Transaction Costs and Cattle Farmers' Choice of Marketing Channels in North-Central Namibia

About 70% of the Namibian population depends on agricultural activities for their livelihood.Moreover, agriculture remains an important sector to Namibia because its national economyis widely dependent on agricultural production. Cattle producers in the Northern CommunalAreas (NCAs) have an option to market their cattle via the formal or informal markets.Efforts have been made to encourage producers to market their cattle through the formalmarket; however, limited improvement has been observed. In this study a number of factorshave been analysed to determine its influences on cattle marketing decisions. Factorsinfluencing the marketing decision of whether or not to sell through the formal market areanalysed using the Probit model. Factors influencing the proportion of cattle sold through theformal market on condition that a producer uses the formal markets to sell cattle are analysedwith the Truncated model. Testing the Tobit model against the alternative of a two-partmodel is done using Cragg’s model. Empirical results revealed that problems with transportto MeatCo, improved productivity, accessibility to market-related information and access tonew information technology, are some factors significantly affecting the decision of whetheror not to sell through the formal market. Payment arrangements by MeatCo, animal handling,accessibility to new information technology, age of respondents and lack of access tomarketing expertise, are some factors influencing the proportional number of cattle soldthrough the formal market. The results suggest that substantially more information isobtained by modelling cattle marketing behaviour as a two decision-making instead of asingle decision-making framework.