Aflatoxin Contamination of Maize in Kenya: Observability and Mitigation Behavior

Abstract

Using a unique dataset of maize samples and consumer interviews form Eastern Kenya, we find that the presence of the fungal contaminant aflatoxin is negatively associated with the use of maize flour for food. While food remains the most common use of maize regardless of the presence of the toxin, contaminated maize is relatively more likely to be used for the production of alcoholic beverages, livestock feed, or sale. Retail maize prices are strongly correlated with an easily observable quality attribute, discoloration, but the correlation between price and aflatoxin contamination is not statistically distinguishable from zero. This suggests that consumers observe attributes that are correlated with aflatoxin upon careful inspection, or perhaps consumption of a portion of maize from a particular batch, and that their use of flour is based on this information. The apparently limited observability of attributes associated with aflatoxin contamination implies that problems associated with asymmetric information may affect this market. A comparison of maize quality by source provides evidence of such problems: purchased maize is more likely to be contaminated with aflatoxin than maize households have grown themselves, despite the fact that maize from larger producers is less likely to be contaminated.