Linking Farms to Markets: Reducing Transaction Costs and Enhancing Bargaining Power

Abstract

For commercialization, along with increased linkages to factor markets, the link to agricultural output markets is also essential. Access to output or commodity markets determines price realization, incentivizing small farms to diversify production in line with the changing demands of the market. Rising demand for diversified foods has led to a growing emphasis on grades and standards to ensure quality, health, safety and differentiation of products based on tastes and preferences. In response, rapid technological changes to improve the quantity, quality and efficiency of production and marketing are becoming increasingly relevant (

Marketing efficiency and determinants of marketing channel choice by rice farmers in rural Tanzania: Evidence from Mbeya region, Tanzania

“…Market distances can be a barrier for farmers to access better markets. This situation was similar to Okoye et al (2016), Romero and Wollni (2018), Pingali et al (2019), and Pham et al (2019), who argued that, in most cases, farmers choose farm gate because it incurs no transaction cost. The results also show that farmers with a higher risk perception are most likely to sell at the farm gate compared to other channels.…”

“…(2016), Romero and Wollni (2018), Pingali et al . (2019), and Pham et al . (2019), who argued that, in most cases, farmers choose farm gate because it incurs no transaction cost.…”

“…(2012), and Pingali et al . (2019), experience also reflects the ability to negotiate better marketing terms.…”

“…have developed social capital) and may have more marketing experience. According to Shiimi et al (2012), and Pingali et al (2019), experience also reflects the ability to negotiate better marketing terms.…”

Assessing the economic impacts of farmer producer organizations: a case study in Gujarat, India

“…These market networks, which have little or no brand recognition and are governed mainly by price and quantity, account for the largest volume of produce but yield little value for producers (Singh 2005). The mandi system aims at ensuring remunerative and stable agricultural prices for producers and consumers by enabling an environment conducive to the fair play of demand and supply forces, but only a very low share of the consumer price accrues to farmers because transaction costs are high and market agents form cartels (Reardon et al 2003;Birthal et al 2007;Pingali et al 2019). This system is counterproductive for those who can sell their produce through commission agents only, and even the proportion of produce sold through the mandi system is low.…”