EFFECT OF MARKETING CHANNEL CHOICE ON THE PROFITABILITY OF CITRUS FARMERS: EVIDENCE FORM PUNJAB-PAKISTAN

Abstract

Pakistan is the thirteenth largest producer and sixth largest exporter of citrus in the world. Citrus is also the most cultivated and exported among all other fruits in the country. The marketing of citrus in the country is totally in the hands of the private sector partially regulated by the government. Empirical assessment of the links between the participation in the marketing channels and farmers’ profitability is characterized by conflicting results. The basic purpose of this paper was to measure the factors contributing to the profitability of citrus growers by taking participationin the marketing channels as the treatment variable. A cross-sectional data of 300 citrus growers were used for this purpose. Multinomial treatment effects model was used toempirically investigate the study objectives. By looking at the dynamics of farmers’ profitability by controlling several productionand household characteristics, findings of the study showed farmers’ profitability was positively affected by the participation in the modern marketing channels, i.e., run by the processors and contractors. These results conveyed two important messages for the policymakers: farmers selling to the modern marketing channels were better off, andthe traditional marketing channels (with intermediaries) did not hamper the profitabilityof the farmers.