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Transaction costs and cattle farmers’ choice of marketing channel in North-Central Namibia

Author

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  • Shiimi, T.
  • Taljaard, P.R.
  • Jordaan, H.

Abstract

About 70 per cent of the Namibian population depends on agricultural activities for their livelihood. Moreover, agriculture remains an important sector in Namibia owing to the fact that its national economy is widely dependent on agricultural production. Cattle producers in the Northern Communal Areas (NCAs) have an option to market their cattle via the formal or informal market. Efforts have been made to encourage producers to market their cattle through the formal market; however, these proved to be futile as the strategy yielded limited improvements. In this study, a number of variables have been analysed to determine factors that influence cattle marketing decisions. Factors influencing the marketing decision on whether to sell or not sell through the formal market have been analyzed using the Probit model. Factors influencing the amount of cattle sold through the formal market, assuming that a producer uses the formal market to sell cattle, were analysed using the Truncated model. Testing the Tobit model against the alternative of a two-part model was done using Cragg's model. Results from empirical research suggest that problems with transportation to MeatCo, marketing experience and the age of cattle producers are some of the factors that significantly influence the decision whether or not sell through the formal market. The accessibility of marketingrelated information, accessibility of new information technology, the age of respondents and a lack of improved productivity are some of the factors that influence the proportional number of cattle sold through the formal market. The results suggest that substantially more information is obtained by modelling cattle marketing behaviour as a dual decision-making framework instead of a single decision-making framework.

Suggested Citation

  • Shiimi, T. & Taljaard, P.R. & Jordaan, H., 2012. "Transaction costs and cattle farmers’ choice of marketing channel in North-Central Namibia," Agrekon, Agricultural Economics Association of South Africa (AEASA), vol. 51(1), February.
    • Handle: RePEc:ags:agreko:345063
    DOI: 10.22004/ag.econ.345063
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    References listed on IDEAS

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    1. Doss, Cheryl R. & McPeak, John G. & Barrett, Christopher B., 2005. "Perceptions of Risk within Pastoralist Households in Northern Kenya and Southern Ethiopia," 2005 Annual meeting, July 24-27, Providence, RI 19504, American Agricultural Economics Association (New Name 2008: Agricultural and Applied Economics Association).
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    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).
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