The insurance role of collective fields in extended household: an obstacle to individualization of farm production?

, Policy briefs

Abstract

Extended agricultural households in West Africa often combine collective and individual fields. Over the last decades, the importance of the latter is increasing leading to greater individualization of land holdings. While family members equally share the proceeds of collective plots, individual production accrues to individual members. In this context, we ask how individualization affects risk-sharing within households. More precisely we analyze the efficiency / risk-sharing trade-off of collective production. Indeed since collective production is shared among family members, it plays an insurance role. However it is subject to serious free-riding problems. We show that the trade-off may vanish when we take into account direct transfers between family members. As individualization increases incentives to engage in income transfers, these transfers may compensate the loss of the insurance value of collective production.

Guirkinger, C.  "The insurance role of collective fields in extended household: an obstacle to individualization of farm production?" Ferdi, Policy brief B77, October 2013.

Codes JEL : O1 , Q1 , D1