Joint market participation choices of smallholder farmers and households' welfare: evidence from Senegal

PurposeThere is much evidence in the literature showing the benefits of input market participation on farmers’ welfare. The same is true for participation in marketing. However, there are very few studies on the expected benefit of input market participation and marketing. This study fills this gap by examining the issue in the Senegalese context for food and cash crops.Design/methodology/approachThe authors estimate a multinomial endogenous switching regression using a highly detailed 2017 agricultural survey in Senegal. They first identify factors that shape farmers’ decision to participate in the input market and marketing and then assess the impact of market participation choices on farmers’ profits.FindingsThe results show that the most profitable market participation regime depends on the crop under consideration. For food crops, joint participation in markets maximizes profit per hectare, while for groundnuts, the main cash crop in Senegal, participation in the input market is not necessary to maximize farm profit.Research limitations/implicationsUsing panel data would improve the quality of estimations (time-variant effects) and help to consider the role of risk in output and input markets.Originality/valueThis paper helps to characterize different profiles of farmers based on their market participation and crop choices and provide policymakers with recommendations for maximizing farmers’ profit.