Participation and utilisation of formal vegetable markets by smallholder farmers in Limpopo : A tobit II approach

Thesis (M.Sc. (Agricultural Economics))--University of Limpopo, 2012

Farmers in Polokwane Local Municipality produce many vegetables including beetroot, carrots, spinach, garlic, cabbage and butternut, which they mainly sell in informal local markets through speculating and hawking. Some sell to hawkers, who sell fresh produce from stalls in small markets and on the streets. Although there are a number of fresh produce markets operating successfully in Polokwane, such as Goseame Fresh Produce Market and Polokwane Fruit and Veg City, only a few smallholder farmers supply vegetables to these major markets. This research focused on providing information relevant to vegetable marketing in the province by identifying and analysing those farm and farmer characteristics influencing smallholder farmers’ decision to participate and utilise formal vegetable markets. The overall objective of the study was to examine farm and farmer characteristics of smallholder vegetable farmers that influence their decision to participate and utilise formal markets. The study was conducted in Polokwane Local Municipality and a sample size of 80 subsistence and emerging farmers was interviewed. STATA (2010) was used to analyse the data.Two approaches were used; the separated OLS and logit regression models and the Heckman selection model, although conclusions are based on the Heckman selection model regression results. We recommend the use of the Heckman selection model due to its limited bias compared to the other method. Results show that two variables; level of education and farmer occupation were positively and significantly associated with smallholder farmers’ decision to participate in the formal vegetable markets. Household size, tenure security and distance to the market had a significant negative influence on smallholder farmers’ decision to participate in the formal markets. Level of education, farm labour, hectares used and cost of transport were significantly and positively associated with the value of vegetables marketed in the formal markets. Gender of household head, member of a farmer group, farming experience, access to non-farm income and access to extension services had a significant negative impact on the value of vegetables marketed in the formal markets. In view of the research findings, several policy suggestions are made. These include capacitating farmers, provision of land for farming, establishment of depots and markets closer to the farmers, encouraging formation of farmer groups or organisations, increasing the number of extension visits to farmers, specialised services and encouraging commercialisation of smallholder agriculture in rural areas.

University of Limpopo Department of Agricultural Economics and Animal Production