Abstract:
This article examines the effects of transaction costs on the choice of marketing channel by
smallholder banana producers (i.e. travel to the market to sell their produce versus selling at
the farmgate). A probit analysis is used to identify the factors which determine the choice of
a selling point. Variables capturing transaction costs are used in the analysis and these relate
to searching for a trading partner, gathering information about the transaction, contracting,
negotiating, monitoring and enforcing of contracts. The findings reveal that collective action,
gender of household head, degree of dependence on the crop, geographical location and
access to price information significantly affect the choice of selling point. This suggests that
policies aimed at establishing market information systems, promotion of collective action
among smallholder farmers, increased investment in rural infrastructure and achieving gender
balance in trade are important.
