Assessment of the role of institutions and transaction cost in sorghum supply chain in Singida rural district

Abstract

The study assess the role of institutions and transaction cost in sorghum supply chain in Singida Rural District. Data were collected from secondary and primary sources. A sample of 60 sorghum farmers, 9 traders, 9 institutions supporting sorghum production and marketing was interviewed. The data obtained were used to describe the structural and social-economic factors that influenced farmers in production and marketing along the supply chain, examine type and role of institutions supporting sorghum production and marketing and transaction cost incurred by actors along the chain. Data was analyzed by descriptive statistics, marketing margin and correlation analysis. Marketing margin and correlation analysis were estimated as indicators of market efficiency. Three sorghum marketing channels were identified (i) farmer’s selling direct to local consumers (ii) farmer’s selling to village trader’s who in turn sell to local consumer and (iii) farmer’s selling through village traders, urban trader’s, urban wholesaler’s and retailer’s to urban consumers. The study revealed that, the flow of sorghum from producers to consumers leads to long supply chain which leads to high transaction cost. High market margin was realized at wholesale level compared to the other chain actors. There was a negative correlation between buying prices and market margin which results to unstable market. This reflects less income to sorghum producers and more benefit to other chain actors. Major constraints to sorghum production and marketing were unreliable market, low producer prices, pests including birds like quelea quelea and limited access to market information. The study recommends that, market information should be improved by promoting telecommunications infrastructure in the area. Institutional supporting sorghum should link sorghum farmers to marketers for the effective supply chain. Policy makers and other stakeholders should find a way of introducing threshing, dehulling and sorghum milling machine in the area which will encourage sorghum production and marketing.