The Impact of Alternative Livestock Market Choice, Constraints and Opportunities: A Case of Smallholder Farmers in the Southern Communal Area of Namibia

Abstract

This paper used Regression Adjustment (RA), Inverse-Probability Weighted (IPW) and the Inverse-Probability Weighted (IPW) Regression Adjustment (IPWRA) estimators to estimate the treatment effects of marketing livestock at the informal market relative to other alternative market choices on the farmers’ gross margin. Estimation is based on survey data obtained by interviewing livestock farmers in the Southern Communal Area of Namibia. Four treatment levels representing market channels are the informal market, the permit sale, auction market, and abattoir. The estimated Average Treatment Effects (ATE) of patronizing permit instead of the informal market is N$142,701.8. Moving from the informal market to the auction, the estimated ATE is N$224,547; also for a movement from the Informal market to the abattoir ATE is N$605,810.8. Results show that among the farmers who marketed at the alternative markets, there is an increase in their gross margin sales from the average of N$142,012.1 to N$145,343.4 for permit sales, N$236,677.8 for auction sales and N$578,671.3 for the abattoir sales. Quantile estimates of the potential outcome distribution were also calculated to determine whether the treatment affects those farmers at the lower end of the distribution differently from those at the middle or upper end. The result of the quantile estimate was found to be consistent with that of the conditional mean. Overall, the study found that upstream markets are more gross profit enhancing than the downstream markets ceteris paribus.

Keywords: treatment effects, average treatment effects, potential outcome framework, potential outcome mean, upstream market, quantile effects.