With deepening globalization of food markets, demand for higher quality agricultural products has been rising rapidly in Sub Saharan Africa. Yet, lack of farm-level quality recognition in domestic value chains frequently fails to give incentives to smallholder farmers to improve quality, putting them at risk of being displaced on their own markets by high quality imports. This is what has been happening with wheat in Ethiopia.
We propose to study the introduction of a new third-party quality certification system for wheat on local markets. A key feature of this innovation is that it will make cost effective the certification of quality at the smallholder farmer level, before any aggregation is operated by traders in selling to mills that do practice quality recognition and price discrimination.
Conducted in partnership with an international NGO (Digital Green) and coordinated with an Ethiopian government agency (the Agricultural Transformation Agency), the market-level experiment will use a randomized controlled trial to assess:
(1) how farmer-purchased certification affects farmer-level price premiums for quality (price pass-through);
(2) what is the price elasticity of farmers’ demand for certification services;
(3) how certification encourages farmers to adopt quality-enhancing inputs and practices as elements of an agricultural transformation (behavioral response);
(4) what are the marketed-surplus and poverty-reduction impacts of this value chain development.
If successful, this one-time intervention is expected to induce a scalable and sustainable transformation of the wheat value chain with an important role for smallholder farmers.
The research team will consist of international experts from the University of Bordeaux, the University of California at Berkeley and the International Food Policy research Institute, with over 15 years of previous collaboration on related topics. The team will be completed with a full time PhD student, along-side with extensive field work in Ethiopia.
The project will yield several types of outcomes, including but not limited to:
(1) A unique dataset, available for downloads, linking farmers’ production behavior with their marketing outcomes, in contexts of high versus low information on product quality.
(2) A set of research papers published in leading academic journals, complemented by a series of policy-notes and blogs targeted at non-academic audience.
(3) A large scale academic and policy conference, focused on markets for development, to serve as a base for a renewed interest in issues of market inefficiencies and potential solutions in low-income countries.
Funding from ANR is sought to cover support for the PhD student for three years, including costs related to field work for close to one year, and academic conferences/seminars. The project will also support field missions and conferences/seminars for senior researchers. Last, the project will cover the cost of the end-of-project academic and policy conference. Additional resources will be leveraged to cover survey costs from ATAI (a dedicated fund supported by the Bill and Melinda Gates foundation and the UK Department for International Development) and the CGIAR (Global Consortium for International Agricultural Research), both of which have already expressed strong interest for the project.
Monsieur Tanguy Bernard (GROUPE DE RECHERCHE EN ECONOMIE THEORIQUE ET APPLIQUEE)
The author of this summary is the project coordinator, who is responsible for the content of this summary. The ANR declines any responsibility as for its contents.
IFPRI International Food Policy Research Institute
GRETHA GROUPE DE RECHERCHE EN ECONOMIE THEORIQUE ET APPLIQUEE
Université de Californie à Berkeley / Agecon
Help of the ANR 185,760 euros
Beginning and duration of the scientific project: September 2019 - 42 Months