South African Journal of Economic and Management Sciences, Vol 17, No 2 (2014)

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Effects of transaction costs on mushroom producers’ choice of marketing channels: implications for agricultural market access in Swaziland

Lawrence Majola Mabuza, Gerald Ortmann, Edilegnaw Wale

Abstract


Mushrooms are highly perishable agricultural commodities, and as such their marketing is invariably associated with high transaction costs. Despite the mushroom enterprise gaining popularity in a number of sub-Saharan African (SSA) countries, where production is dominated by rural-based small-scale farmers, no research has been done to study the nature and complexity of transaction costs encountered by these producers in attempting to participate in mainstream supply chains. This study uses cross-section data obtained in 2011/2012 from mushroom producers in Swaziland to study the effects of transaction costs on producers’ choice of marketing channels and the quantity of mushrooms supplied. Having used Cragg’s model for analysis, the results indicate that producers’ decisions of where to sell their mushrooms are significantly affected by household labour endowment, production capacity, access to cooling facilities and market information, and producers’ bargaining position. Meanwhile, the quantities of mushrooms sold are significantly influenced by the difficulty in accessing reliable transport and producers’ level of uncertainty in meeting buyers’ quality requirements. The study concludes by highlighting potential interventions that could minimise marketing and transaction costs and further improve the general agricultural marketing environment in Swaziland.

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EISSN 2222-3436 (Online)