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Leveraging institutions for collective action to improve markets for smallholder producers in less-favored areas

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  • Shiferaw, Bekele A.
  • Obare, Gideon A.
  • Geoffrey, Muricho
  • Silim, Said
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    Abstract

    Using survey data from the community, producer marketing groups (PMGs) and farm households in Kenya, this paper investigates the potential of rural institutions (farmer organizations, their rules and enforcement mechanisms) for remedying pervasive market imperfections and facilitate access to new technology in rural areas. Qualitative and quantitative analyses show that while the functioning of markets is constrained by high transaction costs and coordination failures, PMGs present new opportunities for small producers through vertical and horizontal coordination of production and grain marketing. They pay 20 to 25% higher prices than other buyers and facilitate the adoption of improved varieties that help increase marketable surplus. Their accumulated assets and traded volumes are influenced by participatory decision making, member contributions and initial start-up capital. While participation declines with farm size, the associated benefits depend on marketed amounts. Moreover, the time lag to payment for deliveries makes PMGs less attractive marketing channels for the poor. The success of such groups requires policy support, increased capital access, rural finance and market information.

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    Bibliographic Info

    Article provided by African Association of Agricultural Economists in its journal African Journal of Agricultural and Resource Economics.

    Volume (Year): 03 (2009)
    Issue (Month): 1 (March)
    Pages:

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    Handle: RePEc:ags:afjare:56941

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    Postal: c/o FORMAT, 5th Floor, Muthaiga Mini Market, Limuru Road, P.O. Box 79 - 00621 Village Market, Nairobi, Kenya
    Phone: 254 20 6752866
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    Web page: http://www.aaae-africa.org/afjare
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    Related research

    Keywords: Market imperfections; Transaction costs; Institutions; Collective action; Producer marketing groups; Kenya; Institutional and Behavioral Economics; Marketing;

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    Cited by:
    1. Fischer, Elisabeth & Qaim, Matin, 2011. "Smallholder Farmers and Collective Action: What Determines the Intensity of Participation?," Proceedings of the German Development Economics Conference, Berlin 2011 28, Verein für Socialpolitik, Research Committee Development Economics.
    2. Fischer, Elisabeth & Qaim, Matin, 2012. "Linking Smallholders to Markets: Determinants and Impacts of Farmer Collective Action in Kenya," World Development, Elsevier, vol. 40(6), pages 1255-1268.
    3. Wollni, Meike & Fischer, Elisabeth, 2012. "Commitment in Collective Marketing Relationships: Evidence from Coffee Cooperatives in Costa Rica," 2012 Conference, August 18-24, 2012, Foz do Iguacu, Brazil 126884, International Association of Agricultural Economists.
    4. Fischer, Elisabeth & Qaim, Matin, 2011. "Smallholder Farmers and Collective Action: What Determines the Intensity of Participation?," Discussion Papers 108551, Georg-August-Universitaet Goettingen, GlobalFood, Department of Agricultural Economics and Rural Development.
    5. Otieno, Zipora & Okello, Julius & Nyikal, Rose & Mwang'ombe, Agnes & Clavel, Daniele, 2011. "The role of varietal traits in the adoption of improved dryland crop varieties: The case of pigeon pea in Kenya," African Journal of Agricultural and Resource Economics, African Association of Agricultural Economists, vol. 6(2), September.

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