Influence of transaction costs on choice of marketing outlets among smallholder peach farmers in Lesotho

Abstract

Peach (Prunus persica) production is a major agro-economic activity in Lesotho. However, most smallholder peach farmers in Lesotho still fail to reap the benefits that are in line with peach commercialization. This is because of high transaction costs, which vary along with different peach marketing outlets. This study was conducted to determine the influence of transaction costs on the choice of marketing outlets of peaches in Lesotho. A multistage sampling technique was used to select 90 respondents for this study. Cross-sectional data were collected using a semi-structured questionnaire. A Multivariate probit model was used to analyse transaction costs influencing the choice of marketing outlets among smallholder peach farmers. The study revealed that gender and communication costs positively influenced the choice of farm gate; while the time taken to reach other outlets and average monthly income negatively influenced the choice of farm gate outlets. Sorting, grading and communication costs negatively impacted the local market; whereas, the average monthly income positively influenced it. Household size influenced farmers’ export market choice negatively. Evidence from the results suggests that the improvement of roads and communication infrastructure could enhance farmers’ income through the proper selection of marketing outlets. Access to market information regarding both distance and the time taken to reach each of the outlets should also be improved.