Locking Crops to Unlock Investment : Experimental Evidence on Warrantage in Burkina Faso

Smallholder farmers in Sub-Saharan Africa face an array of challenges to realizing higher profits from their agricultural activities, including lack of adequate storage facilities and credit market imperfections. To address these constraints, warrantage, an innovative inventory credit system, offers farmers the opportunity to both store their crop production and access credit simultaneously. In a study in Burkina Faso, a research team worked with 38 villages to look at the impacts of warrantage on a variety of household and agricultural outcomes when given access to storage warehouses in close proximity villages. With additional cash on hand from increased revenues, households with access to the warrantage scheme invested more in education, increased their livestock holdings, and invested more in agricultural inputs for the following year. No impacts were found on food expenditures or on food security indicators. These findings suggest that warrantage systems, when established through trusted community institutions, can positively influence household incomes and farmers' investment behavior