Sales location and supply response among semisubsistence farmers in Benin

Hiroyuki Takeshima and Alex Winter-Nelson

No 999, IFPRI discussion papers from International Food Policy Research Institute (IFPRI)

Abstract: In much of rural Africa, high transaction costs limit farmersÂ’ market participation and thus their potential for income growth. Transaction costs can affect not only whether a farmer sells product but also whether sales occur at the farm gate on at a market. If production behavior is related to a chosen sales location, then analysis of interventions can be improved by explicit consideration of the decision of where to sell. This paper develops a double-selection model that explains consumption and production decisions by semi-subsistence farmers who first decide whether to be a seller and then whether to sell at the farm gate or at an off-farm location before deciding on production and consumption. The study tests the validity of this dual-criteria model against a single criterion model in which a grower first decides to be a seller and then decides production, consumption and sales location simultaneously. Dual-criteria and single-criterion models are compared while correcting inconsistency in estimations due to violation of homoskedasticity and normality assumptions in selection equations. The results suggest that the dual-criteria model provides more information than the single-criterion model using a sample of cassava producer in Benin.

Keywords: agricultural supply response; Development strategies; dual-criteria; sales location; Transaction costs (search for similar items in EconPapers)
Date: 2010
New Economics Papers: this item is included in nep-afr, nep-agr and nep-dev
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Persistent link: https://EconPapers.repec.org/RePEc:fpr:ifprid:999

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