World Bank Development Impact Blog • NOVAFRICA Development Economics Job Market Talks Podcast

We conduct a randomized experiment with groundnut producers in Senegal to address barriers to managing food safety and complying with international quality standards. We offer a bundled contract combining credit, extension, and a price premium guarantee to encourage use of a new food safety technology. The contract is flexible regarding sales of output: while cooperatives offering the contract seek to aggregate members’ output, farmers can seize higher price opportunities when they exist. We find that producers randomly offered the contract are significantly more likely to purchase the technology, sell more output via cooperatives, and are more likely to comply with international food safety standards in areas where quality would otherwise be lower due to agro-climatic conditions. In a subsequent season, demand for the technology falls and producers revert to selling more output on the spot market when a price premium guarantee is no longer available.