Improving rural farmers' access to direct agricultural markets is required to ensure sustainable supply of food. Rural farmers in the developing world account for the largest share of food supply including cassava. Globally, cassava (
Agriculture continues to play an important role in promoting economic development and enhancing the rural economy by providing numerous employment opportunities to many people in rural communities in sub-Sahara African (SSA) countries (
The main objective of this study was to analyse the effects of the determinants of farmer decision to either participate in the processor or middlemen marketing channels in the Oyo State of Nigeria. An empirical study on rural farmers' participation in the cassava marketing channels is relevant because the cassava sector in the Oyo State of Nigeria provides numerous employment opportunities to rural farmers and other actors. The cassava processing sector in Oyo State is rapidly expanding, and it requires a constant supply of cassava output. Therefore, it is necessary to ensure that farmers have access to this direct market to encourage them to increase their cassava outputs. More than 80% of the cassava tubers produced in Oyo State are consumed in various processed forms, namely
Extant empirical studies have found that a number of factors influence farmers' participation in agricultural markets (
The present study improves our understanding on the determinants of farmer participation in direct or indirect marketing channels by inculcating different capital variables, namely human, physical, financial and social in the analysis of farmer participation in the marketing channels. These factors could enable policymakers and stakeholders to formulate robust policy frameworks that provide an enabling business environment and facilitate the marketing transaction of smallholder farmers in rural communities in the Oyo State of Nigeria and other cassava producing States in Nigeria. Improved market conditions would encourage farmers to increase their production scale; generate enough incomes and consequently promote rural economic development.
Cassava is a cash crop, so all the cassava farmers included in the study participate in the market. For this reason, the study did not generally focus on the binary decision of whether to participate in the market or not. Instead, it specifically concentrated on farmer participation in the cassava marketing channels, namely the middlemen and processor marketing channels. For the purpose of this study, farmer participation was operationalised as the proportion (percentage) of the marketed surplus (defined as the total harvested cassava output minus the volume consumed by farmers) supplied to each of the marketing channels.
In the processor marketing channel, farmers sell cassava tubers directly to processors without any intermediary. This enables farmers to negotiate the price directly with processors. Farmers search for buyers before they harvest because cassava tubers are highly perishable. Cassava farms are little far from the processing sites; therefore, farmers transport cassava tubers to processors who are located in nearby peri-urban areas. In contrast, in the middlemen marketing channel, farmers sell cassava output to middlemen who usually transport cassava tubers and negotiate the price with processors. Processors add value to the cassava tubers by processing them into traditional food products such as
The theoretical foundation of the study is based on the theory of rational choice. The rational choice theory states that an economic agent seeks to select a choice that maximises his/her utility subject to some constraints (
where
where
The coefficients of the Tobit model do not have a direct interpretation because they represent the effects of the independent variables on the latent dependent variables (
where
Following the 5-capital framework proposed by
Human capital entails aptitudes, knowledge, work capacities and health that together enable people to carry out different strategies to reach their objectives regarding livelihoods (
Natural capital is the natural resources that are essential for sustainable livelihood (
Physical capital refers to the basic infrastructure that facilitates productive, reproductive and social activities of a community (
Financial capital comprises economic resources that are deployed for investment before being used for consumption. They include farmer access to credit and participation in an off-farm activity. The study expects that these financial capital variables will enhance farmers' probability to increase the volume of cassava output sold to processors. Farmers' access to these financial capital factors tends to increase their financial resources which allow them to bear the transaction costs associated with the participation in the processor marketing channel.
Social capital refers to the interactions, connections, and relationships between individuals and communities (
Market conditions are the factors that facilitate market transactions, and they include the price of cassava tubers, farmer access to market information, good road network and transportation costs. The study expects that the price of cassava tubers per tonne, access to market information and good road network exert positive effects on the percentage of cassava output supplied to processors. An increase in the price of cassava tubers per tonne tends to stimulate farmers' probability to increase the volume of cassava sold to processors. This maintained hypothesis holds if the price offered by processors can help farmers to generate an extra high income after accounting for the transaction costs. Market information and access to good road network enable farmers to increase their volume of trade with processors. However, an increase in transportation costs tends to discourage farmers from participating in the distant market. This is because transportation costs increase their transaction costs as well as their total production costs which consequently decrease their profit margins. The relationships between farmer participation in the cassava marketing channels and the relevant explanatory variables are presented in
Based on the theoretical foundation, the empirical models employed to analyse the factors that influence the proportion of cassava tubers sold to processors or middlemen are specified as in (7):
where
Nigeria is located in West Africa with a total geographical area of 923,768 km
2
and a population of 170 million people. About 71.2 million hectares of the land area are cultivable but 34.2 million hectares (about 48% of the cultivable area) are being cultivated, and less than 1% of the arable land is irrigated (
The study was conducted in the Oyo State which is one of the States known for cassava production in Nigeria. Cassava farming serves as an important livelihood option for farmers in the Oyo State. This makes it necessary to collect a primary dataset from cassava farmers to analyse the determinant of their participation in the direct or indirect marketing channels. Oyo State has a total land size of 488,628 km
2
with a population of 6,617,720 people (
A multi-stage cluster sampling technique was employed in the selection of cassava farmers from the study area. The first stage involved a random selection of four (4) local government areas from each cluster. In the second stage, one (1) community known for cassava production was purposively selected from each local government area. This suggests that four (4) cassava-producing communities were selected from each stratum. The last stage involved a random selection of 25 farmers from each community with the assistance of a sample frame (a list of registered cassava farmers in the community) from the agricultural development directorate in the State. In total, 100 cassava farmers were selected from each cluster. This gave a total sample size of 400 cassava farmers. A structured questionnaire was used to collect the data from cassava farmers.
Regarding the levels of education,
In addition, 73.5% of users of the processor marketing channel belonged to farmer associations whereas only 49.4% of the users of middlemen channel were members of farmer associations (
Generally,
The results from the Bivariate Tobit model on farmer participation in the cassava markets are presented in
Two variables, specifically farmer gender and household size under human capital showed statistical significance on farmer participation in the processor and middlemen marketing channels (
The coefficients and marginal effects of age were not statistically different from zero at
Moreover, the coefficients and marginal effects of household size were positively associated with farmer participation in the middlemen marketing channel at
The results in
The coefficients and marginal effects of land did not show significant effects on the percentage of cassava output sold to middlemen or processors at
Five out of the six physical capital variables, mainly ownership of a radio set, a TV set, a mobile phone, a vehicle and a motorbike showed statistically significant effects on the farmers' participation in the cassava marketing channels (
Also, the coefficient of ownership of a mobile phone was negative and statistically significant at
The coefficient of farmers' ownership of a vehicle showed a negative significant effect on the proportion of cassava output sold to middlemen at
Moreover, the coefficient and marginal effect of farmers' ownership of a motorbike showed significant negative signs in the middlemen model and they were statistically significant at
Furthermore,
The empirical result showed that the coefficient and marginal effect of membership of farmer associations were negative in the middlemen model and statistically significant at
Two of the location variables, specifically Oyo and Saki agricultural development zones (ADZs) exhibited statistical significant effects on farmer participation in the processor and middlemen marketing channels, respectively (
The coefficient and marginal effect of the tarred road were negative and statistically significant at
Interestingly, the coefficients and marginal effects of the price of cassava output per tonne exhibited no statistical significance in the middlemen or processor models at
Moreover, the coefficient and marginal effect of transportation costs were negative but showed no statistical significance (
Cassava is an important cash crop for farmers in Nigeria and other cassava producing countries in Africa. Therefore, improving the farmers' access to direct markets is essential to enhance their farm productivity and incomes to promote rural development. This makes it necessary to investigate the effects of the determinants of cassava farmers' participation in the agricultural marketing channels, notably the cassava marketing channels. The study showed that farmers were actively involved in the cassava markets and they also sold a higher percentage of their cassava output. The main sources of markets for farmers in the Oyo State of Nigeria were processors and middlemen marketing channels. On average, farmers sold a higher proportion of their cassava output to processors. These processors were located in nearby peri-urban communities. Farmers incurred transportation costs to convey cassava tubers to these buyers. The transportation costs for participating in the processor marketing channel was higher than that of middlemen marketing channel. However, processors offered farmers a better price than middlemen. The price offered by processors could pay for the transportation costs and farmer could still generate an extra income on per tonne of cassava output sold (
The empirical results showed that human capital, physical capital, social capital and market conditions were the main determinants of the farmers' participation in the cassava marketing channels. On the other hand, natural and financial capitals did not influence the farmers' participation in the marketing channels.
Regarding human capital variables, farmer gender and household size influenced rural farmers' decision to trade with middlemen and processors. This result provided the evidence that male farmers increased the volume of their cassava output traded with middlemen. In the context of rural communities, males are known for agricultural production whereas females are more active in the marketing of the agricultural commodities including cassava output. Therefore, males may prefer to supply a larger proportion of their cassava commodity to middlemen at the farm gate instead of searching for processors in the nearby peri-urban communities. Our finding is consistent with
Besides human capitals, ownership of physical capitals such as a mobile phone, a radio set, a TV set, a vehicle and a motorbike affected farmers' decisions to intensify the supply of their raw cassava commodity to either processors or middlemen. Mobile phones have become an important source of information for rural farmers. Farmers use mobile phones to communicate with processors who are located in nearby peri-urban communities and negotiate with buyers the price and the quantity to be supplied. Through mobile phones, farmers can take advantage of price differences across markets, times, and different buyers (Tadesse & Bahiigwa, 2015). However, the quality of mobile network services remains a great challenge in most rural areas. This can restrict the effective use of mobile to retrieve information from distance markets. Our finding concurs with
Radio and TV sets are another important sources of information for farmers. Some agricultural programmes including the marketing of food commodities are broadcast on radio and TV programmes. Such programmes are mostly done by the International Institute of Tropical Agriculture (IITA) located in Ibadan, Nigeria and other stakeholders in the cassava industry. Therefore, farmers who had a radio set and a TV set could easily get pieces of information on the dynamics of the agricultural markets which strengthened their bargaining power with processors. Moreover, the result showed that ownership of transport assets such as vehicles and motorbikes enabled farmers to overcome transportation challenges. These transport assets helped farmers to trade directly with processors without allowing middlemen to assume the marketing function for them.
The social capital variable, membership of farmer associations, tended to increase the volume of trade of cassava output with processors but it decreased the percentage of cassava output sold to middlemen. Members of farmer associations can undertake group marketing which assists them to overcome transaction costs and trade directly with processors. Furthermore, the cassava farmer association in the Oyo State of Nigeria tends to build a strong relationship with some processor associations to supply them with cassava tubers at negotiated prices. A similar result was obtained by
Access to market information, access to good road networks and transportation costs were the market conditions that influenced farmers' engagement in the cassava markets. This result suggested that access to market information encouraged farmers to intensify their participation in the direct market, notably the processor marketing channel. Access to market information enables farmers to overcome information asymmetry, which middlemen use to overexploit them. Access to market information also increases farmers' bargaining power and this empowers them to negotiate with the buyers for a higher price. Consistent with this result,
Another market condition that enabled farmers to intensify their supply of cassava tubers directly to processors was better road networks. Most farmers were allocated in rural areas where there were poor road networks, and this served as a barrier for most farmers to engage in trade with processors who were in peri-urban communities. Poor road network tended to increase the costs of transportation because transport owners charged higher for dilapidated road networks. The transaction cost theory suggests that farmers try as much as possible to avoid markets associated with high transaction costs (
It is expected in this study that the price differential exerts a significant effect on the proportion of cassava output supplied to processors or middlemen. Unexpectedly, the study showed that the price differential did not influence the supply of cassava tubers to processors and middlemen. The reason was that there was a small variation in the prices offered by processors and middlemen located in different communities in the Oyo State of Nigeria. This explanation is supported by the low standard deviation of the prices paid offered by processors and middlemen (
The study concludes that farmers' participation in the direct marketing channel can improve their livelihoods by raising their profit margins. To increase and sustain farmers' active participation in the direct marketing channel, this study suggests the following policy recommendations. First improving market conditions in rural cassava farming communities is necessary to increase farmers' participation in the direct marketing channel. Specifically, it is important to improve rural-urban road networks to minimise transportation costs associated with the farmers' participation in the direct marketing channel. In addition, farmer access to communication assets such as mobile phones, radio sets and TV sets as well as transport assets, mainly vehicles and motorbikes needs to be encouraged. Access to these communication and transport assets, respectively, are likely to enhance farmers' access to market information and help them overcome the difficulty in the transportation of cassava output to potential buyers. Also, increasing membership of farmer associations and supporting these associations should be a policy priority. It is expected that the effective implementation of these policy recommendations of the present study is likely to enhance the farmers' participation in direct marketing channels.
This study only focused on the effects of the five capital variables and market conditions on farmers' participation in the markets. It is therefore recommended that future research should incorporate political and cultural capital variables in the analysis of farmers' marketing decisions. It is acknowledged that the study was limited to one of the States in Nigeria; hence, the extrapolation of the findings should be done with caution. However, the study's findings study can be beneficial to promoting farmer participation in the direct markets in other states of Nigeria and possibly other cassava producing countries in Africa.
We thank Mr Enoch Bessah for his immense technical assistance in the data collection of the study. We also thank the associate editor and anonymous reviewers for their valuable comments to improve the quality of this paper.