Tailoring Contract Farming to Smallholders: Experimental Evidence on Enrollment Impact, Insurance Provision, and Communication Technologies
Maseno University School of Business and Economics, Harvard University
Lorenzo Casaburi; Michael Kremer; Alphonce Odondo; John Shoven
The research proposes three field experiments in Kenya to evaluate the potential of contract farming schemes to increase smallholder welfare. In the first intervention, a large contract farming company will randomly enroll new farmers among its outgrowers. In the second, we will pilot tailored insurance products for outgrowers that reduce basis risk and provide innovative premium payment options. In the third, we examine the role of mobile phones to reduce communication frictions across agents in the contract farming supply chain.
These interventions are developed in partnership with one of the largest agribusiness companies in East Africa, running a contract farming scheme with about one-hundred thousand outgrowers. The evaluation will rely on the rich farmer-level administrative data provided by the company, as well as on agricultural household survey data, with accurate information on agricultural and non-agricultural income, input choices and technology adoption.
Collaboration between U.S. and Kenyan researchers and capacity building are a crucial component of the project. Capacity building activities — including training, research funding, curriculum development, and degree scholarships — will target academics, policymakers, and the private sector.