In this section, literature related to cash and non-cash assets that influence the volume of produce sold in the markets by smallholder farmers is reviewed. The importance of these assets in generation of marketable surpluses and their significance in enhancing market participation is put in focus.

[21] found size of cultivable land, human and physical capital to be important factors in inducing smallholder market participation. Farmers with bigger cultivable land were found to participate more because of their ability to produce bigger volumes that ensured marketed surpluses. [22] found household labour to be an influential but cheaper asset that leads to higher production volumes and positively influences farmers’ market participation.

[23] used an asset-based approach to study patterns of household market participation in Mozambique. The authors found that private household assets especially land, livestock and farm equipment positively affected crop market participation. [24] , studying market participation in staple grains, found that barriers to participation in markets by smallholders were mainly land, livestock, capital and improved technologies like farm equipment needed to generate a surplus that influenced market participation. [25] on the other hand found that households with larger land holdings per adult member sold larger volumes of their produce as compared to those with smaller land holdings. The authors further found that households with larger livestock endowments produced and sold more crop produce. They explained that it was because the households used manures from the livestock to enhance crop yields. However, [17] pointed out that ownership of livestock by a household negatively affected its participation in the crop market because it distracts the farmer into an alternative source of income.

In a related study, [26] found that price had an important influence on the level of farmers’ market participation in cassava markets which is supported by economic theory that price induces increased supply. [27] also asserted that better output price and market information were key incentives for increased sales in the market, while household size and non-farm income significantly reduced the sales of vegetables in the market. [26] further found that the probability of market participation declined with declining farm size for sellers of cassava but increased with farm sizes for buyers though not significant in either case.

[4] [7] [8] found that the low crop yields were attributed to farmers’ failure to use improved inputs leading to lack of competitive production and low market participation. [9] revealed that small plots of land and high costs of inputs had limited the potato yields in Uganda and hence limiting the profits of smallholder producers.

[10] puts to light the fact that especially for seed and fertiliser, market failures continue to be pervasive in Sub-Saharan Africa because of high transaction costs, risks and low economies of scale. [28] noted that the green revolution in Asia spurred economic growth and reduced rural poverty significantly because many smallholders accessed inputs like improved seed and fertiliser profitably. [29] stated that most smallholders lack the land and other resources to produce a surplus.

Even though there is a lot of research done on farmer market participation, many of the studies seem to concentrate on grain staples especially maize. Little attention has been given to perishables like potato yet they are increasingly being commercialised for household income generation. Therefore, this study set out to address the following hypotheses: what are the factors responsible for taking the decision of entering the market? And what determines the volume of potatoes sold at the market?

Estimation of the model outlined above in Equations (1) to (6) followed a series of regression diagnostics. Variables used in both stages of the model were first checked for normality using Exploratory Data Analysis using the coefficient of kurtosis and skewness. Regression diagnostics included tests for multi-collinearity, self-selec- tion bias and heteroscedasticity. Multicollinearity was tested using the variance inflation factor (VIF) while heteroscedasticity was checked using Breusch-Pagan/Cook-Weisberg tests [35] . Variables used in the first stage of the Heckman model are shown in Table 1 for factors that affect farmers’ decision to participate in the market.

The second stage variables of the model for factors determining farmers’ level of market participation are shown in Table 2.

Sex of household head had a positive and significant (P ≤ 0.01) impact on the decision to participate and how much potato to sell in the market (Table 4). In most cases it is the males in a family who make the decisions on whether to sell potato or not and how much. This means that females are less likely to participate in the whole process of selling potato and price and other transactional bargaining. [38] showed that women rarely had similar access to assets and markets as men, which led to different levels of participation in cash crop markets. Related to that, the authors got results that indicated female farmers selling coffee in Uganda getting significantly lower prices for coffee sold in the same market with male farmers. [39] also supported this finding by indicating that female farmers grow subsistence crops for food security and cash crops meant for cash income are grown mainly by male farmers to cater for cash needs of the household.

The results also revealed that having other food sources in the farmer’s household had a positive coefficient and significant (P ≤ 0.05) effect on the decision to participate in the potato market. This is because since potato is a food as well as a cash crop, presence of other sources of food ensures surplus potato oriented towards the market. [40] found that cash crops did not appear to adversely affect a household’s staple food production.

The results in Table 4 also revealed that price of potato had a positive and significant (P ≤ 0.01) influence on the decision to participate in the potato market. This is because many farmers respond to higher prices because it means getting higher incomes from their produce. Farmers tend to study price trends over seasons and can appropriately predict and respond to the prices. [17] supported this argument and result by stating that unfavourable prices may affect household incomes and consumption adversely.

Results of the second stage of the Heckman model that depict the factors that influence the farmers’ level of participation in the potato market are shown in Table 5.

In addition, farmer’s age had a positive and significant (P ≤ 0.01) impact on the decision to participate in the potato market. This is because many decisions made in the household on whether to sell or not depend on ones position in the order of hierarchy in headship of the family. Older members of the family tend to make the key decisions that affect the family welfare. [32] asserted that age is an indicator of the position of the household in the life cycle and ability to comprehend and use accessed market information. [21] also found a positive relation between age and farmer market participation with older farmers selling higher proportions of their produce to the market.

Access to a village market also had a positive coefficient and significantly (P ≤ 0.05) influenced the potato farmer’s decision to participate in the market (Table 4). This result is explained by the fact that village markets

At the time of this study 1 USD = 2480 UGX; Standard errors in parentheses; Significant level: ^* = 10%; ^** = 5%; ^*** = 1%.

are meeting points for buyers and potato sellers where there is free haggling which leads to better prices than selling at the farm gate. This reveals an important aspect of rural agricultural trade where farmers and traders from different areas converge and carry out commodity market exchanges on given market days and times. By having a closer place where to sell their produce, farmers reduce on transaction costs and interface with more market opportunities of selling directly to buyers rather than through brokers. [41] in support of this kind of arrangement, recommended strengthening market access by smallholders by implementing policies that organise producers to reduce number of intermediaries in input and output markets. Farmers who have access to village market arrangements usually produce and send more to the market than their counterparts without such opportunities. [42] found that physical infrastructure like market sites can increase the efficiency of both marketing and production of agricultural products.

To access market information and production knowledge, smallholders have to interface with a number of market and institutional actors who include traders, brokers and extension agents. In this study, results indicated that the number of extension visits from government workers had a positive and significant (P ≤ 0.01) effect on the decision to participate in the market. This is because extension workers usually provide information on market availability as well as information on new and improved varieties that enhances the farmer’s knowledge and provide a range and choice of market opportunities. [21] also got a similar result when they found a positive and significant effect of extension access on the volume of teff sold. [32] agreed with this argument by stating that to commercialise, the most important factors appear to be improved access to markets, information and risk reduction. [17] also supported the argument by stressing that smallholder commercialisation could be seen as the strength of the linkage between farm households and markets at a given point in time.

The results in Table 4 indicate that education had a positive and significant (P ≤ 0.01) effect on smallholder farmer’s decision to enter the potato market. This can be highly attributed to the fact that education empowers a farmer to make informed decisions and identify market opportunities where they exist. [43] however found results that indicated that farmer’s ability to produce and sell more in a market was highly and positively related to their education levels. The authors asserted that farmers, who had attained secondary education and had combined it with informal education, were more likely to produce and sell more.

Distance to the nearest town had a positive and significant (P ≤ 0.01) effect on potato farmer’s decision to participate in the market. This is because the nearer to town the easier it is to access buyers who offer better payment terms than in the case of farmers far away from towns. This is counter intuitive as earlier literature from Mozambique by [32] showed, even though they offered a possible explanation that since towns tend to be market centres as well, off farm employment opportunities are much better close, to the extent that off farm employment and reliance on output markets are substitutes.

Though not significant, smallholder farmer’s household size, potato farming experience and good road condition to the nearest market had a positive sign (Table 4) meaning they promote a farmer’s decision to enter the market. [31] also found a positive but no significant effect of size of household on entering the market as a seller. [44] explained that large households seem to have higher opportunity costs, perhaps which is reflected in the fact that they have lower per-capita income and hence less surplus to purchase capital equipment to switch to the market. [45] found that the state of bad roads negatively impacted on farmers’ access to urban markets, hence a hindrance to smallholder commercialisation and increased incomes.

Table 5 results indicate that off farm income earned by a potato farmer was found to negatively and significantly, (P ≤ 0.05) affect volumes of potato sold in the market. Farmers engaged in off-farm work and earning incomes other than potato income tend to dedicate less time to production and marketing of potato, which possibly results into smaller quantities sold. [46] found a negative relationship between off farm income and agricultural sales which the authors attributed to time constraints on agricultural production and farm management since off farm employment competes with farm activities for the time resource. [47] added that non-farm incomes of rural households may be derived from casual labour hire, wage employment, private business activity (self-employed) or remittances [24] [48] in support of the importance of off farm income to the smallholders, contended that in the presence of working capital constraints, off-farm earnings may be essential to maintaining a viable farm that requires purchased inputs or that cannot generate enough cash income to satisfy the household’s cash requirements.

The gender of the farmer had a positive and significant (P ≤ 0.05) effect on the volumes of potato sold into the market. Hence, by being male, a farmer had higher chances of selling more potato to the market because male farmers have more contacts that are social with both potato buyers and their agents whom they often meet in trading centres. Males dominate in selling potato to the market and as expected, they make the decisions that affect all family members. Female farmers lack such contacts and are in most cases excluded from direct transactional negotiations with buyers. [11] found that male gender of farmer positively and significantly influenced farmer’s volume of sales in the market. The author stated that the reason is that women spend much of their time doing domestic work and allocate less time to other matters like market transactions.

Related to the above, a potato farmer’s membership in a group or marketing cooperative positively and significantly (P ≤ 0.1) influenced the volumes of potato produce sold in a market (Table 5). The main reason for this was that working in a group creates synergy among the farmers and enables them to access market information as well as sharing experiences. [49] [50] while studying smallholder agricultural commercialization and collective action in Kenya also found a positive and significant influence of membership in a group on the level of commercialization. The authors stated that membership to a farmers’ group improves access to banana technology, training and output markets and consequently increasing expected profits.