Transaction costs and participation in avocado export marketing in Murang’a County, Kenya

Abstract

PurposeThe purpose of this paper is to investigate the role of transactional costs on smallholder avocado farmers’ participation in the export market and the extent of participation in Murang’a County, Kenya.Design/methodology/approachData was collected from 384 avocado farmers in Murang’a County, following stratified sampling. The Heckman two-stage model was used for analysis.FindingsResults showed that the cost of information search was an important variable that impedes smallholders’ participation in export marketing while harvesting costs inhibits the extent of participation in export marketing.Research limitations/implicationsThis study used data at the farm level. Therefore, insights on transaction costs among other marketing agents in the export market value chain would be an issue for future studies.Originality/valueFollowing the debate on transaction costs and market participation among farmers in Sub-Sahara Africa, this paper models transactional costs and export market participation among avocado smallholders and measures the extent of participation with the inclusion of harvesting costs, negotiation costs, monitoring costs and information search costs that are not common in previous studies, thus contributing to the development of literature.