Influence of institutional factors on smallholder farmers’ marketing channel choices - Institutional Constraints to Small Farmer Development in Southern Africa - page 99

Based on the results presented in this section, it is shown that marketing channel choices
among smallholder farmers are influenced by institutional factors. Where the institutional
factors are poorly developed, farmers have difficulties in marketing their produce through
formal and informal markets. It should be acknowledged that there is only enough evidence
to support the influence of the significant variables, but that does not make the insignificant
variables irrelevant. A possible explanation is that without the significant variables, it makes
it difficult for households to be involved in different marketing choices. For the insignificant
variables, whereas they are important, households can still withstand produce marketing
without changing such variables. For instance, without market information, it is difficult to
market produce even if the household owns transport. On the other hand, households can
still market if they have market information but without their own transport.
5.8 Summary
This chapter provided empirical evidence of factors influencing market participation
choices among smallholder farmers in the Kat River Valley. The institutional factors
influencing market participation choices were defined and tested using a multinomial
logistic regression model. The statistically significant variables, at the 5% level are access
to market information, expertise on grades and standards, availability of contractual
agreements, existence of extensive social capital, availability of good market infrastructure,
group participation and reliance on traditions.
Based on the results of this study, several suggestions can be made on how smallholder
farmers can be actively involved in produce marketing. Generally, the findings suggest that an
adjustment in each one of the significant variables can significantly influence the probability
of market participation. That is, technological growth and institutional developments that
affect such variables can help farmers improve participation and encourage formal market
participation. It is important to identify the ideal technological changes and institutional
development pathways that best fit the smallholder farmers. In coming up with different
ways of incorporating smallholder farmers in mainstream agriculture, it has to be accepted
that smallholder farmers cannot individually compete against commercial farmers in
markets. In addition, it is difficult for them to get contractual agreements individually,
owing to a small marketable output. Therefore, smallholder farmers have to be encouraged
to work in groups.
References
Delgado, C. (1999). Sources of growth in smallholder agriculture in sub-Saharan Africa: the role
of vertical integration of smallholders with processors and marketers of high-value added items.
Agrekon 38 (Special Issue), 165-189.