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Farm-to-market transaction costs and specialisation in small-scale agriculture: Explorations with a non-separable household model

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  • Steven Were Omamo
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    Abstract

    Using an integrated household model with endogenous transaction costs, this article illustrates how, even in the absence of risk, the tension between gains from specialisation and corresponding increases in transaction costs may lead to enterprise diversification on small farms. A numerical example illustrates that this tension may contribute to the prevalence of inter-cropped cash-crops on small farms, in apparent disregard for foregone yield and income from greater specialisation involving pure-stands. By implication, measures that augment households' abilities to override trading costs may be critical complements to efforts seeking to raise productivity and incomes in small-scale agriculture via increased specialisation.

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    Bibliographic Info

    Article provided by Taylor & Francis Journals in its journal Journal of Development Studies.

    Volume (Year): 35 (1998)
    Issue (Month): 2 ()
    Pages: 152-163

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    Handle: RePEc:taf:jdevst:v:35:y:1998:i:2:p:152-163

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    Cited by:
    1. Freeman, H. Ade & Kaguongo, Wachira, 2003. "Fertilizer market liberalization and private retail trade in Kenya," Food Policy, Elsevier, Elsevier, vol. 28(5-6), pages 505-518.
    2. Komarek, Adam M. & Ahmadi-Esfahani, Fredoun Z., 2006. "An Economic Analysis of Ugandan Agricultural Constraints," 2006 Conference (50th), February 8-10, 2006, Sydney, Australia, Australian Agricultural and Resource Economics Society 139796, Australian Agricultural and Resource Economics Society.
    3. Escobal, Javier, 2005. "The Role of Public Infraestructure in Market Development in Rural Peru," MPRA Paper 727, University Library of Munich, Germany.
    4. Yang, Dan & Liu, Zimin, 2012. "Does farmer economic organization and agricultural specialization improve rural income? Evidence from China," Economic Modelling, Elsevier, Elsevier, vol. 29(3), pages 990-993.
    5. Waithaka, M.M. & Thornton, P.K. & Herrero, M. & Shepherd, K.D., 2006. "Bio-economic evaluation of farmers' perceptions of viable farms in western Kenya," Agricultural Systems, Elsevier, Elsevier, vol. 90(1-3), pages 243-271, October.
    6. Obare, G.A. & Omamo, S.W. & Williams, J.C., 2003. "Smallholder production structure and rural roads in Africa: the case of Nakuru District, Kenya," Agricultural Economics: The Journal of the International Association of Agricultural Economists, International Association of Agricultural Economists, International Association of Agricultural Economists, vol. 28(3), May.
    7. Fischer, Elisabeth & Qaim, Matin, 2012. "Linking Smallholders to Markets: Determinants and Impacts of Farmer Collective Action in Kenya," World Development, Elsevier, Elsevier, vol. 40(6), pages 1255-1268.
    8. Barrett, Christopher B. & Reardon, Thomas, 2000. "Asset, Activity, And Income Diversification Among African Agriculturalists: Some Practical Issues," Working Papers, Cornell University, Department of Applied Economics and Management 14734, Cornell University, Department of Applied Economics and Management.
    9. Omamo, Steven Were & Mose, Lawrence O., 2001. "Fertilizer trade under market liberalization: preliminary evidence from Kenya," Food Policy, Elsevier, Elsevier, vol. 26(1), pages 1-10, February.
    10. Josep Mª Argilés & Néstor Duch Brown, 2007. "A comparison of the economic and environmental performances of conventional and organic farming: Evidence from financial statements," Working Papers 2007/8, Institut d'Economia de Barcelona (IEB).
    11. Barrett, Christopher B. & Brown, Douglas R., 2002. "Agriculture And Rural Development: Lessons For Christian Groups Combating Persistent Poverty," Working Papers, Cornell University, Department of Applied Economics and Management 14738, Cornell University, Department of Applied Economics and Management.
    12. Qin, Yu & Zhang, Xiaobo, 2012. "The road to specialization in agricultural production:: Evidence from rural China," IFPRI discussion papers, International Food Policy Research Institute (IFPRI) 1221, International Food Policy Research Institute (IFPRI).
    13. Fleming, Euan & Milne, Mary, 2003. "Bioeconomic modelling of the production and export of cocoa for price policy analysis in Papua New Guinea," Agricultural Systems, Elsevier, Elsevier, vol. 76(2), pages 483-505, May.
    14. Alberto Zezza & Luis Llambi, 2001. "Meso-Economic Filters Along the Policy Chain: Understanding the links between policy reforms and rural poverty in Latin America," Working Papers, Agricultural and Development Economics Division of the Food and Agriculture Organization of the United Nations (FAO - ESA) 02-08, Agricultural and Development Economics Division of the Food and Agriculture Organization of the United Nations (FAO - ESA).
    15. Barrett, Christopher B. & Swallow, Brent M., 2006. "Fractal poverty traps," World Development, Elsevier, Elsevier, vol. 34(1), pages 1-15, January.
    16. Barrett, C. B. & Reardon, T. & Webb, P., 2001. "Nonfarm income diversification and household livelihood strategies in rural Africa: concepts, dynamics, and policy implications," Food Policy, Elsevier, Elsevier, vol. 26(4), pages 315-331, August.

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