Effects of access to information on farmer’s market channel choice: The Case of Potato in Tiraque Sub-watershed (Cochabamba - Bolivia) Nadezda R. Amaya Urquieta Thesis submitted to the faculty of the Virginia Polytechnic Institute and State University in partial fulfillment of the requirements for the degree of Master of Science In Agricultural and Applied Economics Jeffrey R. Alwang Maria E. Christie Daniel B. Taylor December 8th, 2009 Blacksburg, Virginia Keywords: Bolivia, potato, market, information, gender roles, market chain. Effects of access to information on farmer’s market channel choice: The Case of Potato in Tiraque Sub-watershed (Cochabamba - Bolivia) Nadezda R. Amaya Urquieta Abstract In Bolivia, potato production and marketing is important for farmers’ livelihoods and anecdotal information shows that cell phones and women are extremely important in the potato marketing chain. Efforts to improve incomes of poor highland potato producers should recognize roles of different actors within the chain and access to market information. This study explores the effects of access to information and gender relations within the potato chain; on farmers’ market channel choice in the Tiraque Watershed (Bolivia). The analysis of qualitative information was useful to deepen the understanding of the subject and complement the quantitative analysis. The main source of data comes from a survey of 400 households from the watershed. Rapid Market Appraisal and Case Studies were used to collect qualitative data. The quantitative data were used to estimate two econometric models (Logit and MNL) to evaluate the importance of farmer and market characteristics on market choices. This analysis demonstrates that the determinants affecting market channel choice include market attributes (time to reach the markets and the nearest paved road), production (number of plots owned by farmers) and household-related variables (access to loan, cell phone ownership, location and age of the head of the household). An important unexpected result is that even though the qualitative analysis shows that gender plays an important role in marketing activities; the econometric analysis shows that gender has no effect on farmer’s market choices. TABLE OF CONTENTS CHAPTER 1. INTRODUCTION...............................................................................................................................1 1.1. BACKGROUND AND PROBLEM STATEMENT...............................................................................................1 1.1.1. The economic problem and its importance............................................................................................1 1.1.2. Transaction costs...................................................................................................................................3 1.1.3. Gender issues.........................................................................................................................................4 1.1.4. Current intervention to be examined .....................................................................................................5 1.1.5. Description of the study area ..................................................................................................................6 1.2. OBJECTIVES ...............................................................................................................................................8 1.3. HYPOTHESES..............................................................................................................................................8 1.4. METHODS ...................................................................................................................................................8 1.5. OUTLINE.....................................................................................................................................................9 CHAPTER 2. BACKGROUND ...............................................................................................................................10 2.1. IMPORTANCE OF THE POTATO CROP IN BOLIVIA ...........................................................................................10 2.1.1. Production and consumption ...................................................................................................................10 2.1.2. Potato marketing characteristics .............................................................................................................11 2.1.3. Characteristics of the potato chain ..........................................................................................................12 2.1.3.1 Wholesalers importance...................................................................................................................................... 13 2.1.3.2. Gender ............................................................................................................................................................... 14 2.2. INFORMATION AND COMMUNICATION TECHNOLOGIES (ICT) IN BOLIVIA ..................................................16 2.2.1. Introduction..............................................................................................................................................16 2.2.2. ICTS and rural women.............................................................................................................................17 2.2.3. ICT in Bolivia...........................................................................................................................................17 2.2.4. Cell phones...............................................................................................................................................18 2.2.4.1. Introduction........................................................................................................................................................ 18 2.2.4.2. Cell phones in Bolivia ........................................................................................................................................ 20 2.3. SUMMARY OF THE CHAPTER ...........................................................................................................................22 CHAPTER 3. CONCEPTUAL FRAMEWORK ....................................................................................................23 3.1. PREVIOUS ECONOMIC ANALYSIS RELEVANT TO THE PROBLEM .............................................................23 3.1.1. Review..................................................................................................................................................23 3.1.2. Main findings of previous studies ........................................................................................................25 3.2. MICROECONOMIC FOUNDATIONS OF THE PROBLEM ..............................................................................26 3.2.1. Model predictions ................................................................................................................................29 3.3. SUMMARY OF THE CHAPTER....................................................................................................................32 CHAPTER 4. METHODS: DATA COLLECTION AND ANALYSIS ................................................................33 4.1. RAPID MARKET APPRAISAL ....................................................................................................................33 4.1.1. Data collection and analysis................................................................................................................34 4.2. CASE STUDIES ..........................................................................................................................................35 4.2.1. Data collection.....................................................................................................................................36 4.2.2. Plan of Analysis ...................................................................................................................................37 4.3. BASELINE SURVEY ...................................................................................................................................38 4.3.1. Econometric model specifications .......................................................................................................38 4.3.2. Variable specification..........................................................................................................................40 4.3.2.1. Household-related variables...................................................................................................................... 40 4.3.2.2. Production-related variables ..................................................................................................................... 41 4.3.2.3. Market-related variables............................................................................................................................ 41 4.3.3. Estimation method ...............................................................................................................................42 iii 4.4. SUMMARY STATISTICS .............................................................................................................................43 4.5. SUMMARY OF THE CHAPTER....................................................................................................................46 CHAPTER 5. RESULTS