An assssment of the efficiency of the groundnut seed market in Lusaka Province, Zambia
Date
2012
Authors
Chomba, Christopher
Journal Title
Journal ISSN
Volume Title
Publisher
University of Zambia
Abstract
This study looked at the efficiency of the groundnut seed market in Lusaka Province. A
structural conduct and performance model as well as a regression model was used to generate
data discussed in this report. In most Sub-Saharan African countries, there is presence of a
formal seed market and the informal seed market. The formal market is characterized by
improved varieties of seeds as compared to the informal seed sector.
The formal sector comprised of seed companies and retailers. It was analyzed in terms of its
structure and conduct. There was strong indication of factors favoring imperfect competition, one
of the factors being the concentration ratio of 57%. This showed that the formal groundnut seed
market was oligopolistic. Further evidence of imperfect competition was seen through product
differentiation. The formal market was characterized by difference in packaging as well as
difference in varieties. There were four barriers to entry identified in the formal market; large
capital, lack of credit facilities, government policy/regulation and large already established
companies. The major barrier to entry into the formal seed market was found to be large already
established seed companies. This was in terms of obtaining a market share from these
companies. Other factors favoring imperfect competition were imperfect competition and market
integration. There was evidence of horizontal market integration, as observed by the retailers
having more than one shop in the same area. The conduct of the market also supported imperfect
competition as there was found to be evidence of promotions carried on so as to compete for
customers.
The informal market on the other hand was found to be relatively competitive. Factors favoring
perfect competition included; a low concentration ratio of 22%, no barriers to entry, availability
of information (although 70% was informal information), no promotions, lack of product
differentiation as well as non-collusive setting of prices and quantity. The informal market was
found to be inefficient based on the low profit margins as well as low farmer share. The factors
found to affect marketing margins were; transport cost (p= 0.001), quantity traded (p=0.002), sex
(p=0.032) and education (p=0.043). Age was found not to have an effect on marketing margins.
Description
Students Project Report
Keywords
Peanut-Marketing , Peanut-Zambia-Marketing