Effect of Transaction Costs on Marketing of Small Scale Maize Farming in Limpopo Province

Abstract

The deregulated and highly competitive nature of current South African markets has created new barriers for capital-poor emerging farmers. Many of these barriers are related to the cost of transacting. A linear regression model and a Multinomial logit regression model were used to predict the hypotheses that transaction costs affect the quantity sold and that factors that affect transaction cost affects market integration respectively on farmers who produce maize. From the analysis, road access, membership in a marketing institution, land size, unit price and ownership of irrigation technology affects the quantity of maize sold. While the nature of the road (P-value, 0.043) and knowledge of price (p-value, 0.000) were the two factors affecting market integration. A possible solution for the problem is the establishment of an information and communication technology centre for price dissemination and produce aggregation.