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Market participation and sale of potatoes by smallholder farmers in the central highlands of Angola: A Double Hurdle approach

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  • Reyes, Byron
  • Donovan, Cynthia
  • Bernsten, Richard H.
  • Maredia, Mywish K.

Abstract

This paper uses a double hurdle regression analysis to estimate the factors influencing marketing decisions among potato growers in the central highlands of Angola, focusing on gender of household head, productive asset ownership and transaction costs. Although the results suggest that the quantity produced is exogenous in the models for market participation and for quantity sold, the methodology used provides a framework for others to follow when endogeneity is suspected in one or more variables. The wealth analysis suggests that potato growers, potato sellers and male heads were richer than their counterparts. The linear regression results on quantity produced suggest that female-headed households produced less than their male counterparts, owning productive assets or having access to public assets had no statistical effect on production, and that farmers who used fertilizer produced more than farmers who didn’t apply fertilizer to their fields. The double hurdle regression results suggest that (1) male-headed households were more likely to sell potatoes, (2) owning productive assets and having access to government extension services, conditional on market participation, positively affected the quantity sold, (3) transaction costs, conditional on market participation, negatively affected the quantity sold, and (4) quantity produced was a marginally significant positive factor on both the likelihood of selling potatoes and the quantity sold. In contrast, the unconditional average partial effects suggest that, (1) potato sales were gender neutral, (2) owning productive assets had no statistical effect on quantity sold, (3) transaction costs negatively affected the quantity sold, and (4) having access to extension services and the quantity produced both positively affected the quantity sold. Thus, to boost sales, investments may be needed to promote farmer participation in organizations and/or establish farmer organizations in villages without them, increase farmers’ access to extension services, invest in infrastructure, and help farmers increase their production.

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Bibliographic Info

Paper provided by International Association of Agricultural Economists in its series 2012 Conference, August 18-24, 2012, Foz do Iguacu, Brazil with number 126655.

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Date of creation: Aug 2012
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Handle: RePEc:ags:iaae12:126655

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Keywords: Crop Production/Industries;

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  1. de Janvry, Alain & Fafchamps, Marcel & Sadoulet, Elisabeth, 1991. "Peasant Household Behaviour with Missing Markets: Some Paradoxes Explained," Economic Journal, Royal Economic Society, vol. 101(409), pages 1400-417, November.
  2. Cragg, John G, 1971. "Some Statistical Models for Limited Dependent Variables with Application to the Demand for Durable Goods," Econometrica, Econometric Society, vol. 39(5), pages 829-44, September.
  3. Nigel Key & Elisabeth Sadoulet & Alain De Janvry, 2000. "Transactions Costs and Agricultural Household Supply Response," American Journal of Agricultural Economics, Agricultural and Applied Economics Association, vol. 82(2), pages 245-259.
  4. Heckman, James J, 1979. "Sample Selection Bias as a Specification Error," Econometrica, Econometric Society, vol. 47(1), pages 153-61, January.
  5. Marcel Fafchamps & Ruth Hill, 2004. "Selling at the Farm-Gate or Travelling to Market," Economics Series Working Papers WPS/2004-30, University of Oxford, Department of Economics.
  6. Marc F. Bellemare & Christopher B. Barrett, 2006. "An Ordered Tobit Model of Market Participation: Evidence from Kenya and Ethiopia," American Journal of Agricultural Economics, Agricultural and Applied Economics Association, vol. 88(2), pages 324-337.
  7. David McKenzie, 2005. "Measuring inequality with asset indicators," Journal of Population Economics, Springer, vol. 18(2), pages 229-260, 06.
  8. Jacob Ricker-Gilbert & Thomas S. Jayne & Ephraim Chirwa, 2010. "Subsidies and Crowding Out: A Double-Hurdle Model of Fertilizer Demand in Malawi," American Journal of Agricultural Economics, Agricultural and Applied Economics Association, vol. 93(1), pages 26-42.
  9. Benfica, Rui M.S. & Tschirley, David L. & Boughton, Duncan, 2006. "Interlinked Transactions in Cash Cropping Economies: The Determinants of Farmer Participation and Performance in the Zambezi River Valley of Mozambique," 2006 Annual Meeting, August 12-18, 2006, Queensland, Australia 25244, International Association of Agricultural Economists.
  10. William J. Burke, 2009. "Fitting and interpreting Cragg's tobit alternative using Stata," Stata Journal, StataCorp LP, vol. 9(4), pages 584-592, December.
  11. Barrett, Christopher B., 2008. "Smallholder market participation: Concepts and evidence from eastern and southern Africa," Food Policy, Elsevier, vol. 33(4), pages 299-317, August.
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