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The influence of proximity to market on bean producer prices in Nicaragua
Author(s) -
Ebata Ayako,
Velasco Pacheco Pamela Alejandra,
CramonTaubadel Stephan
Publication year - 2017
Publication title -
agricultural economics
Language(s) - English
Resource type - Journals
SCImago Journal Rank - 1.29
H-Index - 82
eISSN - 1574-0862
pISSN - 0169-5150
DOI - 10.1111/agec.12347
Subject(s) - sample (material) , economics , agricultural economics , welfare , quality (philosophy) , production (economics) , business , microeconomics , market economy , philosophy , chemistry , epistemology , chromatography
Transport costs are an important determinant of smallholder welfare in developing countries. In particular, transport costs influence the prices that smallholders receive for their produce. We propose a simple way of quantifying this influence. Taking the example of bean producers in Nicaragua, we employ a hedonic price model to estimate the effects of a smallholder's proximity to markets on the prices that he/she receives, while controlling for other factors such as the volume and quality of beans sold. We find that on average each additional minute of travel time reduces farm gate prices by 2.5 cents per quintal. Based on these results, the annual income from bean sales of the average smallholder in our sample would increase by between 24 and 110 USD if travel time to markets were reduced by 25%. Estimates of this nature can make an important contribution to cost–benefit assessments of infrastructure investments.