Observability of food safety losses in maize: Evidence from Kenya

Like many other quality attributes, food safety tends to degrade after harvest, but unlike losses in quantity and many quality attributes, food safety losses are not readily observable by market actors. This implies the absence of incentives to address food safety losses specifically. To the extent that food safety is correlated with valued and observable food attributes, food safety losses may affect price indirectly, partially correcting this information failure. We analyze aflatoxin, a carcinogenic fungal contaminant, and visible quality data from 1500 maize samples and associated consumer surveys collected from clients of small-scale hammer mills in rural Kenya. We find that while losses in both food safety and observable quality increase with storage duration, only observable quality is rewarded by higher prices. There is no correlation between price and aflatoxin, implying an absence of market incentives to manage this aspect of quality loss. Further, of the two observable qualities on which data were collected, the one correlated most strongly with aflatoxin affects both prices and consumers' subjective quality assessment the least. Providing consumers with information about the correlation between visible grain attributes and contamination could allow consumers to direct contaminated grain to uses that minimize aflatoxin exposure and improve the incentives for provision of food safety in this market.