Two-Step Econometric Estimation of Farm Characteristics Affecting Marketing Contract Decisions

Katchova, Ani L.; Miranda, Mario J.

doi:10.1111/j.0092-5853.2004.00564.x

Cited by 133 publications

(124 citation statements)

References 9 publications

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“…Thus, it is argued that the generalised strategies advocated by cooperatives and agricultural advisors may not be applicable to all the farmers. These views are also shared by Katchova & Miranda (2004).…”

Section: Conclusion and Recommendationsmentioning

confidence: 88%

Factors Affecting Maize Producers Adoption of Forward Pricing in Price Risk Management: The Case of Vaalharts

Jordaan¹,

Grové²

2007

Agrekon

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Section: Conclusion and Recommendationsmentioning

confidence: 88%

Factors Affecting Maize Producers Adoption of Forward Pricing in Price Risk Management: The Case of Vaalharts

Jordaan¹,

Grové²

2007

Agrekon

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“…Other researchers (e.g. Katchova & Miranda, 2004), however, contend that such marketing decisions are made sequentially, suggesting that producers pay attention to market conditions, and with the information gathered, they first decide whether or not to participate in a particular channel prior to making the decision on the proportion of the commodity to sell through the selected channel. Sequential decisions are analysed using two-step approaches such as the Cragg's model, also known as the doublehurdle model (Green, 2003).…”

Section: Empirical Modelmentioning

confidence: 99%

Effects of transaction costs on mushroom producers’ choice of marketing channels: implications for agricultural market access in Swaziland

Mabuza¹,

Ortmann

Wale

2014

SAJEMS

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Mushrooms are highly perishable agricultural commodities, and as such their marketing is invariably associated with high transaction costs. Despite the mushroom enterprise gaining popularity in a number of sub-Saharan African (SSA) countries, where production is dominated by rural-based small-scale farmers, no research has been done to study the nature and complexity of transaction costs encountered by these producers in attempting to participate in mainstream supply chains. This study uses cross-section data obtained in 2011/2012 from mushroom producers in Swaziland to study the effects of transaction costs on producers' choice of marketing channels and the quantity of mushrooms supplied. Having used Cragg's model for analysis, the results indicate that producers' decisions of where to sell their mushrooms are significantly affected by household labour endowment, production capacity, access to cooling facilities and market information, and producers' bargaining position. Meanwhile, the quantities of mushrooms sold are significantly influenced by the difficulty in accessing reliable transport and producers' level of uncertainty in meeting buyers' quality requirements. The study concludes by highlighting potential interventions that could minimise marketing and transaction costs and further improve the general agricultural marketing environment in Swaziland.

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“…This assumption is not true, as Katchova and Miranda (2004) found out, a variable that increases the probability of choosing a particular channel does not necessarily influence the quantity sold to that channel. In this study, we adopt a two-step procedure proposed by Katchova and Miranda (2004). The procedure captures farmer characteristics that influence choice of channel in a probit model in the first step, and characteristics that influence the quantity sold using a truncated regression model in the second step.…”

Section: Theoretical Frameworkmentioning

confidence: 99%

“…The 2-step procedure is better than the one stage tobit because the effect of an independent variable on the probability of choosing the channel, and effect of the quantity sold to the particular channel are determined in separate processes. We also test the one step tobit against the Cragg's 2-step procedure as found in Katchova and Miranda (2004):…”

Section: Two-step Proceduresmentioning

confidence: 99%

“…In such a case therefore, multinomial logit or tobit models commonly used would not be appropriate because they assume mutual exclusivity between the channels, and that the effect of the independent variables on choice of channel, and quantity of produce sold to the channel, is similar. This assumption is not true, as Katchova and Miranda (2004) found out, a variable that increases the probability of choosing a particular channel does not necessarily influence the quantity sold to that channel. In this study, we adopt a two-step procedure proposed by Katchova and Miranda (2004).…”

Section: Introductionmentioning

confidence: 99%

See 1 more Smart Citation

Determinants of small-scale mango farmers market channel choices in Kenya: An application of the two-step Craggs estimation procedure

Muthini¹,

Nyikal²,

Otieno³

2017

J. Dev. Agric. Econ.

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The study estimates small-scale mango farmers' choice of market channels using the Cragg's two-step procedure where the farmer decides on the channel in the first step and the proportion sold to the selected channel in the second step. Cross section data was collected from a sample of 224 mango farmers selected through multistage sampling just after the mango season. The study was carried out in Makueni County in Eastern Kenya. The county is leading in production of mangoes in Kenya, having produced over 146,000 tonnes valued at over 18 million US dollars, in 2015. The data was analyzed using Cragg's two step regression model. The first step assessed factors that determine choice of a particular channel, while the second step assessed factors that influence the proportion of produce sold to the channel. Results show that socio-economic factors significant in the first stage are not necessarily significant in the second stage. In some cases, the direction of effect reverses. Factors such as distance to tarmac road, number of mango trees in the farm, membership in producer marketing groups, training in mango agronomy, and access to extension services affect choice of export market channel. Only membership to mango marketing groups significantly influences proportion sold. Household income, distance to tarmac, number of trees, market information, and gender significantly affect choice of the direct market channel. The direct market channel earns farmers the largest margins, followed by the export channel. However, majority of farmers sell to brokers followed by export channel. It was found that despite being aware that they could fetch higher prices through direct selling, they lacked financial capacity, transport resources, and information on market locations and requirements. Policies need to enhance financial capacity of farmers, as well as expand efforts to disseminate timely and accurate market information.

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Two-Step Econometric Estimation of Farm Characteristics Affecting Marketing Contract Decisions

Cited by 133 publications

References 9 publications

Factors Affecting Maize Producers Adoption of Forward Pricing in Price Risk Management: The Case of Vaalharts

Factors Affecting Maize Producers Adoption of Forward Pricing in Price Risk Management: The Case of Vaalharts

Effects of transaction costs on mushroom producers’ choice of marketing channels: implications for agricultural market access in Swaziland

Determinants of small-scale mango farmers market channel choices in Kenya: An application of the two-step Craggs estimation procedure

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