IDEAS home Printed from https://ideas.repec.org/p/ags/iaae15/211746.html
   My bibliography  Save this paper

Transaction Costs and Farm-to-Market Linkages: Empirical Evidence from China Apple Producers

Author

Listed:
  • Hou, Jianyun
  • Huo, Xuexi

Abstract

This article estimates the impact of transaction costs on smallholders’ market participation and integration, using the data collected in two apple production belts of China. Based on an innovative measurement of the transaction costs, and a disaggregated analysis on sales costs, information costs, negotiation costs and monitoring costs. The study shows that levels of the farmers’ market participation are mainly determined by the proportional transaction costs and price, while their market integration depends on the fixed transaction costs and price. This suggests that, in order to lower the transaction costs and enable specialization and market participation, it is necessary to invest and construct the farming infrastructure, update the rural information system, improve the structure of farmer households, and subsidize the cooperative organizations.

Suggested Citation

  • Hou, Jianyun & Huo, Xuexi, 2015. "Transaction Costs and Farm-to-Market Linkages: Empirical Evidence from China Apple Producers," 2015 Conference, August 9-14, 2015, Milan, Italy 211746, International Association of Agricultural Economists.
  • Handle: RePEc:ags:iaae15:211746
    DOI: 10.22004/ag.econ.211746
    as

    Download full text from publisher

    File URL: https://ageconsearch.umn.edu/record/211746/files/HOU-Transaction%20Costs%20and%20Farm-to-Market%20Linkages-231.pdf
    Download Restriction: no
    ---><---

    References listed on IDEAS

    as
    1. Escobal, Javier A. & Cavero, Denice, 2012. "Transaction Costs, Institutional Arrangements and Inequality Outcomes: Potato Marketing by Small Producers in Rural Peru," World Development, Elsevier, vol. 40(2), pages 329-341.
    2. 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.
    3. Pingali, Prabhu & Khwaja, Yasmeen & Meijer, Madelon, 2005. "Commercializing small farms: reducing transaction cost," ESA Working Papers 289070, Food and Agriculture Organization of the United Nations, Agricultural Development Economics Division (ESA).
    4. Williamson, Oliver E, 1979. "Transaction-Cost Economics: The Governance of Contractural Relations," Journal of Law and Economics, University of Chicago Press, vol. 22(2), pages 233-261, October.
    5. Prabhu Pingali & Yasmeen Khwaja & Madelon Meijer, 2005. "Commercializing Small Farms: Reducing Transaction Costs," Working Papers 05-08, Agricultural and Development Economics Division of the Food and Agriculture Organization of the United Nations (FAO - ESA).
    6. 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.
    7. Donovan, Jason & Poole, Nigel, 2014. "Changing asset endowments and smallholder participation in higher value markets: Evidence from certified coffee producers in Nicaragua," Food Policy, Elsevier, vol. 44(C), pages 1-13.
    8. Marcel Fafchamps, 2002. "Returns to social network capital among traders," Oxford Economic Papers, Oxford University Press, vol. 54(2), pages 173-206, April.
    9. Vakis, Renos & Sadoulet, Elisabeth & de Janvry, Alain, 2003. "Measuring Transactions Costs from Observed Behavior: Market Choices in Peru," Department of Agricultural & Resource Economics, UC Berkeley, Working Paper Series qt7p81h66q, Department of Agricultural & Resource Economics, UC Berkeley.
    10. Getachew A. Woldie & E.A. Nuppenau, 2011. "A contribution to transaction costs: evidence from banana markets in Ethiopia," Agribusiness, John Wiley & Sons, Ltd., vol. 27(4), pages 493-508, September.
    11. Pamphile Kokou Degla, 2012. "Transaction Costs in the Trading System of Cashew Nuts in the North of Benin: A Field Study," American Journal of Economics and Sociology, Wiley Blackwell, vol. 71(2), pages 277-297, April.
    12. Steven Were Omamo, 1998. "Farm-to-market transaction costs and specialisation in small-scale agriculture: Explorations with a non-separable household model," Journal of Development Studies, Taylor & Francis Journals, vol. 35(2), pages 152-163.
    13. Andrew Dorward, 2001. "The Effects of Transaction Costs, Power and Risk on Contractual Arrangements: A Conceptual Framework for Quantitative Analysis," Journal of Agricultural Economics, Wiley Blackwell, vol. 52(2), pages 59-73, May.
    14. Teece, David J., 2010. "Forward Integration and Innovation: Transaction Costs and Beyond," Journal of Retailing, Elsevier, vol. 86(3), pages 277-283.
    15. Jill E. Hobbs, 1997. "Measuring the Importance of Transaction Costs in Cattle Marketing," American Journal of Agricultural Economics, Agricultural and Applied Economics Association, vol. 79(4), pages 1083-1095.
    Full references (including those not matched with items on IDEAS)

    Most related items

    These are the items that most often cite the same works as this one and are cited by the same works as this one.
    1. Cuevas, Agham C., 2014. "Transaction Costs of Exchange in Agriculture: A Survey," Asian Journal of Agriculture and Development, Southeast Asian Regional Center for Graduate Study and Research in Agriculture (SEARCA), vol. 11(1), pages 1-18, June.
    2. 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.
    3. B.C. Okoye & A. Abass & B. Bachwenkizi & G. Asumugha & B. Alenkhe & R. Ranaivoson & R. Randrianarivelo & N. Rabemanantsoa & I. Ralimanana, 2016. "Effect of transaction costs on market participation among smallholder cassava farmers in Central Madagascar," Cogent Economics & Finance, Taylor & Francis Journals, vol. 4(1), pages 1143597-114, December.
    4. Mujawamariya, G. & Burger, K. & D’Haese, M., 2015. "Market-driven production with transaction costs outlook: Gum arabic collection systems in Senegal," Journal of Forest Economics, Elsevier, vol. 21(3), pages 111-130.
    5. Zezza, Alberto & Llambi, Luis, 2002. "Meso-Economic Filters Along the Policy Chain: Understanding the Links Between Policy Reforms and Rural Poverty in Latin America," World Development, Elsevier, vol. 30(11), pages 1865-1884, November.
    6. Embaye, Weldensie T. & Bergtold, Jason S. & Schwab, Benjamin & Zereyesus, Yacob A., 2018. "Modeling Farm Household’s Productivity under Inseparable Production and Consumption decisions," 2018 Annual Meeting, August 5-7, Washington, D.C. 274226, Agricultural and Applied Economics Association.
    7. Kuijpers, Rob, 2020. "Integrated Value Chain Development: Evidence from Bangladesh," Food Policy, Elsevier, vol. 97(C).
    8. Paswel P. Marenya & Christopher B. Barrett, 2009. "Soil quality and fertilizer use rates among smallholder farmers in western Kenya," Agricultural Economics, International Association of Agricultural Economists, vol. 40(5), pages 561-572, September.
    9. Rob Kuijpers, 2019. "Value Chain Development as Public Policy: Conceptualization and Evidence from the Agri-Food Sector in Bangladesh," LICOS Discussion Papers 41419, LICOS - Centre for Institutions and Economic Performance, KU Leuven.
    10. 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.
    11. Escobal, Javier, 2005. "The Role of Public Infraestructure in Market Development in Rural Peru," MPRA Paper 727, University Library of Munich, Germany.
    12. Chamberlin, Jordan & Jayne, T.S., 2013. "Unpacking the Meaning of ‘Market Access’: Evidence from Rural Kenya," World Development, Elsevier, vol. 41(C), pages 245-264.
    13. Hayatullah Ahmadzai, 2018. "Factor market participation and tests for separability in Afghanistan," Discussion Papers 2018-10, University of Nottingham, CREDIT.
    14. Kherallah, Mylène & Kirsten, Johann, 2001. "The new institutional economics," MSSD discussion papers 41, International Food Policy Research Institute (IFPRI).
    15. Salas Garcia, Vania B. & Fan, Qin, 2015. "Information Access and Smallholder Farmers’ Selling Decisions in Peru," 2015 AAEA & WAEA Joint Annual Meeting, July 26-28, San Francisco, California 205380, Agricultural and Applied Economics Association.
    16. Codjo, Ogoudélé Simon & Fiamohe, Rose & Kpenavoun, Sylvain & Acclassato, Denis & Biaou, Gauthier, 2016. "Determinants of the choice of multi-modes of governance by producers and processors of paddy in Benin," 149th Seminar, October 27-28, 2016, Rennes, France 244791, European Association of Agricultural Economists.
    17. 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.
    18. Takeshima, Hiroyuki, 2008. "Behavior of subsistence producers in response to technological change- The elasticity of cassava production and home consumption in Benin," 2008 Annual Meeting, July 27-29, 2008, Orlando, Florida 6108, American Agricultural Economics Association (New Name 2008: Agricultural and Applied Economics Association).
    19. Vellema, W. & Buritica Casanova, A. & Gonzalez, C. & D’Haese, M., 2015. "The effect of specialty coffee certification on household livelihood strategies and specialisation," Food Policy, Elsevier, vol. 57(C), pages 13-25.
    20. Ebata, Ayako & Pacheco, Pamela Alejandra & Cramon-Taubadel, Stephan von, 2015. "Distance to market and farm-gate prices of staple beans in rural Nicaragua," 2015 Conference, August 9-14, 2015, Milan, Italy 211582, International Association of Agricultural Economists.

    More about this item

    Keywords

    Crop Production/Industries; Marketing;

    NEP fields

    This paper has been announced in the following NEP Reports:

    Statistics

    Access and download statistics

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:ags:iaae15:211746. See general information about how to correct material in RePEc.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: (AgEcon Search). General contact details of provider: https://edirc.repec.org/data/iaaeeea.html .

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    If CitEc recognized a reference but did not link an item in RePEc to it, you can help with this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service hosted by the Research Division of the Federal Reserve Bank of St. Louis . RePEc uses bibliographic data supplied by the respective publishers.