Economic analysis of smallholder’s cashew nuts production and marketing under market liberalization: a case study of Coast region
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Date
2003
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Publisher
Sokoine University of Agriculture
Abstract
This study investigated the effect of market liberalization on smallholder cashew nuts
production and marketing. Specifically the study aimed at assessing the effect of market
liberalization on cashew nuts production, analysing the relative profitability of crop
enterprises competing with cashew nuts in resource use, studying the marketing practices
of traders, evaluating market efficiency and examining the effect of export price, exchange
rate and amount of cashew nuts produced on cashew export. Multistage and simple
random techniques were employed for selecting farmers. For traders, systematic and
simple random techniques were used. Both descriptive and quantitative techniques were
used. Descriptive analysis included the use of means, percentages, and other summary
statistics. Quantitative analysis involved the use of regression analysis, gross margin,
buyer’s concentration ratio, market integration and co-integration and error correction
method. A regression result shows that lagged cashew nuts price, farm size, credit
availability and amount of labour used had significant positive influences on cashew nuts
output (P< 0.05). While, sulphur price and price of competing crops had significant
negative influences on cashew nuts output (P< 0.05). Amount of sulphur used and area
under competing crops had no significant influence (P> 0.05). Pineapple was found to
have highest gross margin per hectare followed by cassava and cashew. However, cashew
was found to have highest return to labour. The degree of market transparency was found
to be poor due to lack of proper market information. Lack of capital and higher market
fees act as barrier to entry in cashew nut trading activity. This results to lack of
competition a tendency towards oligopolistic market as indicated by strong level of
concentration ratio. Overall, only 180 Tshs was realized as marketing margin and 55 Tshs
was realized as profit margin. This situation is caused by high marketing fees and transport
cost as they account for 33 and 16.7 % respectively of the marketing margin. Export and
domestic markets are highly integrated in the long run but the rate of adjustment to
equilibrium is low. The quantity of cashew nuts exported was determined by exchange
rate, nation income (GDP) and amount of domestic cashew nuts production.
Description
Masters Dissertation
Keywords
Smallholder’s cashew nuts production, Coast region