Determinants of smallholder farmers' participation in maize and pigeonpea markets in Tanzania

Abstract

ABSTRACTThis paper analyses factors influencing market participation decisions and the level of commercialisation among maize and pigeonpea smallholder farmers in Tanzania. The study utilises cross-sectional farm household-level data collected in 2010 from a randomly selected sample of 700 smallholder farming households. The two-step decision-making process was analysed using a Heckman selectivity procedure. The results showed that fixed transaction costs associated with market information and household characteristics such as gender and education level of the household head had a statistically significant influence on market participation. Proportional transaction costs (distance to market) and variables such as output prices, farm size, labour force, membership of farmer associations and geographical location of households influenced both market participation and intensity of participation. The results suggest that policies aimed at improving rural road infrastructure, market information systems, smallholder asset accumulation, human capital and promotion of farmer association could reduce transaction costs and enhance market participation and marketed supply by smallholder farmers.