Can Information Help Reduce Imbalanced Application of Fertilizers in India? Experimental Evidence from Bihar

Abstract

The imbalanced application of chemical fertilizers in India is widely blamed for low yields, poor soil health, pollution of water resources, and large public expenditures on subsidies, amounting to about 1 percent of India’s gross domestic product. To address the issue, the government of India is investing in a large-scale, expensive program of individualized soil testing and customized fertilizer recommendations, with the hope that scientific information will lead farmers to optimize the fertilizer mix. We conducted a randomized controlled trial in the Indian state of Bihar in what we believe to be the first evaluation of the effectiveness of the program as currently implemented. We did not find evidence of a statistically significant impact of customized fertilizer recommendations on fertilizer use. The lack of impact can be attributed to several factors, including a lack of understanding, lack of confidence in the information’s reliability, or other factors such as fertilizer costs that inhibit farmers from optimizing fertilizer application ratios even if the information shifts their underlying preferences. We provide evidence that suggests lack of confidence is the main factor inhibiting farmers’ response.