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Agricultural markets in Benin and Malawi : the operation and performance of traders

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Author Info

  • Fafchamps, Marcel
  • Gabre-Madhin, Eleni

Abstract

Drawing on original surveys of agricultural traders, the authors examine how traders operate in two Sub-Saharan African countries, Benin and Malawi. They find the following: The largest transaction costs for traders are search and transport. Search methods rely principally on personal visits by the trader, which raises search costs. And since enterprises are very small, transport represents a large share of marketing costs. Brand recognition, grading, and quality certification are nonexistent. Brokers and agents are not organized in commodity exchanges. Quantities are not pooled for transport and storage so as to achieve returns to scale. Interseasonal and interregional arbitrage is not feasible for most traders, who prefer to operate day to day in a small territory. This information provides some important insights into how agricultural trade could be improved. It suggests possible policy interventions in four main areas: increasing traders'asset base, reducing transaction risk, promoting more sophisticated business practices, and reducing physical marketing costs.

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Bibliographic Info

Paper provided by The World Bank in its series Policy Research Working Paper Series with number 2734.

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Date of creation: 31 Dec 2001
Date of revision:
Handle: RePEc:wbk:wbrwps:2734

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Related research

Keywords: Markets and Market Access; International Terrorism&Counterterrorism; Payment Systems&Infrastructure; Economic Theory&Research; Environmental Economics&Policies; International Terrorism&Counterterrorism; Economic Theory&Research; Banks&Banking Reform; Markets and Market Access; Access to Markets;

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Cited by:
  1. 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, Blackwell, vol. 28(3), pages 245-254, May.
  2. Marcel Fafchamps & Eleni Gabre-Madhin & Bart Minten, 2002. "Increasing Returns and Market Efficiency in Agricultural Trade," CSAE Working Paper Series 2002-18, Centre for the Study of African Economies, University of Oxford.
  3. Quattri, Maria A. & Ozanne, Adam & Wang, Xioabing & Hall, Alastair R., 2011. "On The Role Of The Brokerage Institution In The Development Of Ethiopian Agricultural Markets," 85th Annual Conference, April 18-20, 2011, Warwick University, Coventry, UK 108941, Agricultural Economics Society.
  4. Masakure, Oliver & Cranfield, John & Henson, Spencer, 2008. "The Financial Performance of Non-farm Microenterprises in Ghana," World Development, Elsevier, vol. 36(12), pages 2733-2762, December.
  5. Abiola Babajide Ph.D, 2012. "Effects of Microfinance on Micro and Small Enterprises (MSEs) Growth in Nigeria," Asian Economic and Financial Review, Asian Economic and Social Society, vol. 2(3), pages 463-477, July.
  6. Mujawamariya, Gaudiose & Burger, Kees & D'Haese, Marijke F.C., 2012. "Behaviour and performance of traders in the gum arabic supply chain in Senegal: Investigating oligopsonistic myths," 2012 Conference, August 18-24, 2012, Foz do Iguacu, Brazil 126236, International Association of Agricultural Economists.
  7. Takeshima, Hiroyuki, 2009. "Sensitivity of welfare effects estimated by equilibrium displacement model: A biological productivity growth for semisubsistence crops in Sub-Sahara African market with high transaction costs," IFPRI discussion papers 936, International Food Policy Research Institute (IFPRI).

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