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Farmgate versus market centre sales: a multi-crop approach

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  • Benjamin Musah Abu

    (University for Development Studies)

  • Haruna Issahaku

    (University for Development Studies)

  • Paul Kwame Nkegbe

    (University for Development Studies)

Abstract

Smallholder farmers have two basic decisions to make regarding selling their surplus produce: selling at farmgate at low prices or travelling to a market centre where higher prices are offered while incurring some transaction costs. Whichever decision is made has implications for poverty alleviation efforts. Previous studies have ignored modelling participation and market choice simultaneously. Taking a multi-crop approach, this paper fills the gap by investigating the key determinants of market participation decisions of smallholder farmers in Ghana using the sample selectivity probit model in order to account for potential endogeneity and selectivity bias and thus obtain unbiased estimates. Household survey data in the Upper West region of Ghana for the 2011 production season are used to achieve the goal of the study. The results reveal that yields of maize and groundnut and market information are the simultaneous determinants of market participation decisions while age of the farmer, yields of the two crops, membership of farmer organisation and prices of the two crops simultaneously determine the choice of market. These imply that policies that enhance productivity of these smallholders and market information are vital in the drive for a commercially oriented agriculture. Also, the incentives to incur transaction costs to market centres to benefit from remunerative prices lie in measures to increase yields.

Suggested Citation

  • Benjamin Musah Abu & Haruna Issahaku & Paul Kwame Nkegbe, 2016. "Farmgate versus market centre sales: a multi-crop approach," Agricultural and Food Economics, Springer;Italian Society of Agricultural Economics (SIDEA), vol. 4(1), pages 1-16, December.
    • Handle: RePEc:spr:agfoec:v:4:y:2016:i:1:d:10.1186_s40100-016-0065-6
    DOI: 10.1186/s40100-016-0065-6
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    3. William J Burke, 2019. "Evidence against Imposing Restrictions on Hurdle Models as a Test for Simultaneous versus Sequential Decision Making," American Journal of Agricultural Economics, Agricultural and Applied Economics Association, vol. 101(5), pages 1473-1481.
    4. Emmanuel Abokyi & Dirk Strijker & Kofi Fred Asiedu & Michiel N. Daams, 2022. "Buffer Stock Operations and Well-Being: The Case of Smallholder Farmers in Ghana," Journal of Happiness Studies, Springer, vol. 23(1), pages 125-148, January.
    5. Muhammed Abdella Usman & Daniel Callo-Concha, 2021. "Does market access improve dietary diversity and food security? Evidence from Southwestern Ethiopian smallholder coffee producers," Agricultural and Food Economics, Springer;Italian Society of Agricultural Economics (SIDEA), vol. 9(1), pages 1-21, December.
    6. Khun, Channary & Lim, Sokchea, 2023. "Productivity and market participation: Cambodian rice farmers," Journal of Asian Economics, Elsevier, vol. 88(C).
    7. Tawanda Chingozha & Dieter von Fintel, 2019. "Property rights, market access and crop cultivation in Southern Rhodesia: evidence from historical satellite data," Working Papers 03/2019, Stellenbosch University, Department of Economics.
    8. Paul Kwame Nkegbe & Abdelkrim Araar & Benjamin Musah Abu & Hamdiyah Alhassan & Yazidu Ustarz & Edinam Dope Setsoafia & Shamsia Abdul-Wahab, 2022. "Nonfarm activity and market participation by farmers in Ghana," Agricultural and Food Economics, Springer;Italian Society of Agricultural Economics (SIDEA), vol. 10(1), pages 1-23, December.
    9. Samuel Sekyi & Benjamin Musah Abu & Paul Kwame Nkegbe, 2020. "Effects of farm credit access on agricultural commercialization in Ghana: Empirical evidence from the northern Savannah ecological zone," African Development Review, African Development Bank, vol. 32(2), pages 150-162, June.
    10. Temitayo A. Adeyemo & Victor O. Okoruwa, 2018. "Value Addition and Productivity Differentials in the Nigerian Cassava System," Sustainability, MDPI, vol. 10(12), pages 1-22, December.
    11. Chauhan, Sonalee & Varma, Poornima & Singh, Sukhpal, 2024. "What drives smallholder market participation and channel choice decision? Insights from paddy markets in India," IAAE 2024 Conference, August 2-7, 2024, New Delhi, India 344325, International Association of Agricultural Economists (IAAE).

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