A field study in Western Kenya tested the degree to which access to appropriate savings mechanisms can help poor farmers purchase fertilizer when they need it.
- In 2008, the authors published results from a randomized control trial which demonstrated that average returns to using fertilizer in Western Kenya is 70% per annum. Yet only 29% of households in this area of Western Kenya had used fertilizer during the previous two growing seasons.
- In 2009, the authors conducted an experiment which tested whether under-investment in fertilizer is due (in part) to farmers’ inability to conserve cash between the harvest season (when they tend to be cash-flush) and the planting season (when they tend to be cash-scarce), without access to appropriate savings mechanisms.
To test this hypothesis, the researchers randomly assigned farmers into treatment and control groups:
- Farmers in the treatment group were given the opportunity to purchase fertilizer vouchers during the harvest season for use during the planting season. This voucher served as a savings instrument which enabled households to conserve cash for investment between these two seasons.
- Farmers in the control group were not given access to the voucher. The experiment was conducted twice – in two separate seasons among two separate sample groups.
- In season one, fertilizer usage-rates were 32% higher among farmers who were offered the fertilizer voucher compared to farmers who weren’t offered the product (45% versus 34).
- In season two, fertilizer usage-rates were 39% higher among farmers who were offered the voucher compared to farmers who weren’t (39% versus 28%).
The authors conclude that many farmers in Western Kenya find it difficult to conserve cash between the harvest season and the planting season without access to appropriate savings mechanisms.