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Liquid milk: Savings, insurance and side-selling in cooperatives

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Title Liquid milk: Savings, insurance and side-selling in cooperatives
 
Creator Geng, Xin
Janssens, Wendy
Kramer, Berber
 
Subject liquid milk
milk
insurance
cooperatives
dairy cooperatives
markets
cash flow
 
Description Limited access to reliable financial instruments makes it difficult for rural households to manage daily cash flows. Selling goods through cooperatives can improve savings, but cooperative income is not easily accessible when facing an emergency. Cash-constrained households may therefore side-sell in local markets that pay on the spot, while insurance could reduce the need to side-sell. We test these hypotheses using panel data for farmers from two Kenyan dairy cooperatives. Both cooperatives pay only once a month, with local market vendors paying a lower price but upon delivery. We find that farmers sell less milk to the cooperatives when facing uninsured health emergencies or when cash on hand is low. Health insurance reduces side-selling. These findings highlight that selling, saving and risk-coping decisions are intertwined, with side-selling providing a strategy to manage temporary cash constraints. This suggests that linking agricultural and insurance contracts can enhance cooperatives’ financial sustainability.
 
Date 2023-10-01
2023-09-14T20:15:52Z
2023-09-14T20:15:52Z
 
Type Journal Article
 
Identifier Journal of Development Economics 165(October 2023): 103142
0304-3878
https://hdl.handle.net/10568/131865
https://doi.org/10.1016/j.jdeveco.2023.103142
https://doi.org/10.34894/AXFRPB
 
Language en
 
Relation Discussion Paper https://ebrary.ifpri.org/cdm/ref/collection/p15738coll2/id/131058; https://ebrary.ifpri.org/cdm/ref/collection/p15738coll2/id/131229; https://ebrary.ifpri.org/cdm/ref/collection/p15738coll2/id/131128 Journal article https://ebrary.ifpri.org/cdm/ref/collection/p15738coll5/id/6889
 
Rights CC-BY-4.0
Open Access
 
Source Journal of Development Economics