Improving Cash-Constrained Smallholder Farmers' Revenue: The Role of Government Loans

• 成果类型: Article; Early Access
• 署名作者: Park, Jimin; Singhvi, Somya; Zheng, Yanchong
• 署名单位: Massachusetts Institute of Technology (MIT); University of Southern California; Massachusetts Institute of Technology (MIT)
• 刊物名称: MANAGEMENT SCIENCE
• ISSN/ISSBN: 0025-1909
• DOI: 10.1287/mnsc.2024.06206
• 发表日期: 2026
• 关键词: cash needs; government loan; policy design; smallholder farmers; socially responsible operations

摘要

This paper examines how the need for immediate cash by smallholder farmers may lead to undesirable selling decisions that hurt their revenue and analyzes the efficacy of government loan policies in tackling this challenge. We develop a game-theoretic model to characterize the base scenario of no loan, uncovering the impacts of cash needs on farmers' revenue. We then examine how a government loan, under which farmers store some of their production at government warehouses in exchange for immediate cash, may counteract these negative impacts. We analyze and optimize two types of policies: one in which all farmers are eligible (a homogeneous loan) and another in which the loan is offered only to farmers whose production is below a certain threshold (a heterogeneous loan). Our results demonstrate that, when designed properly, both loans simultaneously increase aggregate farmer revenue and generate a more equitable revenue distribution among farmers. Nonetheless, overly generous loans can be counterproductive and harm farmers. We further show that heterogeneous loans achieve optimal market outcomes with lower government expenditure when cash needs are moderately high. We then contrast the two policies across key metrics related to farmers. Whereas the homogeneous loan better mitigates inequity among farmers, the heterogeneous loan helps more farmers meet cash needs. These results underscore that government loan design must carefully account for farmers' strategic responses to the policy to generate positive societal outcomes. Finally, we use field data from India to numerically illustrate our insights and demonstrate the economic impacts of the policies studied.