Factors affecting the choice of governance structure along the vegetable value chain in Bangladesh

Abstract

Analyzing governance structure is considered important when designing development interventions in the value chain. The objective of this paper was to explore the governance structure (GS) in cauliflower and tomato value chain, specifically the types of GS followed by the farmers and factors behind these choices. The two-stage random sampling procedure was used to collect data from 100 farmers whereas 60 traders were surveyed purposively for this study. Multinomial logit model was used to analyze the factors affecting farmer’s choice of GS. Trader’s perceptions regarding internal and external governance as well as good governance indicators were assessed by utilizing non-parametric test. Cauliflower and tomato farmers were involved in practicing spot market, relational, farmer’s association and outgrowing scheme-based GS. The results showed that the probability to choose relational, outgrowing scheme and farmer’s association-based GS were significantly affected by education of farmers, distance to the nearest market, access to extension services, access to price information, trust commitment, transaction specific investment, preferences of diversification, farm size, transactional uncertainty, and access to producer’s cooperative. Wilcoxon-Mann-Whitney-U test established trader’s dissimilation towards governance indicators. The study suggests that smallholder farmers need to be well organized and coordination mechanisms among all stakeholders should be increased.