Locking Crops to Unlock Investment: Experimental Evidence on Warrantage in Burkina Faso

51 Pages Posted: 19 May 2020 Last revised: 21 May 2020

See all articles by Clara Anne Delavallade

Clara Anne Delavallade

affiliation not provided to SSRN

Susan Godlonton

International Food Policy Research Institute (IFPRI)

Date Written: May 18, 2020

Abstract

Financial market imperfections remain pervasive in developing countries, constraining potentially profitable investment decisions, especially for rural smallholder farmers. Warrantage is an innovative model of rural finance with the potential to overcome credit, storage, and commitment constraints through a localized inventory credit scheme. Exploiting random variations in household access to warrantage and intensity of access across villages, this paper studies the direct impact of this scheme on beneficiaries as well as its spillover effects. Take-up of storage is high (94 percent), while credit take-up is moderate (38 percent). Households with access to warrantage primarily store sorghum and maize and sell their production over an extended period of time, earning higher average prices and resulting in higher sales revenue ($248, or 33 percent, on average). Increased incomes are spent on long-term investments, includinghuman capital expenditures (education), livestock purchases, and investment in agricultural inputs for the subsequent year.

Keywords: Crops and Crop Management Systems, Climate Change and Agriculture, Livestock and Animal Husbandry, Educational Sciences, Nutrition, Food Security

Suggested Citation

Delavallade, Clara Anne and Godlonton, Susan, Locking Crops to Unlock Investment: Experimental Evidence on Warrantage in Burkina Faso (May 18, 2020). World Bank Policy Research Working Paper No. 9248, Available at SSRN: https://ssrn.com/abstract=3604697

Clara Anne Delavallade (Contact Author)

affiliation not provided to SSRN

No Address Available

Susan Godlonton

International Food Policy Research Institute (IFPRI) ( email )

1201 Eye St, NW,
Washington, DC 20005
United States

HOME PAGE: http://www.ifpri.org

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