Business Aspirations Among Smallholders in Rural Zambia: Drivers and Effects on Agricultural Marketing Strategies

Abstract

Socio-psychological factors, including aspirations, play a significant role in economic decisions and the sustainable development of low-income economies. However, the interplay between business aspirations and business strategies among smallholder farmers in Africa is complex, with little known about how they develop, what motivates them, and how these aspirations affect business decisions. To address this knowledge gap, this study examines how small-scale farmers in rural Zambia develop crop-specific business aspirations and how these aspirations influence their agricultural marketing strategies, such as marketing channels and coordination mechanisms. Our descriptive analysis shows farmers aspire to increase maize and soybeans' income, price, value-addition, and bargaining power within 2 years. There is, however, significant heterogeneity in the sample, as over half of the farmers reported lower aspirations for the maize business and some aspects of the soybean business. The instrumented multinomial probit analysis reveals that farmers with higher human capital and positive socio-cognitive psychology, such as locus of control, have higher business aspirations (i.e., ambition) and aspirations gap (i.e., ambition level). Evidence also shows that farmers' business aspirations influence their agricultural marketing decisions, with ambitious farmers preferring to transact with large-scale buyers rather than small-scale traders and retailers, using relational contracts. The study concludes that farmers' business aspirations, particularly their business aspiration gap, strongly influence agricultural marketing strategies, but their effects vary with crops and levels of business decisions.