TRANSACTION COSTS AND CATTLE FARMERS' CHOICE OF MARKETING CHANNEL IN NORTH-CENTRAL NAMIBIA

• Main Author: Shiimi, Theofilus
• Other Authors: Mr H Jordaan
• Format: Others
• Language: en-uk
• Published: University of the Free State 2010
• Subjects: Agricultural Economics
• Online Access: http://etd.uovs.ac.za//theses/available/etd-11172010-152823/restricted/

Approximately 70 % of the Namibian population depends on agricultural activities for their livelihoods. Moreover, agriculture remains an important sector in Namibia, because its national economy is widely dependent on agricultural production. However, two distinct land tenure systems (communal and commercial farming sectors) separated by the Veterinary Cordon Fence (VCF) complicated the marketing of cattle from the Northern Communal Areas (NCA). Cattle producers in the NCA have the option to market their cattle via the formal or informal market. Although efforts have been made to encourage producers to market their cattle through the formal market, limited improvement has been observed. In this study a number of factors were analysed to determine their influence on the decisions made in respect of cattle marketing. Factors influencing the decision of whether or not to sell through the formal market were analysed using the Probit Model. Factors influencing the proportion of cattle sold through the formal market in cases where the producer has decided to use that market to sell her/his cattle were analysed using the Truncated Model. Testing the Tobit Model against the alternative of a two-part model was done by means of Craggâs Model. Factor analysis was used to study the underlying structure resulting in transaction costs. The empirical results revealed that problems related to transport to MeatCo, improved productivity, accessibility to market-related information and accessibility to information on new technology are some of the factors significantly affecting the decision of whether or not to sell through the formal market. Payment arrangements by MeatCo, animal handling, accessibility to new information technology, age of respondents and lack of access to marketing expertise are some of the factors influencing the proportion of cattle sold through the formal market. The results suggest that substantially more information is obtained by modelling cattle-marketing behaviour as a two-decision-making framework instead of a single-decision-making framework. Factor analysis identified discounting factors, delivery aspects and market features as the underlying structure resulting in transaction costs.