Determinants of Marketing Channels Choices: Evidence from Vegetable Farmers in the Eastern Cape Province of South Africa

Abstract

Vegetable farmers are faced with computational and informational restrictions when making marketing decisions. Fresh produce markets in South Africa lack an efficient approach to supply chain management, from the farmers to the consumers. Improving market access can incentivise smallholder farmers to scale up their production. The present paper investigates factors influencing smallholder vegetable farmers' choice of market channels in the Eastern Cape Province of South Africa. A structured questionnaire and a multi-stage sampling technique were used to select 149 vegetable farmers. Multivariate probit regression and descriptive statistics were used for analysis. The results show that most sampled vegetable farmers in the study area sell their vegetable produce to traditional, wholesale, and retail outlets compared to other outlets. The study found that vegetable farmers can substitute one market with the other. Various socio-economic characteristics, transaction costs, asset ownership, membership of farm organisations, and access to extension services influence the selection choice. The study recommends intensive education and training to capacitate smallholder farmers through extension officers and farm organisations to enable farmers to understand and meet the requirements of high-value markets.