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Transaction costs and crop marketing in the communal areas of Impendle and Swayimana, KwaZulu-Natal

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  • Pierre Matungul
  • Michael Lyne
  • Gerald Ortmann

Abstract

High transaction costs are detrimental to the efficient operation or existence of markets for inputs and outputs. The cost of information and the costs associated with the search for trade partners, the distance to formal markets and contract enforcement are likely to influence the marketing of food crops. This study hypothesises that the level of income generated from food-crop sales by small-scale farmers in the Impendle and Swayimana districts of KwaZuluNatal is influenced by transaction costs and certain household and farm characteristics. Regression analysis shows that the depth of marketing methods is significantly influenced by transaction cost proxies, such as cooperation with large commercial farmers and ownership of means of transport. Results from a block-recursive regression analysis show that the level of crop income generated is determined by the depth of marketing methods, the size of allocated arable land and off-farm income. Households with lower transaction costs, sizeable allocated land and off-farm income can be expected to generate higher income from food crops. Investment in public goods such as roads, telecommunications and an efficient legal system (to uphold commercial contracts), as well as farmer support services (input supply, extension, marketing information and research), would probably raise farm and non-farm income by reducing transaction costs. This would increase the effective demand for locally produced goods and services, thus contributing to rural employment and livelihoods within rural communal areas.

Suggested Citation

  • Pierre Matungul & Michael Lyne & Gerald Ortmann, 2001. "Transaction costs and crop marketing in the communal areas of Impendle and Swayimana, KwaZulu-Natal," Development Southern Africa, Taylor & Francis Journals, vol. 18(3), pages 347-363.
  • Handle: RePEc:taf:deveza:v:18:y:2001:i:3:p:347-363
    DOI: 10.1080/03768350120070017
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    References listed on IDEAS

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    1. Nabli, Mustapha K. & Nugent, Jeffrey B., 1989. "The New Institutional Economics and its applicability to development," World Development, Elsevier, vol. 17(9), pages 1333-1347, September.
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    Cited by:

    1. Peter Dannenberg, 2013. "The rise of supermarkets and challenges for small farmers in South African food value chains," ECONOMIA AGRO-ALIMENTARE, FrancoAngeli Editore, vol. 15(3), pages 15-34.
    2. Mignouna, D.B. & Abdoulaye, T. & Alene, A. & Akinola, A.A. & Manyong, V.M., 2015. "Drivers of Market Participation Decisions among Small-scale Farmers in Yam Growing Areas of Nigeria and Ghana," 2015 Conference, August 9-14, 2015, Milan, Italy 230219, International Association of Agricultural Economists.
    3. Bola Amoke Awotide & Aziz A. Karimov & Aliou Diagne, 2016. "Agricultural technology adoption, commercialization and smallholder rice farmers’ welfare in rural Nigeria," Agricultural and Food Economics, Springer;Italian Society of Agricultural Economics (SIDEA), vol. 4(1), pages 1-24, December.
    4. Kirsten, J, 2002. "Forty Years Of Agricultural Economics Scholarship And Practice In South Africa: A Time To Challenge The Consensus And Refocus Our Intellectual Work," Agrekon, Agricultural Economics Association of South Africa (AEASA), vol. 0(Issue 4).
    5. 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.
    6. Jordaan, Henry & Grove, Bennie, 2010. "Analysis of the Governance Structure used by Eksteenskull Raisin Producers: Is there a need for more Vertical Coordination?," 2010 AAAE Third Conference/AEASA 48th Conference, September 19-23, 2010, Cape Town, South Africa 96645, African Association of Agricultural Economists (AAAE).
    7. Kherallah, Mylene & Kirsten, Johann F, 2002. "The New Institutional Economics: Applications For Agricultural Policy Research In Developing Countries," Agrekon, Agricultural Economics Association of South Africa (AEASA), vol. 0(Issue 2).
    8. Wang LIJIA & Huo XUEXI, 2014. "Transaction Costs Comparison Between Cooperatives And Conventional Apple Producers: A Case Study Of Northwestern China," Annals of Public and Cooperative Economics, Wiley Blackwell, vol. 85(2), pages 233-255, June.
    9. Mohd Suhaimi, Nurul Aisyah & de Mey, Yann & Oude Lansink, Alfons, 2017. "A transaction cost analysis of Malaysian dairy farmers' marketing channel selection," 2017 International Congress, August 28-September 1, 2017, Parma, Italy 261436, European Association of Agricultural Economists.
    10. Zhang, Wan-Shou & Li, Feng-Min & Xiong, You-Cai & Xia, Qing, 2012. "Econometric analysis of the determinants of adoption of raising sheep in folds by farmers in the semiarid Loess Plateau of China," Ecological Economics, Elsevier, vol. 74(C), pages 145-152.
    11. Onyango, Mercy Anyango & Otieno, David Jakinda & Nyikal, Rose Adhiambo & Ojiem, John, 2017. "An Economic Analysis of Grain Legumes Utilization and Gross Margins in Nandi County, Kenya," Dissertations and Theses 269545, University of Nairobi, Department of Agricultural Economics.
    12. Mabuza, Majola Lawrence & Ortmann, Gerald F. & Wale, Edilegnaw Zegeye, 2012. "Collective action in commercial mushroom production: the role of social capital in the management of informal farmer groups in Swaziland," 2012 Conference, August 18-24, 2012, Foz do Iguacu, Brazil 126764, International Association of Agricultural Economists.

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