Information Access and Smallholder Farmers' Selling Decisions in Peru

Abstract

Previous studies have examined the effects of information access on rural price dispersion and local economy in developing countries, but few studies investigate information access on farmers’ selling decisions that directly relate to individual farmer’s utility and welfare. No study, to our knowledge, has particularly examined the effects of information access on smallholder farmers in Peru who generally occupy plots of less than five hectares and face enormous disadvantages. To bridge the gap in the literature, we employ an instrumental variable (IV) approach and seemingly unrelated regression (SUR) to examine the effects of internet and cell phones on Peruvian smallholder farmers’ selling decisions using IV Agricultural Census (IV CENAGRO) of Peru data for the year 2012. Results suggest that internet positively affects Peruvian smallholder farmers’ decisions to sell in both national and international markets and tends to have larger impact on decisions to sell in the national market. Mobile phones have smaller impacts compared to internet and only affect farmers’ decisions to sell in the international market. Results provide empirical support for policies and social programs that promote internet usage and mobile phone coverage for rural Peru, which are important channels to enhance information access for economically disadvantaged smallholder farmers. Our results also suggest that ignoring endogeneity of information access understates its effects.