the crop connection: impact of cell phone access on crop...
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The Crop Connection: Impact of Cell Phone Access onCrop Choice in Rural Pakistan
Saher Asad
Lahore University of Management Sciences
June 20, 2016ABCDE 2016
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Motivation
Cash crops can have positive impacts on development (World Bank,2008; IFPRI,2013; FAO,2014)
Cash crops are often highly perishable Profitability
In developing countries - storage is limited, market linkages are weak
Risk of high post-harvest losses deters production
Can the cell phones mitigate this risk?
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This Paper
Provides estimates for impact of cell phone access on crop choicealong the perishability dimension
Mechanisms
“Farmer-Trader Coordination (FTC)”“Price Information Effect (PIE)” - (e.g. Jensen, 2007; Aker, 2010;Goyal, 2010; Muto and Yamano, 2009; Nakasone, 2013; Mitra et al.,2013)“Weather Information Effect (WIE)” - (e.g. Cole and Fernando,2012; Fafchamps and Minten, 2012)
Distinguish effects
Income and Consumption
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Context: Pakistan
Agriculture constitutes 21% of GDP in Pakistan
Punjab(study region) is the hub of agriculture
Farmers grow 4-6 crops in a year
Farmers are constrained by storage and timely sale
Traders are constrained by limited capacity and power outages
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Evidence from Field
“Before I had a cell phone I harvested my crop and then had to wait for atrader to buy my crops; now I talk to the trader and harvest my cropswhen he will buy it.”- Farmer in Rural Pakistan
“I cannot buy an unlimited amount of crop in one day. The power keepsgoing out and I cannot store these crops for very long period. The retailersdont like to buy rotten crops.”- Trader in a Mandi
“Farmers can adjust the watering schedule to adjust the harvest date upto 10 days.”- Agricultural Expert
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Model
Agriculture Household Model (De Janvry and Sadoulet, 2006;Dercon, 1996) highlights the role of coordination in farmer productionchoices Assumptions Baseline CellPhone
Solving the model gives the following results
Result 1:CellPhone → ProbabilityofSalec ↑→ SharetoPerishablec ↑
Result 2:CellPhone → ProbabilityofSalenc ↓→ SharetoPerishablenc ↓
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Identification Strategy
Cell Phone coverage is endogenous- heavily provided to rich areas
Coverage Restricted from villagesin 10 km of border with India -“Dead Zone”
Enforced with: (a) Strategic TowerPlacement; (b) Jammer Placement
Does not coincide with the “NoMan’s Land” (500m)
Spatial Regression Discontinuity
India
µ
1:1,250,000
Legend
International Border
District Boundary
Dead Zone Boundary
Villages Without Cell Phone Coverage
Villages With Cell Phone Coverage
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Village Level Data
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Village Level Data
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Village Level Data
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Village Level Data
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Village Level Data
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Household Level Data
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Household Level Data
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Household Level Data
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Household Level Data
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Household Level Data
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Household Level Data
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Estimation
Covariates are balanced Village
Household
Fuzzy RD for village data
Sharp RD for household data
Due to the sample size limitations Iadopt a semi-parametric estimationmethod based on Dell(2010)
Present results for quadratic, cubicand quartic polynomials inEuclidean distance and lat-long
India
µ
1:1,250,000
Legend
International Border
District Boundary
Dead Zone Boundary
Villages Without Cell Phone Coverage
Villages With Cell Phone Coverage
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Discontinuity in Probability of Producing Perishable Crop
0.0
0.2
0.5
0.7
0.9
Pro
babi
lity
of G
row
ing
Ext
rem
ely
and
Hig
hly
Per
isha
ble
Cro
ps
−10 −5 0 5 10Distance from Restriction
Density Smoothness
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Discontinuity in Area Allocated to Growing PerishableCrops
0.0
0.3
0.5
0.8
1.0
Are
a U
nder
Ext
rem
ely
and
Hig
hly
Per
isha
ble
Cro
ps
−5 0 5Distance from Restriction
Density Smoothness
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Is this a Major Crop in the Village?
(Degree of Perishability of Crop)
(Extremely & Highly) (Least) (Extremely & Highly) ( Least)
(Probit)Cell Phone 0.31*** 0.09 0.29*** 0.12
(0.06) (0.08) (0.11) (0.16)
(Quadratic in Distance from Restriction)Cell Phone 0.23*** 0.032 0.26*** 0.02
(0.03) (0.04) (0.03) (0.04)
(Quadratic in Lat-Long)Cell Phone 0.24*** 0.012 0.25*** 0.09
(0.02) (0.09) (0.03) (0.07)
Controls Y Y Y Y
District Dummies, Crop Dummies, Dist Crop Dummies Y Y Y Y
Number of Observations 1785 1785 1094 1094Size of Band Around Restriction 10km 10km 5km 5kmMean of Control Group 0.15 0.89 0.18 0.92
∗ ∗ ∗p < 0.01, ∗ ∗ p < 0.05, ∗p < 0.1
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Percentage of Area Under Crop
(Degree of Perishability of Crop)
(Extremely) (Highly) (Least)
(OLS)Cell Phone 0.28*** 0.19*** -0.48***
(0.08) (0.06) (0.18)
(Quadratic in Distance from Restriction)Cell Phone 0.245*** 0.16*** -0.411***
(0.11) (0.02) (0.09)
(Quadratic in Lat-Long)Cell Phone 0.265*** 0.18*** -0.37***
(0.08) (0.03) (0.06)
Controls Y Y Y
District Dummies, Crop Dummies, Dist Crop Dummies Y Y Y
Number of Observations 450 450 450Mean of Control Group 0.11 0.13 0.76
∗ ∗ ∗p < 0.01, ∗ ∗ p < 0.05, ∗p < 0.1
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Farmer Trader Coordination: Can the Farmer Sell Crops onFirst Trip to Market?
(Degree of Perishability of Crop)
(Extremely) (Highly) (Least)
(Probit)Cell Phone 0.58*** 0.42*** 0.03
(0.16) (0.19) (0.07)
(Quadratic in Distance from Restriction)Cell Phone 0.40*** 0.32*** 0.06
(0.07) (0.04) (0.19)
(Quadratic in Lat-Long)Cell Phone 0.49*** 0.31*** 0.07
(0.02) (0.065) (0.17)
Controls Y Y Y
District Dummies, Crop Dummies, Dist Crop Dummies Y Y Y
Number of Observations 450 450 450Mean of Control Group 0.35 0.39 0.86
∗ ∗ ∗p < 0.01, ∗ ∗ p < 0.05, ∗p < 0.1
Number of DaysSaher Asad (LUMS) Crop Connection June 20, 2016 24 / 47
Farmer Trader Coordination: Percentage of Output Lost toPost-Harvest Losses?
(Degree of Perishability of Crop)
(Extremely) (Highly) (Least)
(OLS)Cell Phone -0.37*** -0.21*** -0.11
(0.13) (0.09) (0.14))
(Quadratic in Distance from Restriction)Cell Phone -0.21*** -0.15*** 0.04
(0.09) (0.07) (0.11)
(Quadratic in Lat-Long)Cell Phone -0.25*** -0.13*** 0.05
(0.03) (0.045) (0.15)
Controls Y Y Y
District Dummies, Crop Dummies, Dist Crop Dummies Y Y Y
Number of Observations 450 450 450Mean of Control Group 0.63 0.51 0.12
∗ ∗ ∗p < 0.01, ∗ ∗ p < 0.05, ∗p < 0.1
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Weather Information Effect: Difference Between Actualand Optimal Plantation Date?
(Degree of Perishability of Crop)
(Extremely) (Highly) (Least)
(OLS)Cell Phone -8.5*** -4.9*** 1.3
(1.85) (0.75) (1.14)
(Quadratic in Distance from Restriction)Cell Phone -6.43*** -4.28*** -1.12
(0.97) (0.84) (0.91)
(Quadratic in Lat-Long)Cell Phone -4.73*** -3.18*** -0.98
(1.15) (1.12) (0.97)
Controls Y Y Y
District Dummies, Crop Dummies, Dist Crop Dummies Y Y Y
Number of Observations 450 450 450Mean of Control Group 12.91 10.85 9.98
∗ ∗ ∗p < 0.01, ∗ ∗ p < 0.05, ∗p < 0.1
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Weather Information Effect: Log of Crop Yield
(Degree of Perishability of Crop)
(Extremely) (Highly) (Least)
(OLS)Cell Phone 0.06*** 0.03*** 0.02
(0.03) (0.01) (0.08)
(Quadratic in Distance from Restriction)Cell Phone 0.05*** 0.04*** 0.01
(0.01) (0.009) (0.02)
(Quadratic in Lat-Long)Cell Phone 0.03*** 0.02*** 0.009
(0.01) (0.006) (0.02)
Controls Y Y Y
District Dummies, Crop Dummies, Dist Crop Dummies Y Y Y
Number of Observations 450 450 450
∗ ∗ ∗p < 0.01, ∗ ∗ p < 0.05, ∗p < 0.1
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Price Information Effect: Percentage Difference BetweenFarmers’ and Market Price
(Degree of Perishability of Crop)
(Extremely) (Highly) (Least)
(OLS)Cell Phone -0.34*** -0.38*** -0.29***
(0.14) (0.17) (0.05)
(Quadratic in Distance from Restriction)Cell Phone -0.31*** -0.34*** -0.36***
(0.15) (0.16) (0.09)
(Quadratic in Lat-Long)Cell Phone -0.29*** -0.35*** -0.26***
(0.11) (0.12) (0.07)
Controls Y Y Y
District Dummies, Crop Dummies, Dist Crop Dummies Y Y Y
Number of Observations 450 450 450Mean of Control Group 0.48 0.43 0.45
∗ ∗ ∗p < 0.01, ∗ ∗ p < 0.05, ∗p < 0.1
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Income and Consumption
(Agricultural Income) (Consumption)
(OLS)Cell Phone 0.17*** 0.14***
(0.05) (0.04)
(Quadratic in Distance from Restriction)Cell Phone 0.10*** 0.08***
(0.03) (0.02)
(Quadratic in Lat-Long)Cell Phone 0.13*** 0.10***
(0.05) (0.03)
Controls Y Y
District Dummies, Crop Dummies, Dist Crop Dummies Y Y
Number of Observations 450 450
∗ ∗ ∗p < 0.01, ∗ ∗ p < 0.05, ∗p < 0.1
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Income By Crop Category and Mechanism
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Robustness Checks
Use of higher order polynomials
Alternative identification strategy and external validity Full Country
Radio test radio
Pre-coverage placebo test Placebo
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Policy Implications and Conclusion
Improving extension services - when to provide critical information?
Post-harvest risk mitigation - coordination, post-harvest Insurance?
Cell phone coverage makes farmers shift towards producing perishablecash crops
Analysis of mechanisms suggest “Farmer-Trader Coordination Effect”dominates in economic importance
Future work: Impacts on Traders, Impacts on Non-AgriculturalHouseholds
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THANK YOU
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Crop Profitability By Degree of Perishability
Return
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Assumptions
A1: 2 crops
A2: Land normalized to 1 and all land cultivated
A3: Extreme Perishability Assumption(EPA)
A4: Participation Constraint (PC) holds
A5: Fair Trader Assumption(FTA)
A6: One Market
A7: Utility Function is: U(c) = cρ and ρ < 1
Return
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Baseline Case
Based on FTA probability of sale when no one has cell phone is 1θ = k
Budget Constraint c = σbYp + (1− σb)Ynp
Maximization gives σb
σb =Ynp
Ynp+YpD−1
where D = [( k1−k )(
Yp−Ynp
Ynp)]
11−ρ
Return
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Case with Cell Phones
Some fraction α gets cell phone access
Those with cell phone; k = 1
Those without cell phone; k ′ = 1−αθθ−αθ ; k ′ < k
σc = 1 ;
σnc =Ynp
Ynp+YpD−1
where D = [( k ′
1−k ′ )(Yp−Ynp
Ynp)]
11−ρ
Return
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Village Level Diff of Means
ReturnSaher Asad (LUMS) Crop Connection June 20, 2016 38 / 47
Household Level Diff of Means
Return
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Cell Phones versus Radios
(Probability of Being a Major Crop in the Village)
(Degree of Perishability of Crop)
(Highly & Extremely) (Less & Least) (Highly & Extremely) (Less & Least)
Radio 0.036 0.023 0.034 0.025(0.226) (0.212) (0.242) (0.016)
R-Square 0.24 0.18 0.21 0.14
Controls Y Y Y Y
District FE, Crop FE and District-Crop FE Y Y Y Y
Number of Observations 52,378 52,378 27,059 27,059Sample Full Country Full Country Full Punjab Full Punjab
Controls include percentage of area cultivated, pre-coverage distance from pucca road network, wealth measures like roofstructure of majority of households in the village, elevation, access to agricultural credit and access to irrigation. Theregression also includes set of district specific, crop specific and district-crop specific fixed effects.∗ ∗ ∗p < 0.01, ∗ ∗ p < 0.05, ∗p < 0.1
Return
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Pre-Coverage Placebo Test
(Probability of Being a Major Crop in the Village)
(Degree of Perishability of Crop)
(Highly & Extremely) (Less & Least)
Cell Phone 0.01 0.007(0.03) (0.04)
R-Square 0.15 0.17
Controls Y Y
District FE, Crop FE and District-Crop FE Y Y
Number of Observations 498 498
Controls include percentage of area cultivated, pre-coverage distance from pucca road network,wealth measures like roof structure of majority of households in the village, elevation, access toagricultural credit and access to irrigation. The regression also includes set of district specific,crop specific and district-crop specific fixed effects.∗ ∗ ∗p < 0.01, ∗ ∗ p < 0.05, ∗p < 0.1
Return
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Farmers Lined Up at the Market to Sell Crops
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Perishability Ranking of Crops
Extremely Perishable : Tomatoes, Oranges, Mangoes, Corn, SugarCane
Highly Perishable : Onion, Garlic, Potato, Taro, Peas, Fresh Turmeric
Least Perishable : Millet, Feed, Sorghum, Rice, Wheat, Cotton
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Density Smooth at Village Level
0.0
2.0
4.0
6.0
8
−20 −10 0 10 20
Return
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Density Smooth at Household Level
0.0
5.1
.15
−5 0 5
Return
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Conditional Correlation
(Probability of Being a Major Crop in the Village)
(Degree of Perishability of Crop)
(Highly & Extremely) (Least) (Highly & Extremely) (Least)
Cellphone 0.29*** 0.01 0.31*** 0.04(0.004) (0.02) (0.002) (0.1)
R-Square 0.38 0.25 0.29 0.17
Controls Y Y Y Y
District FE, Crop FE and District-Crop FE Y Y Y Y
Number of Observations 52,378 52,378 27,059 27,059Mean of Control 0.12 0.78 0.17 0.85Sample Full Country Full Country Full Punjab Full Punjab
Controls include percentage of area cultivated, pre-coverage distance from pucca road network, wealth measures like roofstructure of majority of households in the village, elevation, access to agricultural credit and access to irrigation. Theregression also includes set of district specific, crop specific and district-crop specific fixed effects.∗ ∗ ∗p < 0.01, ∗ ∗ p < 0.05, ∗p < 0.1
Return
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Mechanisms : FTC
(Number of Days Between Harvest and Sale)
(Degree of Perishability of Crop)
(Extremely) (Highly) (Less and Least)
(OLS)Cell Phone -8.9*** -6.5*** 2.3*
(2.23) (1.56) (1.40)
(Quadratic in Distance from Restriction)Cell Phone -6.13*** -5.34*** 0.51
(0.05) (0.12) (0.45)
(Quadratic in Lat-Long)Cell Phone -6.96*** -6.15*** 1.23
(1.12) (1.55) (1.85)
Controls Y Y Y
District Dummies, Crop Dummies, Dist Crop Dummies Y Y Y
Number of Observations 450 450 450Mean of Control Group 10.35 8.68 5.38
∗ ∗ ∗p < 0.01, ∗ ∗ p < 0.05, ∗p < 0.1
Return
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