ANALYZING SMALLHOLDERS AGRICULTURAL COMMERCIALIZATION IN BURKINA FASO. THE ROLE OF TRANSACTION COSTS AND HOUSEHOLDS ASSETS

Abstract

Promoting smallholders’ agricultural commercialization is frequently identified as a promising strategy to improve agricultural contribution to poverty reduction and economic growth in developing countries. This paper analyses the determinants of agricultural commercialization of smallholder farmers in Burkina Faso, focusing on the role of transaction costs and households’ productive resources. Based on data collected in 2011 at national level from a sample of 1178 farm households, a double hurdle model of market participation and intensity of participation measured by crop commercialization index is estimated. The results indicate that households’ productive resources such as farm size per worker, use of animal traction, quantity of fertilizer used per hectare and access to credit significantly increase the likelihood of households’ market participation and the intensity of commercialization. In addition, transaction costs factors such as quality of rural roads and ownership of communication assets have positive and significant effects on the probability of market participation. Therefore, reducing remoteness-induced transaction costs by unlocking rural areas and improving farm households’ access to productive assets and technologies are required to promote agricultural transformation and commercialization of smallholder farmers.