Abstract
The expansion of agro-dealers into remote areas can be seen as conducive to more smallholders adopting new technologies and inputs, to include improved seed and fertilizer. However, lower travel costs may be offset by agro-dealer decisions on stocking and pricing, reflecting both travel time from wholesale markets as well as the level of competition in localized areas. This paper investigates the geographical distribution of agro-dealers and related patterns of local market competition on the availability and prices of maize seed and fertilizer. We use a unique census of agro-dealers in eight districts of Tanzania (n = 299) which maps distribution points for agricultural inputs in these areas. Results suggested that despite a high number of agro-dealers, almost 30% of farmers lived more than an hour travel time from at least one agro-dealer. Instead of wide geographical coverage, agro-dealers tended to be found in clusters, with strong variation in cluster sizes between different districts. Overall, more remote agro-dealers faced less competition, resulting in fewer stocked product choices and charging higher prices to customers, even after controlling for travel time from district headquarters. Remote farmers are disadvantaged in their uptake of new technologies and critical production inputs due to lack of competition among agro-dealers. Our results suggest that highly aggregated and/or simplified measures of market access fail to reflect important heterogeneity in the market access conditions faced by farmers; a better understanding of distribution networks and competition is needed.
Highlights
The increased use of inorganic fertilizer, improved seed and other agricultural inputs are critical components of strategies aimed at raising farm productivity and living standards in subSaharan Africa (SSA)
Muange (2011), demand factors could be a key in influencing geographical coverage with stronger agro-dealer presence in districts with higher tendency of farmers to invest in agricultural inputs
While a large size of the farmer population live within the proximity of an agrodealer, these numbers are still low compared to a country like Kenya (Chamberlin & Jayne, 2013)
Summary
The increased use of inorganic fertilizer, improved seed and other agricultural inputs are critical components of strategies aimed at raising farm productivity and living standards in subSaharan Africa (SSA). Chamberlin & Jayne, 2013; Christiaensen et al, 2003; Headey et al, 2018; Stifel et al, 2016; Stifel & Minten, 2008), these stylized facts provide little direct insight into the spatial distribution of market access across the farming population, and how market accessibility, in turn, correlates with local measures of the structure, conduct and performance in rural input supply markets. Zavale et al (2020) found that the growth of the fertilizer industry in Mozambique was limited by demand side factors (i.e., limited effective demand from farmers) and supply side factors (including high transactions costs). Both of these factors are known to have strong spatial expressions (Minten et al, 2013)
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