/ Par / by Sebastian Schienle

The impact of cash on coffee farmers – results from our RCT

Over the past 2 years, we worked with GiveDirectly to support ~5,200 rural households in Uganda with cash transfers. The program was evaluated with a randomized controlled trial (RCT). Now, the results are in. And they are compelling.

The program was based in a coffee-growing region of eastern Uganda, and about half of program participants grew coffee. Each recipient received ~$1,000 via a mobile money service. They were free to spend the money as they wished. (See here, and here for earlier posts on the program.) To better understand how recipients – and smallholder coffee farmers in particular – benefitted from the transfers and to hold ourselves accountable to the impact we achieved, we accompanied the program with an RCT, for which GiveDirectly partnered with the research consultancy IDinsight.

About a year after the transfers, recipients were faring substantially better than similar households in the same village who didn’t receive any cash: their monthly earnings were 71% higher, consumption increased by 40%, and child meals skipped decreased by 46%. (GiveDirectly’s summary is available here, the full report here, and supplementary analyses are available by following this link.)

Similarly, coffee farming also benefited. Overall, recipients of the transfers were more likely to cultivate coffee at endline. This came from both causing coffee farmers to continue producing and inducing new farmers to begin cultivating coffee. (Surprisingly to us, many more households than we expected appear to have switched in or out of cultivating coffee between baseline and endline.) Coffee farmers who received cash reported higher coffee revenues than their peers who did not receive any transfers, and a higher share of them adopted a set of good agricultural practices like pruning, stumping, and weeding. (However, the RCT didn’t detect an increase in yield.)

Overall, cash has thus demonstrated (once again) to be an effective intervention to assist poor families in developing countries generally, and, in this particular case, smallholder coffee farmers. Particularly for households who grow very little coffee and whose coffee sales only make up a small portion of their overall income – like many of the families who benefited from GiveDirectly’s cash transfer – cash may well be the intervention of choice. I.e. it may be the most cost-efficient way of supporting such coffee farmers.

So what does this all mean? In our view, the results can serve as an important benchmark for other interventions that support smallholder coffee farmers. Per dollar spent, are these interventions as effective as cash? Or even more so? And if so, for which coffee farmers?

Our Uganda Coffee Agronomy Training Program is our biggest effort at the moment. It is also being evaluated through an RCT. (Final results won’t come in until 2023). The cash transfer program provides an important benchmark to compare both interventions in order to better understand how to support coffee farmers in the most impactful and cost-efficient way.