Distance to Market and Search Costs in an African Maize Market
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World Bank, Washington, DC
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Farm-gate buying by small itinerant
buyers is the dominant mode of primary marketing in
Tanzania's maize market. This paper estimates the
effect of household distance to market on maize farm-gate
prices, and the extent to which seasonally determined search
costs can explain price variations between the lean and the
harvest seasons using data from the most recent Tanzania
Household Budget Survey (2007). The author observes that
greater distance to market depresses farm-gate prices but
that it is a relatively modest effect, and that this effect
is pro-cyclical in that it is stronger during the harvest
season when prices are lowest. The paper discusses the
latter result with reference to search costs as an
explanatory factor. It also briefly places the findings in
the context of Tanzania's food security patterns,
making a link between food insecurity and high search costs.
The main policy conclusion is that coordinating mechanisms
such as village market places (in parallel with farm-gate
buying) may reduce transaction costs in rural markets.
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ACCESS TO INFORMATION, ACCESS TO MARKETS, AGRICULTURAL ECONOMICS, AGRICULTURE, BARRIERS TO ENTRY, BASIC FOODS, BASIC NEEDS, BUSINESSES, BUYER, BUYERS, CAR, COMMERCIALIZATION, COMPETITIVE PRICE, COOKING, COST OF TRANSPORT, ECONOMIC DEVELOPMENT, ECONOMIES OF SCALE, ELECTRONIC MARKETPLACES, FLOUR, FOOD INSECURITY, FOOD MARKETS, FOOD POLICY, FOOD PRODUCERS, FOOD PRODUCTION, FOOD SECURITY, HOUSEHOLD FOOD INSECURITY, INSTITUTION, LICENSE, LIMITED ACCESS, LONGER DISTANCES, MAIZE, MARKET ASSESSMENT, MARKET CONDITIONS, MARKET INFORMATION, MARKET LIBERALIZATION, MARKET PLACES, MARKET POWER, MARKET PRICES, MARKET REFORMS, MARKET SEGMENT, MARKET SHARE, MARKET SHARES, MARKETING, MARKETPLACE, MARKETPLACES, MENUS, MILLS, MOBILE PHONE, MONOPOLY, MONOPOLY PRICES, NETWORKS, ONLINE SALES, OPEN ACCESS, PADDY, PDF, POPULATION GROWTH, PRICE FLUCTUATION, PRICE FLUCTUATIONS, PRICE INFORMATION, PRICE VARIATIONS, PRIVATE SECTOR, PROCUREMENT, PRODUCER PRICES, PRODUCT DESIGN, PRODUCT MARKET, PROFIT MARGIN, PURCHASING, RADIO, RADIOS, RAIL, RESTAURANTS, RESULT, RESULTS, RETAIL, ROAD, ROADS, ROUTE, RURAL INFRASTRUCTURE, SALES, SEARCH, STANDARDIZATION, STOCKS, STORAGE CAPACITY, STORAGE FACILITIES, SUGAR, SUPPLY CHAIN, SURPLUS, TELEPHONE, TELEPHONES, TRANSACTION, TRANSIT, TRANSPORT, TRANSPORT CAPACITY, TRANSPORT COSTS, TRANSPORTATION, TRANSPORTATION COSTS, TRANSPORTATION SERVICES, VEHICLE, WEB, WFP, WHOLESALERS, WORLD FOOD PROGRAM