CAREER: Agricultural Markets, Firms, and Development

Yale University, New Haven CT

Investigators

Abstract

This CAREER award funds four projects on agricultural markets. Each examines the effects of market frictions on whether or not farmers are able to sell in high value-added, export-oriented markets. The frictions include limited competition, lack of information, and financial market imperfections. Economic theory predicts that certain specific policies may reduce the impact of these market frictions and improve economic outcomes. Each research project tests whether or not these predictions are supported by real-world evidence in a specific agricultural market. Because farmers earn higher incomes when they are successful in producing these high-value products, the broader impacts of this award could include economic growth in regions dependent on agriculture as a main economic sector. The award also funds an education plan to mentor students and support international scientific collaboration. This CAREER award funds a research plan including four field experiments to study how market frictions at each step of agricultural supply chains impede structural economic transformation. Project 1 uses a randomized control trial (RCT) design to study the limited pass-through of quality incentives from world markets to upstream coffee producers to identify whether intermediary market power constrain quality upgrading by farmers. Projects 2 and 3 explore the role of search costs and information constraints in preventing agricultural small and medium enterprises (SMEs) from connecting with exporters and multinational buyers. Project 4 uses an RCT of an export loan facility to test whether agricultural exporters are constrained by limited availability of financing. In all projects, original data collection and administrative data access allow measurement of causal effects on directly impacted firms, on competitors, and on upstream suppliers. The results of this research project will help to identify ways to improve agricultural markets, increase agricultural incomes and accelerate structural transformation. This award reflects NSF's statutory mission and has been deemed worthy of support through evaluation using the Foundation's intellectual merit and broader impacts review criteria.