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Agricultural markets in Benin and Malawi : the operation and performance of traders

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  • Fafchamps, Marcel*Gabre-Madhin, Eleni

Abstract

Drawing on original surveys of agricultural traders, the authors examine how traders operate in two Sub-Saharan African countries, Benin and Malawi. They find the following: The largest transaction costs for traders are search and transport. Search methods rely principally on personal visits by the trader, which raises search costs. And since enterprises are very small, transport represents a large share of marketing costs. Brand recognition, grading, and quality certification are nonexistent. Brokers and agents are not organized in commodity exchanges. Quantities are not pooled for transport and storage so as to achieve returns to scale. Interseasonal and interregional arbitrage is not feasible for most traders, who prefer to operate day to day in a small territory. This information provides some important insights into how agricultural trade could be improved. It suggests possible policy interventions in four main areas: increasing traders'asset base, reducing transaction risk, promoting more sophisticated business practices, and reducing physical marketing costs.

Suggested Citation

  • Fafchamps, Marcel*Gabre-Madhin, Eleni, 2001. "Agricultural markets in Benin and Malawi : the operation and performance of traders," Policy Research Working Paper Series 2734, The World Bank.
  • Handle: RePEc:wbk:wbrwps:2734
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    References listed on IDEAS

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    1. Ravallion, Martin, 1999. "Themystery of the vanishing benefits : Ms. Speedy Analyst's introduction to evaluation," Policy Research Working Paper Series 2153, The World Bank.
    2. James J. Heckman & Hidehiko Ichimura & Petra Todd, 1998. "Matching As An Econometric Evaluation Estimator," Review of Economic Studies, Oxford University Press, vol. 65(2), pages 261-294.
    3. Kye Woo Lee, 1998. "An alternative technical education system : a case study of Mexico," Social Protection and Labor Policy and Technical Notes 20107, The World Bank.
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    Citations

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    Cited by:

    1. Fafchamps, Marcel & Gabre-Madhin, Eleni & Minten, Bart, 2005. "Increasing returns and market efficiency in agricultural trade," Journal of Development Economics, Elsevier, pages 406-442.
    2. Takeshima, Hiroyuki, 2009. "Sensitivity of welfare effects estimated by equilibrium displacement model: A biological productivity growth for semisubsistence crops in Sub-Sahara African market with high transaction costs," IFPRI discussion papers 936, International Food Policy Research Institute (IFPRI).
    3. Obare, G. A. & Omamo, S. W. & Williams, J. C., 2003. "Smallholder production structure and rural roads in Africa: the case of Nakuru District, Kenya," Agricultural Economics, Blackwell, vol. 28(3), pages 245-254, May.
    4. Baylis, Kathy & Mallory, Mindy & Songsermsawas, Tisorn, 2015. "Effects of credit and market access on farm gate prices in India," 2015 AAEA & WAEA Joint Annual Meeting, July 26-28, San Francisco, California 205434, Agricultural and Applied Economics Association;Western Agricultural Economics Association.
    5. Masakure, Oliver & Cranfield, John & Henson, Spencer, 2008. "The Financial Performance of Non-farm Microenterprises in Ghana," World Development, Elsevier, vol. 36(12), pages 2733-2762, December.
    6. Camilla Andersson & Mintewab Bezabih & Andrea Mannberg, 2015. "The Ethiopian Commodity Exchange and spatial price dispersion," GRI Working Papers 204, Grantham Research Institute on Climate Change and the Environment.
    7. Andersson, Camilla & Bezabih, Mintewab & Mannberg, Andrea, 2015. "The Ethiopian Commodity Exchange and spatial price dispersion," Discussion Papers 209963, Georg-August-Universitaet Goettingen, GlobalFood, Department of Agricultural Economics and Rural Development.
    8. Quattri, Maria A. & Ozanne, Adam & Wang, Xioabing & Hall, Alastair R., 2011. "On The Role Of The Brokerage Institution In The Development Of Ethiopian Agricultural Markets," 85th Annual Conference, April 18-20, 2011, Warwick University, Coventry, UK 108941, Agricultural Economics Society.
    9. Mujawamariya, Gaudiose & Burger, Kees & D'Haese, Marijke F.C., 2012. "Behaviour and performance of traders in the gum arabic supply chain in Senegal: Investigating oligopsonistic myths," 2012 Conference, August 18-24, 2012, Foz do Iguacu, Brazil 126236, International Association of Agricultural Economists.
    10. Abiola Babajide Ph.D, 2012. "Effects of Microfinance on Micro and Small Enterprises (MSEs) Growth in Nigeria," Asian Economic and Financial Review, Asian Economic and Social Society, vol. 2(3), pages 463-477, July.

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