October 2022 LOCKING CROPS TO UNLOCK INVESTMENT: GENDER EXPERIMENTAL EVIDENCE ON INNOVATION LAB WARRANTAGE IN BURKINA FASO The Gender Innovation Lab (GIL) conducts impact evaluations of Authors: Clara Delavallade (Africa Gender Innovation Lab) and Susan Godlonton development interventions in (Williams College) Sub-Saharan Africa, seeking to generate evidence on KEY MESSAGES how to close gender gaps in • Smallholder farmers in Sub-Saharan Africa face an array of challenges earnings, productivity, assets, to realizing higher profits from their agricultural activities, including lack and agency. The GIL team is of adequate storage facilities and credit market imperfections. For female currently working on over 80 farmers, who tend to earn less per hectare than their male counterparts, impact evaluations in more than overcoming these issues could play an important role in unlocking the resources 30 countries with the aim of needed to improve their earnings and boost investment in their farms and building an evidence base with households. lessons for the region. • To address these constraints, warrantage, an innovative inventory credit The impact objective of GIL is system, offers farmers the opportunity to both store their crop production increasing take-up of effective and access credit simultaneously. At harvest time, farmers can deposit their policies by governments, grains at a warehouse as collateral for a loan commonly up to 80% of the grain development organizations, value, to be stored for a pre-determined period at an annual interest rate. and the private sector to address the underlying • In a study in Burkina Faso, a research team worked with 38 villages to look causes of gender inequality at the impacts of warrantage on a variety of household and agricultural in Africa, particularly in terms outcomes when given access to storage warehouses in close proximity of women’s economic and villages. The study found that households which had access to the warrantage social empowerment. The Lab scheme had significantly higher harvest value: on average, they had a 15% aims to do this by producing increase. It appears that this effect is driven by households taking advantage and delivering a new body of the ability to sell when prices were higher. of evidence and developing a compelling narrative, geared • With additional cash on hand from increased revenues, households with towards policymakers, on what access to the warrantage scheme invested more in education, increased works and what does not work their livestock holdings, and invested more in agricultural inputs for the in promoting gender equality. following year. No impacts were found on food expenditures or on food security indicators. These findings suggest that warrantage systems, when established through trusted community institutions, can positively influence household incomes and farmers’ investment behavior. https://www.worldbank.org/en/programs/africa-gender-innovation-lab CONTEXT Immediately post-harvest in December 2014 and early For smallholder farmers, it is often difficult to store crops January 2015, researchers instituted a household-level beyond the immediate short-term. Constraints like randomization through a public lottery among households inadequate storage facilities or credit market imperfections expressing interest in warrantage. Households were hold farmers back from potentially storing their crops randomly assigned into receiving either access to a to sell at points of the season when they might fetch a warrantage system using a nearby facility or no access. higher price, leaving farmers more vulnerable to volatile crop prices or seasonal liquidity constraints that can After the lottery, crops were stored in the warehouses lead to weaker investment decisions. These challenges until May 2015, when bags were redistributed to the may be particularly acute for female farmers who face farmers. At the time of both storage and redistribution, additional gender-specific constraints to accessing and researchers collected administrative data that noted the using productivity-enhancing resources, and achieving types of crops that were stored, as well as the number of the same returns from those resources as men. bags owned by each farmer. In August/September 2015, several months into the next agricultural growing season, To address these constraints, warrantage, an inventory researchers conducted an endline survey. Treated credit system, offers farmers the opportunity to both store households were offered both features of warrantage: a their crop production and access credit simultaneously. credit feature, and a storage feature. At harvest time, farmers can deposit their grains at a warehouse as collateral for a loan commonly up to 80% of the grain value, to be stored for a pre-determined WHAT WE FOUND period at an annual interest rate. Take-up of the storage feature of warrantage was near- universal, at 92%, which allowed households to shift from In this context, grain storage acts as a commitment device that keeps farmers from accessing their stored storing their crops at their home to storing them in village grains for a fixed duration and helps them to resist the warehouses. In contrast, credit use was lower: only 38% need to sell crops at harvest when prices are low, helping of treated households took up the credit offer. There were to realize profits from seasonal price increases. It also no detectable differences between women- and men- acts as collateral, which allows financial institutions to headed households in interest in warrantage or in take- provide credit to farmers, who are typically unbanked up of storage and credit features. and lack other methods of gaining credit. When farmers Households who had access to the warrantage scheme use a warrantage system to shift the timing of their sales, had significantly higher harvest value: on average, they they can also still maintain cash on hand, smooth their had a 15% increase over the agricultural season. It consumption, and diversify investment across the year appears that this effect is driven by households taking due to the credit aspect of the system. In addition, by providing an appropriately constructed and ventilated advantage of the ability to sell when prices were higher: facility for grain storage (in contrast to home storage, households generally used the storage facilities to store which can leave grains at-risk for pests), warrantage can sorghum and maize grains, which are common in the area reduce grain losses. and historically have significant price volatility. Through this increased storage of key grains, there is suggestive evidence that households sold less of them immediately WHAT WE DID after harvest, instead shifting their sales to the destocking In collaboration with the farmers’ organization Cooperative period, when prices were higher. de Prestation de Services Agricoles Coobsa (COPSA-C), the financial institution Coris Bank, the NGO Communita With additional cash on hand from increased revenues, Impegno Servizio Volontariato (CISV), the International households in villages with access to the warrantage Food Policy Research Institute (IFPRI), and researchers at scheme consumed almost 10% more than those without Williams College, the Africa Gender Innovation Lab worked access, invested more in education, increased their with 38 villages to look at the impacts of warrantage on livestock holdings, and invested more in agricultural a variety of household outcomes when given access to inputs for the following year. No impacts were found on warehouses in 13 close proximity villages. food expenditures or on food security indicators. Among households that used the credit option, the Stakeholders were concerned that warrantage may average loan size was approximately $40, at an annual negatively impact village sharing norms, but this study interest rate of 9.75%. Credit take-up was higher among found limited evidence to support these concerns. In households with a credit history. Credit repayment was addition, the prevalence of warrantage did little to alter universal. measures of institutional trust among either participating or non-participating households. FIGURE 1: IMPACTS OF WARRANTAGE ON REVENUES AND EXPENDITURES Total value (in FCFA) Control Households Treatment Households Revenue from warrantage crops ** Annualized expenditure per capita: Total ** Annualized expenditure per capita: Food Annualized expenditure per capita: Non-Food *** 0 10,000 20,000 30,000 40,000 50,000 60,000 70,000 Expenditures (in FCFA) in the last 30 days on... Control Households Treatment Households Health Education *** Personal Effects ** Household goods Social Events 0 5,000 10,000 15,000 20,000 25,000 Note: The symbols */**/*** denote statistical significance at the 10%, 5%, and 1% levels, respectively. POLICY IMPLICATIONS & NEXT STEPS: Households that received access to a warrantage system had clear benefits: increased income, which was spent on long-term investments, including human capital expenditures, livestock holding, and investment in agricultural inputs. This result shows that smallholder inventory credit can have positive impacts on farmers’ investment behavior. Simple cost-effectiveness calculations showed that the method of implementation for warrantage, using underutilized existing storage infrastructure is highly cost-effective, showing gains in production value roughly nine times higher than program costs. When designing this type of policy to scale, it is important to note that the effectiveness of a warrantage system depends greatly on community trust in the institutions involved. In this study, COPSA-C had a long history of working in the community. Building trust prior to introducing warrantage is likely key to ensuring high take-up. Reference: “Locking Crops to Unlock Investment: Experimental Evidence on Warrantage in Burkina Faso”, C. Delavallade and S. Godlonton, Journal of Development Economics. 2023. Vol. 160. FOR MORE INFORMATION, PLEASE CONTACT Africa Gender Innovation Lab afrgenderlab@worldbank.org Clara Delavallade cdelavallade@worldbank.org Léa Marie Rouanet lrouanet@worldbank.org 1818 H St NW Washington, DC 20433 USA www.worldbank.org/africa/gil Photo credit: Photo © Dominic Chavez/World Bank This work has been funded in part by the Umbrella Facility for Gender Equality (UFGE), which is a multi-donor trust fund administered by the World Bank to advance gender equality and women’s empowerment through experimentation and knowledge creation to help governments and the private sector focus policy and programs on scalable solutions with sustainable outcomes. The UFGE is supported with generous contributions from Australia, Canada, Denmark, Germany, Iceland, Latvia, the Netherlands, Norway, Spain, Sweden, Switzerland, United Kingdom, United States, and the Bill and Melinda Gates Foundation.