Determinants of market participation by smallholder cattle

farmers and the institutional constraints to market

participation in Botswana: Case study of Kweneng West

Kgosikoma R.K. and Malope, P.

Conference on Policies for Competitive Smallholder Livestock Production

Gaborone, Botswana, 4-6 March 2015

Introduction

Livestock production in Botswana

accounts for over 80% of agricultural

GDP.

The beef sector dominates livestock

sector in terms of both output and

employment.

The communal grazing system

accounts for 88% of the national herd

(Statistics, Botswana, 2012).

Introduction

However, the off-take rates in

communal areas through formal

markets remain relatively low at 8.26%

compared to 15.79% from commercial

farming.

Low off-take rates attributed to:

◦ Alternative income sources

◦ Institutional constraints

◦ Transaction costs

◦ Availability of marketable surplus

Introduction

Marketing channels:

◦ formal (butcheries, BMC)

◦ Informal (sale to individuals for home

ceremonial purposes)

Constraints to formal market

participation for smallholder farmers:

◦ Socio-economic

◦ Technical

◦ Institutional

Methods

Study area: Kweneng West◦ Main economic activity: livestock farming

◦ 8 livestock extension areas

Study design: cross sectional survey using the face-to-face administration method.

Sampling: multi-stage sampling procedure used to select a sample of 132 livestock farmers in the KwenengWest sub-district.

Data collection: 3-part structured questionnaires.

Theoretical Framework

Following Uchezumba et. al. (2009) and Gujarati (2003), a logistic regression model is specified as:

𝑃𝑖 = 𝐸 𝑌𝑖 = 1 𝑋𝑖 =1

1+𝑒− 𝛼𝑖+ 𝑖=1

𝐾 𝛽𝑖𝑋𝑖(1)

◦ Pi is the probability of household iparticipating in the market for cattle.

◦ Yi is the level of participation household i.

◦ Xi is a set of explanatory variables influencing the participation of household i in the cattle market.

◦ βi’s are the parameters to be estimated.

Empirical Model

The empirical model, with the explanatory variables selected based on theory, is presented as:

ln 𝑃𝑖 1 − 𝑃𝑖 = 𝛽0 + 𝛽1𝐻𝐸𝑖 + 𝛽2𝑇𝐶𝑖 + 𝛽3𝐻𝐶𝑖 + 𝛽4𝑆𝑆𝑖(9)

◦ household endowment (HE) variables,

◦ transaction costs (TC) variables,

◦ household characteristics (HC) variables,

◦ Supply shock (SS) variable.

ResultsTable 1: Summary Statistics of the Explanatory

Variables Variable Mean Minimum Maximum Std. Dev.

Household endowment

ARAB

HERD

NONFARMINC

OWNTRANS

SMLSTCK

10.18

57.36

0.856

0.379

0.583

0

2

0

0

0

70

979

1

1

1

10.26

99.06

0.352

0.487

0.495

Transaction costs/ Information

Access

DISTMKT

DISTRD

PRICEINFO

MRKTNCRS

124.23

14.15

0.735

0.053

1

0

0

0

390

120

1

1

123.38

15.22

0.443

0.225

Household characteristics

GENDER

HHSIZE

AGEHH

EDU

YRSFARM

CROPS

0.818

3.33

56.40

2.20

2.62

0.614

0

1

32

1

1

0

1

11

89

7

3

1

0.387

1.94

14.46

1.77

0.648

0.489

Market Shock

DIED 4.57 0 30 5.55

Dependent Variable

CTSOLD12 0.818 0 1 0.387

Results

Table 2: Factors Influencing Participation in the Cattle

Market

Variable Parameter Estimate Odds Ratio

AGEHH -0.065 (0.033)** 0.937

EDU

None (reference)

Some primary

Diploma

Other

-2.754(1.249)**

-7.107 (3.676)*

-3.614 (2.063)*

0.064

0.0008

0.027

CROPS 1.855 (0.849)** 6.390

HERD 0.022 (0.013)* 1.022

DISTMKT 0.007 (0.003)** 1.007

PRICEINFO 1.570 (0.748)** 4.806

MRKTCRS -3.300 (1.608)** 0.037

DIED 0.232 (0.126)* 1.261

CONSTANT 2.177 (2.400)

Institutional Constraints

Table 3: Institutional Constraints to Market Participation

Table 4: Frequency of Difficulties in Meeting BMC

RequirementsFrequency/Variabl

e

Bolus DVS-permit Police Permit BMC Quota Total

More frequent 7 1 2 4 14

Frequent 6 5 6 0 17

Less frequent 21 12 10 0 43

Total 34 18 18 4 74

Conclusions

Important determinants of cattle market participation: age, education, mixed cropping, herd size, distance to the market, access to price information and market shock.

Bolus requirement most problematic institutional constraint.

Farmers advocate for efficiency in the provision of services to meet institutional requirements in cattle markets.

Recommendations

Continued investment in agricultural

youth programs.

Mixed agricultural practices should

also be encouraged.

Publishing agricultural commodity

prices by the Ministry of Agriculture

and cattle marketing channels should

be maintained.

Efficient service provision in the

supply and use of cattle identification

devices.