The Nature of Agricultural Markets: Output Marketing in Tanzania

The main objective of this study is to investigate empirically the effect of free or preferential trade agreements (PTAs) on Pakistan’s export performance (value of exports, number of exporters and number of products per exporter) during the period 2003 to 2010. The analysis covers the South Asian Free Trade Area (SAFTA) and five bilateral PTAs with China, Sri Lanka, Malaysia, Iran and Mauritius. Data from the World Bank Exporters Dynamics Database are analysed using fixed effect panel data techniques. The SAFTA and PTAs with China and Iran are associated with improved export performance in terms of value of exports and number of exporters. There is no evidence that the bilateral PTAs with Sri Lanka and Mauritius affect export performance of Pakistan. There is some evidence for product diversification under the PTAs with Malaysia and Mauritius, whereas with Sri Lanka and China product diversification declined. This paper uses the three available waves of data from the Tanzanian National Panel Surveys to study different agricultural markets. We use crop level data to analyse the factors influencing farmers’ choice between selling to market or retaining output for household consumption, allowing for market differences across crops. We estimate probit models for each wave and crop (or crop categories). Results show that there is not a homogeneous market for all crops, and the entrance decision is driven by different factors. Contemporaneous and lagged prices as well as use of storage facility are important variables that influence the decision to enter a market differently across crops. Entering the markets for subsistence crops such as maize or cassava can be the result of economic distress, supporting a ‘forced commerce’ hypothesis. The market for export crops responds to price and expectation mechanisms and is closer to the conception of agricultural markets in standard theory.