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Smallholder Maize Market Participation and Choice of Marketing Channel in the Presence of Liquidity Constraints: Evidence from Zambia

Author

Listed:
  • Aakanksha Melkani
  • Nicole M. Mason
  • David L. Mather
  • Brian Chisanga

Abstract

Key Findings -Smallholders with liquidity constraints in maize production are 11% less likely to be a net seller of maize. One explanation for this is that liquidity constrained households are less able to adequately invest in productivity enhancing inputs, thus limiting limits their capacity to produce a marketable surplus. -While households without liquidity constraints (UC) have a statistically significant positive response to higher maize prices, liquidity-constrained (LC) households do not respond to changes in maize prices. -A 10% increase in maize production is correlated with a 4% increase in probability of being a net seller for UC households and 3% for LC households. An additional expected moisture stress period during the growing season reduces the probability that a LC household is a net seller by 16%. -LC households are 18% less likely to sell to the FRA, and thereby are less likely to be able to enjoy the benefits of relatively high FRA maize purchase prices.

Suggested Citation

  • Aakanksha Melkani & Nicole M. Mason & David L. Mather & Brian Chisanga, 2019. "Smallholder Maize Market Participation and Choice of Marketing Channel in the Presence of Liquidity Constraints: Evidence from Zambia," Feed the Future Innovation Lab for Food Security Policy Research Briefs 303623, Michigan State University, Department of Agricultural, Food, and Resource Economics, Feed the Future Innovation Lab for Food Security (FSP).
    • Handle: RePEc:ags:miffpb:303623
    DOI: 10.22004/ag.econ.303623
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