Liquid milk: Cash constraints and day-to-day intertemporal choice in financial diaries

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dc.creatorGeng, Xin
dc.creatorJanssens, Wendy
dc.creatorKramer, Berber
dc.date2017
dc.date2024-06-21T09:23:35Z
dc.date2024-06-21T09:23:35Z
dc.date.accessioned2026-06-27T15:32:30Z
dc.descriptionThis paper analyzes implications of cash constraints for collective marketing, using the case of the Kenyan dairy sector. Collective marketing, for instance through cooperatives, can improve smallholder farmer income but relies on informal, nonenforceable agreements to sell outputs collectively. Side selling of output in the local market occurs frequently and is typically attributed to price differences between the market and cooperative. This paper provides an alternative explanation, namely that farmers sell in the local market when they are cash constrained because cooperatives defer payments while buyers in local markets pay cash immediately. Building on semiparametric estimation techniques for panel data, we find robust evidence of this theory. High-frequency, high-detail panel data show that farmers sell more in the local market, in particular to buyers who pay cash immediately, in weeks when they have low cash on hand. Moreover, households cope with health shocks by selling more milk in the local market and less to the cooperative, but only in weeks when they are not covered by health insurance. Increased flexibility in payment and the provision of insurance through agricultural cooperatives can potentially reduce side selling and improve the performance of collective marketing arrangements.
dc.formatapplication/pdf
dc.identifierhttps://hdl.handle.net/10568/147965
dc.identifier.urihttp://hdl.handle.net/123456789/107310
dc.languageen
dc.publisherInternational Food Policy Research Institute
dc.relationhttps://hdl.handle.net/10568/150570
dc.relationhttps://hdl.handle.net/10568/35059
dc.relationhttps://hdl.handle.net/10568/147964
dc.relationhttps://doi.org/10.2499/p15738coll2.133514
dc.rightsOpen Access
dc.sourceGeng, Xin; Janssens, Wendy;and Kramer, Berber. 2017. Liquid milk: Cash constraints and day-to-day intertemporal choice in financial diaries. IFPRI Discussion Paper 1602. Washington, DC: International Food Policy Research Institute (IFPRI). https://hdl.handle.net/10568/147965
dc.subjectdairy cooperatives
dc.subjectapproximation
dc.subjecteconomic development
dc.subjectliquidity
dc.subjecthouseholds
dc.subjectsmallholders
dc.subjectmarketing
dc.subjectagricultural cooperatives
dc.subjectfinance
dc.subjectdairy industry
dc.titleLiquid milk: Cash constraints and day-to-day intertemporal choice in financial diaries
dc.typeWorking Paper

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Instituto Internacional de Investigación sobre Políticas Alimentarias (IFPRI)