AbstractThis paper explores and ass

Abstract
This paper explores and assesses efficiency of the structure, conduct and performance of groundnuts markets in
northern and central Malawi. Smallholder farmers and traders involved in groundnuts were interviewed. Using
time series price data, the spatially distinct groundnuts markets were also examined. The results show that most
smallholder farmers adopted Chalimbana and CG7 groundnut varieties, over-recycle groundnut seed, and do not
use recommended seed rate. Five different groundnut marketing channels are identified. However, there is
minimal value addition in all channels. The markets are weakly integrated and segmented with a few sellers. The
study highlights the need for organised groundnut seed systems to ensure supply of high quality seed to farmers;
strengthened market oriented extension services; improved roads to production areas; improved and affordable
technologies on production and value addition; vibrant farmer organisations and improved market information
generation and dissemination to farmers and traders.
Keywords: Groundnut Market, Structure, Conduct, Performance, Efficiency, Margin, Malawi
1.0 Introduction
1.1 Overview of Agricultural Sector in Malawi
Agriculture continues to remain the main driver of Malawi’s economy despite some growths in the industrial and
manufacturing sectors. It contributes 39% of the country’s Gross Domestic Product (GDP), employs 85% of the
country’s workforce in food and cash production, agro-industries and inputs and outputs markets and accounts for
more than 90% of the country’s foreign exchange earnings (Government of Malawi [GoM], 2009). It is also the
main source of savings and investible funds in Malawi—about 61% of the country’s households depend on crop
sales for their incomes. The sector consists of smallholder and estate subsectors. The estate subsector is mainly for
production of high value cash crops such as tobacco, tea, sugar, coffee and macadamia (Kachule, 2011). The
smallholder subsector accounts for more than 70% of agricultural GDP (GoM, 2009). One of the crops grown
under smallholder subsector is groundnuts. Groundnuts provide about 25% of household’s agricultural income
(Minde et al., 2008).
© Center for Promoting Ideas, USA www.ijbssnet.com
131
1.2 Groundnuts Production and Marketing
Groundnut is produced by farmers in all districts of Malawi as source of food and income, livestock feed, for
export and also for improving soil fertility. About 70% of the total groundnut production is consumed locally.
Over the past 10 years, overall production has not significantly increased in Malawi. The annual unshelled
groundnut production grew from 131,543T in 1999 to 282,054T in 2009 (FAO STAT, 2011). This production
accounted for 2% of total groundnuts production in Africa. By 2009, Malawi ranked as 19th largest producer of
groundnuts in the world (FAO STAT, 2011).
In terms of marketing, the Agricultural Development and Marketing Corporation (ADMARC), a statutory
corporation, was the sole buyer and supplier of produce and inputs respectively. However, since mid 1980s
government liberalized market to allow private sector play an active role in the marketing of inputs and produce in
Malawi. Simtowe et al., 2009 noted that Malawi ranked 9th exporter of groundnuts in sub-Saharan Africa. The
export volume over the past ten years has been small and with lots of fluctuations. By 2009, Malawi’s groundnuts
exports had increased to 19,879T (FAO STAT, 2011).
The government still feels there is low groundnut production and marketing despite market liberalization
opportunity to smallholder farmers and traders (GoM, 2008). This contributes to poor human nutrition status,
slow growth of livestock and crop cereals sectors, low income and low foreign exchange earnings from
groundnuts. The low and fluctuating groundnuts production and marketing in Malawi is an indication of market
failure to stimulate production and marketing.
1.3 Objectives of the Study
In order to address problems associated with market failure so as to increase groundnuts production and
marketing, knowledge of the structure, conduct and performance of groundnuts markets is required. The type of
market structure that prevails in a market determines efficiency of marketing system (conduct and performance of
markets). The knowledge of structure, conduct and performance of groundnuts markets facilitates further
innovations and productivity growth in the groundnuts subsector. Unfortunately, no studies have been conducted
in Malawi to analyze or investigate the structure, conduct and performance of groundnuts markets. This study
therefore aims at analysing the structure, conduct and performance of groundnuts markets in Northern and Central
Malawi. Specifically, the paper aims to (i) analyse existing marketing systems of groundnuts (ii) conduct
groundnuts profitability analysis (iii) identify factors affecting groundnuts production and (iv) identify
smallholder farmer’s constraints to groundnuts production and marketing.
2.0 Materials and Methods
2.1 Market Structure, Conduct and Performance
Market structure refers to a set of market characteristics that determine the economic environment in which a firm
operates (Thomas and Maurice, 2011). It is characterized on the basis of four industry characteristics: (i) number
and size distribution of active buyers and sellers and potential entrants; (ii) degree of product differentiation; (iii)
amount and cost of information about product price and quality and (iv) condition of entry and exit (Hirschey et
al., 1993).
Market conduct refers to the patterns of behaviours that firms follow in adapting or adjusting to the markets in
which they sell or buy. The dimensions of conduct include methods employed by firms in determining the price of
an output and sales promotion policy, the presence or absence of coercive tactics directed against either
established rivals or potential entrants (Bain, 1968).
Market performance refers to the economic results that flow from the industry and how well it performs in terms
of efficiency and progressiveness or innovation, given its technical environment (Bain, 1968). It is the impact of
structure and conduct as measured in terms of the variables such as prices, costs and volume of output (Bresser
and King, 1970).
2.2 Analytical Framework/Procedure
The structure, conduct and performance of markets have been analysed by researchers using various different
approaches. Nambiro et al., (2001) analysed the structure and conduct of the market in Trans Nzoia district
(Western Kenya) in order to understand the organisation of the market and assess the degree of competition in
hybrid maize seed production and retailing using Gini coefficients.
International Journal of Business and Social Science Vol. 5 No. 6; May 2014
132
Enibe et al., (2008) described the structure, conduct and performance of banana market in Anambra State of
Nigeria using descriptive statistics, Gini coefficients, price spread, behaviour of middlemen, conduct of marketing
functions and gross marketing margins.
Giroh et al., 2010 also examined the structure, conduct and performance of farm gate marketing of natural rubber
in Edo and Delta States of Nigeria using Gini coefficient, Budgetary technique, Market margins, Marketing Costs
and Rate of Return to investment. Odhiambo et al., (2006) analysed the structure and performance of beans
marketing system in Nairobi using descriptive statistics, concentration ratios and co-integration models. Bain
(1968) observed that by analyzing the level of the marketing margins and their cost components, it is possible to
evaluate the impact of structure and conduct characteristics on market performance.
In this study, a number of analytical approaches were used. They include: Herfindahl-Hirschman Index (HHI),
Marketing Margins, Marketing Efficiency Index (MEI), Price Spread, Cobb Douglas Production Function, and
Spatial Market Integration (using bivariate correlation coefficients of price difference). Market structure was
determined by assessing market concentrations and entry conditions of the markets using HHI as follows:
ଶܵܯ ෌ = ܫܪܪ
௡
௜ୀଵ
− − − − − − − − − − − − − − − − − − − − − − − − − − − − − −(1)
Where: MSi is the Market Share of selleri; and n is the number of sellers in the market. The market shares were
calculated based on quantities of groundnuts handled by each seller as follows:
= ௜ܵܯ
௏೔
∑ ௏೔
೙
೔సభ
------------------------------------------------------------------------------------------------ (2)
Vi is the quantity of groundnuts handled by seller i (in kg); and ∑ ܸ݅ is the total quantity of groundnuts handled by
sellers in the market (in kg)
Marketing margins were calculated by determining price variations at different segments and compare them with
the final price paid by the consumer. The formula for total marketing margin was as follows:
ቀ = ݊݅݃ݎܽܯ ݃݊݅ݐ݁݇ݎܽܯ ݏݏ݋ݎܩ ݈ܽݐ݋ܶ
ோ௘௧௔௜௟ ௉௥௜௖௘ିி௔௥௠ ீ௔௧௘ ௉௥௜௖௘
ோ௘௧௔௜௟ ௉௥௜௖௘ ቁ ∗ 100 − − − − − − − −(3)
The price spread was applied to measure the degree of pricing efficiency. For farmers, it was calculated by
deducting costs of marketing from gross price. For traders in all the channels, the price-spread focused on the
trader’s surplus as a percentage of total marketing costs.
Marketing efficiencies of all channels were determined by MIE. According to Acharya and Agarwal (2001), MIE
is the ratio of net price received by the farmer to the total marketing cost plus total margin as follows:
= ܫܧܯ
ே௉
ெெାெ஼
− − − − − − − − − − − − − − − − − Abstract
This paper explores and assesses efficiency of the structure, conduct and performance of groundnuts markets in
northern and central Malawi. Smallholder farmers and traders involved in groundnuts were interviewed. Using
time series price data, the spatially distinct groundnuts

Hasil (Bahasa Indonesia) 1:

AbstrakMakalah ini membahas dan menilai efisiensi struktur, perilaku dan kinerja pasar kacang tanah diMalawi Utara dan tengah. Petani dan pedagang yang terlibat dalam kacang tanah diwawancarai. Menggunakandata time series harga, pasar kacang tanah spasial berbeda juga diperiksa. Hasilnya menunjukkan bahwa kebanyakanpetani mengadopsi Chalimbana dan CG7 kacang tanah varietas, over mendaur ulang biji kacang tanah, dan tidakmenggunakan rate direkomendasikan benih. Lima berbeda kacang tanah saluran pemasaran diidentifikasi. Namun, adanilai minimum tambahan di semua saluran. Pasar lemah terintegrasi dan tersegmentasi dengan beberapa penjual. Thestudi ini menyoroti kebutuhan untuk sistem biji kacang tanah teratur untuk memastikan pasokan benih bermutu tinggi untuk petani;memperkuat pasar berorientasi layanan perpanjangan; perbaikan jalan ke daerah-daerah produksi; peningkatan dan terjangkauteknologi produksi dan nilai tambah; organisasi-organisasi petani yang semarak dan pasar yang membaik informasigenerasi dan penyebaran kepada para petani dan pedagang.Kata kunci: Kacang tanah pasar, struktur, perilaku, kinerja, efisiensi, Margin, Malawi1.0 pengenalan1.1 Ikhtisar dari sektor pertanian di MalawiPertanian akan terus menjadi pendorong utama dari ekonomi Malawi's meskipun beberapa pertumbuhan dalam industri dansektor manufaktur. Itu menyumbang 39% dari negara domestik produk bruto (PDB), mempekerjakan 85% darinegara tenaga kerja di produksi makanan dan uang tunai, agro-industri dan input dan output pasar dan menyumbanglebih dari 90% dari pendapatan devisa negara (pemerintah Malawi [GoM], 2009). Hal ini jugasumber utama tabungan dan investible dana di Malawi — sekitar 61% rumah tangga di negara ini tergantung pada tanamanpenjualan untuk pendapatan mereka. Sektor ini terdiri dari petani dan estate subsectors. Subsektor perkebunan adalah terutama untukproduksi tanaman bernilai tinggi seperti tembakau, teh, gula, kopi dan macadamia (Kachule, 2011). Thepetani subsektor menyumbang lebih dari 70% dari PDB pertanian (GoM, 2009). Salah satu tanaman yang tumbuhdi bawah petani subsektor adalah kacang tanah. Kacang tanah menyediakan sekitar 25% dari pendapatan pertanian tangga(Minde et al., 2008). © Pusat untuk mempromosikan ide, Amerika Serikat, www.ijbssnet.com1311.2 kacang tanah produksi dan pemasaranKacang tanah yang dihasilkan oleh petani di semua Kabupaten Malawi sebagai sumber makanan dan pendapatan, pakan ternak, untukekspor dan juga untuk meningkatkan kesuburan tanah. Sekitar 70% dari produksi kacang tanah total dikonsumsi secara lokal.Selama 10 tahun, produksi keseluruhan belum secara signifikan meningkat di Malawi. Tahunan tanpa kulitproduksi kacang tanah tumbuh dari 131, 543T di 1999 untuk 282, 054T pada tahun 2009 (FAO STAT, 2011). Produksi inimenyumbang 2% dari produksi total kacang tanah di Afrika. 2009, Malawi peringkat sebagai produsen terbesar 19kacang tanah di dunia (FAO STAT, 2011).Dalam hal pemasaran, pengembangan pertanian dan Marketing Corporation (ADMARC), perundang-undanganCorporation, adalah satu-satunya pembeli dan pemasok produk dan input. Namun, sejak pertengahan 1980-anpemerintah liberalisasi pasar untuk memungkinkan sektor swasta bermain peran aktif dalam pemasaran input dan menghasilkanMalawi. Simtowe et al., 2009 mencatat bahwa Malawi peringkat 9 eksportir kacang tanah di sub-Sahara Afrika. Thevolume ekspor selama sepuluh tahun telah kecil dan dengan banyak fluktuasi. 2009, kacang tanah Malawiekspor telah meningkat menjadi 19, 879T (FAO STAT, 2011).Pemerintah masih terasa ada produksi kacang tanah rendah dan pemasaran meskipun liberalisasi pasarkesempatan untuk petani dan pedagang (GoM, 2008). Ini memberikan kontribusi untuk status gizi buruk manusia,memperlambat pertumbuhan ternak dan tanaman sereal sektor, berpenghasilan rendah dan penghasilan rendah Valuta Asing darikacang tanah. Kacang tanah rendah dan berfluktuasi produksi dan pemasaran di Malawi merupakan indikasi pasarkegagalan untuk merangsang produksi dan pemasaran.1.3 tujuan studiDalam rangka untuk mengatasi masalah yang terkait dengan kegagalan pasar untuk meningkatkan produksi kacang tanah danpemasaran, pengetahuan tentang struktur, perilaku dan kinerja pasar kacang tanah diperlukan. Jenisstruktur pasar yang berlaku di pasar yang menentukan efisiensi sistem (perilaku dan kinerja pemasaranmarkets). The knowledge of structure, conduct and performance of groundnuts markets facilitates furtherinnovations and productivity growth in the groundnuts subsector. Unfortunately, no studies have been conductedin Malawi to analyze or investigate the structure, conduct and performance of groundnuts markets. This studytherefore aims at analysing the structure, conduct and performance of groundnuts markets in Northern and CentralMalawi. Specifically, the paper aims to (i) analyse existing marketing systems of groundnuts (ii) conductgroundnuts profitability analysis (iii) identify factors affecting groundnuts production and (iv) identifysmallholder farmer’s constraints to groundnuts production and marketing.2.0 Materials and Methods2.1 Market Structure, Conduct and PerformanceMarket structure refers to a set of market characteristics that determine the economic environment in which a firmoperates (Thomas and Maurice, 2011). It is characterized on the basis of four industry characteristics: (i) numberand size distribution of active buyers and sellers and potential entrants; (ii) degree of product differentiation; (iii)amount and cost of information about product price and quality and (iv) condition of entry and exit (Hirschey etal., 1993).Market conduct refers to the patterns of behaviours that firms follow in adapting or adjusting to the markets inwhich they sell or buy. The dimensions of conduct include methods employed by firms in determining the price ofan output and sales promotion policy, the presence or absence of coercive tactics directed against eitherestablished rivals or potential entrants (Bain, 1968).Market performance refers to the economic results that flow from the industry and how well it performs in termsof efficiency and progressiveness or innovation, given its technical environment (Bain, 1968). It is the impact ofstructure and conduct as measured in terms of the variables such as prices, costs and volume of output (Bresserand King, 1970).2.2 Analytical Framework/ProcedureThe structure, conduct and performance of markets have been analysed by researchers using various differentapproaches. Nambiro et al., (2001) analysed the structure and conduct of the market in Trans Nzoia district(Western Kenya) in order to understand the organisation of the market and assess the degree of competition inhybrid maize seed production and retailing using Gini coefficients. International Journal of Business and Social Science Vol. 5 No. 6; May 2014132Enibe et al., (2008) described the structure, conduct and performance of banana market in Anambra State ofNigeria using descriptive statistics, Gini coefficients, price spread, behaviour of middlemen, conduct of marketingfunctions and gross marketing margins.Giroh et al., 2010 also examined the structure, conduct and performance of farm gate marketing of natural rubberin Edo and Delta States of Nigeria using Gini coefficient, Budgetary technique, Market margins, Marketing Costsand Rate of Return to investment. Odhiambo et al., (2006) analysed the structure and performance of beansmarketing system in Nairobi using descriptive statistics, concentration ratios and co-integration models. Bain(1968) observed that by analyzing the level of the marketing margins and their cost components, it is possible toevaluate the impact of structure and conduct characteristics on market performance.In this study, a number of analytical approaches were used. They include: Herfindahl-Hirschman Index (HHI),Marketing Margins, Marketing Efficiency Index (MEI), Price Spread, Cobb Douglas Production Function, andSpatial Market Integration (using bivariate correlation coefficients of price difference). Market structure wasdetermined by assessing market concentrations and entry conditions of the markets using HHI as follows:ଶܵܯ ෌ = ܫܪܪ௡௜ୀଵ− − − − − − − − − − − − − − − − − − − − − − − − − − − − − −(1)Where: MSi is the Market Share of selleri; and n is the number of sellers in the market. The market shares werecalculated based on quantities of groundnuts handled by each seller as follows:= ௜ܵܯ௏೔∑ ௏೔೙೔సభ------------------------------------------------------------------------------------------------ (2)Vi is the quantity of groundnuts handled by seller i (in kg); and ∑ ܸ݅ is the total quantity of groundnuts handled bysellers in the market (in kg)Marketing margins were calculated by determining price variations at different segments and compare them withthe final price paid by the consumer. The formula for total marketing margin was as follows:ቀ = ݊݅݃ݎܽܯ ݃݊݅ݐ݁݇ݎܽܯ ݏݏ݋ݎܩ ݈ܽݐ݋ܶோ௘௧௔௜௟ ௉௥௜௖௘ିி௔௥௠ ீ௔௧௘ ௉௥௜௖௘ோ௘௧௔௜௟ ௉௥௜௖௘ ቁ ∗ 100 − − − − − − − −(3)The price spread was applied to measure the degree of pricing efficiency. For farmers, it was calculated bydeducting costs of marketing from gross price. For traders in all the channels, the price-spread focused on thetrader’s surplus as a percentage of total marketing costs.Marketing efficiencies of all channels were determined by MIE. According to Acharya and Agarwal (2001), MIEis the ratio of net price received by the farmer to the total marketing cost plus total margin as follows:= ܫܧܯே௉ெெାெ஼− − − − − − − − − − − − − − − − − AbstractThis paper explores and assesses efficiency of the structure, conduct and performance of groundnuts markets innorthern and central Malawi. Smallholder farmers and traders involved in groundnuts were interviewed. Usingtime series price data, the spatially distinct groundnuts