Market timing, farmer expectations, and liquidity constraints

Rui Albuquerque, Bruno De Araujo, Luis Brandao-Marques, Mosse, Geravásia, Pippy De Vletter and Helder Zavale

No 16220, CEPR Discussion Papers from C.E.P.R. Discussion Papers

Abstract: This paper uses data on farmers' price expectations from a randomized survey of smallholder farmers in Mozambique. Survey data show that across all crops most interviewed farmers expect prices to be higher in the lean season. Yet, farmers report selling most of their output shortly after harvest when prices are lower. We find that higher expected prices and lower current sale prices are associated with increased storage for liquidity constrained farmers versus unconstrained farmers. We develop an intertemporal model of market timing in the presence of liquidity constraints that is consistent with these findings and discuss other model predictions.

Keywords: Liquidity constraints; Market timing; Household expectations; Pricing; Storage; Developing economies (search for similar items in EconPapers)
JEL-codes: D14 D15 G51 O13 O16 Q11 Q12 Q14 (search for similar items in EconPapers)
Date: 2021-06
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