The Crop Connection: Impact of Cell Phone Access on Crop Choice in Rural Pakistan

Type Working Paper
Title The Crop Connection: Impact of Cell Phone Access on Crop Choice in Rural Pakistan
Author(s)
Publication (Day/Month/Year) 2016
URL http://pubdocs.worldbank.org/en/368061466183263192/Saher-Asad.pdf
Abstract
A transition to cash crop production is widely considered to be a principal pathway
for poverty reduction and economic development. However, cash crops are often perishable, and
therefore suffer from a high risk of incurring post-harvest losses when modern storage is unavailable
and market linkages are weak. Can cell phones help farmers overcome this risk of producing cash
crops? The empirical analysis is motivated and framed by an extension of the agricultural household
model that highlights the role of farmer-trader coordination. Using administrative village
census data and primary household survey data I collected in rural Pakistan, this paper provides
the first estimates of the impact of cell phone access on crop choice, farmer-trader coordination,
and post-harvest losses. To deal with endogeneity of cell phone tower placement, I exploit a unique
policy that restricts cell phone coverage in Pakistan from villages that lie within 10 km of the Indian
border. Regression discontinuity estimates of village level data indicate that cell phone access
causes a 23-27% increase in the probability of producing perishable crops. To uncover the distinct
impacts of cell phone access on crop choice and farmer-trader coordination, I estimate the household
level regressions by degree of perishability. For the extremely perishable crops, the area allocated
increases by 23-27%; the gap between harvest and sale decreases by 5-7 days; and post-harvest
losses fall by 21-35%. In case of the highly perishable crops, the effects, although significant, have
a lower magnitude. In contrast, for the least perishable crops, the area allocated decreases, but
no effects are observed on farmer-trader coordination. Farmers’ agricultural income and household
consumption increase by 10-15% and 8-10% respectively. While I find evidence that cell phone
access improves price and weather information, as well as coordination with traders, I show that
the latter channel, which this paper is the first to highlight, dominates in economic importance.

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