Realizing the Gains from Trade : Export Crops, Marketing Costs, and Poverty

This paper explores the role of export
costs in the process of poverty reduction in rural Africa.
The authors claim that the marketing costs that emerge when
the commercialization of export crops requires
intermediaries can lead to lower participation into export
cropping and, thus, to higher poverty. They test the model
using data from the Uganda National Household Survey. The
findings show that: i) farmers living in villages with fewer
outlets for sales of agricultural exports are likely to be
poorer than farmers residing in marketendowed villages; ii)
market availability leads to increased household
participation in export cropping (coffee, tea, cotton,
fruits); and iii) households engaged in export cropping are
less likely to be poor than subsistence-based households.
The authors conclude that the availability of markets for
agricultural export crops helps realize the gains from
trade. This result uncovers the role of complementary
factors that provide market access and reduce marketing
costs as key building blocks in the link between the gains
from export opportunities and the poor.