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Risk Free Fertilizer in Tanzania

Agriculture Tanzania

Low use of modern inputs such as fertilizer is a major contributor to low crop yields in sub-Saharan Africa. A possible inhibitor of take-up is fragmented markets that raise transport costs and allow middlemen to charge high markups. This study evaluated an intervention addressing this issue in a predominantly agricultural area in northern Tanzania. This study took place over two consecutive growing seasons, one short and one long. To determine if lower prices would stimulate demand, the investigators randomly allocated vouchers to farmers allowing them to purchase fertilizer at 10-100% of market prices prior to season 1. This price randomization was cross-cut with two interventions: i) agricultural extension services and ii) a savings product to measure if farmers reinvest additional profits generated by fertilizer use. In season 2, farmers were revisited and reoffered subsidies. The main goals of this design are to assess the effect of the savings intervention, determine long-term demand for fertilizer at a range of prices, and benchmark the intervention vis-a-vis agricultural extension services. Preliminary results show that doubling transportation costs to the primary regional market is associated with an 8% increase in the delivered price for fertilizer, and a reduction in fertilizer adoption by 25%.

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