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Heterogeneous impacts of cash transfers on farm profitability

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Ervin Prifti's (FAO) presentation at the UNU-WIDER Development Conference in Bangkok, 11-13 September 2019.

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Heterogeneous impacts of cash transfers on farm profitability

  1. 1. TITLE Heterogeneous impacts of cash transfers on farm profitability Ervin Prifti WIDER Development Conference 11-13 September 2019, Bangkok, Thailand
  2. 2. Smallholder farming, poverty and markets Basic technologies and inputs Few animals Limited access to land Limited modern inputs No or little access to credit and insurance Low human capital Agricultural interventions insufficient to increase production
  3. 3. Vicious circle of poverty
  4. 4. Program and data β€’ Lesotho CGP is an unconditional social cash transfer targeted to poor and vulnerable households β€’ Eligibility of HHs in the village was based on PMT and community validation β€’ Transfer value originally set at 360 LSL ($36, I$79) quarterly. From April 2013 indexed to number of children (360-750LSL) β€’ Study design based on community-randomized controlled trial implemented in 96 electoral divisions. β€’ Longitudinal study with BL in 2011 and FU in 2013 β€’ Sample size of 1353 HHs (2706 obs) almost equally distributed β€’ Randomization successful
  5. 5. 33 studies 26programs 15 countries Livestock 70+measuresLand Savings Farm productive assets Nonfarm productive assets Overview of the literature Source: Hidobro et al. 2018
  6. 6. Productive asset holdings % OF HOUSEHOLDS WITH FARM ASSETS NUMBER OF AGRICULTURAL ASSESTS % OF HOUSEHOLDS WITH LIVESTOCK NUMBER OF LIVESTOCK % OF HOUSEHOLDS WITH NON-FARM ASSETS SAVINGS LAND 0 9935- 13 44 53 - 6 14 86 - 6 12 108 - 3 7 38 1504920 - 6 3 0 Source: Hidobro et al. 2018 ZAM ZAM ZAM ETH ZAM 97
  7. 7. Economic and productive impacts Crop output, value and sales Livestock accumulation Labor use Risk management Self-esteem and social capital Farm inputs and assets Source: Daidone et al. 2019
  8. 8. Empirical strategy 𝑦𝑖 = 𝛼 + 𝛽𝑿𝑖 + 𝛿𝐷𝑖 + Ρ𝑖 β€’ Mean Effects β€’ Constant ATE β€’ ATE as a function of x: CATE β€’ Parametricβ€’ 𝑦𝑖 = 𝛼 + 𝛽𝑿𝑖 + 𝛿𝐷𝑖 + Ξ³X 𝐷𝑖 + 𝑣𝑖 β€’ Semi-Parametricβ€’ 𝑦𝑖 = 𝑓(𝑿𝑖) + 𝛿(X)𝐷𝑖 + 𝑣𝑖 𝑦𝑖 = 𝛼 π‘ž + 𝛽 π‘ž 𝑿𝑖 + 𝛿 π‘ž 𝐷𝑖 + e𝑖 β€’ Quantile Effects - QTE
  9. 9. Outcomes and covariates β€’ Gross margin - relative measures of profitability: value of production netted of the corresponding production costs and divided by some measure of capital β€’ Crop (CrGM) – value of crop production divided by the area of operated land β€’ Livestock (LvsGM) - value of livestock production divided by the number of Tropical Livestock Units β€’ Covariates – household size, share of female-headed HHs, age and education of HH head, dependency and sex ratio, operated land, irrigated land, TLUs, tractor use, shocks at community of floods and droughts, district dummies
  10. 10. Covariates balance -30 -20 -10 0 10 20 BLdwgcropm BLpmlk dBer BLfemhd BLedhd BLpmze BLpccons cmflody cmcrls_mdr BLdepratio BLagehd dMas BLutrctr BLsexratio dLer dMaf BLpsrg cmdrgty BLlndopirr BLlndop BLhhsz BLTLUtotob cmcrfs_mdr BLpwht BLpegg
  11. 11. Results Gross margin (crop) Gross margin (lvst) ATT 646.72** [304.67] 289.06* [169.80] Gross margin (crop) Gross margin (lvst) T x # members in the hh -42.786 (90.726) -185.177* (90.513) T x Age of hh head (years) -12.015 (16.544) -7.574 (8.059) T x Years of edu of hh head -19.997 (101.811) -1.630 (54.509) T x Dependency ratio -145.638* (59.009) 36.613 (38.523) T x Operated land, ha 172.678 (194.006) -18.999 (68.863) T x Herd size 1y before BL -7.907 (175.479) -38.864 (147.395) T x per capita cons exp 5.664* (2.661) 1.891 (1.693) β€’ Constant ATE β€’ ATE as a function of x: CATE β€’ Parametric
  12. 12. Results -2000-1000 0 100020003000 4 6 8 10 12 Household size 0 500 1000150020002500 Grossmargin-crops 30 40 50 60 70 Age of head -6000-4000-2000 0 2000 Grossmargin-crops 0 2 4 6 8 10 Education of head -1000 0 10002000 Grossmargin-crops 0 2 4 6 8 Dependency ratio -6000-4000-2000 0 2000 4 6 8 10 12 Household size -400-200 0 200400600 Grossmargin-livestock 30 40 50 60 70 Age of head -2000 0 20004000 Grossmargin-livestock 0 2 4 6 8 10 Education of head -2000-1000 0 1000 Grossmargin-livestock 0 2 4 6 8 Dependency ratio β€’ Semi- Parametric
  13. 13. Results 0 500 100015002000 0 2 4 6 Operated land, ha 0 1000200030004000 Grossmargin-crops 0 1 2 3 4 Herd size 1y before BL -1000 0 1000200030004000 Grossmargin-crops 50 100 150 200 250 Per capita tot consumption -500 0 500 1000 0 1 2 3 4 Operated land, ha -1000 -500 0 500 1000 Grossmargin-livestock 0 1 2 3 4 Herd size 1y before BL 0 500 100015002000 Grossmargin-livestock 50 100 150 200 250 Per capita tot consumption β€’ Semi- Parametric
  14. 14. Results β€’ Quantile effects 0 500 100015002000QTE .05.1 .2 .3 .5 .7 .8 .9.95 Quantile -100 -50 0 50 100 treatmentareas .05.1 .2 .3 .5 .7 .8 .9.95 Quantile CrGM LvsGM 𝛿05 122.462 [176.824] 1595.865 [307.106]*** 𝛿10 100.234 [120.804] 995.937 [187.410]*** 𝛿20 54.276 [115.947] 171.154 [75.779]** 𝛿30 47.671 [99.214] 40.141 [25.436] 𝛿50 208.275 [105.832]** 14.975 [14.574] 𝛿70 365.860 [187.081]* 42.173 [33.606] 𝛿80 327.846 [272.069] 123.119 [88.043] 𝛿90 772.788 [417.873]* 328.259 [285.754] 𝛿95 1266.092 [543.965]** 101.607 [285.002] F-test 0.034 0.000
  15. 15. Conclusions β€’ In terms of heterogeneity across subgroups defined by baseline observed characteristics, we highlight that households with sufficient labor capacity (dependency ratio below 3) and with sufficient land endowment (at least 2 ha) experience bigger increases in crop profitability. β€’ A minimum of two years of schooling and two TLUs also come out as thresholds above which recipients reap greater increases of crop profitability from the extra liquidity provided by the program. β€’ Increases in crop profitability kick in only above a level of per capita consumption expenditure of 100 LSL. β€’ In the livestock sector, impacts on the gross margin are greater for households with a dependency ratio above 3 and no more than 2 ha of land, which is the exact opposite profile of those that benefit more in the crop sector.
  16. 16. β€’ The program leads to greater increases in livestock profitability for those with at least 0.8 TLUs approximately and a level of per capita consumption expenditure or LSL 160, underlining the idea of some minimum endowment in order to productively benefit from the cash transfer. β€’ Completing the profile of those that benefit more in terms of livestock gross margin is a minimum education of the household head of 2 years. Conclusions

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