Factors influencing Cowpea producers' choice of marketing channels in Zambia

FACTORS INFLUENCING COWPEA PRODUCERS’ CHOICE OF MARKETING CHANNELS IN ZAMBIA Agness Mzyece Supervisor: The University of Zambia, 2011 Dr. Gelson Tembo Cowpeas are an important food legume throughout central and southern Africa and Zambia in particular. They have the potential to contribute to poverty reduction, food security, income generation and even to the achievement of Millennium Development Goals (MDGs). The development of the cowpea industry can also lead to the achievement of the Zambian Agricultural policy vision of promoting and facilitating the development of an efficient, competitive and sustainable agricultural sector which assures food security and increased incomes. However, to tap into the potential in the cowpea industry, the markets have to be set right. In setting the markets right, important aspects of marketing such as producer marketing choices should be considered. This is because increased reliance on markets as the foundation for development strategies has put a premium on understanding household market participation. Marketing channel decisions are among the most critical decisions facing an organization and the chosen channels intimately affect all other marketing decisions (Berry .T, 2010). In an effort to identify interventions that could stimulate farmer participation in marketing, it is important to understand the factors that influence the farmers’ choices of marketing channels. Previous studies have analyzed market participation decisions as being made sequentially with the decision of what volumes to buy or sell (Goetz, 1992; Key et. al., 2000; Holloway et. al., 2001; Bellemare and Barrett, 2006; and others). However, it is unclear whether market participation decisions are related to choice of marketing channel decisions, whether as being made simultaneously or sequentially. Secondary data from the third supplemental survey to the 1999/2000 post harvest survey, collected from CSO was used. The study employed the probit model to identify the factors that influence cowpea producers’ market participation decisions as well as their choice of marketing channels in Zambia. The results showed that cowpea producers sold to a particular channel as long as it presented a ready market to the seller. Markets were the only significant factor with p-values of 0.025 and 0.000. The factors that influence the producers’ market participation decisions included price (Pvalue = 0.019), inventory (P-value = 0.024), transport (P-value = 0.043), level of mechanization (Pvalue = 0.004) and marital status (P-value = 0.000). The market participation decision and choice of marketing channel are therefore influenced by different factors such that policies to stimulate market participation for cowpea producers are not likely to affect the producers’ choice of marketing channel. The results also clarified that cowpea is mainly grown by the resource poor farmers and that its market is largely informal. This study therefore recommends the setting up of appropriate policies and infrastructure to encourage more market participants thus developing the cowpea value chain CHAPTER ONE INTRODUCTION 1.1 Background Cowpeas (Vigna unguiculata.L.Walp) are an important food legume throughout central and southern Africa. They are a high-value food crop which is consumed by relatively rural and periurban people of less developed countries. Africa produces 64 percent of the world’s cowpeas estimated at 7.6 metric tons per year (African Agricultural Technology Foundation, 2009). Zambia in particular had a production of 4,164 metric tons of cowpeas in the 2007/2008 agricultural season (CSO, 2007). Cowpeas are a source of high-value protein for consumers and also significantly contribute towards food security by bridging food gaps for farmers. The crop is sometimes called the “poor man’s meat” because its seeds and leaves are very rich in good quality protein and can easily be accessed by the rural poor. Cowpeas are also rich in potassium and Vitamin A (Patil, 2009). Many new cowpea varieties have high concentrations of Iron, Zinc, Calcium and other minerals. Other improved varieties are loaded with antioxidants and many health-enhancing factors (Fannin, 2010). The crop therefore has many health benefits to consumers and can help improve the currently deteriorated nutritional and health status in Zambia. Since good quality nutrition is the cornerstone of development (Kachingwe, 2009), cowpeas are a potential crop in directly and indirectly promoting development. In addition, cowpeas have favorable agronomic characteristics which are beneficial to the producers. They mature early, thereby bridging food gaps for farmers (Langyintuo, 2001) and can also be easily accessed by consumers since they are a cheap source of high value protein. However, the potential for cowpeas to contribute towards sustainable agriculture has remained unexploited because little attention has been paid to it. An important argument was presented by the honorable minister of agriculture in Zambia in 2004, in which it was stated that, to tap into the potential in agriculture, we need to set the markets right. This need cannot be overemphasized for the cowpea industry. Previously, the governments played a major role in helping farmers to market their agricultural products in most sub-Saharan countries. In Zambia, parastatal institutions such as the National out and the responsibility for marketing rested on the individual farmers. This was with the exceptions of Maize farmers who benefited from the establishment of FRA, a quasi governmental organization established for purposes of stock reserves and marketing of Zambia’s staple food, maize. One of the most important aspects of marketing is channel selection. According to Lanchester (2000), distribution arrangements tend to be long term and hence distribution channel choices are usually classified as strategic rather than tactical or operational. This is because channel choices have a direct effect on the rest of the firm’s marketing activities and also, once established, channel systems may be difficult to change especially in the short run. Although this may be less true for smallholder farmers, marketing channel decisions are still among the most critical decisions facing any organization or small-scale farmer and the chosen channels intimately affect all other marketing decisions (Berry, 2010). Cowpeas, just as most agricultural products, are likely to be faced with a multi-channel marketing system. The complexities of a multi-channel marketing system can be daunting and seems to exponentially increase the variables that a marketer must consider (Yulisky, 2000). In increasing producer market participation, these variables and overall farm objectives that influence the cowpea producer’s choice of marketing channel must be identified. 1.2 Problem Statement In an effort to identify interventions that could stimulate farmer participation in markets, it is important that factors influencing the farmers’ choice of marketing channels are identified and understood. An increase in market participation in turn makes it easy for farmers to shift into commercial farming, in turn increasing economic growth (Jari, 2009). Little is known on most important aspects of marketing such as factors affecting farmer market participation in relation to channel choices. Market participation decisions have previously been described as occurring in two steps: 1) whether to participate in the market (buy or sell, versus remain autarkic), and 2) what volume will be bought or sold (Goetz, 1992; Key et. al., 2000; Holloway et. al., 2001; Bellemare and Barrett, 2006; and others). Market participation studies have therefore attempted to model the market participation decision in these two stages. It is unclear however whether market In preceding researches, demographics, production and market characteristics as well as asset ownership factors have not been considered collectively, in trying to determine market participation determinants (Jari, 2009, Nyaupane, 2010 and others). This study therefore intends to build on these previous studies by identifying the factors that influence cowpea producers’ marketing channel choices in Zambia, were such a research has never been carried out in the pulse industry. According to Barrett (2004), there has been scanty research on market participation, especially in developing country settings where significant frictions make this question most salient. Currently in Zambia, research efforts in the pulse industry by public institutions such as The University of Zambia, The Zambia Agricultural Research Institute (ZARI) and other research organizations have concentrated on agronomic conditions and characteristics of cowpeas with the view of increasing yields. However, even with the most efficient high yielding innovations, without markets, farmers will only produce enough for their consumption unless the constraints to marketing are identified and dealt with. These research efforts therefore have had limited impacts on the growth of the cowpea industry because they have not been coupled with economic researches.