A transaction cost analysis of factors affecting market arrangements in the agroforestry tree product value chain in Cameroon uri icon

abstract

  • Farmers are often encouraged to form producer group s to facilitate their access to markets by linking them with traders in urban markets. Most of the times, this initiative fails after project withdrawal. This calls for a better understanding o f factors that influence market arrangements between producers and traders. The tra nsaction cost economics is used as the analytical framework to investigate: factors that i nfluence successful market arrangements between producer groups and traders in the agrofore stry tree product value chain in Cameroon, to compare transaction cost farmers incur red when they sell in groups and when they sell as individuals through their habitual cha nnel and to asses the relevance of producer groups-traders market arrangements in overcoming tr ansaction costs. Results of the study show that transactions cost are higher when farmers sell in groups than when they sell individually, however the benefits of group sales a re higher than the cost. The study identifies amongst others, higher prices the groups negotiate for their members, financial assistance and advanced payments from traders, nature of the produ cts, asymmetric market information, distances producers cover to get to the agreed plac e of group sales and the nature of the roads and bridges as important elements that determine su ccess and recommends producer groups and trader market arrangements as appropriate gover nance structure to overcome transaction cost in the AFTPs value chain in Cameroon within a poverty reduction context

publication date

  • 2009