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Risk-Free Sample Purchase for Inorganic Fertilizer

Agriculture Uganda

Despite the well-documented benefits of fertilizer on crop yields, take-up among smallholder farmers in Uganda remains low due in part to liquidity constraints, limited information and risk aversion. This pilot aimed to overcome these challenges by introducing an innovative payment mechanism: a risk-free sample. Randomly selected farmers were offered fertilizer to use on a select portion of their plot thereby allowing them to directly compare fertilized versus non-fertilized maize yields. The farmers only paid for the fertilizer if it increased yields. At the time of repayment, farmers were also offered the option to purchase fertilizer for the next planting season. The comparison group were provided the traditional fertilizer sales offer. Preliminary results show that while the treatment increased the initial sales by 66% over the control, the treatment did not increase the likelihood of adoption. Farmers were not willing to spend their own money to purchase the fertilizer in the second season. Non adopters’ concerns included having to wait a long time to see the return on investment of fertilizer purchase, and weather risks which they felt could render the fertilizer useless.

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