Smallholder potato farmers in Uganda face many production and marketing challenges including limited access to markets and low surpluses for sale into the market. This study sought to underscore the factors that influence smallholder farmers’ decision to participate in the potato market and level of participation in such markets. Data were collected from 200 smallholder potato farmers in Kabale and Mbale districts. Descriptive statistics and a two-stage Heckman model were used to analyse the data. Results indicated that proximity to a village market positively and significantly (p ≤ 0.05) influenced decision to participate in the potato market. Results of the second stage of the model indicated that non-farm income earned negatively and significantly (p ≤ 0.01) affected the potato farmer’s level of market participation.
In most of the developing countries, potato is considered the fourth most important food crop after rice, wheat and maize. [
Between 1994 and 2008, potato production in Sub Saharan Africa was estimated to have more than doubled from 100 metric tonnes to 290 metric tonnes with 70% of this growth concentrated in Eastern Africa [
Farmer market access is a vital component of market participation. A smallholder farmer can access the market either by selling to a buyer at the farm gate or physically transporting the produce to the market place using available means. A number of scholars have researched about what drives farmers’ market access and much has been revealed, for example, [
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Potato was introduced into East Africa in the 1880s by the British. In Uganda, its production is concentrated in Kigezi highlands of Kabale and Kisoro in the south-west, Mountain Elgon districts of Mbale and Kapchorwa in eastern Uganda with highlands between 1500 m and 3000 m above sea level [
The government of Uganda has been committing resources towards increasing productivity and creating sustainable market linkages for farmers through the Plan for Modernisation of Agriculture (PMA) from which National Agricultural Advisory Services (NAADS) was curved. It has also significantly funded research in crop diseases and improved varieties under NARO [
Social-demographic characteristics of the farmers play a very crucial role in either promoting or impeding their participation in agricultural markets. In this sub-section, key social-demographic factors related to market participation of smallholders are reviewed.
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In this section, literature related to cash and non-cash assets that influence the volume of produce sold in the markets by smallholder farmers is reviewed. The importance of these assets in generation of marketable surpluses and their significance in enhancing market participation is put in focus.
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Even though there is a lot of research done on farmer market participation, many of the studies seem to concentrate on grain staples especially maize. Little attention has been given to perishables like potato yet they are increasingly being commercialised for household income generation. Therefore, this study set out to address the following hypotheses: what are the factors responsible for taking the decision of entering the market? And what determines the volume of potatoes sold at the market?
The main objective of this study was to determine factors that influence potato farmers’ market participation and economic viability of value addition by farmers. The specific objectives were to:
1) Characterise potato farmers according to market participation.
2) Determine factors that influence the decision of smallholder farmers to participate in the market as sellers.
3) Determine the factors that influence the level of potato smallholder farmers’ market participation as sellers.
The study was guided by the following hypotheses:
1) What are the factors responsible for smallholder farmers’ decision to enter the market?
2) What determines the volume of potatoes sold at the market by a smallholder farmer?
The study was conducted in Kabale and Mbale districts in South Western and Eastern Uganda respectively. The districts were selected purposively for being the major potato producing areas in Uganda. The main economic activities in the study area are growing crops especially potato, sorghum and coffee and rearing animals. A random sampling technique based on farmers’ participation in potato markets was adopted in choosing the respondents. Two sub-counties from Kabale and one from Mbale district were purposively selected to represent the leading potato producing areas. Two parishes from each sub-county were also purposively selected followed by random sampling of respondents where 60 farmers were selected from Mbale and 140 from Kabale in proportion of the area’s contribution to national potato output giving a total sample of 200 farmers.
Data were collected between December 2011 and May 2013 to capture data for the two major potato growing seasons in the study area using a pre-tested self administered structured questionnaire. Data was collected on potato farm gate prices for the two seasons before the interviews, marketing and market conditions related to market access and infrastructure, production and information access as well as inputs used in production, household endowments, credit access, farming experience, farm characteristics and household socio-demo- graphic characteristics.
The analytical methods used in this study included the two-stage Heckman model as previously used by [
Variables in the two stages differed because originally, such models were estimated using the Tobit model that accounts for the clustering of zeros due to non-participation. However, a major limitation with the Tobit model is that it assumes that the same set of parameters and variables determine both the probability of market participation and the level of transactions. A two-step model however relaxes these assumptions by allowing different mechanisms to determine the discrete probability of participation and the level of participation [
Variables used in the model were; Age of farmer (Years), Farmer’s gender (1 = male, 0 = female), Farmer’s household size, Potato marketing experience (years), Farmer’s monthly non-farm income (UGX), Value of farming equipment owned (UGX), Distance to nearest potato market (km), Farmer being a member of a group or cooperative, access to a village market, Farmer’s education level (Years spent at school), Farmer has other food sources apart from potato, Road condition to nearest market, number of extension visits made to the farm specifically on potato per year and average Price of potato (Shillings per kg).
The Heckman model was stated as:
where;
The participation equation can then be written as:
where
The binary model is then stated as:
In specific terms, the probit model in stage one of estimation is stated as;
where,
where,
Sn is the volume of potato sold annually in the market by a smallholder farmer in two seasons.
y1 ∙∙∙ y11 are the variables that were aPriori hypothesised to affect the volume of potato sold by a farmer in the market and ε, the error term.
Estimation of the model outlined above in Equations (1) to (6) followed a series of regression diagnostics. Variables used in both stages of the model were first checked for normality using Exploratory Data Analysis using the coefficient of kurtosis and skewness. Regression diagnostics included tests for multi-collinearity, self-selec- tion bias and heteroscedasticity. Multicollinearity was tested using the variance inflation factor (VIF) while heteroscedasticity was checked using Breusch-Pagan/Cook-Weisberg tests [
. Explanatory variables hypothesised to affect market participation decision
Variable | Variable description |
---|---|
Pr (Potsal) | Probability that a farmer sold potato or not |
Household characteristics | |
X1 | Age of farmer (Years) |
X2 | Farmer’s gender (1 = male, 0 = female) |
X3 | Potato farming experience (years) |
X4 | Farmer’s education level (Years spent at school) |
X5 | Farmer’s household size |
X6 | Farmer has other food sources apart from potato |
Farmer endowments (Assets) | |
X7 | Value of livestock owned (UGX) |
X8 | Value of farmer’s household durables (UGX) |
X9 | Farmer’s monthly non-farm income (UGX) |
Information access | |
X10 | Distance to nearest potato market (km) |
X11 | Number of extension visits made to the farm specifically on potato per year |
X12 | Road condition to nearest potato market (1 = good, 0 = poor) |
X13 | Availability of a village market |
Other factors | |
X14 | Average Price of potato (Shillings per kg) |
X15 | Time farmer takes to walk to the garden (minutes) |
The second stage variables of the model for factors determining farmers’ level of market participation are shown in
The results in
Following a two-stage Heckman model, the factors that influence the decision to sell to a market by smallholder farmers were regressed in the first stage, upon selling or not selling potato in the market in the last two seasons of the research period as shown in
. Explanatory variables and hypothesised relationship with market participation level
Variable | Variable description |
---|---|
Sn | Volume of potato sold in the market (kg) |
Household characteristics | |
y1 | Age of farmer (Years) |
y2 | Farmer’s gender (1 = male, 0 = female) |
y3 | Farmer’s household size |
y4 | Farmer’s district of operation (Kabale) |
y5 | Total annual potato harvest (kg) |
y6 | Potato marketing experience (years) |
Farmer endowments (Assets) | |
y7 | Value of farming equipment owned (UGX) |
y8 | Dummy (1 = possession of a bicycle or motor cycle, 0 = otherwise) |
y9 | Farmer’s monthly non-farm income (UGX.) |
Information access | |
y10 | Distance to nearest potato market (km) |
y11 | Farmer is a member of a group or cooperative |
y12 | Transport cost for 100 Kg of potato to market (UGX) |
y13 | Availability of a village market |
. Characteristics of sampled potato selling and non selling farmers
Characteristic (Variable) | Overall n = 200 | Potato sellers n = 165 | Non sellers n = 35 |
---|---|---|---|
Mean | Mean | Mean | |
Farmer age (years) | 41.11 | 41.45 | 39.46 |
Farmer’s household size | 6.55 | 6.81 | 5.29* |
Number of annual extension visits | 2.45 | 2.45 | 2.46 |
Total landholding owned (ha) | 1.411 | 2.586 | 2.195** |
Potato farming experience (years) | 11.63 | 11.86 | 10.54 |
Farmer’s education level (school years) | 7.00 | 6.84 | 7.74 |
Value of farming equipment(UGX) | 147612.50 | 152006.70 | 126897.10 |
Distance from home to market (km) | 7.33 | 7.91 | 4.61** |
Farmer’s non-farm income (UGX) | 60190.00 | 56751.52 | 76400.00 |
Percentages | |||
Farmer gender (male) | 79.00 | 79.40 | 77.10 |
Road condition to market (good) | 11.50 | 12.10 | 8.60 |
Farmer having other food sources | 82.00 | 81.80 | 82.90 |
Access to a village market | 36.00 | 34.50 | 42.90 |
Membership to a farmer group/cooperative | 25.00 | 27.30 | 14.30* |
Significant level: * = 10%; ** = 5%; *** = 1%.
. Factors that determine the decision by a smallholder farmer to participate in the market
Dependent Variable: does farmer sell any potato in the market? (Yes = 1, No = 0) | Coefficient |
---|---|
Farmer’s age (years) | 0.0065*** (0.0014) |
Average price of potato (UGX) | 0.0005*** (0.0001) |
Distance to the nearest market (Km) | 0.0081*** (0.0021) |
Farmer sex (male) | 0.2566*** (0.0467) |
Household size | 0.0023 (0.0047) |
Potato farming experience (years) | 0.0004 (0.0019) |
Road condition to nearest market (good) | 0.0173 (0.0420) |
Number of annual extension visits | 0.0143*** (0.0054) |
Farmer has other food sources other than potato | 0.0836** (0.0346) |
Farmer’s education level (years) | 0.0137*** (0.0039) |
Monthly non farm income (UGX) | −3.05e−07** (1.51e−07) |
Access to a village market | 0.0651** (0.0322) |
UGX means Uganda Shillings and at the time of this study 1 USD = 2480 UGX; Standard errors in parentheses; Significant level: * = 10%; ** = 5%; *** = 1%.
Sex of household head had a positive and significant (P ≤ 0.01) impact on the decision to participate and how much potato to sell in the market (
The results also revealed that having other food sources in the farmer’s household had a positive coefficient and significant (P ≤ 0.05) effect on the decision to participate in the potato market. This is because since potato is a food as well as a cash crop, presence of other sources of food ensures surplus potato oriented towards the market. [
The results in
Results of the second stage of the Heckman model that depict the factors that influence the farmers’ level of participation in the potato market are shown in
In addition, farmer’s age had a positive and significant (P ≤ 0.01) impact on the decision to participate in the potato market. This is because many decisions made in the household on whether to sell or not depend on ones position in the order of hierarchy in headship of the family. Older members of the family tend to make the key decisions that affect the family welfare. [
Access to a village market also had a positive coefficient and significantly (P ≤ 0.05) influenced the potato farmer’s decision to participate in the market (
. Factors affecting the volume of potato sold by a farmer in a market
Selection dependent variable: annual potato sales (kg) | Coefficient |
---|---|
Distance from home to nearest market (km) | −0.0072 (0.0308) |
Farmer’s sex (Male = 1, female = 0) | 1.8884*** (0.6107) |
Farmer’s non farm income (UGX) | −4.15e−06*** (1.45e−06) |
Farmer’s potato marketing experience (years) | 0.0539 (0.0307) |
Membership to a cooperative or group | 1.0889* (0.6653) |
Transport cost for 100 Kg potato bag to market (UGX) | −0.0001 (0.0001) |
Value of farming equipment owned (UGX) | 1.38e−07 (1.53e−06) |
Availability of a village market | 0.1919 (0.4006) |
Age of farmer (years) | −0.0106 (0.0189) |
Household size | −0.0599 (0.0733) |
Constant | 2.2133 (1.1292) |
At the time of this study 1 USD = 2480 UGX; Standard errors in parentheses; Significant level: * = 10%; ** = 5%; *** = 1%.
are meeting points for buyers and potato sellers where there is free haggling which leads to better prices than selling at the farm gate. This reveals an important aspect of rural agricultural trade where farmers and traders from different areas converge and carry out commodity market exchanges on given market days and times. By having a closer place where to sell their produce, farmers reduce on transaction costs and interface with more market opportunities of selling directly to buyers rather than through brokers. [
To access market information and production knowledge, smallholders have to interface with a number of market and institutional actors who include traders, brokers and extension agents. In this study, results indicated that the number of extension visits from government workers had a positive and significant (P ≤ 0.01) effect on the decision to participate in the market. This is because extension workers usually provide information on market availability as well as information on new and improved varieties that enhances the farmer’s knowledge and provide a range and choice of market opportunities. [
The results in
Distance to the nearest town had a positive and significant (P ≤ 0.01) effect on potato farmer’s decision to participate in the market. This is because the nearer to town the easier it is to access buyers who offer better payment terms than in the case of farmers far away from towns. This is counter intuitive as earlier literature from Mozambique by [
Though not significant, smallholder farmer’s household size, potato farming experience and good road condition to the nearest market had a positive sign (
The gender of the farmer had a positive and significant (P ≤ 0.05) effect on the volumes of potato sold into the market. Hence, by being male, a farmer had higher chances of selling more potato to the market because male farmers have more contacts that are social with both potato buyers and their agents whom they often meet in trading centres. Males dominate in selling potato to the market and as expected, they make the decisions that affect all family members. Female farmers lack such contacts and are in most cases excluded from direct transactional negotiations with buyers. [
Related to the above, a potato farmer’s membership in a group or marketing cooperative positively and significantly (P ≤ 0.1) influenced the volumes of potato produce sold in a market (
The findings of the study overwhelmingly support the hypothesis that transaction costs play a big role in impeding smallholders from entering markets. The failure of farmers to access information on the markets through long distances and lack of access to village market arrangements seemed to lock out many of them from making decisions to enter the potato market to sell.
Results also revealed that once a smallholder farmer decides to enter the market to sell, household characteristics and farmer endowments are the key factors that influence how much will be sold into the market. Factors like gender, membership to a farmers’ group or cooperative came out to significantly influence the level of market participation in form of how much is sold.
In light of these findings, it is therefore recommended that potato farmers be sensitised on investment of external incomes into potato production as a profitable venture and policy makers should also promote the village market collection centres. Membership to a farmer group or cooperative being a key factor in enhancing the volumes of potato sold, it is recommended that policy makers should promote collective action among smallholders because it eases access to production and marketing information as well as cheaper inputs.
This paper is based on earlier research work done by the authors on Irish Potato with support from the Regional University Forum for Capacity Building in Agriculture (RUFORUM) and Belgium Technical Cooperation (BTC) in Uganda. However, the views expressed herein do not necessarily represent the position of any of these organizations. All errors in interpretation are the authors’ own.