Speaker
Description
Over-application of fertilizers is common in Indonesia harming the environment and reducing farmers’ profits. Soil tests combined with individualized fertilizer recommendations can help to reduce the over-application of fertilizer, yet they are rarely used and typically not offered by extension officers. Hence, high hopes are pinned on a market-based dissemination. In this paper, we elicit small-scale farmers’ revealed willingness-to pay for rapid low-cost soil test kits in Indonesia. We use an incentive-compatible auction, based on the Becker-DeGroot-Marschak (BDM) approach. We compare two different ways soil tests could be distributed among farmers outside of our experiment by government extension officers. In the first experimental arm, we offer farmers the chance to bid for the service of having their soil tested with a rapid soil test. In the second experimental arm, farmers are asked to make a bid for their contribution to buy the complete soil test kit including a training how to use them as a farmer group. A further design feature of our sample is that half of the farmers were randomly assigned to a one-day training on soil fertility management in 2022. Hence, we test whether farmers who were offered that training systematically differ in their price bids from those farmers who were not offered that training. Our results suggest that the willingness-to-pay for soil tests is substantial and hence, a provision by extension workers at a subsidized rate would be feasible. On a per test basis, both types of provisions imply comparable price bids. We do not find much free riding in the group setting. For lower subsidies the service provision would be more effective, but for higher subsidies uptake would be higher in the group setting. Yet, prior training in soil management has no or if at all a very small positive effect. These results provide the first evidence on the effectiveness of alternative distribution channels of rapid low-cost soil tests among small-scale farmers.
