Farmers’ export market participation decisions in transition economies: a comparative study between Armenia and Uzbekistan

Ihtiyor Bobojonov,Ramona Teuber,Shavkat Hasanov,Vardan Urutyan,Thomas Glauben

doi:10.1080/21665095.2016.1262272

Abstract

ABSTRACTThe Russian import ban on Western food products has stimulated a discussion about whether and how countries in Central Asia and Caucasus might benefit from this political decision by expanding their agrifood exports to Russia. Given this background, our study compares farmers’ willingness to participate in export markets in Armenia and Uzbekistan. Discussions are based on the analysis of surveys of 400 farmers from each country conducted in the spring of 2015. The results show that farmers already participating in local markets have a higher motivation to engage in the production of exportable commodities when a sudden export opportunity emerges. Beyond this general finding, the relative importance of farm and infrastructure characteristics were identified under different commercialization levels. Although both types of factors have been identified as important determinants in the existing literature, our analysis provides further evidence. We demonstrate that variables related to farm characteristics play a rather crucial role in more subsistence-oriented small-scale farming systems as found in the case of Armenia. In contrast, infrastructure may become more important than farm endowments in more commercially oriented farming systems such as observed in Uzbekistan.

Highlights

A review of the literature over the last two decades demonstrates a widespread interest in the analysis of how the globalization of agrifood systems has affected smallholder farms in developing countries (e.g. von Braun 1995; Pingali and Rosegrant 1995; Barrett 2008; Ouma et al 2010)
The analyses of this study demonstrate clear differences between Armenia and Uzbekistan in the willingness of farmers to increase the production of exportable commodities
About 5% of farmers in Armenia are motivated to increase exportable commodities, compared to about 69% of farmers in Uzbekistan. This difference can be explained by differences in farm characteristics, commercialization levels of farms, and supply chain development

Summary

Introduction

A review of the literature over the last two decades demonstrates a widespread interest in the analysis of how the globalization of agrifood systems has affected smallholder farms in developing countries (e.g. von Braun 1995; Pingali and Rosegrant 1995; Barrett 2008; Ouma et al 2010). The results of the survey data show large differences in farmers’ willingness to increase production of exportable crops due to emerged market opportunities associated with the Russian import ban across the two countries. A rather high share of Uzbek farmers is planning to increase vegetable, fruit, and livestock production, in response to demand in the Russian market Given these large differences in motivation of farmers coupled with the pronounced differences in institutional characteristics, the data were not pooled but empirical analyses were carried out for each country separately. Participation in cooperatives (which includes both formal and informal cooperatives), access to extension services, marketing according to formal contracts, and participation in insurance markets were found to have a statistically significant impact Most of these institutional variables exhibit a positive sign, meaning that they increase the willingness of farmers to participate in export markets.

Findings

Discussion

Conclusions