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Market Orientation Index

The market orientation index is used as a measure to distinguish between households that are producing goods destined for the market. The index that we present below gives more importance to agricultural activities that are more marketable. For example, if household A allocates 70% of their total land to three cash crops and the remaining land to food crops, and household B allocates 70% of their land to food crops and the remaining 30% to cash crops, using the market orientation index, the results will show that household A is more market oriented than household B (assuming that food crops have lower marketability than cash crops).

How to operationalize the metric

Method of data collection and data needed to compute the method:

Market orientation indices have examined the proportion of household production sold to the market and the proportion of land allocated to crops (Gebremedhin and Jaleta, 2010; Hichaambwa and Jayne, 2012). The data used generate this index can be obtained via agricultural survey. As indicated in the market participation index, data on area planted for each crop will be used to operationalize this metric. In addition, data on the amount sold for each crop should be collected. In standard agricultural surveys data on the amount of harvest sold is enumerated.  These data are enumerated for each plot listed by the household and for each crop on that plot. In the LSMS-ISA survey, the following questions are used to obtain that data (for the area questions please refer to the Market Participation section):

  1. What was the quantity harvested?
  2. What was the area harvested for [crop]?
  3. What fraction of crops remains to be harvested in this period?
  4. What was the quantity of [crop] sold?

Question 2 may be used in cases where the survey is performed in the same month as the harvest and some crops still remain in the garden, or for crops like tubers where farmers may harvest a portion and leave the other amount still in the field. 

Unit of analysis:


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