An analysis of the factors influencing marketing channel choice by paddy rice farmers in Myanmar

Rice industry is vital for food security and the economic development of Myanmar as its economy relies on agriculture sector. Promoting the marketing capability of farmers especially the smallholders is the key challenge of increasing farm investment. The rice fanners generally have channels selling to (1) the brokers or commission men who come and collect at the farm gate, (2) the collectors or traders at the farm gate, and (3) selling directly to the rice mills nearby towns. Assessing from different channels is central for exploiting the potential to increase production, farm income and investment. However there are restrictions in channel choices because of poor infrastructure, lack of marketing facilities, insufficient credit and up to date market information. Moreover, due to the oligopsony market structure and without organization, individual marketing practices exposes them to high transaction costs with low bargaining position. The majority of farmers unable to receive a fair price as they have to sell their products soon after harvest when the price is generally low because of the immediate cash need for repayment. So, the farmers cannot maximize profit which in turn affects the future investment of paddy farmers. This paper investigates the factors determine the marketing channel choice using the Multinomial Logit Model. The results show the probability of selling at the farm gate is increase with the distance to market. The farmers who possess storage, transportation, larger quantity and access of market information are more likely to sell the remunerative direct marketing channels to the rice mills directly. The result underscore the importance of forming the farmers' cooperative, development of marketing infrastructures, accessibility of up to date marketing information in order to support farmers bargaining power to develop farm's profit and investment.