Sokoine University of Agriculture

Policy imperatives for control of market exchange failure in the cashew nut industry

Show simple item record Akyoo, A. Mpenda, Z. 2021-01-13T13:47:27Z 2021-01-13T13:47:27Z 2014
dc.identifier.isbn 978-88-96189-19-1
dc.description NAF-International Working Paper Series, 2014 en_US
dc.description.abstract This study examined the root causes of incessant market failure problem facing Tanzanian cashew nut industry. The overarching hypothesis was that the industry challenges are both structural and institutional. Competition status and economic coordination in the industry were thus duly scrutinized. Key informant and questionnaire interviews were carried out with key industry stakeholders and cashew farmers respectively. Data analysis entailed operationalizing the Institutional Analysis and Development framework, the DFID Competition Assessment Framework and estimating the Stochastic Frontier Production Model. Results showcased a systematic positive effect of the Warehouse Receipt System (WRS) on indicative and final producer prices over the years. Concentration ratio results professed the industry as being fairly concentrated and hence oligopolistic. Farmers’ input use efficiency was calculated at 51% on average suggesting that majority could be high cost producers. The WRS was vindicated as an effective system for the industry though its high transaction costs due to hiked administrative costs, weak institutional arrangements along the value chain, cooperative monopoly and inadequate enforcement of underlying regulations counteract its strength. Fair competition in the industry is stifled by clandestine buyer collusion and predatory pricing at the expense of local processing. Production cost would overstate indicative price if used as a basis for its setting given inefficient farmers. For better results the industry needs to depoliticize, change warehouses’ ergonomics, eliminate unnecessary WRS administrative costs, break cooperative monopoly to accommodate private buyers’ participation, strengthen regulatory enforcement mechanisms, restore export parity pricing procedures and establish an advisory to sieve conflicting scholar recommendations. en_US
dc.description.sponsorship Funded by iAGRI en_US
dc.language.iso en en_US
dc.publisher NAF-IRN en_US
dc.subject Cashew nut industry en_US
dc.subject Market failure en_US
dc.subject Institutional analysis en_US
dc.subject Production efficiency en_US
dc.subject Competition assessment en_US
dc.title Policy imperatives for control of market exchange failure in the cashew nut industry en_US
dc.type Working Paper en_US
dc.url en_US

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