Description:

Speaker:

Hope Michelson, Associate Professor, Department of Agricultural and Consumer Economics, The University of Illinois

Title:

Negative returns explain failure to exploit temporal arbitrage by small farmers in low income countries

Abstract:

We propose a new explanation for the frequently observed “sell low, buy high” behavior among small farmers in developing countries: a substantial probability of negative returns to storage. We use 20 years of data from 732 markets in 23 countries to demonstrate that the lean-season price (the “high-price” season) fails to rise above the harvest-season price (the “low-price” season) 28.6% of the time. We show that aversion to these negative returns can induce households to forgo storage. Widespread policies to encourage small farmer storage may not be beneficial in all contexts. Authors: Lila Cardell and Hope Michelson

Speaker Bio:

Hope Michelson is an associate professor of development economics at the University of Illinois at Urbana-Champaign (UIUC) in the department of Agricultural and Consumer Economics. She earned a PhD in applied economics from Cornell University, a MS in agricultural economics from UIUC, and a BA in literature and history from Georgetown University. She is a non-resident fellow at the Chicago Council on Global Affairs. Her research is at the intersection of development and agriculture. She focuses on small farmers in low income countries and on the relationships between agriculture, natural resources, markets, and household outcomes. She has a special interest in household poverty dynamics and food security at multiple spatial scales. Recent work has focused on small farmer market participation in low income countries: from transactions with traders in small local spot markets to small farmers contracting with multinationals including Walmart. Current projects are mostly in East and Southern Africa but she has also worked in Mexico, Nicaragua, and China.

Webinar:

Webinar link: https://northwestern.zoom.us/j/96241847919
Passcode: nico

About the Speaker Series:

Wednesdays@NICO is a vibrant weekly seminar series focusing broadly on the topics of complex systems and data science. It brings together attendees ranging from graduate students to senior faculty who span all of the schools across Northwestern, from applied math to sociology to biology and every discipline in-between.