Using agriculture for development: Supply- and demand-side approaches

For most poor countries of today, using agriculture for development is widely recognized as a promising strategy. Yet, in these countries, investment in agriculture has mostly been lagging relative to international norms and recommendations. Current wisdom on how to use agriculture for development is that it requires asset building for smallholder farmers, productivity growth in staple foods, an agricultural transformation (diversification of farming systems toward high value crops), and a rural transformation (value addition through rural non-farm activities linked to agriculture). This sequence has too often been hampered by extensive market and government failures. We outline a theory of change where the removal of market and government failures to use this Agriculture for Development strategy can be addressed through two contrasted and complementary approaches. One is from the “supply-side” where public and social agents (governments, international and bilateral development agencies, NGOs, donors) intervene to help farmers overcome the major constraints to adoption: liquidity, risk, information, and access to markets. The other is from the “demand-side” where private agents (entrepreneurs, producer organizations) create incentives for smallholder farmers to modernize through contracting and vertical coordination in value chains. We review the extensive literature that has explored ways of using Agriculture for Development through these two approaches. We conclude by noting that the supply-side approach has benefited from extensive research but met with limited success. The demand-side approach has promise, but received insufficient attention and is in need of additional rigorous research which we outline

Subsidy policies and insurance demand

Using data from a two-year pricing experiment, we study the impact of subsidy policies on weather insurance take-up. Results show that subsidies increase future insurance take-up through their influence on payout experiences. Exploring mechanisms of the payout effect, we find that for households that randomly benefited from financial education, receiving a payout provides a one-time learning experience that improves take-up permanently. In contrast, households with poor insurance knowledge continuously update take-up decisions based on recent experiences with disasters and payouts. Combining subsidy policies with financial education can thus be effective in promoting long-run insurance adoption

Fair trade and free entry: Can a disequilibrium market serve as a development tool?

The Fair Trade (FT) coffee initiative attempts to channel charity from consumers to poor producers via increased prices. We show that the rules of the FT system permit this rent to be eliminated due to free entry and costly excess certification of output. Using data from an association of coffee cooperatives in Central America, we verify that expected producer benefits are close to 0 when we take into account the output that is certified but not sold as FT. Our results illustrate how free entry undermines the attempt at extending charity via a price distortion in an otherwise competitive market

Prompting microfinance borrowers to save: A field experiment from Guatemala

The article reports on the results of an experiment that introduced a new set of commercial products based on planning and reminders to help microfinance borrowers from Guatemala's largest public-sector bank build their savings. Behavioral explanations for the difficulty of saving focus on the group of individuals who wish to save but prove unable to do so. The bank had no intention and no legal means of enforcing any of these self-commitments. Hence, these savings plans offer individuals a psychological means of committing themselves to a savings trajectory with no financial penalties for failing to implement it. Despite a wealth of recent empirical work demonstrating the efficacy of hard commitment, there are at least two reasons why self-commitment may provide a more attractive alternative in practice. Self-commitment, if effective at promoting savings, retains broad latitude for households to use savings to protect themselves from shocks even during the asset-accumulation phase

Testing for Separability in Household Models with Heterogeneous Behavior: A Mixture Model Approach"

Department of Agricultural & Resource Economics, UCB. CUDARE Working Paper 990. http://repositories.cdlib.org/are_ucb/99

Modeling the power flow in normal conductor-insulator-superconductor junctions

Normal conductor-insulator-superconductor (NIS) junctions promise to be interesting for x-ray and phonon sensing applications, in particular due to the expected self-cooling of the N electrode by the tunneling current. Such cooling would enable the operation of the active element of the sensor below the cryostat temperature and at a correspondingly higher sensitivity. It would also allow the use of MS junctions as microcoolers. At present, this cooling has not been realized in large area junctions (suitable for a number of detector applications). In this article, we discuss a detailed modeling of the heat flow in such junctions; we show how the heat flow into the normal electrode by quasiparticle back-tunneling and phonon absorption from quasiparticle pair recombination can overcompensate the cooling power. This provides a microscopic explanation of the self-heating effects we observe in our large area NIS junctions. The model suggests a number of possible solutions