Liquidity Constraints and Postharvest Selling Behavior: Evidence from China's Maize Farmers

This paper addresses the impacts of liquidity constraints on household postharvest commodity selling behavior. Using data collected from China's maize farmers, we find that households with debt, in general, sell their maize much earlier than debt‐free households, thus potentially losing inter‐t...

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Bibliographic Details
Published in:Developing economies 2013-09, Vol.51 (3), p.260-277
Main Authors: Sun, Dingqiang, Qiu, Huanguang, Bai, Junfei, Liu, Haiyan, Lin, Guanghua, Rozelle, Scott
Format: Article
Language:English
Subjects:
Children
Chinese agriculture
Commodities
Elderly
Farm storage
Farmers
Illness
Liquidity constraint
Low Income Groups
Maize
O13
O53
Peoples Republic of China
Postharvest sales
Q12
Q13
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Summary:This paper addresses the impacts of liquidity constraints on household postharvest commodity selling behavior. Using data collected from China's maize farmers, we find that households with debt, in general, sell their maize much earlier than debt‐free households, thus potentially losing inter‐temporal arbitrage opportunities. Segmenting our sample into wealthy and poor households, we find that the relationship between a liquidity constraint and postharvest sales is apparent only among poor households. Using the occurrence of an illness in children or an elderly household member as an instrument for liquidity, we control for potential endogeneity associated with liquidity. We find that poor households in which there were children or elderly people with sicknesses in previous years are more likely to sell maize early than other poor households.
ISSN:0012-1533
1746-1049
DOI:10.1111/deve.12018