Abstract
AbstractThis article estimates how storage losses from mold, insects, and other pests, combined with liquidity constraints, influence a smallholder farm household's decision to store maize on farm after harvest. We analyze panel data from 309 smallholders in Benin covering the 2011 and 2013 harvest seasons. Results suggest that smallholders are driven to sell at harvest time for different reasons, depending on their motivation for storing. In households that report direct consumption as their primary goal for storing maize, liquidity constraints, not storage losses, reduce the amount they store. In contrast, households that store maize with the intention of selling it later in the year appear unaffected by liquidity constraints. Instead, these households store less when they expect to lose more during storage. These results suggest that policies to provide liquidity will be more helpful in motivating storage among consumption‐oriented households. Households motivated to store for later sale will benefit from modern storage technologies that mitigate the operational costs associated with storage losses.
Highlights
Smallholder farm households throughout the developing world often sell substantial portions of their staple crop output immediately after harvest, a time when prices are low, only to repurchase the same staples later in the year at higher prices
We find that the coefficient estimate on expected storage losses has a statistically significant and negative effect on the quantity of maize stored for marketoriented households only
This is extremely relevant to policy actions amidst the growing interests for reducing postharvest losses (PHLs) and improving grain management in sub-Saharan Africa (SSA) (Affognon et al, 2015; Kaminski and Christiaensen, 2014; World Bank, 2011)
Summary
Smallholder farm households throughout the developing world often sell substantial portions of their staple crop output immediately after harvest, a time when prices are low, only to repurchase the same staples later in the year at higher prices. The entomology literature focuses on quantity losses in storage due to mold, insects, and other pests as the reason smallholders do not store more grain at harvest. The objective of the present article is to estimate the extent to which storage concerns and liquidity constraints affect the quantity of maize that a household decides to store at harvest for sale or consumption later in the year. Having access to cash increases the quantity of maize stored by those who store with the intention of consuming it later in the year Based on these findings, we conclude that consumption-oriented households and market-oriented households both tend to “sell low” at harvest time.
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