Determinants of participation of smallholder farmers in the marketing of small grains and strategies for improving their participation in the Limpopo River basin of Zimbabwe

Abstract

This thesis identifies determinants of market participation of smallholder sorghum and millet farmers and proposes strategies for improving their market participation. The study used survey data from 195 smallholder communal and resettled farmers, and agribusiness firms dealing with sorghum and millet. The farmers were selected from three sorghum and millet producing districts of Zimbabwe. The firms were located in Bulawayo and Harare. Data was collected through face-to-face interviews with the sampled farmers and firm representatives. The thesis also explores the way the small grains have been marketed and the extent of field crop contracting in Zimbabwe. In addition, literature on determinants of market participation for other commodities was reviewed. Recommendations were then drawn on strategies for improved market participation for smallholder farmers. Transaction cost related factors are an important component of marketing that determines the extent of market participation for smallholder farmers. Results of the multiple regression and the probit models showed that transaction cost related factors, such as previously agreed prices (PRICEAGREE), confidence and trust in the buyer (CONFIDENCE), the difference in price knowledge (PRICEKNOW) and delayed payment for sold grain (DELAYPAY) have a significant impact on the quantity of grain sold and the extent of smallholder farmer participation in the market. Discriminant analysis was used to identify factors discriminating sorghum and millet sellers and non-sellers. The division was made according to whether or not a household sold sorghum and/or millet during the period 2004/05 to 2006/07. Of the fourteen potential discriminating variables, six explained group differences with statistical significance. The six important variables in the discriminant function analysis were: number of donkeys owned by a household, crop production levels, source of household income, method of transporting grain to the market, district and area cultivated. Five of the six discriminating variables point to wealth-ranking factors (household asset endowments) implying that poorer households are unable to participate in markets effectively. Farmers identified issues that need to be addressed for sorghum and millet production and marketing to be improved. The identified issues offer guidelines for priority areas to focus on when addressing limitations that are currently inhibiting farmer market participation. The major issues which included; seed unavailability, lack of access to draft power, lack of access to fertilizer, establishment of irrigation schemes; provision of transport to the market, production of marketable surplus and establishing a local market, all point to the need for external assistance to farmers. A review of literature confirms that contracting is an effective way to coordinate and promote production and marketing in agriculture. Sorghum and millet can be grown under contract successfully. The presence of successful contracts for other commodity crops is an indicator of the potential to increase marketing of sorghum and millet through contracting. However, for contracting to succeed, it is necessary to improve sorghum and millet productivity with an assured quality of the grain. The conclusion is that small grains are important food crops for smallholder farmers in drier environments but their productivity is low. Hence, to enhance farmer access to markets, it is necessary to increase the productivity of sorghum and millet and thus, enable smallholder farmers to produce adequate marketable surplus. Interventions by government and private sector should aim at addressing the major factors that determine market participation. Important to note is that, if poorer households are unable to effectively participate in markets, then interventions to increase households’ productive assets or the public goods that support agricultural production and marketing may be necessary. Based on the study findings, the thesis proposes possible key intervention ingredients for successful contracting of sorghum and millet in Zimbabwe. An enabling environment and legal framework created by government and private sector, addressing identified priority areas, primarily will largely determine the level of market participation of smallholder farmers in Zimbabwe. Copyright