers who have prior awareness of the bag are willing to pay 20% more on average than those previously unaware of it. In total, the highly elastic demand for the improved bags, along with the fact that prior awareness of the bag leads to higher willingness to pay, suggests that a one-time price subsidy for the new technology could spur demand and increase future adoption.

Suggested Citation

  • Channa, Hira & Chen, Amy Z. & Pina, Patricia & Ricker-Gilbert, Jacob & Stein, Daniel, 2019. "What drives smallholder farmers’ willingness to pay for a new farm technology? Evidence from an experimental auction in Kenya," Food Policy, Elsevier, vol. 85(C), pages 64-71.
    • Handle: RePEc:eee:jfpoli:v:85:y:2019:i:c:p:64-71
    DOI: 10.1016/j.foodpol.2019.03.005
    as

    Download full text from publisher

    File URL: http://www.sciencedirect.com/science/article/pii/S0306919218306353
    Download Restriction: Full text for ScienceDirect subscribers only
    File URL: https://libkey.io/10.1016/j.foodpol.2019.03.005?utm_source=ideas
    LibKey link: if access is restricted and if your library uses this service, LibKey will redirect you to where you can use your library subscription to access this item
    ---><---

    As the access to this document is restricted, you may want to search for a different version of it.

    References listed on IDEAS

    as
    1. Foster, Andrew D & Rosenzweig, Mark R, 1995. "Learning by Doing and Learning from Others: Human Capital and Technical Change in Agriculture," Journal of Political Economy, University of Chicago Press, vol. 103(6), pages 1176-1209, December.
    2. Matin Qaim & Alain de Janvry, 2003. "Genetically Modified Crops, Corporate Pricing Strategies, and Farmers' Adoption: The Case of Bt Cotton in Argentina," American Journal of Agricultural Economics, Agricultural and Applied Economics Association, vol. 85(4), pages 814-828.
    3. Keith O. Fuglie & Catherine A. Kascak, 2001. "Adoption and Diffusion of Natural-Resource-Conserving Agricultural Technology," Review of Agricultural Economics, Agricultural and Applied Economics Association, vol. 23(2), pages 386-403.
    4. Feder, Gershon & Just, Richard E & Zilberman, David, 1985. "Adoption of Agricultural Innovations in Developing Countries: A Survey," Economic Development and Cultural Change, University of Chicago Press, vol. 33(2), pages 255-298, January.
    5. Ruth Vargas Hill & John Hoddinott & Neha Kumar, 2013. "Adoption of weather-index insurance: learning from willingness to pay among a panel of households in rural Ethiopia," Agricultural Economics, International Association of Agricultural Economists, vol. 44(4-5), pages 385-398, July.
    6. Besley, Timothy & Case, Anne, 1993. "Modeling Technology Adoption in Developing Countries," American Economic Review, American Economic Association, vol. 83(2), pages 396-402, May.
    7. Travis J. Lybbert & Nicholas Magnan & David J. Spielman & Anil K. Bhargava & Kajal Gulati, 2018. "Targeting Technology to Increase Smallholder Profits and Conserve Resources: Experimental Provision of Laser Land-Leveling Services to Indian Farmers," Economic Development and Cultural Change, University of Chicago Press, vol. 66(2), pages 265-306.
    8. Kadjo, Didier & Ricker-Gilbert, Jacob & Alexander, Corinne, 2016. "Estimating Price Discounts for Low-Quality Maize in sub-Saharan Africa: Evidence from Benin," World Development, Elsevier, vol. 77(C), pages 115-128.
    9. Prieto, Stacy & Bauchet, Jonathan & Ricker-Gilbert, Jacob, 2017. "How do improved drying and storage practices influence aflatoxin spread? Evidence from smallholder households in Senegal," 2017 Annual Meeting, July 30-August 1, Chicago, Illinois 258497, Agricultural and Applied Economics Association.
    10. Daniel Stein & Jeremy Tobacman, 2016. "Weather Insurance Savings Accounts," The Geneva Papers on Risk and Insurance - Issues and Practice, Palgrave Macmillan;The Geneva Association, vol. 41(4), pages 677-700, October.
    11. Timothy G. Conley & Christopher R. Udry, 2010. "Learning about a New Technology: Pineapple in Ghana," American Economic Review, American Economic Association, vol. 100(1), pages 35-69, March.
    12. Horna, J. Daniela & Smale, Melinda & Oppen, Matthias Von, 2007. "Farmer willingness to pay for seed-related information: rice varieties in Nigeria and Benin," Environment and Development Economics, Cambridge University Press, vol. 12(6), pages 799-825, December.
    13. Jeffrey M Wooldridge, 2010. "Econometric Analysis of Cross Section and Panel Data," MIT Press Books, The MIT Press, edition 2, volume 1, number 0262232588, December.
    14. List, John A. & Shogren, Jason F., 1998. "Calibration of the difference between actual and hypothetical valuations in a field experiment," Journal of Economic Behavior & Organization, Elsevier, vol. 37(2), pages 193-205, October.
    15. Tavneet Suri, 2011. "Selection and Comparative Advantage in Technology Adoption," Econometrica, Econometric Society, vol. 79(1), pages 159-209, January.
    16. Cole, Shawn & Fernando, A. Nilesh & Stein, Daniel & Tobacman, Jeremy, 2020. "Field comparisons of incentive-compatible preference elicitation techniques," Journal of Economic Behavior & Organization, Elsevier, vol. 172(C), pages 33-56.
    17. Cragg, John G, 1971. "Some Statistical Models for Limited Dependent Variables with Application to the Demand for Durable Goods," Econometrica, Econometric Society, vol. 39(5), pages 829-844, September.
    18. Cunguara, Benedito & Darnhofer, Ika, 2011. "Assessing the impact of improved agricultural technologies on household income in rural Mozambique," Food Policy, Elsevier, vol. 36(3), pages 378-390, June.
    19. Omotilewa, Oluwatoba J. & Ricker-Gilbert, Jacob & Ainembabazi, John Herbert & Shively, Gerald E., 2018. "Does improved storage technology promote modern input use and food security? Evidence from a randomized trial in Uganda," Journal of Development Economics, Elsevier, vol. 135(C), pages 176-198.
    20. Waldman, Kurt B. & Kerr, John M. & Isaacs, Krista B., 2014. "Combining participatory crop trials and experimental auctions to estimate farmer preferences for improved common bean in Rwanda," Food Policy, Elsevier, vol. 46(C), pages 183-192.
    Full references (including those not matched with items on IDEAS)

    Most related items

    These are the items that most often cite the same works as this one and are cited by the same works as this one.
    1. Garbero, A. & Marion, P., 2018. "IFAD RESEARCH SERIES 28 - Understanding the dynamics of adoption decisions and their poverty impacts: the case of improved maize seeds in Uganda," IFAD Research Series 280077, International Fund for Agricultural Development (IFAD).
    2. Khushbu Mishra & Abdoul G. Sam & Gracious M. Diiro & Mario J. Miranda, 2020. "Gender and the dynamics of technology adoption: Empirical evidence from a household‐level panel data," Agricultural Economics, International Association of Agricultural Economists, vol. 51(6), pages 857-870, November.
    3. Josephson, Anna & Ricker-Gilbert, Jacob, 2020. "Preferences and crop choice during Zimbabwe’s macroeconomic crisis," African Journal of Agricultural and Resource Economics, African Association of Agricultural Economists, vol. 15(3), September.
    4. Kondylis, Florence & Mueller, Valerie, 2012. "Seeing is Believing? Evidence from a Demonstration Plot Experiment in Mozambique," MSSP working papers 1, International Food Policy Research Institute (IFPRI).
    5. Michelson, Hope & Fairbairn, Anna & Ellison, Brenna & Maertens, Annemie & Manyong, Victor, 2021. "Misperceived quality: Fertilizer in Tanzania," Journal of Development Economics, Elsevier, vol. 148(C).
    6. Kate Vaiknoras & Catherine Larochelle, 2023. "Training and seed production spillovers and technology adoption: The case of seed producer groups in Nepal," Agricultural Economics, International Association of Agricultural Economists, vol. 54(6), pages 921-942, November.
    7. Anna Folke Larsen, 2019. "When knowledgeable neighbors also share seedlings: diffusion of banana cultivation in Tanzania," Agricultural Economics, International Association of Agricultural Economists, vol. 50(1), pages 51-65, January.
    8. Mishra, Khushbu & Abdoul, Sam G. & Miranda, Mario J. & Diiro, Gracious M., 2015. "Gender and Dynamics of Technology Adoption: Evidence from Uganda," 2015 AAEA & WAEA Joint Annual Meeting, July 26-28, San Francisco, California 206550, Agricultural and Applied Economics Association.
    9. Kazushi Takahashi & Rie Muraoka & Keijiro Otsuka, 2020. "Technology adoption, impact, and extension in developing countries’ agriculture: A review of the recent literature," Agricultural Economics, International Association of Agricultural Economists, vol. 51(1), pages 31-45, January.
    10. Nakano, Yuko & Tsusaka, Takuji W. & Aida, Takeshi & Pede, Valerien O., 2015. "The Impact of Training on Technology Adoption and Productivity of Rice Farming in Tanzania: Is Farmer-to-Farmer Extension Effective?," Working Papers 90, JICA Research Institute.
    11. Verkaart, Simone & Munyua, Bernard G. & Mausch, Kai & Michler, Jeffrey D., 2017. "Welfare impacts of improved chickpea adoption: A pathway for rural development in Ethiopia?," Food Policy, Elsevier, vol. 66(C), pages 50-61.
    12. Jeremy L. Jelliffe & Boris E. Bravo-Ureta & C. Michael Deom & David K. Okello, 2018. "Adoption of High-Yielding Groundnut Varieties: The Sustainability of a Farmer-Led Multiplication-Dissemination Program in Eastern Uganda," Sustainability, MDPI, vol. 10(5), pages 1-21, May.
    13. Anna Folke Larsen, 2015. "The network at work: Diffusion of banana cultivation in Tanzania," CAM Working Papers camwp2015_01, University of Copenhagen. Department of Economics. Centre for Applied Microeconometrics.
    14. Terrance Hurley & Jawoo Koo & Kindie Tesfaye, 2018. "Weather risk: how does it change the yield benefits of nitrogen fertilizer and improved maize varieties in sub‐Saharan Africa?," Agricultural Economics, International Association of Agricultural Economists, vol. 49(6), pages 711-723, November.
    15. Aker, Jenny C. & Dillon, Brian & Welch, C. Jamilah, 2023. "Demand, supply and long-term adoption: Evidence from a storage technology in West Africa," Journal of Development Economics, Elsevier, vol. 165(C).
    16. Rema Hanna & Sendhi Mullainathan & Josh Schwartstein, 2012. "Learning Through Noticing: Theory and Experimental Evidence in Farming," CID Working Papers 245, Center for International Development at Harvard University.
    17. Jim Engle-Warnick & Javier Escobal & Sonia Laszlo, 2007. "Ambiguity Aversion as a Predictor of Technology Choice: Experimental Evidence from Peru," CIRANO Working Papers 2007s-01, CIRANO.
    18. Apoorv Gupta & Jacopo Ponticelli & Andrea Tesei, 2020. "Language Barriers, Technology Adoption and Productivity: Evidence from Agriculture in India," NBER Working Papers 27192, National Bureau of Economic Research, Inc.
    19. Gobillon, Laurent & Wolff, François-Charles, 2020. "The local effects of an innovation: Evidence from the French fish market," Ecological Economics, Elsevier, vol. 171(C).

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:eee:jfpoli:v:85:y:2019:i:c:p:64-71. See general information about how to correct material in RePEc.

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    If CitEc recognized a bibliographic reference but did not link an item in RePEc to it, you can help with this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: Catherine Liu (email available below). General contact details of provider: http://www.elsevier.com/locate/foodpol .

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service. RePEc uses bibliographic data supplied by the respective publishers.