The Effects of Risk Perceptions and Liquidity Constraints on the Storage Decisions of Maize and Legume Producers in Uganda

Abstract

This study empirically investigates the effects of risk perceptions and liquidity constraints on the maize and legume storage decisions in Uganda. Maize is the most important staple food in Eastern and Southern Africa, and legume crops constitute the major source of protein for most of these consumers. While production is seasonal, consumption occurs year-round. As a result, postharvest storage decisions among smallholder farmers are important for food and income security. We use a randomized control trial implemented among more than 1000 farm households to study how perceptions of postharvest losses through improved storage technology, and cash saving at the beginning of harvest, influence storage decisions. We exogenously treated one group of farm households by providing them with improved storage technology. A control group continued to use traditional storage techniques. Preliminary investigation suggests that for maize, an expected loss of 1kg increased quantity stored by about 1kg. Households with cash on hand at the beginning of harvest increased storage by 60kgs. For legume crops, households store 2.5kg more when anticipating similar storage losses and 24kgs more when they possess cash savings at the beginning of harvest.