Transaction costs and cattle farmers' choice of marketing channel in North-Central Namibia

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Date
2009
Authors
Shiimi, Theofilus
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Publisher
University of the Free State
Abstract
English: Approximately 70 % of the Namibian population depends on agricultural activities for their livelihoods. Moreover, agriculture remains an important sector in Namibia, because its national economy is widely dependent on agricultural production. However, two distinct land tenure systems (communal and commercial farming sectors) separated by the Veterinary Cordon Fence (VCF) complicated the marketing of cattle from the Northern Communal Areas (NCA). Cattle producers in the NCA have the option to market their cattle via the formal or informal market. Although efforts have been made to encourage producers to market their cattle through the formal market, limited improvement has been observed. In this study a number of factors were analysed to determine their influence on the decisions made in respect of cattle marketing. Factors influencing the decision of whether or not to sell through the formal market were analysed using the Probit Model. Factors influencing the proportion of cattle sold through the formal market in cases where the producer has decided to use that market to sell her/his cattle were analysed using the Truncated Model. Testing the Tobit Model against the alternative of a two-part model was done by means of Cragg’s Model. Factor analysis was used to study the underlying structure resulting in transaction costs. The empirical results revealed that problems related to transport to MeatCo, improved productivity, accessibility to market-related information and accessibility to information on new technology are some of the factors significantly affecting the decision of whether or not to sell through the formal market. Payment arrangements by MeatCo, animal handling, accessibility to new information technology, age of respondents and lack of access to marketing expertise are some of the factors influencing the proportion of cattle sold through the formal market. The results suggest that substantially more information is obtained by modelling cattle-marketing behaviour as a two-decision-making framework instead of a single-decision-making framework. Factor analysis identified discounting factors, delivery aspects and market features as the underlying structure resulting in transaction costs.
Afrikaans: Ongeveer 70 % van Namibië se bevolking is afhanklik van landbouproduksie om ’n lewensbestaan te maak. Bowendien bly landbou ’n belangrike ekonomiese sektor in Namibië, omdat die nasionale ekonomie regstreeks afhanklik is van landbouproduksie. Twee afsonderlike grondeienaarskap-gebruikstelsels (kommunaal in die noorde en die kommersiële landbou in die suide), word geskei deur die “Veterinary Cordon Fence” (VCF), wat die bemarking van lewendehawe vanaf die noordelike kommunale gebiede bemoeilik. Beesvleisprodusente in die noordelike kommunale gebiede, het die opsie van ’n formele en informele bemarkingskanaal. Hoewel verskeie pogings al aangewend is om die produsente aan te moedig om die formele bemarkingskanaal te gebruik, is daar nie veel verbetering te bespeur nie. In die studie word verskeie faktore geanaliseer om die invloed daarvan op die bemarkingskeuse van beesvleisprodusente te bepaal. Faktore verantwoordelik vir die bemarkingsbesluit om wel die formele bemarkingskanaal te gebruik, word ge-analiseer met behulp van ’n “Probit-” model. Faktore wat ’n invloed uitoefen op die verhouding van beeste wat op die formele mark bemark word, in gevalle waar die produsent besluit het om daardie mark te gebruik om sy/haar beeste te bemark, word met behulp van ’n “Truncated-” model bepaal. Die toetsing van die “Tobit-” model, teenoor die alternatief van ’n tweeledige model, word gedoen met behulp van die sogenaamde “Cragg’s-” model. Faktor-analise is verder gebruik om die onderliggende transaksie-kostestruktuur te ontleed. Die empiriese resultate dui daarop dat probleme met vervoer van diere na MeatCo, verbeterde produktiwiteit, toegang tot markinligting en nuwe inligtingstegnologie, van die faktore is wat verantwoordelik is vir die besluit om wel beeste deur die formele mark te verkoop. Betalingsooreenkomste tussen produsente en MeatCo, dierehantering, toegang tot nuwe inligtingstegnologie, die ouderdom van respondente, asook die tekort aan bemarkingsvaardigheid, is van die faktore wat die verhouding van beeste deur die formele bemarkingskanaal beïnvloed. Die resultate toon dat aanmerklik meer inligting verkry word deur die bemarkingsbesluite van beesvleisprodusente as ’n tweeledige, eerder as ’n enkelvoudige besluit te modelleer. Faktoranalise het diskontofaktore, afleweringsaspekte en markeienskappe geïdentifiseer as die onderliggende struktuur van die beesvleismark wat transaksiekoste beïnvloed.
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Keywords
Transaction costs, Formal markets, Decision-making, Cattle marketing, Cattle -- Namibia -- Costs, Cattle -- Namibia -- Marketing, Cattle -- Economic aspects -- Namibia, Dissertation (M.Sc.Agric. (Agricultural Economics))--University of the Free State, 2009
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