Abstract
Misalignment of quality incentives along value chains may limit quality and therefore function as a barrier to smallholder participation in modern value chains. This article uses survey and administrative data to study how individual quality incentives provided by private actors can help smallholders to improve milk quality. By matching farmers on baseline characteristics, I find that individual quality incentives increased the compositional quality of milk quickly after its introduction. Together with physical inputs and training, individual quality incentives also increased the hygienic quality of milk. Decreasing hygienic quality over time by treated farmers suggests that the impact of the intervention decreased over time.
Highlights
Increasingly stringent food quality standards benefit consumers in many ways, they can function as a barrier to entry on the supply side
Though trends in total solids content differ across upgraded milk collection points (MCPs), a substantial and quick increase in the total solids content is observed at all upgraded MCPs around their opening
The impacts found on compositional quality are unlikely to be a byproduct of the intervention’s efforts to increase the hygienic quality of milk but instead the result of introducing individual incentives for compositional quality
Summary
Farmers at upgraded MCPs were more likely to be female, were more wealthy, had more cows, and had more farm assets, but there are no significant pre-existing differences in the quality of milk delivered by farmers at upgraded and non-upgraded MCPs. Quality measures were available for all months in the endline period. To formally test the effect of individual incentives on compositional quality, I regressed the mean total solids (TS) content and the frequency of the freezing point (FP) being above −0.520C on the intervention indicator. Both switching from intervention MCPs to comparison MCPs and vice versa was rare To correct for these limited individual selection effects, I estimated Intention-To-Treat (ITT) effects by using as intervention indicator the actual endline upgrade status of the MCP to which the farmer delivered its last milk in 2014. As non-compliance to the treatment status of the this MCP is limited, the ITT effect is close to average causal impact of the intervention at upgraded MCPs (Average Treatment Effect on the Treated, ATT), where causal attribution relies on the assumption that matched famers at non-upgraded MCPs provide an accurate counterfactual for farmers at upgraded MCPs
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