Smallholder Maize Market Participation and Choice of Marketing Channel in the Presence of Liquidity Constraints: Evidence from Zambia

Key Findings -Smallholders with liquidity constraints in maize production are 11% less likely to be a net seller of maize. One explanation for this is that liquidity constrained households are less able to adequately invest in productivity enhancing inputs, thus limiting limits their capacity to produce a marketable surplus. -While households without liquidity constraints (UC) have a statistically significant positive response to higher maize prices, liquidity-constrained (LC) households do not respond to changes in maize prices. -A 10% increase in maize production is correlated with a 4% increase in probability of being a net seller for UC households and 3% for LC households. An additional expected moisture stress period during the growing season reduces the probability that a LC household is a net seller by 16%. -LC households are 18% less likely to sell to the FRA, and thereby are less likely to be able to enjoy the benefits of relatively high FRA maize purchase prices