Rural institutions and producer organizations in imperfect markets: experiences from producer marketing groups in semi-arid eastern Kenya
Abstract"Many countries in sub-Saharan Africa have liberalized markets to improve efficiency and enhance market linkages for smallholder farmers. The expected positive response by the private sector in areas with limited market infrastructure has however been disappointing. The functioning of markets is constrained by high transaction costs and coordination problems along the production-to-consumption value chain. New kinds of institutional arrangements are needed to reduce these costs and fill the vacuum left when governments withdrew from markets in the era of structural adjustments. One of these institutional innovations has been the strengthening of producer organizations and formation of collective marketing groups as instruments to remedy pervasive market failures in rural economies. The analysis presented here with a case study from eastern Kenya has shown that while collective action – embodied in Producer Marketing Groups (PMGs) – is feasible and useful, external shocks and structural constraints that limit the volume of trade and access to capital and information require investments in complementary institutions and coordination mechanisms to exploit scale economies. The effectiveness of PMGs was determined by the level of collective action in the form of increased participatory decision making, member contributions and initial start-up capital. Failure to pay on delivery, resulting from lack of capital credit, is a major constraint that stifles PMG competitiveness relative to other buyers. These findings call for interventions that improve governance and participation; mechanisms for improving access to operating capital; and effective strategies for risk management and enhancing the business skills of the PMGs." Author's Abstract
Download InfoIf you experience problems downloading a file, check if you have the proper application to view it first. In case of further problems read the IDEAS help page. Note that these files are not on the IDEAS site. Please be patient as the files may be large.
Bibliographic InfoPaper provided by International Food Policy Research Institute (IFPRI) in its series CAPRi working papers with number 60.
Date of creation: 2006
Date of revision:
Market imperfections; Transaction costs; Farmer organizations; Institutions; Collective action; Semi-arid tropics; Kenya; East Africa;
Please report citation or reference errors to , or , if you are the registered author of the cited work, log in to your RePEc Author Service profile, click on "citations" and make appropriate adjustments.:
- Bingen, Jim & Serrano, Alex & Howard, Julie, 2003. "Linking farmers to markets: different approaches to human capital development," Food Policy, Elsevier, vol. 28(4), pages 405-419, August.
- 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.
- 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.
- Jonathan Kydd & Andrew Dorward, 2006.
"Implications of Market and Coordination Failures for Rural Development in Least Developed Countries,"
- Jonathan Kydd & Andrew Dorward, 2004. "Implications of market and coordination failures for rural development in least developed countries," Journal of International Development, John Wiley & Sons, Ltd., vol. 16(7), pages 951-970.
- Kranton, Rachel E, 1996. "Reciprocal Exchange: A Self-Sustaining System," American Economic Review, American Economic Association, vol. 86(4), pages 830-51, September.
- Dorward, Andrew & Kydd, Jonathan & Morrison, Jamie & Urey, Ian, 2004.
"A Policy Agenda for Pro-Poor Agricultural Growth,"
Elsevier, vol. 32(1), pages 73-89, January.
- Staal, Steven & Delgado, Christopher & Nicholson, Charles, 1997. "Smallholder dairying under transactions costs in East Africa," World Development, Elsevier, vol. 25(5), pages 779-794, May.
- Lele, Uma, 1981. "Co-operatives and the poor: A comparative perspective," World Development, Elsevier, vol. 9(1), pages 55-72, January.
- Fafchamps, Marcel & Minten, Bart, 1998.
"Relationships and traders in Madagascar,"
MTID discussion papers
24, International Food Policy Research Institute (IFPRI).
- Jayne, T. S. & Jones, Stephen, 1997. "Food marketing and pricing policy in Eastern and Southern Africa: A survey," World Development, Elsevier, vol. 25(9), pages 1505-1527, September.
- Dorward, Andrew & Fan, Shenggen & Kydd, Jonathan & Lofgren, Hans & Morrison, Jamie & Poulton, Colin & Rao, Neetha & Smith, Laurence & Tchale, Hardwick & Thorat, Sukhadeo & Urey, Ian & Wobst, Peter, 2004. "Institutions and economic policies for pro-poor agricultural growth," DSGD discussion papers 15, International Food Policy Research Institute (IFPRI).
- 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.
- Gabre-Madhin, Eleni Z., 2001. "Market institutions, transaction costs, and social capital in the Ethiopian grain market:," Research reports 124, International Food Policy Research Institute (IFPRI).
- Chowdhury, Shyamal & Negassa, Asfaw & Torero, Maximo, 2005. "Market institutions," MTID discussion papers 89, International Food Policy Research Institute (IFPRI).
- Winter-Nelson, Alex & Temu, Anna, 2002. "Institutional Adjustment and Transaction Costs: Product and Inputs Markets in the Tanzanian Coffee System," World Development, Elsevier, vol. 30(4), pages 561-574, April.
- Jayne, T. S. & Govereh, J. & Mwanaumo, A. & Nyoro, J. K. & Chapoto, A., 2002. "False Promise or False Premise? The Experience of Food and Input Market Reform in Eastern and Southern Africa," World Development, Elsevier, vol. 30(11), pages 1967-1985, November.
- Place, Frank & Kariuki, Gatarwa & Wangila, Justine & Kristjanson, Patti & Makauki, Adolf & Ndubi, Jessica, 2002. "Assessing the factors underlying differences in group performance: methodological issues and empirical findings from the highlands of Central Kenya," CAPRi working papers 25, International Food Policy Research Institute (IFPRI).
- Anderson White, T. & Ford Runge, C., 1995. "The emergence and evolution of collective action: Lessons from watershed management in Haiti," World Development, Elsevier, vol. 23(10), pages 1683-1698, October.
- Kelly, Valerie & Adesina, Akinwumi A. & Gordon, Ann, 2003. "Expanding access to agricultural inputs in Africa: a review of recent market development experience," Food Policy, Elsevier, vol. 28(4), pages 379-404, August.
- Kherallah, Mylène & Delgado, Christopher L. & Gabre-Madhin, Eleni Z. & Minot, Nicholas & Johnson, Michael, 2000.
"The road half traveled,"
2, International Food Policy Research Institute (IFPRI).
- Colin Poulton & Andrew Dorward & Jonathan Kydd, 1998. "The revival of smallholder cash crops in Africa: public and private roles in the provision of finance," Journal of International Development, John Wiley & Sons, Ltd., vol. 10(1), pages 85-103.
- Colin Poulton & Jonathan Kydd & Andrew Dorward, 2006. "Overcoming Market Constraints on Pro-Poor Agricultural Growth in Sub-Saharan Africa," Development Policy Review, Overseas Development Institute, vol. 24(3), pages 243-277, 05.
- Andrew Dorward & Shenggen Fan & Jonathan Kydd & Hans Lofgren & Jamie Morrison & Colin Poulton & Neetha Rao & Laurence Smith & Hardwick Tchale & Sukhadeo Thorat & Ian Urey & Peter Wobst, 2004. "Institutions and Policies for Pro-poor Agricultural Growth," Development Policy Review, Overseas Development Institute, vol. 22(6), pages 611-622, November.
- Andrew Dorward & Nigel Poole & Jamie Morrison & Jonathan Kydd & Ian Urey, 2003. "Markets, Institutions and Technology: Missing Links in Livelihoods Analysis," Development Policy Review, Overseas Development Institute, vol. 21, pages 319-332, 05.
- Ayuya, Oscar Ingasia, 2010. "Evaluation Of Willingness To Accept And Adopt Clean Development Mechanism Projects Among Smallscale Farmers In Njoro District, Kenya," Research Theses 117799, Collaborative Masters Program in Agricultural and Applied Economics.
- Katengeza, Samson P. & Mangisoni, Julius H. & Okello, Julius Juma, 2010. "The Role of ICT-based Market Information Services in Spatial Food Market Integration: The Case of Malawi Agricultural Commodity Exchange," 2010 AAAE Third Conference/AEASA 48th Conference, September 19-23, 2010, Cape Town, South Africa 96170, African Association of Agricultural Economists (AAAE) & Agricultural Economics Association of South Africa (AEASA).
For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: ().
If references are entirely missing, you can add them using this form.