Effect of transaction costs on market participation among smallholder cassava farmers in Central Madagascar

Figures & data

Figure 1. Graphic illustration of the three-tiered market participation model.

Figure 2. Map of Madagascar showing the survey location.

Table 1. Characteristics of the survey households, by market participation status

Variable description	Seller (participants)		Non-seller (non-participants)	Total
	Off-farm	On-farm
Number of observations	93	68	79	240
Information and Search Costs Related
% with membership of a cooperative societies	28.41	17.89	2.66	16.32
% with access to communication facilities	62.14	50.16	13.16	41.82
Education in years	6.72	5.91	6.15	6.26
	(3.35)	(3.12)	(3.28)	(3.25)
Bargaining and negotiation costs related
% of male respondents	28.16	42.33	61.36	43.95
Age in years	40.11	48.35	49.79	46.05
	(10.31)	(15.12)	(15.19)	(13.54)
% who are native of the community	88.36	83.12	85.35	85.61
Farming experience in years	15.14	10.28	12.71	12.71
	(13.01)	(8.02)	(3.66)	(8.23)
Monitoring and enforcement costs related
Time to get paid in days	3.10	7.12		5.71
	(2.19)	(5.87)		(4.03)
Number of times payment requested	1.21	5.35		3.28
	(0.64)	(3.66)		(2.15)
% who trust the buyer	52.15	98.67		75.11
Proportional transaction costs related
% that have personal means of transportation	48.91	15.72	32.75	32.46
Distance from the farm to the market	2.31	9.47		5.89
	(1.11)	(11.99)		(6.55)
Distance to the nearest town (km)	3.74	12.15	8.41	8.10
	(5.81)	(15.71)	(14.34)	(12.62)
Household size	5.12	5.87	6.02	5.67
	(2.02)	(2.05)	(6.25)	(3.44)
Cassava marketing experience in years	10.11	10.35		10.23
	(5.23)	(6.39)		(5.81)
Farm income (Ar)	691,201	352,583		521,892
	(920,001)	(723,805)		(821,903)
% with road connections to the nearest town is good	36.28	39.71	39.24	38.41
Farm size (ha)	0.26	0.49	0.06	0.27
	(0.15)	(0.09)	(0.12)	(0.12)
Yield (t/ha)	2.61	2.93	2.59	2.71
	(1.31)	(1.52)	(2.63)	(1.82)
Quantity sold (t)	1.49	1.87		1.68
	(1.22)	(1.40)		(1.31)
Quantity consumed (t)	0.37	0.90	1.43	0.90
	(0.06)	(0.52)	(0.26)	(0.28)

Note: Field Survey, 2011; numbers in parentheses are standard deviations.

Table 2. Results of the probit regression analysis for market participation

Variable	Parameter	Coefficient	Std. error	t-value
Constant	b0	2.9115	0.4747	6.1327^***
Membership of a cooperative	X1	0.0382	0.0129	2.9521^***
Access to communication facilities	X2	−0.1252	0.0767	−1.6310
Education level (years)	X3	−2.9751	5.3974	−0.5512
Gender	X4	−0.4113	0.1249	−3.2912^***
Age (years)	X5	−0.0813	0.0311	−2.6118^**
Native of the community	X6	0.0742	0.0235	3.1571^***
Farming experience (years)	X7	0.0418	0.0148	2.8113^***
Time to getting paid in Days	X8	−0.0051	0.1188	−0.0429
Number of times payment requested	X9	0.0037	0.1271	0.0291
Personal means of transportation	X10	0.2715	2.2776	0.1192
Distance to the nearest town (km)	X11	−0.0614	0.0249	−2.4612^*
Distance from farm to market (km)	X12	−0.0968	0.0233	−4.1521^***
Transportation costs (Ar/t)	X13	−0.0003 .	0.0008	−3.5732^***
Condition of road to the nearest town	X15	0.2193	0.0921	2.3811^*
Marketing experience (years)	X16	0.0831	0.0683	1.2158
Farm income level (N)	X17	0.000007	0.000004	1.5941
Yield (t/ha)	X18	0.0072	0.0045	1.6027
Log likelihood		−285.5902
χ^2		0.0000
Pseudo R^2		0.5190
Number of observations	240

^* Significant at 10%.

^** Significant at 5%.

^*** Significant at 1%.

Table 3. Results of probit regression for market participation decisions, by seller type

Variable	Parameter	Coefficient	Std. error	t-value
Constant	a0	1.7881	0.1872	9.5543^***
Personal means of transportation	a10	0.6211	0.2984	2.0814^*
Distance to the nearest town (km)	a11	−0.2172	0.0815	−2.6651^**
Distance from farm to market (km)	a12	−0.2913	0.1160	−2.5107^**
Transportation costs (Ar/t)	a13	−0.0004	0.0001	−3.1132^***
Household size	a14	−0.3471	0.2195	−1.5815
Condition of road to the nearest town	a15	0.0739	0.0734	1.0062
Marketing experience	a16	0.0051	0.0015	3.3571^***
Farm income levels (Ar)	a17	5.8152e−05	3.899e−05	1.4914
Yield (t/ha)	a18	0.0013	0.0010	1.2942
Log likelihood		−159.8251
χ^2		0.0001
Pseudo R^2		0.4178
Number of observations	161

^* Significant at 10% level of probability.

^** Significant at 5% level of probability.

^*** Significant at 1% level of probability.

Table 4. Factors influencing Cassava sales levels (off-farm): Heckit results

Variable	Direct	Indirect	Total
Personal means of transportation	0.2561	1.5135	1.7696
	(2.0143^*)	(2.6218^**)	(4.6361^***)
Distance to the nearest town (km)	−1.1590	−0.6152	−1.7742
	(−1.6571^*)	(−2.9173^***)	(−4.5744^***)
Distance from the farm to the market (km)	−0.1461	−0.0257	−0.1718
	(−2.8214^**)	(−1.6072)	(−4.4286^***)
Transportation costs (Ar/kg)	−0.0073	−0.0182	−0.0255
	(−2.6181^**)	(−2.5029^**)	(−5.1210^***)
Household size	−0.2614	0.3250	−0.0636
	(−0.0914)	(1.2517)	(−1.1603)
Condition of road to the nearest town	0.8472	0.1371	0.9843
	(3.2715^***)	(2.9521^***)	(6.2236^***)
Marketing experience	1.2692	0.7153	1.9845
	(2.4790^**)	(2.5151^**)	(4.9941^***)
Farm income (Ar)	0.000014	5.1730e−05	0.000019
	(1.0732)	(0.1625)	(1.2357)
Yield (t/ha)	0.0061	−0.00019	0.0059
	(1.1441)	(−1.0027)	(0.4383)
Constant	11.5913	2.6142	14.2037
	(4.5719^***)	(2.6731^**)	(7.2452^***)
Ρ	0.7567
λ (Mills’ ratio)	5.4718 (4.2614^***)
χ^2	0.00001
Σ	7.2310
Number of observations	79 (non participants)	172
	93 (off-farm sellers)

^* Significant at 10% level of probability.

^** Significant at 5% level of probability.

^*** Significant at 1% level of probability.

Figures in parenthesis are t-values.

Table 5. Factors influencing cassava sales (on-farm): Heckit results

Variable	Direct	Indirect	Total
Personal means of transportation	−0.5113	−0.8124	−1.3237
	(−1.2629)	(−0.3172)	(−1.5801)
Distance to the nearest town (km)	0.7177	0.4049	1.1226
	(2.6819^**)	(2.4912^**)	(5.1731^***)
Distance from the farm to the market (km)	0.6113	0.2519	0.8632
	(2.5917^**)	(2.6844^**)	(5.2761^***)
Household size	0.4412	0.1825	0.6237
	(1.0582)	(0.5291)	(1.5873)
Condition of the road to the nearest town	−0.9352	−0.5825	−1.5177
	(−2.9834^***)	(−2.6719^***)	(−5.6553^***)
Marketing experience	1.5319	0.5140	2.0330
	(0.7247)	(0.2018)	(0.9265)
Farm income (Ar)	0.00009	4.912e−05	0.00009
	(1.0051)	(0.6103)	(1.6154)
Yield (t/ha)	0.0082	0.00026	0.0084
	(1.1061)	(0.2967)	(1.4028)
Constant	15.8143	−6.9731	8.8412
	(5.1826^***)	(−3.7253^***)	(1.4573)
Ρ	0.9424
λ (Mills’ ratio)	4.8217
	(3.5114^***)
χ^2	0.00001
Σ	5.1162
Number of observations	79 (non participants)	147
	68 (On-farm sellers)

^* Significant at 10% level of probability.

^** Significant at 5% level of probability.

^*** Significant at 1% level of probability.

Figures in parenthesis are t-values.