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Access to dynamic markets for small commercial farmers: the case of potato production in the Peruvian Andes

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  • Escobal, Javier
  • Torero, Maximo

Abstract

"The purpose of this study is twofold. On one hand, the objective is to assess the impact of new and more complex contracting schemes, as opposed to traditional marketing channels, on small farmers' welfare. On the other hand, the study explores which may be the critical factors that determine the small farmers' participation in these institutional arrangements. In this context, two critical factors are stressed. The first one has to do with access to credit and the second one is the size of the agricultural plot. In order to examine the decision of farmers to access the dynamic markets, the paper follows the study of Lapar et al (2003). The paper also follows impact evaluation techniques to identify the differences in the performance of farmers with access to dynamic markets and those without access. As it can be seen, in all cases, the difference between farmers with access and those without access is positive. This implies that having access to dynamic markets has positive impacts on the welfare of farmers. The results show that the farmers linked to the dynamic markets gain two cents of a dollar more per kilogram of potato. ...Our simulations showed that increase of their plot size to a minimum of five hectares (optimal size according to the industry) increases their sales to dynamic markets in 16%. However, the impact of new and more complex contracting schemes, as opposed to traditional marketing channels, could reduce significantly the access gap to dynamic markets by reducing transaction costs, increasing productivity, and increasing scale production through coordination of smallholders." Authors' Abstract

Suggested Citation

  • Escobal, Javier & Torero, Maximo, 2006. "Access to dynamic markets for small commercial farmers: the case of potato production in the Peruvian Andes," MTID discussion papers 99, International Food Policy Research Institute (IFPRI).
  • Handle: RePEc:fpr:mtiddp:99
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    References listed on IDEAS

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    1. Holloway, Garth J. & Barrett, Christopher B. & Ehui, Simeon K., 2002. "Bayes' Estimates Of The Double Hurdle Model In The Presence Of Fixed Costs," Working Papers 14741, Cornell University, Department of Applied Economics and Management.
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    Cited by:

    1. Escobal, J. & Ponce, C. & Hernández Asensio, R., 2011. "El caso de la dinámica territorial rural en la Sierra de Jauja, Junín," Working papers 069, Rimisp Latin American Center for Rural Development.
    2. 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.

    More about this item

    Keywords

    Potato production; Market access; Small farmers; Contract farming; Access to credit; Dynamic markets; Impact evaluation; income growth; Transaction costs;

    JEL classification:

    • Q13 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Agriculture - - - Agricultural Markets and Marketing; Cooperatives; Agribusiness
    • Q16 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Agriculture - - - R&D; Agricultural Technology; Biofuels; Agricultural Extension Services

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