IDEAS home Printed from https://ideas.repec.org/p/tin/wpaper/20160054.html
   My bibliography  Save this paper

How does Market Access for Smallholders affect Export Supply? The Case of Tobacco Marketing in Malawi

Author

Listed:
  • Wouter Zant

    (VU University Amsterdam, the Netherlands)

Abstract

Transaction costs play a key role in the behaviour of smallholders in developing countries. We investigate smallholder tobacco cultivation in Malawi, Malawi’s major export crop, and exploit the introduction of an additional tobacco auction floor to measure the impact of a reduction in transaction costs on smallholders’ decisions on tobacco crop area and production. Estimations are based on annual data by Extension Planning Area, from the Ministry of Agriculture and Food Security, combined with data from other sources. A 10% reduction in transport cost is shown to lead to an increase in crop area and production of around 4% and 2.5%, respectively. Supply response runs along the extensive margin: both area and production increase, but production slightly less, leading to a decrease in yield, most likely because tobacco cultivation expands to less suitable areas and/or less productive farmers. In view of the non-experimental nature of the data, we confirm impacts by estimating a dose response function using generalised propensity scores. Supply response increases substantially within a distance to auction floor of less than 60km. We find no empirical support for conversion of crop area from maize and other crops into tobacco.

Suggested Citation

  • Wouter Zant, 2016. "How does Market Access for Smallholders affect Export Supply? The Case of Tobacco Marketing in Malawi," Tinbergen Institute Discussion Papers 16-054/V, Tinbergen Institute.
  • Handle: RePEc:tin:wpaper:20160054
    as

    Download full text from publisher

    File URL: http://papers.tinbergen.nl/16054.pdf
    Download Restriction: no

    References listed on IDEAS

    as
    1. Renkow, Mitch & Hallstrom, Daniel G. & Karanja, Daniel D., 2004. "Rural infrastructure, transactions costs and market participation in Kenya," Journal of Development Economics, Elsevier, vol. 73(1), pages 349-367, February.
    2. Balat, Jorge & Brambilla, Irene & Porto, Guido, 2009. "Realizing the gains from trade: Export crops, marketing costs, and poverty," Journal of International Economics, Elsevier, vol. 78(1), pages 21-31, June.
    3. 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.
    4. Harrigan, Jane, 2008. "Food insecurity, poverty and the Malawian Starter Pack: Fresh start or false start?," Food Policy, Elsevier, vol. 33(3), pages 237-249, June.
    5. Negri, Mariano & Porto, Guido, 2007. "Burley Tobacco Clubs in Malawi: Nonmarket Institutions for Exports," MPRA Paper 6210, University Library of Munich, Germany.
    6. Marcel Fafchamps & Ruth Vargas Hill, 2005. "Selling at the Farmgate or Traveling to Market," American Journal of Agricultural Economics, Agricultural and Applied Economics Association, vol. 87(3), pages 717-734.
    7. Kydd, Jonathan & Christiansen, Robert, 1982. "Structural change in Malawi since independence: Consequences of a development strategy based on large-scale agriculture," World Development, Elsevier, vol. 10(5), pages 355-375, May.
    8. Minten, Bart & Kyle, Steven, 1999. "The effect of distance and road quality on food collection, marketing margins, and traders' wages: evidence from the former Zaire," Journal of Development Economics, Elsevier, vol. 60(2), pages 467-495, December.
    9. de Janvry, Alain & Fafchamps, Marcel & Sadoulet, Elisabeth, 1991. "Peasant Household Behaviour with Missing Markets: Some Paradoxes Explained," Economic Journal, Royal Economic Society, vol. 101(409), pages 1400-1417, November.
    10. Aparajita Goyal, 2010. "Information, Direct Access to Farmers, and Rural Market Performance in Central India," American Economic Journal: Applied Economics, American Economic Association, vol. 2(3), pages 22-45, July.
    11. Michela Bia & Alessandra Mattei, 2008. "A Stata package for the estimation of the dose–response function through adjustment for the generalized propensity score," Stata Journal, StataCorp LP, vol. 8(3), pages 354-373, September.
    12. Stephan J. Goetz, 1992. "A Selectivity Model of Household Food Marketing Behavior in Sub-Saharan Africa," American Journal of Agricultural Economics, Agricultural and Applied Economics Association, vol. 74(2), pages 444-452.
    13. Jacoby, Hanan G. & Minten, Bart, 2009. "On measuring the benefits of lower transport costs," Journal of Development Economics, Elsevier, vol. 89(1), pages 28-38, May.
    14. Jenny C. Aker, 2010. "Information from Markets Near and Far: Mobile Phones and Agricultural Markets in Niger," American Economic Journal: Applied Economics, American Economic Association, vol. 2(3), pages 46-59, July.
    15. Steven Were Omamo, 1998. "Transport Costs and Smallholder Cropping Choices: An Application to Siaya District, Kenya," American Journal of Agricultural Economics, Agricultural and Applied Economics Association, vol. 80(1), pages 116-123.
    16. Robert Jensen, 2007. "The Digital Provide: Information (Technology), Market Performance, and Welfare in the South Indian Fisheries Sector," The Quarterly Journal of Economics, Oxford University Press, vol. 122(3), pages 879-924.
    17. Alain de Janvry & Elisabeth Sadoulet, 2010. "Agriculture for Development in Africa: Business-as-Usual or New Departures?-super- †," Journal of African Economies, Centre for the Study of African Economies (CSAE), vol. 19(suppl_2), pages 7-39.
    18. Orr, Alastair, 2000. "'Green Gold'?: Burley Tobacco, Smallholder Agriculture, and Poverty Alleviation in Malawi," World Development, Elsevier, vol. 28(2), pages 347-363, February.
    Full references (including those not matched with items on IDEAS)

    More about this item

    Keywords

    transaction costs; market access; subsistence farming; food & cash crops; Malawi; Africa;

    JEL classification:

    • D23 - Microeconomics - - Production and Organizations - - - Organizational Behavior; Transaction Costs; Property Rights
    • O13 - Economic Development, Innovation, Technological Change, and Growth - - Economic Development - - - Agriculture; Natural Resources; Environment; Other Primary Products
    • O55 - Economic Development, Innovation, Technological Change, and Growth - - Economywide Country Studies - - - Africa
    • Q11 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Agriculture - - - Aggregate Supply and Demand Analysis; Prices
    • Q13 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Agriculture - - - Agricultural Markets and Marketing; Cooperatives; Agribusiness

    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:tin:wpaper:20160054. 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: (Tinbergen Office +31 (0)10-4088900) or (Rebekah McClure). General contact details of provider: http://edirc.repec.org/data/tinbenl.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.