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

Autor: Dan J. Stein, Jacob Ricker-Gilbert, Hira Channa, Patricia Pina, Amy Z. Chen
Rok vydání: 2019
Předmět:
Zdroj: Food Policy
ISSN: 0306-9192
DOI: 10.1016/j.foodpol.2019.03.005
Popis: Highlights • Demand among smallholder farmers in Kenya for improved storage bags is elastic. • Lowering the price of the bag by 20% leads to a 29% increase in profit. • Prior awareness of the technology increases mean willingness to pay by 20%. • Medium by which information is disseminated does not affect willingness to pay. • Cheapest media option, text message, is most cost-effective.
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.
Databáze: OpenAIRE
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