Pigeonpea Marketing Costs Sample Clauses

Pigeonpea Marketing Costs. Based on the conceptual framework from previous chapter, marketing of pigeonpea is associated with both variable and fixed costs. Total variable costs of marketing pigeonpea include marketing costs, and transaction costs and total fixed costs include the costs of identifying, negotiating, and concluding an exchange (Xxxxxxxxxx 1985, Xxxxx and Xxxxxx, 1997). Based on the conceptual framework for the study we used the total cost as marketing costs (which involves processing cost, packaging and labeling cost, payments to agent, transport cost, loading and offloading charges, cleaning cost, weighing charges, storage cost, tax charges, cost of buying bags) and transaction cost (which involves seller search cost and buyer search cost). According to the literature reviewed, the total cost in a value chain is affected by the number of factors, such as geographical distribution which affect transportation cost, the nature of the channels with many actors in between and no value addition and activities involved in a value chain. From the analysis, the shortest channel is the direct channel to exporter, in this channel the cost associated with marketing of pigeonpea is high compared to rural assembler and low compared to urban wholesalers. This is due to geographical distribution of farmers and lack of economies of scale. The long channel in the pigeonpea value chain is the channel of urban wholesalers. Urban wholesalers buy from the farmers and rural assembler; they incur transaction cost and transport pigeonpea from the first market in Babati rural to the second market in Babati town market and third market in Arusha market. The cost incurred by urban wholesaler selling in the second market in Babati town is small compared to the cost incurred by urban wholesaler selling to third market in Arusha. This increase in cost is due to distance and has influence on price too. In this channel the price is not affected by the distance only, but also other extra cost incurred by urban wholesalers in searching for sellers and buyers and handling cost such as loading and offloading cost when many link involved. These costs adds up to the total cost which affect the final price due to high cost and reduces the total profit on the value chain. Table 6.10 Distribution of Dry Pigeonpea Total Channel Marketing Cost and Profits Actors Channel 1 Rural Assembler/Broker Channel 2 Urban Wholesaler Channel 3 Urban Exporter Cost (in kg in TZs) Profit(in kg in TZs) Cost (in kg in TZs) Prof...
Sample 1
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