C4EDC4ED

Project Description

Background

In partnership with the International Food Policy Research Institute, we conducted a randomized control trial (RCT) impact evaluation on cash-on-delivery and information on sales to enhance the capabilities of rural producer organizations in Uganda.

Dysfunctional farmer cooperatives are a main concern in Uganda and hamper rural development. Smallholder farmers in Uganda often face substantial market access barriers to selling their produce at decent prices. Rural cooperatives, in which smallholder farmers join forces and cooperate in marketing or production, can potentially help them obtain better input and/or output prices. However, these rural cooperatives have been found to fail to work effectively in several areas of Uganda. One of the reasons is the prevalence of side selling through local traders, which is weakening the cooperatives’ market power as well as group cohesion.

Evaluation

To enhance the capabilities of rural producer organizations, three interventions were implemented. The first intervention, cash-on-delivery, addresses liquidity constraints of the members and allows avoiding substantial delays in payment of the cooperative. In fact liquidity constraints can force the coffee farmers to sell their produce directly at the farm gate to itinerant traders, thereby bypassing the mediator of the cooperatives. In the innovative system set up as part of the intervention, advance payments were provided to the farmers at delivery of the harvest to the producer organization in order to increase bulking. A second intervention, information on sales, improves the reliability of the producer organization’s leaders. Finally, the combination of both interventions was also implemented. The three program implementation modalities were evaluated through a randomized control trial. Both interventions were found to help the cooperatives improve their group marketing and sales.

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