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Encouraging​ ​Fertilizer​ ​Adoption​ ​through Risk-Free​ ​Sales​ ​Offers

  • Author(s): Adong, Annet
  • Tinker, James
  • Levine, David
  • Mbowa, Swaibu
  • Odokonyero, Tony
  • et al.
Abstract

Only around 8 percent of farmers in Uganda use fertilizer, even though most of the country’s soil is nitrogen deficient and fertilizer is typically profitable when it is used. A variety of constraints may contribute to low fertilizer usage, such as: lack of liquidity at planting season, weather risk, lack of access to fertilizer, lack of training, and risk of purchasing counterfeit fertilizer. In this experiment we test the efficacy of a “risk-free sample offer” sales model to increase fertilizer adoption and to better understand the constraints farmers face. The risk-free sample offer provided farmers with enough fertilizer for 1/8 of an acre. The sales agents then assisted the farmers in staking off a 1/8 acre plot to test the fertilizer on and a separate 1/8 acre plot to serve as a comparison. The farmers agreed to pay for the fertilizer after harvest, but only if the increased profit from the fertilized plot was more than the value of the fertilizer. We explained we would only sell farmers fertilizer for the following season if they paid for their risk-free sample. Therefore, the ability to do future business with the sales agent provided incentive for the farmer to make the payment.

We tested the sale offer in Mityana district using a randomized control trial of 333 treatment farmers and 352 control farmers from September 2016 to April 2017. The risk-free sample offer increased initial uptake of fertilizer by 74 percentage points over the control group. Unfortunately, the region suffered a very serious drought which led many farmers to have a very low harvest (and sometimes none). The drought persisted into the following planting season, which discouraged many of the farmers from investing in fertilizer. Regardless, 34 percent repaid some or all of the fertilizer from the risk free purchase even though most were not required to, and 24 treatement farmers purchased fertilizer for the following season (21 percent above the control group).

Despite the severe drought, the experiment demonstrated that the risk-free sample offer generated considerable demand for fertilizer. We also found evidence of spillover effects to such as control farmers who initially turned declined to purchased fertilizer in the first round, but indicated interested in the second round. Ugandan farmers also exhibited high trustworthiness, with many repayments from farmers who were not required to repay after the drought prevented the fertilizer from turning a profit.

Future interventions to improve fertilizer adoption should consider using a multi-pronged approach that addresses weather risk, training, fertilizer access, and price risk simultaneously. The document concludes with some lessons learned and recommendations for practitioners interested in exploring this sales offer further.

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