Drivers of trader participation in bean and cowpea marketing

Abstract

Beans and cowpeas are considered nutritionally dense and good sources of protein. In this sense, they are considered excellent food in poor households, especially in those that exhibit high levels of malnutrition or under-nutrition. To address food security and nutrition security in poor countries, there has been an increasing interest in encouraging farmers to grow beans and cowpeas. This has spurred research in value chains for these crops in many countries, especially those that do not traditionally grow them as primary staples. Most of these research efforts have focused on the producer and consumer issues, with little or no attention paid to traders who operated between these two players in the value chain. The objective of this study, therefore, is to contribute to the literature on the bean and cowpea value chain research by identifying the factors influencing the participation decisions of traders in this segment of the agricultural economy in Zambia. Using data collected by the Pulse Value Chain Initiative – Zambia in 2011, a probit model was used to analyze data. The dependent variable trader participation in wholesale marketing of beans and cowpeas in Lusaka and its principal food markets. The explanatory variables encompass trader demographic characteristics and available assets or resources. The research explored the effect of the assets or resources on the choice to trade cowpeas or beans at the wholesale level in Lusaka with and without controlling for traders’ demographic characteristics. Three procurement sources are identified in the study: the local market within which the traders operate; producers/suppliers within Lusaka District; and producers/suppliers outside Lusaka District. The results indicate that the procurement source for beans and cowpeas influenced trader decision to operate at the wholesale level. For example, traders who purchased their produce from locations outside Lusaka District were about 37% more likely to participate in wholesale trade compared to those sourcing their produce within the market in which they operate when demographic characteristics of traders are not controlled for in the model. When the demographic factors are controlled, the likelihood of those procuring from outside Lusaka District participating in the wholesale trade declines slightly to about 34%. These coefficients were both statistically significant at the 1 percent level. The results also showed that traders using credit from friends and family were nearly 18% less likely to participate in wholesale trade than those borrowing from other traders, significant at the 5% level. Controlling for demographic characteristics led to a reduction of this likelihood to about 16.7%, significant only at the 10% level. There were no statistical differences between traders for all education levels and those without any education except for respondents with lower primary and lower secondary education. Traders with lower primary and lower secondary education had a 31% higher likelihood of operating at the wholesale level compared to those without any formal education while those with upper secondary education had about 26.7% higher likelihood of operating at the wholesale level compared to those without any formal education. Marital status was not a discriminant in the decision to operate at the wholesale level. However, males had about a 9% higher probability than females in operating at the wholesale level. Wholesalers tend to move larger volumes of produce and, hence, create wealth much quickly than retailers. Wholesalers are also more likely to be engaging processors when these exist in the supply chain. Given that traders sourcing their produce from outside Lusaka District are more likely to engage in wholesale trading, it recommended that further research into the intricate characteristics of these traders are explored. This future research will do well to explore the factors that specifically differentiate these traders from the others. Understanding these and their potential effects could allow policymakers to provide support and services to this class of traders to engage in structured relationships with larger organizations such as processors and exporters.