Factors Influencing Smallholder Cocoa Farmers' Participation in the Warehouse Receipt Marketing Channel in Kyela District, Tanzania

Abstract

This study aimed to identify the factors influencing smallholder cocoa farmers' participation in the Warehouse Receipt System (WRS) marketing channel in Kyela District, Mbeya. A quantitative cross-sectional approach was employed, collecting primary data from 177 WRS participants and 87 non-participants across Ikolo, Sinyanga, Makwale, and Mbwasyo villages. Data analysis with multivariate logistic regression revealing key findings. Two factors positively influenced participation: education and extension services. Conversely, cocoa being the primary source of income and reliance on informal market information negatively affected participation decisions. Cragg’s double hurdle regression analysis highlighted four factors that increased the extent of participation: education, compliance with quality standards, market accessibility, and price predictability. In contrast, two factors negatively influenced participation extent: WRS payment lead time and access to credit. The study concludes that socio-economic, market, and institutional factors significantly influence smallholder cocoa farmers' decisions and extent of participation in the WRS. Whenever smallholder farmers are constrained within a mix of formal and informal marketing channels, or WRS with parallel brokers who have no choice but to sell through WRS need to ensure that limiting factors are properly addressed. Transaction costs associated with high standards need to be mitigated, credit schemes need to be separated from WRS payment process.