Influence of institutional factors on smallholder farmers’ marketing channel choices - Institutional Constraints to Small Farmer Development in Southern Africa - page 97

in expertise on grades and standards results in an increase in the formal market participation
choice by households. An unexpected sign was noted between expertise on grades and
standards, and the informal market choice. A negative relationship between the two variables
and an odds ratio value less than one explain that it is less likely for households to change
from non-market participation to informal market choice with an increase in expertise
on grades and standards. A possible explanation that can be given for this relationship is
that expertise on grades and standards involves capital commitment (Reardon and Barrett,
2000). Therefore, households who acquire it will be willing to market their produce in
the formal markets, which are more rewarding than informal markets. Unfortunately, the
negative relationship is not significant at the 5% level but is at the 10% level.
A positive and significant (0.047) relationship was found between formal market
participation and the availability of contractual agreements. The relationship implies
that households tend to increase in formal market participation with the availability of
contractual agreements. This relationship is most likely due to the influence of the citrus
farmers. The value of the odds ratio (16.49) supports the higher probability of the variable
influence on the formal market choice.
The variable existence of extensive social capital is significant for both informal (0.050)
and formal (0.031) market choices. The positive relationship in both formal and informal
market participation choices explains that an increase in social capital results in households
shifting from non-participation to formal and informal market participation. The odds
ratios for both formal and informal market choices suggest a higher probability of shifting
to formal and informal marketing with an increase in social capital. Therefore, it can be
concluded that social networks are important in produce marketing, regardless of the
choice of market being used.
It was expected that the availability of good market infrastructure could have a positive
influence on alternative market participation choices, away from not participating in
marketing. However, the a priori expectations hold true for the informal market choice
only. There is sufficient evidence (significance value of 0.013) to support that the availability
of good market infrastructure is likely to encourage households to market their produce
through informal channels. Unlike formal channels where market infrastructure is not
important for farmers, as they supply their produce in bulk once harvested to the higher
level of the marketing channel (Takavarasha and Jayne, 2004).
Group participation in marketing was expected to have a positive influence on the
dependent variable. The results shown in Table 5.2, for this variable are consistent with the a
priori expectations. For both formal and informal market choices, there is enough evidence
to support that when households market their produce in groups, there is a higher chance
of participating in either formal or informal markets. Thus, group participation encourages