Effect of choice of market outlets on profitability among vanilla smallholder farmers in Antalaha District, Madagascar

Abstract

Madagascar's agricultural sector is dominated by smallholder fanners, who contribute significantly to the nation‘s economy, employment, food security, and income. Besides that, Madagascar is the world's leading vanilla producer, primarily in the north-east, precisely in the SAVA region of Sambava, Antalaha, Vohémar and Andapa, where 87.2% of the smallholder farmers engage in the production of vanilla. However, smallholder vanilla farmers in this region still face food insecurity, lower incomes and high levels of poverty. The market outlet choices by vanilla smallholder farmers affect their profitability. This research seeks to contribute to improved livelihoods of smallholder vanilla fanners in Antalaha district of Madagascar through an understanding of the market outlet choices for enhanced profitability. The specific objectives of this research are to examine vanilla market constraints among smallholder farmers, to determine factors influencing choice of different market outlets of vanilla among smallholder farmers, to determine the profitability of participation in different vanilla market outlets among smallholder farmers and to assess the effect of market outlet choices on profitability among smallholder vanilla farmers. The study used data collected from a sample of 384 smallholder vanilla farmers from two municipalities, Ampohibe and Ambalabe, in the Antalaha districts of Madagascar. A multistage sampling technique was employed to select the respondents and cross-sectional data was collected using semi-structured questionnaires. The software Statistical Package for Social Sciences (SPSS) and STATA were employed to analyse the data. Principal component analysis (PCA) was used to group vanilla market constraints into clusters. The results revealed that smallholder farmers in both municipalities faced l4 vanilla market constraints, which were grouped into 4 principal components. Multivariate probit (MVP) results show that factors including sex, education level, off-farm income, land ownership, group membership, vanilla yield, dry vanilla, and green vanilla significantly affect the of market outlet choices among smallholder vanilla farmers. Gross margin analysis and Endogenous Switching Regression indicate that cooperatives and urban markets (608968 Ariary per kg) offer higher gross margins per kilogram for farmers than those who use local markets (434O.65 Ariary per kg). The research recommends that vanilla small-scale farmers should be encouraged to join cooperatives, with government support for cooperative programs, alongside improvements in education, market access, agricultural training and infrastructure. The results should help smallholder vanilla farmers to select the most profitable outlets in order to achieve higher gross margins and improve their livelihoods.