/ Par / by Sebastian Schienle

How to help coffee farmers? With cash?

Last fall, we wrote about why we focus our international activities on smallholder coffee farmers. We also outlined our belief that teaching them core agricultural skills can help improve their livelihoods. Yet, other interventions clearly also have their merits — especially those that are well researched and supported by clear evidence of impact.

Cash transfers are among the most thoroughly and rigorously evaluated tools in development assistance, as we have laid out before. So we asked ourselves, together with our project partner GiveDirectly: what if instead of giving goods and services, we just gave farmers cash?

Between June and December 2016, GiveDirectly enrolled 3,400 recipients in eastern Uganda in a program funded by us that is designed to answer this question. The recipients all live in the district of Iganga, a nexus of high coffee production and extreme poverty. Roughly half of them are coffee farmers, although all were selected based on poverty indicators. This ensured we would reach the poorest members of the community, not just those who happened to grow coffee. All households receive ~$1,000.

With this program, we first want to understand the impact of cash on the coffee production itself — do farmers invest more in their coffee, grow more of it, and generate more revenue when they sell it? But we also want to broaden the focus to the impact of cash on the livelihoods of our recipients. After all, investment in other areas than that of coffee — from investing in other crops and businesses, to purchasing assets or paying school fees — might be what recipients consider as important to improve their lives.

To answer our questions, a randomized controlled trial (RCT) will be used to study the impact of the cash transfer on coffee farmers as well as those who are not coffee farmers. Put simply, our goal is to develop a benchmark for future work with coffee farmers — both ours and that of others. GiveDirectly just published the details of this study in the RCT’s Pre-Analysis Plan [PAP]. RCTs take a while, however, and we expect results a year from now, in early to mid-2018.

So what can we say about the program in the meantime? We visited Iganga in November 2016. And by mid-March, $2.5 million had already been paid out to recipient households. While it is still too early for any definitive insights, particularly regarding coffee-related outcomes, we can be quite certain of two things in particular:

  1. As in other GiveDirectly programs, recipients are overwhelmingly putting their cash to good use. Shortly after cash transfers are made, boda-bodas (motorcycle taxis) laden with iron sheets (roofing materials) and mattresses (for many recipients the first mattress in their life) drive through the villages, and heaps of bricks are clear signs of construction. In addition, recipients told us they are using funds to pay school fees, lease or buy land, buy cows, or motorbikes to offer taxi services in their village.
    When it comes to coffee, many cash-strapped farmers used to pre-sell their coffee ahead of the harvest at very low prices to generate urgently needed cash for their most basic needs. So the least that the cash transfer does for them is allow them to sell ripe cherries during harvest at higher prices, thus increasing the income they generate from coffee. (For unfiltered, unedited real-time stories of GiveDirectly’s recipients, including some from our program, have a look at GDLive.)

  2. The transparency, rigor, and adaptability of GiveDirectly that we have observed so far in the context of our Iganga program is impressive. It serves well as a benchmark for all of us in the area of non-profit. GiveDirectly rigorously tracks a core set of operational KPIs on a monthly basis and adjusts program implementation accordingly. All of it is shared extremely openly and transparently with us as funders. For example, GiveDirectly has tested multiple approaches to ensure recipients can cash out their mobile money transfers easily, and safely, carefully balancing implementation costs with the needs of recipients. As a result, GiveDirectly estimate that instances of fraud or bribery on the program make up less than 0.5% of transfers so far.

When we started our program with GiveDirectly, we were looking for an opportunity to support an intervention that is efficient and effective, as proven by reliable evidence. And we wanted to cast a vote in the direction of systemic change towards a world in which all giving is based on such evidence of where one dollar can do the most good. We are confident that we’re on track to achieve both objectives and look forward to sharing final results of our program here when they become available in mid-2018.