Quality Control in Agriculture and The Power of New Technology

Abstract

Agricultural markets in low-income countries are often plagued by serious input quality problems. An estimated 30% of fertilizer and 50% of hybrid seed sold are inauthentic (Bold et al. 2017), and even “certified” seed is frequently mislabelled or not the advertised variety (Kosmowski et al. 2016). These distortions matter greatly for both farm production and aggregate agricultural productivity. While there have been some efforts to help farmers assess input quality, most existing interventions focus on doing so at the point of sale and/or for easily observable characteristics. However, improving the ability to discern quality at the time of purchase can only go so far if the underlying inputs are already low quality. In this project we focus further upstream, right when the inputs themselves are actually produced. We implement a randomized controlled trial in Orissa, India to test two interventions aimed at improving seed quality: DNA verification technology and enhanced incentive contracts. We find that combining both interventions significantly improves seed purity, and that this effect appears to be driven primarily by a reduction in moral hazard.