Field Research on Transportation Costs, Farm-Gate and Farmer Market Prices in the Atlantic Zone of Costa Rica
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O ? FEB 1996 FIELD RESEARCH ON TRANSPORTATION COSTS, FARM-GATE AND FARMER MARKET PRICES IN THE ATLANTIC ZONE OF COSTA RICA REPOSA, WAU/CATIE/MAG, Guápiles, Costa Rica Susan J. Hoekstra November, 1995 TABLE OF CONTENTS SUMMARY 1 INTRODUCTION 2 SURVEY DESIGN AND IMPLEMENTATION 4 2.1 Background 4 2.2 Farm survey design 4 2.3 Farmer market survey design 6 2.4 Cattle auction survey design 6 TRANSPORTATION COSTS 3.1 Background 8 3.2 Materials and methods 10 3.3 Multiple regression analysis 11 3.4 Results and discussion on farm survey data 18 3.4.1 Summary statistics on farm survey data 18 3.4.3 Non-linear regression and power estimation results for inputs and output 25 3.5 Results on farmer markets 27 3.6 Results on cattle auction 27 3.6.1 Summary statistics on cattle transportation 27 3.6.2 Non-linear regression results for cattle transportation 36 4. FARM-GATE AND FARMER MARKET PRICES FOR AGRICULTURAL CROPS 38 4.1 Background 38 4.2 Materials and methods 41 4.3 Results and discussion 42 4.3.1 Results on farm-gate prices 42 4.3.2 Results on farmer markets 52 -2; 9 6S0c) o REFERENCES 59 Appcndix Ia: Farm survey 62 Appendix Ib: Code book for farm survey 73 Appendix II: Farmer market survey 84 Appendix III: Cattle auction survey 85 Appendix IV: Study arca and rcspondents 86 Appendix V: Codes of village location, 'FINLUGAR' 87 Appendix VI: Canton and district codes 89 SUMMARY In summary, this study aims to provide the following outputs; - Costs of hiring transportation to markets (farmer markets, CENADA), exporters from different parts of the Atlantic Zone. - Quantitative relation between costs of hiring transport and distance on four road types. - Output prices of different crops at farm level, specified per economic subregion. - Price of crops at feria's del agricultor in the AZ. - Relation between farm-gate and prices at CENADA wholesale market. - Relation between farm-gate and farmer market prices in the Atlantic Zone 1 1. INTRODUCTION This study is carried out in the context of REPOSA (Research Program on Sustainability in Agriculture). REPOSA is a interdisciplinary research collaboration between Wageningen Agricultura] University, the Tropical Agronomical Research and Higher Education Centre (CATIE) and the Costa Rican Ministry of Agriculture and Livestock (MAG). Main objective of the programme is the development of USTED (Uso Sostenible de Tierras En el Desarollo, Sustainable Land Use in Development), a land use and evaluation methodology. En USTED, Land Use Systems at a defined Technology (LUST) describe quantified operation sequences. Each LUST is described in an individual database. Additional information, e.g. prices of inputs and outputs, is stored in so-called attribute databases. The attribute databases adapt easily to changing prices in time or per region. Thus, technical options are separated from socioeconomic conditions (Jansen & Schippper, 1995) For the required regionalization of the USTED methodology, the quality of the road infrastructure is an important variable due to its influence, among others, on the return from crops and cattle that the farmer may obtain. REPOSA developed USTED at sub-regional d level, under the condition that input and output prices are fixed. Further research now focuses on the up-scaling of the methodology towards the regional level (Stoorvogel et al, 1995). This requires information on farm-gate and factor prices at the sub-regional level since it can no longer be expected that these are the same in all sub-regions of the AZ. In the USTED methodology, the objective function for a linear programming model is maximization of the total net farm income, including household and hired labour and off-farm earnings, for a region or subregion for small and medium size farmers (Schipper, et al, 1995). Apart from activity returns, also prices of production factors might differ within the AZ at any moment in time. Production factors include capital, labour and land. Costs of labour and capital are included in the linear programming model and for an update of the model, the labour costs in the first half of 1995 should be incorporated. This study provides information on renting land, interest rates of agricultura] credit and on off-farm wages. 2 The objective of the field research on transportation costs and farm-gate prices for crops is twofold. First, data on transportation costs together with data on geographical distance specified for four road types will be used in regression models to calculate transportation costs of crops and cattle within the AZ and from farm-gate to CENADA wholesale market. The aim of the research on farm-gate prices is to update and geographically differentiate prices of commercial products. Second, the data on geographically differentiated farm-gate prices, in combination with the transportation costs, form the basis for a definition of five economic zones within the AZ. Economic zones are based on the premise that prices at farm-gate level diminish when distance to markets increase. In each economic zone it is assumed that costs of production and farm-gate prices are the same for each farmer. Different databases are defined for output prices of products within each of the economic zones. 3 2. SURVEY DESIGN AND IMPLEMENTATION ■ 2.1 Background This study combines data from different sources. Primary data are obtained through three field surveys, i.e. a farm survey, a farmer market survey and a cattle auction survey. The farm survey provides information on transportation costs, farm-gate prices and factor costs. The farmer markets survey provides information on transportation costs, farm-gate prices and farmer markets prices, while the cattle auction survey provides solely data on transportation costs of cattle. Secondary data administered by governmental institutions on prices for agricultural crops are also used. Besides, price information of agricultural products is obtained through farmer cooperatives and exporters operating in the AZ. 2.2 Farm survey design The farm household, with the family living on or nearby its land, cultivating the land in 1994 and/or 1995, and having sold at least some products or cattle, is chosen as the sample unit of the farm survey. Farm households are chosen non-randomly. Therefore the sample is not a statistical representation of total population of farm households in each of the regions. Consequently, no conclusions can be drawn on the frequency of a certain behaviour. A random sample procedure is not feasible due to lack of complete population data. However, considering the main objective of this study, i.e. estimation of transportation costs of agricultural crops, it is not necessary to work with a perfectly random sample. The decision making unit, or head of the farm, is preferably chosen as respondent. Excluded are farms managed by caretakers because their knowledge on marketing issues is generally insufficient since they are not responsible for the commercialization of the produce. Furthermore, large plantations ( > 50 ha) and large cattle holdings ( > 100 ha) are excluded from the survey. Thus, the sample in the farm survey consists of small-and medium-scale farms that practice agriculture, animal husbandry, or both, at small to medium size scale (appendix 1). 4 The objective of the field research on transportation costs and farm-gate prices for crops is twofold. First, data on transportation costs together with data on geographical distance specified for four road types will be used in regression models to calculate transportation costs of crops and cattle within the AZ and from farm-gate to CENADA wholesale market. The aim of the research on farm-gate prices is to update and geographically differentiate prices of commercial products. Second, the data on geographically differentiated farm-gate prices, in combination with the transportation costs, form the basis for a definition of five economic zones within the AZ. Economic zones are based on the premise that prices at farm-gate level diminish when distance to markets increase. In each economic zone it is assumed that costs of production and farm-gate prices are the same for each farmer. Different databases are defined for output prices of products within each of the economic zones. 3 2. SURVEY DESIGN AND IMPLEMENTATION 2.1 Background This study combines data from different sources. Primary data are obtained through three field surveys, i.e. a farm survey, a farmer market survey and a cattle auction survey. The farm survey provides information on transportation costs, farm-gate prices and factor costs. The farmer markets survey provides information on transportation costs, farm-gate prices and farmer markets prices, while the cattle auction survey provides solely data on transportation costs of cattle. Secondary data administered by governmental institutions on prices for agricultura) crops are also used. Besides, price information of agricultura) products is obtained through farmer cooperatives and exporters operating in the AZ. 2.2 Farm survey design The farm household, with the family living on or nearby its land, cultivating the land in 1994 and/or 1995, and having sold at least some products or cattle, is chosen as the sample unit of the farm survey. Farm households are chosen non-randomly. Therefore the sample is not a statistical representation of total population of farm households in each of the regions. Consequently, no conclusions can be drawn on the frequency of a certain behaviour. A random sample procedure is not feasible due to lack of complete population data. However, considering the main objective of this study, i.e. estimation of transportation costs of agricultura) crops, it is not necessary to work with a perfectly random sample. The decision making unit, or head of the farm, is preferably chosen as respondent. Excluded are farms managed by caretakers because their knowledge on marketing issues is generally insufficient since they are not responsible for the commercialization of the produce.