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A Triple-Hurdle Model of Production and Market Participation in Kenya's Dairy Market

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  • William J. Burke
  • Robert J. Myers
  • Thomas S. Jayne

Abstract

Existing analyses of market participation are based on a "double-hurdle" modeling approach. Such models are appropriate only when all members of the population of interest actually produce the good. In some contexts, however (e.g., smallholder farmers), many members of the population do not produce particular goods that they could produce and that their neighbors do produce. Policies influencing market participation among producers may thus also induce additional farmers to become producers. Previous double-hurdle approaches do not allow explicitly for this possibility. To address these limitations, this article presents a "triple-hurdle" approach with an initial stage that includes nonproducers. The model is used to identify the factors associated with Kenyan smallholder farmers choosing to participate in dairy production, and the role that these producers choose to play (or not) in the marketplace. In the midst of debates underway over the privatization of the parastatal Kenya Creameries Company, new knowledge about smallholder participation in dairy could be an important contribution. Results suggest the importance of rural electrification, training, and improved grazing practices. We find that expected net sales are significantly higher when farmers have access to informal private markets. We also describe a version of the ordered tobit model that includes nonproducers and is nested in our triple-hurdle model. A likelihood ratio test shows the latter to be a significantly better fit to our data. We discuss how insights gained from this study differ from the insights that would come from a double-hurdle ordered tobit that also includes nonproducers.

Suggested Citation

  • William J. Burke & Robert J. Myers & Thomas S. Jayne, 2015. "A Triple-Hurdle Model of Production and Market Participation in Kenya's Dairy Market," American Journal of Agricultural Economics, Agricultural and Applied Economics Association, vol. 97(4), pages 1227-1246.
  • Handle: RePEc:oup:ajagec:v:97:y:2015:i:4:p:1227-1246.
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    File URL: http://hdl.handle.net/10.1093/ajae/aav009
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    Cited by:

    1. Tabe-Ojong, M.P.J. & Mausch, K. & Woldeyohanes, T. & Heckelei, T., 2018. "A Triple-Hurdle Model of the Impacts of Improved Chickpea Adoption on Smallholder Production and Commercialization in Ethiopia," 2018 Conference, July 28-August 2, 2018, Vancouver, British Columbia 277287, International Association of Agricultural Economists.
    2. Shiferaw, K. & Gebremedhin, B. & Tegegne, A. & Hoekstra, D., 2018. "Analysis of milk production, butter marketing and household use of inputs in rural Ethiopia," 2018 Conference, July 28-August 2, 2018, Vancouver, British Columbia 277104, International Association of Agricultural Economists.
    3. Yao, B. & Shanoyan, A., 2018. "The Use of Mobile Money Application and Smallholder Farmer Market Participation: Evidence form Cote d Ivoire and Tanzania," 2018 Conference, July 28-August 2, 2018, Vancouver, British Columbia 277259, International Association of Agricultural Economists.
    4. repec:spr:agfoec:v:6:y:2018:i:1:d:10.1186_s40100-018-0114-4 is not listed on IDEAS
    5. Julius Juma Okello & Yuan Zhou & Norman Kwikiriza & Sylvester Ochieng Ogutu & Ian Barker & Elmar Schulte-Geldermann & Elly Atieno & Justin Taj Ahmed, 2016. "Determinants of the Use of Certified Seed Potato among Smallholder Farmers: The Case of Potato Growers in Central and Eastern Kenya," Agriculture, MDPI, Open Access Journal, vol. 6(4), pages 1-12, October.
    6. Seng, Kimty, 2016. "The Effects of Market Participation on Farm Households’ Food Security in Cambodia: An endogenous switching approach," MPRA Paper 69669, University Library of Munich, Germany.
    7. repec:gam:jsusta:v:10:y:2018:i:11:p:4324-:d:184464 is not listed on IDEAS
    8. CAMARA, Alhassane, 2017. "Market participation of smallholders and the role of the upstream segment: evidence from Guinea," MPRA Paper 78903, University Library of Munich, Germany, revised May 2017.
    9. Benjamin Musah Abu & Haruna Issahaku & Paul Kwame Nkegbe, 2016. "Farmgate versus market centre sales: a multi-crop approach," Agricultural and Food Economics, Springer;Italian Society of Agricultural Economics (SIDEA), vol. 4(1), pages 1-16, December.
    10. Kadjo, Didier & Ricker-Gilbert, Jacob & Tahirou, Abdoulaye & Shively, Gerald & Baco, Nasser, 2016. "Adverse selection in informal maize markets in Benin," 2016 Fifth International Conference, September 23-26, 2016, Addis Ababa, Ethiopia 249289, African Association of Agricultural Economists (AAAE).
    11. Okello, Julius J. & Zhou, Yuan & Kwikiriza, Norman & Ogutu, Sylvester & Barker, Ian & Schulte-Geldermann, Elmar & Ahmed, Justin & Atieno, Elly, 2016. "Welfare-environmental quality tradeoffs of promoting use of certified seed potato in tropical highlands of Africa: Evidence from central highlands of Kenya," 2016 Annual Meeting, July 31-August 2, Boston, Massachusetts 236242, Agricultural and Applied Economics Association.

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