Determinants Of Choice Of Marketing Channels Among Potato Farmers In Musanze District, Rwanda: Evidence After The 2015 Potato Market Reforms

Abstract

Marketing plays an important role in poverty alleviation through the generation of employment and improvement of household income. It connects input and output markets as demand for modern agricultural technologies accelerate their development. However, agricultural marketing in Rwanda is characterized by poor infrastructure such as roads and storage facilities which make it less efficient. Inefficiency is also a result of undeveloped marketing channels which consist of many players; thus increasing transaction costs for producers. To achieve the Malabo declaration target on harnessing markets and trade opportunities, the government of Rwanda has put much effort in developing value chains of priority crops such as potato for local and regional trade to increase farmers` income and achieve food security. The new trading system for potato involves using collection centers to harmonize supply through formal contracts as well as facilitate equitable income distribution among all the actors. Previous studies on the choice of marketing channels found that socio-economic and institutional factors such as age, education and access to extension services influenced farmer`s choice of marketing channels. However, the relevance of these factors after the 2015 marketing channel reforms has not been extensively investigated in Rwanda. Using 210 randomly selected farmers from Musanze District, the study aimed at analyzing the determinants of farmer`s choice of marketing channels. The Multinomial Logit Model was used to analyze the determinants of the choice of marketing channels among the potato farmers, whilst descriptive statistics were used to characterize different marketing channels in the study area. The results showed that three main marketing channels were used by potato farmers namely brokers, open-air market and collection centers. The study found that 48% of the respondents used potato collection centers while 38% v and 14% sold to brokers and open-air market respectively. The findings showed that brokers offered slightly high prices compared to collection centers; however, there was no significant difference between prices offered by collection centers and other marketing channels. The results from the Multinomial Logit Model revealed that age had a positive influence on the choice of brokers while group membership, land size under potato cultivation, the quantity produced and off-farm income negatively influenced the choice of brokers relative to collection centers. The study, therefore, recommended that farmers should organize themselves into groups and cooperatives to be able to bulk their production and benefit from economies of scale. Further, they should consider using their cooperatives as saving groups which will enable them to get off-farm income to look for better markets.