EVALUATING THE IMPACT OF PROVIDING INFORMATION ABOUT FUTURE PRICES

Principal Investigators: Shawn Cole (Harvard Business School), Stefan Hunt (Oxford University), David Yanagizawa-Drott (Harvard Kennedy School)
Research Team: Shahid Vaziralli
LEAD Centre: Centre for Microfinance (CMF)
Focus Area: Credit, Livelihoods
Project Geography: Gujarat
Partner: SEWA
Status: Ongoing

Background:

Knowledge of current as well as future market prices of crops is important to many farmers who could use this information to make better planting decisions. In theory, farmers could use current and future spot prices to allocate inputs during planting season, store crops that they could potentially sell at a higher price later during the storing season and increase their bargaining power relative to local buyers and market auctioneers. This study in association with Self Employed Women’s Association (SEWA) is evaluating the impact of providing small and medium scale farmers in rural Gujarat access to spot and future prices for cash crops like cotton, castor, and guar. Specifically, researchers are measuring the effect that providing price information has on agricultural decision-making. Analysis of preliminary data shows that the provision of price information positively impacts farmers’ price expectations as respondents in treatment villages consistently score higher on coefficients measuring knowledge of futures markets. However, researchers still have not found enough evidence to say for certain that price information affects planting, harvesting, storing, and selling decision of farmers.