Smallholder marketed surplus and input use under transactions costs: maize supply and fertilizer demand in Kenya

This paper assessed the effects of transactions costs—relative to price and non-price factors—on smallholder marketed surplus and input use in Kenya. A selectivity model was used that accounts not only for the effects of fixed and variable transactions costs but also for the role of assets, technology, and support services in promoting input use and generating a marketable surplus. Output supply and input demand responses to changes in transactions costs and price and non-price factors were estimated and decomposed into market entry and intensity. The results showed that while transactions costs indeed have significant negative effects on market participation, cost-mitigating innovations—such as group marketing—are also emerging to mitigate the costs of accessing markets. Output price has no effect on output market entry and only provides incentives for increased supply by sellers. On the other hand, both price and non-price factors have significant influence on adoption and intensity of input use. Overall, the findings suggest that policy options are available other than price policies to promote input use and agricultural surplus.

Issue Date:
Publication Type:
Conference Paper/ Presentation
Record Identifier:
PURL Identifier:
Page range:
Total Pages:
Series Statement:
Advancing Technical Change in African Agriculture

 Record created 2017-04-01, last modified 2018-01-22

Download fulltext

Rate this document:

Rate this document:
(Not yet reviewed)