Farmer organizations and maize productivity in rural Burkina Faso: The effects of the diversion strategy on cotton input loans

• Date: 01 August 2020
• DOI: http://doi.org/10.1111/rode.12674
• Published date: 01 August 2020
• Author: Salimata Traore

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wileyonlinelibrary.com/journal/rode Rev Dev Econ. 2020;24:1150–1166.

© 2020 John Wiley & Sons Ltd

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INTRODUCTION

In developing countries, improving the productivity, profitability, and sustainability of rural farmers

is considered the main method for alleviating rural poverty (Verhofstadt & Maertens, 2014). In 2012,

the average output of cereal production was 1,476kg/ha for sub-Saharan African countries compared

to 5,922, 5,837, and 7,524kg/ha for the United States, China, and France, respectively (World Bank,

2013). By helping farmers overcome market deficiencies, farmer organizations (FOs), as institutional

innovations, play a key role in sector development (Hazell, Poulton, Wiggins, & Dorward, 2010).

Received: 13 June 2018

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Revised: 19 April 2020

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Accepted: 23 April 2020

DOI: 10.1111/rode.12674

REGULAR ARTICLE

Farmer organizations and maize productivity in

rural Burkina Faso: The effects of the diversion

strategy on cotton input loans

SalimataTraore

Department of Economics and

Management, University Ouaga II,

Ouagadougou, Burkina Faso

Correspondence

Salimata Traore, Department of Economics

and Management, University Ouaga II,

Ouagadougou, Burkina Faso.

Email: trasally@gmail.com

Abstract

This study analyzes the impact of the diversion strategy of

cotton inputs on maize productivity among farmer organi-

zation (FO) members in Burkina Faso, based on an endog-

enous treatment effect model. This impact is assessed by

measuring the effects of the producers’ strategy of using

part of their cotton inputs for growing other crops, such as

maize. The data from a 2014 multisectoral survey in Burkina

Faso were used. The main result is that maize productivity

is 59.11% lower for FO members who divert their cotton

inputs. We suggest the development of financing systems

for cereals, similar to those in the cotton sector, and the es-

tablishment of monitoring the use of input credits.

KEYWORDS

agricultural productivity, Burkina Faso, farmer organizations

JEL CLASSIFICATION

O47; O55; P13; P32; Q12

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TRAORE

Two opposing theories exist regarding the relationship between FOs and agricultural productivity.

According to neoclassical theory, the market is the best way to allocate resources. On the contrary,

neo-institutional economics (NIE) states that the existence of transaction costs and information asym-

metries is a source of market failures likely to discourage economic agents (Coase, 1960; Greenwald

& Stiglitz, 1986; North, 1992), especially in rural areas where market infrastructures are almost non-

existent (Shiferaw, Obare, Muricho, & Silim, 2009). Therefore, FOs may emerge as types of organi-

zations that try to play the role of the state in addressing deficiencies. FOs are created as a way of

minimizing transaction costs and reducing information asymmetries. Market failures also reveal the

very important role FOs play in correcting them. NIE's two branches of analysis, namely, the institu-

tional arrangement and the institutional environment (North, 1991), may be thought of as the type of

organization and the internal regulations necessary to reduce these failures, respectively.

The discussion regarding the relationship between FOs and agricultural productivity is also

empirical. Many studies have shown that FO membership improves individual farmers’ economic

situations (Elah & Makoudem, 2012; Kolade & Harpham, 2014) through, among other things, an

increase in members’ spending (Ahmed & Mesfin, 2017) or an increase in their incomes (Verhofstadt

& Maertens, 2014). Other authors, however, refute the idea of a systematic positive impact of FOs

on agricultural productivity (Allahdadi, 2011; Bernard, Taffesse, & Gabre-Madhin, 2008; Holmgren,

2011). The explanation that some authors give for the unsystematic positive impact of FOs is the

inadequacy of agricultural policies and the marginalization of FOs due to their becoming victims of

public administrations (Maiga, 2006). FO members can choose different strategies for conducting ag-

ricultural activities. In this study, we focus on input diversion by members of FOs and its relationship

with productivity.

Burkina Faso, where 40.1% of the population lives below the poverty threshold, is the focus of

our analysis for several reasons. In this country, as in most developing countries, agricultural produc-

tivity is low, with the average annual production of cereals being 860kg/ha between 1985 and 2009

(Institut national de laStatistique et de laDémographie [INSD], 2010) compared to 1,204, 1,359, and

1,765kg/ha between 2004 and 2008 for Benin, Ghana, and Côte d'Ivoire, respectively (AGRA, 2013).

Maize, in addition to rice, is one of the crops with a higher added value per hectare (MAFAP, 2013)

although it accounts for only 21% of the total cereal production. FOs are numerous and can be con-

sidered as a way to improve agricultural productivity in the context of rural financial market failure.

The issue of access to financial resources substantially explains the low level of agricultural produc-

tion. This situation is all the more true since 71.2% of Burkinabe farmers still use outdated means of

production—only 0.2% use tractors and only 1.2% use seeds modified to increase cereal production

(DPSAA, 2009). FOs thus represent an alternative, an interface tool, a guarantee of efficiency, and

an institutional tool to improve farmers' participation in the market and their income (Bernard &

Taffesse, 2012; Herbel, Crowley, Ourabah Haddad, & Lee, 2012; Mojo, Fischer, & Degefa, 2017;

Wanglin & Awudu, 2016).

In the cotton sector, a formal financing system for the provision of input credit has existed since

1999. Its main organizer was the public cotton company in Burkina Faso, leader of an oligopsony.

According to the contracts, at the end of the growing season, the amount of credit granted to the

farmer is deducted from his or her income. The system is efficient and remains the only reliable way

to obtain inputs on credit. Faced with the absence of such a system in other agricultural sectors, some

farmers are increasing their cotton acreage to access inputs and diverting some of it to the cultivation

of other cereals, particularly maize (Dowd-Uribe, 2014).

Does this strategy of diversion of cotton inputs have an impact on the productivity of maize by FO

members? This study attempts to answer this important question. More specifically, this study aims to

analyze the impact of the strategy of diversion of cotton inputs on FO members’ maize productivity in