An Ordered Probit Model Analysis of Transaction costs and Market Participation by Sweet Potato Farmers in South Eastern Nigeria

• Main Authors: Ohajianya, D.O, Ugochukwu, Albert I
• Format: Conference Proceeding
• Language: English
• Published: 01.04.2011
• Subjects: Agricultural Finance; autarkic; Crop Production/Industries; Market participation; Ordered probit; potato; Transaction costs

This study determined the factors (related to fixed and variable transaction costs) influencing the decision to participate in sweet potato markets by a random sample of 320 small holder farmers in south eastern Nigeria. Data were collected with structured and validated questionnaire, and analyzed using the ordered probit analysis procedure. Participation decisions revealed that marketing experience, farm size, membership of cooperatives/social organizations, extension contact, farming experience and road conditions to the nearest town had positive relationship with decision to be autarkic other than buyer and to be seller other than autarkic, and were significant at 1% level of probability. The coefficient of age, household size, and output were also positive and significantly related to decision to be autarkic other than buyer and to be seller other than autarkic at 5% level of probability. The coefficients for access to credit, and access to communication facilities were positive and significantly relate to decision to remain autarkic other than buyer and to be seller other than autarkic. The coefficients for level of education, distance to the nearest town, distance from the farm to the market and cost of transportation were negative and significantly related with the decision to remain autarkic other than a seller and to be buyer other autarkic at 1% level of probability. The coefficient for sex was positive and significantly related to decision by female farmers to be autarkic other than buyer and to be seller other than autarkic. These decisions to participate as a buyer, seller or2remain autarkic were as a result of fixed and proportional transaction costs associated with participating in the market.