There is a strong potential for growth in livestock production and consumption, particularly in developing countries, as indicated by recent global trends in the livestock sector (Delgado et al. 1999). The critical policy question is whether smallholders are able to participate and compete in the domestic and global markets. This study has examined the competing effects of transaction costs, labour mobility, (intellectual, financial and physical), and capital formation and indebtedness on smallholders' market participation and selling decisions. The important role of policy in providing an enabling environment for improving the productivity of smallholder livestock production systems is suggested by the strong effect of animal numbers in the participation and selling decisions of farmers. Technology and policy options that will enhance incentives to increase production will have a large, though indirect, impact on motivating market participation. Social prescriptions that increase education will, however, divert smallholder attentions elsewhere and this finding appears to be in marked contrast to other studies (e.g. Holloway et al. 2000) that find a strong participatory impact from education. Whether this difference stems from externalities arising from differences in off-farm employment opportunities; differences in risks associated with different commodities; or, perhaps, climatic variability, remains an open research question. In addition, potentially important insights for policy appear possible in comparison of results at different locations. For example, such comparisons may uncover additional factors explaining differences in results attributable to infrastructure, especially the quality of roads, communication and transport systems. Presently we find that 'distance' (the return time to transport goods to market) is neither a significant determinant of participation nor sales. However, the companion transactions-costs proxy 'members' (the total number of members of the household) appears to significantly affect both the participation and sales decisions. Thus, we suggest that this impact may be due to increased responsibilities for risk bearing which greater household numbers engender.
The availability of alternative occupation opportunities affects significantly the potency of social and economic prescriptions, and policymakers need to be mindful of these results when targeting objectives for smallholders. In addition, the emergence of capital stock variables, especially remittances, as a positive influence on market participation, suggests the importance of financial security in enabling smallholders to cope with risks as well as meet their subsistence requirements. This also points to the more important and general issue of farmers' capacities to bear risks as a critical determinant of market entry, and how this can be addressed through appropriate policy interventions that can facilitate risk-bearing. Improving farm-specific skills through visits by extension agents' appears important in precipitating entry, but not supply. Here, animal productivity-improving technologies appear to be, perhaps, the most lucrative of all policies.
