Transaction costs and smallholder household access to maize markets in Zambia

Abstract

After liberalization of the Zambian economy, farmers were faced with the responsibility of finding the right buyers, negotiating prices and delivering produce leading to them incurring transaction costs. This study aimed at identifying and quantifying transaction costs factors and their impact on maize market participation for small holder farmers in Zambia. The study used primary data collected from a sample of 240 randomly selected households from Zambia's central Province. The Heckman's procedure was used to analyze factors affecting the likelihood and extent of participation in maize markets. The logit results (from the Heckman's two-stage process) show that ownership of assets such as radios and having access to alternative marketing channels increased the likelihood of market participation while the heckit results (OLS corrected for selectivity bias) shows that ownership of oxcarts, increased family size and experience in maize marketing were the factors that increased quantities of maize marketed. The study recommends provision of market information, improving accessibility to markets as well as increasing access to productive assets as means of alleviating impact of transaction costs.

The impact of social grant dependency on smallholder maize producers’ market participation in South Africa: Application of the double-hurdle model

“…This result is in agreement with other market participation studies (e.g. Bwalya et al 2013;Geoffrey et al 2013;Komarek 2010). Consistent with a priori expectations informed by economic theory and literature (e.g.…”

“…As expected, and in line with the literature (Bwalya et al 2013;Hlongwane et al 2014), farmers who stay further away from the markets (MKTDIST) had less chances of participating in the market than those who stay nearer. This is because market information published in formal channels, such as newspapers, is not very relevant to farmers in rural areas as these channels mainly report national figures.…”

“…This model was chosen over the Heckman sample selection model, which has been used by many studies (e.g. Alene et al 2008;Bwalya, Mugisha & Hyuha 2013;Geoffrey et al 2013;Goetz 1992;Sebatta et al 2014). The Heckman approach addresses the statistical challenge posed by cases in which market sales equal zero as a missing data problem.…”

Effect of Information Access through Social Capital on Mitigating Business Opportunism of Small Enterprises in Sri Lanka

“…The key benefit of SC is that it facilitates the reach of information and increases the quality and relevance of information (Adler & Kwon, 2002;Burt, 1992;Granovetter, 1983). Thus, SC facilitates the access of information reducing information asymmetry (Bwalya, Mugisha, & Hyuha, 2013;Priyanto, Mazkie, & Khusaini, 2014) and helps SEs to mitigate information asymmetry enabling the access of information leading to the mitigation of the opportunism of exchange partners (Henningsen & Henning, 2013;Richman, 2006).…”

Effect of Network Structure on Transaction Cost of Small Enterprises in Sri Lanka: An Empirical Study

“…These informal and personal connections do not have formal and written agreement but these connections are based on network relationships with family members, relatives, friends, exchange partners, supportive institutions and the others (Bhagavatula, 2009;Lu, 2007;Priyanath and Premaratne, 2017). Literature describes that the network structure facilitates access to information (Adler and Kwon, 2002;Burt, 1992;Granovetter, 1983) and has an ability to access information reducing information asymmetric (Bwalya et al, 2013;Priyanto et al, 2014). Network structure helps SEs to mitigate information asymmetric facilitating to access information which enable to improve rational ability and mitigate the opportunism of exchange partners (Henningsen and Henning, 2013;Richman, 2006).…”