Household Market Participation, Access, and Farm Productivity in AJK: Evidence from Farm Household Data (Article)

The goal of the study is to get insight into agriculture production and market constraints in the AJK region. To achieve the objectives of the study, in the first stage, production function is estimated to obtain technical efficiency scores that are explicitly dependent on the farm and farm-specific variables. For this, single-step stochastic production estimation was applied. Tobit regression was employed in the second phase, with the market participation index as the dependent variable and market accessibility factors and efficiency as explanatory variables. The findings show that all inputs contributed favourably and considerably to farm production, with a mean technical efficiency of 58 percent, indicating that sample farmers might achieve the maximum production frontier by raising their efficiency to 42 percentage points. Among the determinants of technical efficiency farm size, land fragmentation and traction power negatively contributed to efficiency. Market participation was low as approximately 47 percent of the sampled farmers had less than 50 percent market participation and 20 percent did not participate in the market. The remaining 33 percent had market participation greater than 50 percent. The major factors that affect market participation were production efficiency, distance from roads and the market, credit facility, training, experiences, and internet and refrigerator facilities. All these variables were positive and significantly contributed to market participation.