Food crop marketing and agricultural productivity in a high price environment: evidence and implications for Mozambique

This paper assesses the relationships between smallholder agricultural productivity and market participation in a high food price environment in Mozambique. To understand the bi-directional nature of these relationships we used panel data methods to evaluate the relative importance of market participation (measured in terms of sales intensity) compared to household and farm-level factors in explaining productivity changes; and the relative importance of crop productivity versus marketing investments in explaining household market participation. Results indicate that, for smallholder farmers in Mozambique, investments that lead to increased adoption of productivity enhancing technologies could have significantly higher impacts on sales intensity than efforts to increase sales intensity could have on productivity. The magnitude of estimated effects is relatively stronger for cereals and beans/groundnuts than for roots/tubers, reflecting the role of the latter as food reserve/insurance crops. The results indicate that productivity investments for cereals and beans/groundnuts crops can help boost production and sales intensity significantly in a time when market participation rates are on the rise in response to better prices. For roots/tubers, investing in processing facilities and creating demand for processed root products combined with improvements in farm-level productivity may provide better long-term prospects than improvements in productivity alone.