The impact of transport- and transaction-cost reductions on food markets in developing countries: evidence for tempered expectations for Burkina Faso

Abstract

Reductions in transport and transaction costs are expected to have a major effect on the functioning of food markets in developing countries. For Burkina Faso, this is a relevant issue as it may have important consequences for the food markets in urban and rural deficit areas. A partial equilibrium model is presented to analyze the short-term effects of reduced costs on price formation, inter-regional cereal trade, and farmers' and traders' storage strategies. Our results show that the high expectations with regard to the direct effects of cost reductions on food prices and food availability require some nuance. The effects of a reduction of transport costs will be small. Moreover, also the unintended negative consequences on the competitive position of farmers and traders in other regions that do not profit from roadconstruction should be taken into account. Finally, it is concluded that only if transport and transaction costs are reduced simultaneously, will both the consumers and farmers benefit significantly. 0 2004 Elsevier B.V. All rights reserved. JEL classijcation: L 1 1 ; 0 18; R4 1

The Transaction Cost Theory :A Field Research on Small-Scale Animal Producer S

“…Matungul et al (2001), Gong et al (2007), Shiimi (2009) and Koatla (2012), in their studies, have described lack of adequate equipment and appropriate technology among the constraints faced producers in developing countries. Matungul et al (2001), Makhura (2001), Ruijs et al (2004), Gong et al (2007), Kyeyamwa et al (2008), Koatla (2012), Martey et al (2012) and Lijia and Xuexi (2014), in their studies, have stated that bad infrastructure is positively correlated with transportation costs. Jagwe et al (2010) have highlighted that small-scale animal producers are usually located in remote areas and that they suffer from poor transportation facilities and poor infrastructure.…”

“…Kyeyamwa et al (2008) have discussed poor infrastructure emerging as a significant variable in his model and concluded that poor infrastructure decreases the likelihood of farmers participating in spot market as opposed to farm gate. Ruijs et al (2004) have stated that reductions in transportation costs have a major effect on the functioning of food markets in developing countries. They have considered quality of road infrastructure as a significant factor and conclude that improvements reduce transportation costs substantially.…”

“…more accessible roads and vehicles, facilitate access to spot markets. Ruijs et al (2004) have suggested that better road conditions decrease cattle prices and improve transport flows. Vernimmen et al (2000), Matungul et al (2001), Gong et al (2006), Shiimi (2009) and Jordaan and Grove (2013), in their studies, have suggested that being informed about government policies is an important factor in market participation for small-scale animal producers in developing countries since producers often lack information about their rights and the legislative frameworks.…”

“…a3 Unfeasibility due to bad physical infrastructure during transport and at spot market (road, electricity, telecommunications, water, sewage, etc.). Matungul et al (2001), Makhura (2001), Ruijs et al (2004), Gong et al (2007), Kyeyamwa et al (2008), Koatla (2012), Martey et al (2012), Lijia and Xuexi (2014).…”

Firm Size and Financial Performance: Intermediate Effects of Indebtedness

“…Second, this study provides new empirical evidence to transaction cost and agency theories in agribusiness sector. Transaction costs theory has been widely employed by agricultural economics researchers (e.g., Meyer, ; Ruijs et al., ; Hernández‐Espallardo et al., ). In this regard we postulate that firm size influences the transaction costs related to access to financial resources.…”