Smallholder maize market participation and choice of marketing channel in the presence of liquidity constraints: Evidence from Zambia

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December 23, 2019 - Aakanksha Melkani, Nicole M. Mason, David L. Mather and Brian Chisanga

Aakanksha Melkani, Nicole M. Mason, David L. Mather and Brian Chisanga, 2019. Smallholder maize market participation and choice of marketing channel in the presence of liquidity constraints: Evidence from Zambia, FSP Policy Brief 108, East Lansing: Michigan State University.

Key Findings

  • Smallholders with liquidity constraints in maize production are 11% less likely to be a net seller of maize. One explanation for this is that liquidity constrained households are less able to adequately invest in productivity enhancing inputs, thus limiting limits their capacity to produce a marketable surplus.
  • While households without liquidity constraints (UC) have a statistically significant positive response to higher maize prices, liquidity-constrained (LC) households do not respond to changes in maize prices.
  • A 10% increase in maize production is correlated with a 4% increase in probability of being a net seller for UC households and 3% for LC households.
  • An additional expected moisture stress period during the growing season reduces the probability that a LC household is a net seller by 16%.
  • LC households are 18% less likely to sell to the FRA, and thereby are less likely to be able to enjoy the benefits of relatively high FRA maize purchase prices.

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Tag List
  • agrifood system transformation,
  • c1-c2,
  • food security group,
  • fsg policy brief,
  • fsp policy brief,
  • innovation lab for food security policy,
  • input use and market development,
  • zambia
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