Agricultural market failures and peasants’ welfare in South-Kivu

This research develops the analysis of the incidence of agricultural markets failures on peasants’ welfare in South Kivu, a highly specific equatorial environment made of high mountains, sizeable plains and combining mining and farming activities. Agricultural markets imperfections are key elements explaining the inefficient production and commercialization of food products. Our empirical study, the first of this kind ever made in South Kivu, is based on a personal survey of four territories. A stratified sample of 780 households among which 586 producers and 194 consumers has been built. The first chapter is a two stage analytical process. Market failures and inadequate transport infrastructures are studied in a system of interconnected markets.The data collected in Idjwi and Kalehe are used to test the predictions of the theoretical model. An improvement of transport infrastructures and a decrease in transaction costs increase peasants’ welfare, but only if productive capacities are sufficient. The cassava and the banana are basic commodities in South-Kivu, being extensively cultivated by the farmers. The second chapter analyzes the cassava supply and its price elasticity in a situation of market failures. The results indicate that farmers are fairly insensitive to price changes because of the high transactions costs. The third chapter analyzes the choice between selling at the farm or on the market.The endogenous switching regression model used in this chapter show that farmers’ choices are crucially dependent on transaction costs and that the intermediaries’ collusions on price are not always stable. Chapter four discusses the various policies to support production and value chains. Agricultural cooperatives networks, policies of improving infrastructures and an adequate institutional regulatory framework to monitor the market exchange processes, especially the role of intermediaries, are key points.