Going the Distance: The Impact of Distance to Market on Smallholders Crop and Technology Choices

Smallholder farmers in Honduras and the Trifinio region of Central America contend with poor roads and high transportation costs when making production decisions. Farmers select crop activities based on cost, revenue and profit but are constrained by labor requirements, cash requirements, food security concerns, and input and output market access. Market access is directly related to distance to market. Distance to market increases the cost of inputs, increases transportation costs, and reduces the effective price farmers receive for outputs. We conduct two analyses to study the impact of distance to market on crop and technology choices. We utilize a household survey to analyze the determinants of fruit and vegetable production and market participation. Probit and multinomial logit models are employed to analyze the impact of distance to market and other variables on fruit and vegetable production. Results indicate that as distance to market increases, the probability of fruit and vegetable production for consumption increases and the probability of fruit and vegetable production for sale at market decreases.

In a second paper, we utilize data from extension agencies, research institutions, a household survey, and expert opinions to model a representative Honduran farm. With linear programming, we analyze the crop and technology mix selected by the farm given changes in distance to the output market, changes in distance to the input market, food security concerns, and labor market participation. We focus specifically on integrated pest management (IPM) technologies. Results indicate that beyond a specific distance, vegetable production ceases, while staple crop production remains profitable. Additionally, a combination of low, medium, and high-technology crop activities is selected by a profit-maximizing farm. Even far away from the market, medium and high-technology crop activities are selected. Overall, these two studies indicate that distance to market is negatively related to fruit and vegetable production. A reduction in transportation costs and an increase in the prevalence of less input-intensive integrated pest management techniques may increase the incidence of fruit and vegetable production and market participation in Trifinio and Honduras.