The Role of Price Information in Agricultural Markets: Experimental Evidence from Rural Peru

This paper presents new experimental evidence on the role of price information in agricultural markets. For this purpose, I set up a Randomized Control Trial (RCT) in the central highlands of Peru. A group of farmers in randomly selected villages got access to detailed price information for the most relevant local crops in six regional markets through cell phone SMS. The information was delivered throughout the four-month period immediately after harvest, where they sell most of their production. I find that the beneficiaries got higher sales prices for their products, compared to households in the control group. The effect is robust to different specifications. I also find that this effect was mostly driven by increases in the prices for relatively more perishable crops, for which information could be more valuable. Additionally, information made farmers more likely to sell their production (extensive margin). Albeit not statistically significant, the estimate for sales on the intensive margin are positive and quite large. Finally, I also investigate the possibility of information spillovers by examining marketing outcomes of households who did not receive the information but lived in villages where others did. I do not find any significant effects among households in this group.