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VALUE CHAIN ANALYSIS OF VEGETABLES: THE CASE OF

HABRO AND KOMBOLCHA WOREDAS IN OROMIA REGION,


ETHIOPIA

M.Sc. Thesis

ABRAHAM TEGEGN WOLDESENBET

May, 2013
Haramaya University

VALUE CHAIN ANALYSIS OF VEGETABLES: THE CASE OF


HABRO AND KOMBOLCHA WOREDAS IN OROMIA REGION,
ETHIOPIA

A Thesis Submitted to School of Agricultural Economics and


Agribusiness, School of Graduate Studies
HARAMAYA UNIVERSITY

In Partial Fulfillment of the Requirements for the Degree of


MASTER OF SCIENCE IN AGRICULTURE
(AGRICULTURAL ECONOMICS)

By
ABRAHAM TEGEGN WOLDESENBET

May, 2013
Haramaya University

APPROVAL SHEET
SCHOOL OF GRADUATE STUDIES
HARAMAYA UNIVERSITY
As Thesis Research advisors, we hereby certify that we have read and evaluated this thesis
prepared, under our guidance, by Abraham Tegegn entitled Value Chain Analysis of
Vegetables: The Case of Habro and Kombolcha Woredas in Oromia Region,
Ethiopia. We recommend that it be submitted as fulfilling the thesis requirement.

Dr. Lemma Zemedu

_________________

Major Advisor

Signature

Dr. Mengistu Ketema

_________________

Co-Advisor

Signature

_______________
Date

_______________
Date

As member of the Board of Examiners of the M.Sc. Thesis Open Defense Examination,
We certify that we have read, evaluated the Thesis prepared by Abraham Tegegn and
examined the candidate. We recommended that the Thesis be accepted as fulfilling the
Thesis requirement for the Degree of Master of Science in Agriculture (Agricultural
Economics).

______________________
Chairperson

______________________
Internal Examiner

______________________
External Examiner

_________________
Signature

_________________
Signature

_________________
Signature

II

_______________
Date

_______________
Date

_______________
Date

DEDICATION
I dedicate this thesis manuscript to my families for their continuous contribution
throughout my life.

III

STATEMENT OF AUTHOR
First, I declare that this thesis is my own work and that all sources of materials used for
this thesis have been duly acknowledged. This thesis has been submitted in partial
fulfillment of the requirements for M.Sc. degree at Haramaya University and is deposited
at the University Library to be available to borrowers under rules of the library. I solemnly
declare that this thesis is not submitted to any other institution anywhere for the award of
any academic degree, diploma, or certificate.

Brief quotations from this thesis are allowable without special permission provided that
accurate acknowledgement of the source is made. Requests for permission for extended
quotation from or reproduction of this manuscript in whole or part may be granted by the
head School of Agricultural Economics and Agribusiness or the Dean of the School of
Graduate Studies when in his/her judgment the proposed use of the material is in the
interest of scholarship. In all other instances, however, permission must be obtained from
the author.

Name: Abraham Tegegn

Signature:

Place: Haramaya University, Haramaya


Date of submission: May, 2013

IV

BIOGRAPHICAL SKETCH
The author was born on 3rd March, 1983 in Gojeb town of- Kafa zone, SNNP region. He
attended his elementary and junior education at Gojeb and Diry Goma primary and junior
secondary schools at Gojeb and Diry towns respectively, and Secondary School in Gimbo
Senior Secondary School in Gimbo town. After successful passing ESLCE, he joined
Mekelle University in 2003 and graduated with B.Sc. in Natural Resource Economics and
Management (NREM) in 16th July, 2006. After graduation he served in Chena Woreda
Office of Agriculture and Rural Development for one year and in Kafa Development
Forum Office for about four years. He joined Haramaya University in October 2011 to
pursue his M.Sc. degree in Agricultural Economics program.

ACKNOWLEDGEMENTS
I am indebted to many individuals for their help and encouragement rendered while
conducting this study. First, I would like to appreciate my major advisor Dr. Lemma
Zemedu and my Co-advisor Dr. Mengistu Ketema for their valuable comments, guidance
and encouragement from proposal write up and questionnaire development up to
submission of the final thesis write up.

I would like to thank CASCAPE project at Haramaya University for financial grant for my
research works. It is a great pleasure to extend my appreciation to staff members of
CASCAPE project for their facilitation of the study process and encouragement. I would
like to thank all staff members and development agents of Habro and Kombolcha Woreda
Agriculture and Rural Development offices for their permission and cooperation to use
available data from Woreda offices and all sample respondents for this study.

Above all, I thank the Almighty God for giving me health and strength for the completion
of the study.

VI

ABBREVIATIONS AND ACRONYMS


ADLI

Agricultural Development Led Industrialization

BoARD

Bureau of Agriculture and Rural Development

CASCAPE

Capacity Building for Scaling Up of Evidence Based Best Practices in


Agricultural Production in Ethiopia

CSA

Central Statistical Authority

DA

Development Agent

EHDA

Ethiopian Horticultural Development Agency

GDP

Gross Domestic Product

GMM

Gross Market Margin

GTP

Growth and Transformation Plan

IIA

Independent Irrelevant Alternative

MNL

Multinomial Logit

MoFED

Ministry of Finance and Economic Development

NGO

Non Governmental Organization

NMM

Net Marketing Margin

OLS

Ordinary Least Square

OoARD

Office of Agriculture and Rural Development

OCSI

Oromia Credit and Saving Institution

OoTI

Office of Trade and Industry

PSNP

Productive Safety Net Program

RMA

Rapid Market Appraisal

VIF

Variance Inflation Factor

VII

TABLE OF CONTENTS
DEDICATION

III

STATEMENT OF AUTHOR

IV

BIOGRAPHICAL SKETCH

ACKNOWLEDGEMENTS

VI

ABBREVIATIONS AND ACRONYMS

VII

LIST OF TABLES

XI

LIST OF FIGURES AND MAPS

XII

LIST OF TABLES IN THE APPENDIX

XIII

ABSTRACT

XIV

1. INTRODUCTION

1.1. Background of the Study

1.2. Problem Statement

1.3. Research questions

1.4. Objectives of the Study

1.5. Scope and Limitations of the Study

1.6. Significance of the Study

1.7. Organization of the Thesis

2. LITERATURE REVIEW

2.1. Definitions and Concepts in Vegetables Value Chain Analysis

2.1.1. Market chains versus value chains

2.1.2. Major concepts guiding agricultural value chain analysis

10

2.1.2.1. Effective demand

10

2.1.2.2. Production

10

2.1.2.3. Value chain governance

11

2.1.2.4. Value chain upgrading

12

2.1.3. Market and marketing

13

2.1.3.1. Marketing efficiency

13

2.1.3.2. Marketing channel

13

2.1.3.3. Marketing performance

14

2.1.3.4. Measuring value chain

15

2.2. Benefit of Value Chain in Agricultural Sector

VIII

15

TABLE OF CONTENTS (Continued)


2.3. Developing Value Chain Systems towards the Benefits of the Poor

16

2.5. Development of Market-Driven Vegetable Value Chain

17

2.6. Status of Vegetable Production in Ethiopia

19

2.7. Review of Empirical Studies

19

2.7.1. Value chain approach

19

2.7.2. Determinants of marketable surplus

21

2.7.3. Determinants of market channel choices

22

3. RESEARCH METHODOLOGY

24

3.1. Description of the Study Areas

24

3.2. Types, Sources and Methods of Data Collection

26

3.3. Sampling Procedure and Sample Size

26

3.4. Methods of Data Analysis

27

3.4.1. Descriptive and inferential statistics

27

3.4.1.1. Value chain analysis

27

3.4.1.2. Analysis of vegetable value chain performance

29

3.4.2. Econometric analysis

31

3.4.2.1. Market supply model

31

3.4.2.2. Market outlet choice model

32

3.5. Hypothesis, Variable Selection and Definition

37

3.5.1. Dependent variables

37

3.5.2. Independent variables

37

4. RESULTS AND DISCUSSION

43

4.1. Descriptive Results

43

4.1.1. Demographic characteristics of sample households

43

4.1.2. Production overview

45

4.1.3. Means of livelihood

46

4.1.4. Producers characteristics by the level of market supply

47

4.1.5. Producers characteristics by marketing outlets

50

4.2. Value Chain Analysis

51

4.2.1. Value chain map of vegetables in Habro and Kombolcha Woredas

51

4.2.2. Actors and their role in vegetable value chain

53

IX

TABLE OF CONTENTS (Continued)


4.2.2.1. Primary actors

53

4.2.2.2. Supporting actors

59

4.2.3. Value chain governance

61

4.3. Marketing Channels and Performance Analysis


4.3.1. Marketing channels

61
61

4.3.1.1. Tomato marketing channel

62

4.3.1.2. Potato marketing channel

63

4.3.1.3. Cabbage marketing channel

65

4.3.2. Performance of vegetables market

66

4.3.2.1. Tomato market performance

67

4.3.2.2. Potato market performance

70

4.3.2.3. Cabbage market performance

72

4.4. Econometric Model Outputs

74

4.4.1. Determinants of vegetables market supply

74

4.4.2. Determinants of vegetable market outlet choices

79

4.5. Challenges and Opportunities in Vegetables Value Chain

83

4.5.1. Production constraints

84

4.5.2. Production opportunities

85

4.5.3. Marketing constraints

86

4.5.4. Marketing opportunities

87

5. SUMMARY, CONCLUSION AND RECOMMENDATIONS

88

5.1. Summary and Conclusion

88

5.2. Recommendations

90

6. REFERENCES

93

7. APPENDICES

101

Appendix A. Tables

102

Appendix B. Interview Schedules

108

LIST OF TABLES
Table

Page

1. Enterprise relations: production chain versus value chain. ............................................. 9


2. Sample size distribution in the sample rural Kebeles ................................................... 27
3. Demographic and socioeconomic characteristics of samples (categorical variables) .... 44
4. Demographic and socioeconomic characteristics of samples (continuous variables) .... 44
5. Type of vegetable crops produced by sample households ............................................ 45
6. Mean productivity of vegetables per hectare ............................................................... 46
7. Statistical test of continues variables by the level of market supply ............................. 48
8. Statistical test of dummy variables by the level market supply .................................... 49
9. Producers by demographic characteristics across marketing outlets ............................ 50
10. Percentage of producers by demographic characteristics across marketing outlets ..... 51
11. Source of vegetable seeds for sample respondents ..................................................... 54
12. Chemical fertilizer use by sample respondents .......................................................... 54
13. Cropping systems, value addition and irrigation use .................................................. 55
14. Post-harvest loss of vegetables in percent of production ............................................ 56
15. Access to services by sample respondents ................................................................. 60
16. Tomato marketing costs and benefit shares of actors ................................................. 68
17. Marketing margins of actors in different marketing channel of tomato ...................... 69
18. Potato marketing costs and benefit shares of actors ................................................... 70
19. Marketing margins of actors in different marketing channel of potato ....................... 71
20. Cabbage marketing costs and benefit share of actors ................................................. 73
21. Marketing margins of actors in different marketing channel of cabbage .................... 74
22. Factors affecting potato production ........................................................................... 76
23. Determinants of vegetables quantity supplied to the market ...................................... 77
24. Coefficients and marginal effects of Multinomial Logit Model for the choice of
marketing outlets ............................................................................................................ 81
25. Major production constraints of vegetable producers ................................................ 84
26. Major marketing constraints of vegetable producers.................................................. 87

XI

LIST OF FIGURES AND MAPS


Figure

Page

1. Typical agricultural value chain and associated business development services. ............ 8
2. Geographical location of the study areas ..................................................................... 25
3. Value chain map of vegetables .................................................................................... 52
4. Tomato market channel .............................................................................................. 63
5. Potato market channel ................................................................................................. 64
6. Cabbage market channel ............................................................................................. 66

XII

LIST OF TABLES IN THE APPENDIX


Appendix tables

Page

1. The result of multicillinearity test ............................................................................. 102


2. Hausman tests of IIA assumption for MNL model .................................................... 102
3. Conversion factors used to compute tropical livestock units (TLU) ........................... 103
4. Conversion factor used to compute adult equivalent.................................................. 103
5. Mean land allocation of sample households for different crops in hectare ................. 104
6. Income sources by woreda ........................................................................................ 104
7. Means of transportation for sample respondents ........................................................ 104
8. Market place for selected vegetables ......................................................................... 105
9. Quantity purchased and income of vegetable consumers ........................................... 105
10. Source of extension service ..................................................................................... 106
11. Source of credit by sample farm households in numbers ......................................... 106
12. Need of respondents to expand vegetables production and marketing...................... 106
13. Marketing problems mentioned by traders .............................................................. 107

XIII

VALUE CHAIN ANALYSIS OF VEGETABLES: THE CASE OF


HABRO AND KOMBOLCHA WOREDAS IN OROMIA REGION,
ETHIOPIA
ABSTRACT
This study was aimed at analyzing value chain of vegetables in Habro and Kombolcha
Woredas of Oromia Region with specific objectives of identifying vegetable value chain
and examining the performance of actors in the chain; analyzing the determinants of
vegetable supply to the market in the study area; and identifying marketing channels and
factors affecting outlet choice decisions of farm households. The data were collected from
both primary and secondary sources. The primary data for this study were collected from
162 farmers, 37 traders and 30 consumers through application of appropriate statistical
procedures. The study result showed that vegetable producers are faced with lack of
modern input supply and high postharvest losses. On marketing side, limited access to
market, low price of product, lack of storage, lack of transport, low quality of product and
lack of policy framework to control the illegal Ethio-Somalia trade route are the major
problems. The value chain analysis revealed that the major actors in the Woredas are
input suppliers, vegetable producers, collectors, wholesalers, retailers, exporters and
consumers. Accordingly, the value chain activities in the survey period were input supply,
production, marketing and consumption. It is also found out that vegetable passes through
several intermediaries with little value being added before reaching the end users. The
chain is governed by wholesalers and exporters who have capital advantage over the
other chain actors. Therefore, farmers are forced to capture a lower share of profit
margin. The result of the multiple regression model indicated that marketable supply is
significantly affected by access to market information and quantity of tomato produced in
the case of tomato; access to extension service, access to market information, vegetable
farming experience and quantity of potato produced in the case of potato; and Woreda
dummy, non/off-farm activities, distance to the nearest market and quantity of cabbage
produced in the case of cabbage. The multinomial logit model results also indicated that
the probability to choose the collector outlet was significantly affected by access to
extension service, owning transport facility, membership to any cooperatives and post
harvest value addition compared to wholesale outlet. Similarly, the probability of
choosing retailer marketing outlet was affected by Woreda dummy, educational status of
household head, access to extension service and owning transport facility compared to
wholesale outlet. Therefore, policy aiming at increasing farmers access to modern inputs,
developing and improving infrastructure, gender consideration, cooperative development
and improving extension system are recommended to accelerate the chains development.
Key words: Value chain analysis, Vegetables, Actors, Multiple regression model,
Multinomial logit model.

XIV

1. INTRODUCTION
1.1. Background of the Study

Agriculture is the main stay of Ethiopian economy contributing about 43% of the GDP,
80% of employment and 90% of the export (MoFED, 2011). Having all these importance,
agriculture continues to face a number of problems and challenges. The major ones are
adverse climatic conditions, lack of appropriate land use system resulting in soil and other
natural resources degradation, limited use of improved agricultural technologies, the
predominance of subsistence agriculture and lack and/or absence of business oriented
agricultural production system, limited or no access to market facilities resulting in low
participation of the smallholder farmers in value chain or value addition of their produces
(Bezabih, 2010).

Ethiopia adopted Agricultural Development Led Industrialization (ADLI) development


strategy in 1994/95. The strategy argues that growth starts from agriculture and initiates
the growth of other sectors especially the industry sector through backward and forward
linkages (MoFED, 2006). Furthermore, Ethiopia launched and commenced implementing
earnestly its Growth and Transformation Plan (GTP) in 2009/10. GTP envisages the ADLI
strategy to continue with the bid to transform Ethiopian economy from agriculture
domination and using agriculture itself as a stepping board (MoFED, 2010). Therefore, it
is becoming increasingly crucial for policy makers to focus immediate attention on agroindustries. Such industries, established along efficient value chains, can increase
significantly the rate and scope of industrial growth (UNIDO, 2009).

Demand for horticultural products tends to grow very rapidly with urbanization and
increased income. Exports of vegetable products from Ethiopia have increased from
25,300 tons in 2002/03 to 63,140 tons in 2009/10 (EHDA, 2011). Horticultural produce is
a high value item. Diversity of fruits and vegetables are demanded by consumers, such
growth provides major opportunities for farmers to diversify their production and increase
their incomes. Such opportunities may be especially valuable for women, who are the
primary producers and marketers of horticultural produce throughout Ethiopia. Finally,
from the farming through retailing, horticultural production employs about twice as much

labor as cereals per hectare of production; small farmers, rural laborers, and the urban poor
stand to gain extremely from these employment opportunities (Munguzwe and Tschirley,
2006).

Vegetable production plays important role in poverty alleviation through employment


generation, improving the feeding behavior of the people, and creating new opportunities
for poor farmers. Since the labor to land ratio of vegetable cultivation is high, vegetable
products are bulky and perishable, and vegetable has continuous demand in the market, its
production and marketing allows high productive employment. Increasing horticultural
production and marketing thus contribute to commercialization of the rural economy and
create many off-farm jobs (Weignberger and Lumpkin, 2005).

In 2011/12 production year 293,609 and 266,264 smallholder farmers were engaged in
vegetable production, and 909,776.5 and 710,988.48 quintals of vegetables were produced
in East Hararghe and West Hararghe Zones, respectively (CSA, 2012). Vegetable
production has significant contribution in supporting household income and used as source
of food in both Zones. In Kombolcha Woreda of Eastern Hararghe Zone and Habro
Woreda of Western Harargehe Zone different vegetables are grown with different
intensities depending on environmental condition and level of marketability. In
Kombolcha Woreda 693,899 quintals of vegetables were produced in 2011/12 production
season on 2,607.5 hectares of land (KWOoARD, 2012). In Habro Woreda 223,080
quintals of vegetables were produced in 2011/12 production season on 1309 hectares of
land (HWOoARD, 2012). The most common grown vegetables are potato, cabbage, carrot
and beetroots in Kombolcha Woreda, and tomato, cabbage, beetroot and onion in Habro
Woreda.

Vegetables produced in the eastern part of Ethiopia are supplied to the local markets and
to the neighboring countries. Potato and onion/shallot are the most commonly marketed
vegetables accounting for about 60% and 20% of the marketed products. The other
products such as cabbage, beetroots, carrot, garlic, green pepper and tomato are marketed
at relatively smaller quantities by few farmers (Bezabih and Hadera, 2007). The marketing
of vegetables in Eastern Ethiopia is characterized by seasonal gluts and shortages which in
turn affect the marketing behavior of producers, traders and consumers (Jema, 2008).
Vegetable marketing is an important source of income and employment in the study areas.

Being the center of production and marketing of vegetables, the study areas have access to
both domestic and terminal markets.

1.2. Problem Statement

In Africa, per capita supply of fresh produce has fallen since 1970, by an average of 0.3%
per year (USAID, 2005). This decline has been driven by falling real incomes, but also by
increasingly inadequate production and marketing systems that limit yield growth at the
farm level and increase marketing costs throughout the supply chain. Ethiopia probably
has not escaped this trend. Reversing the trend; and realizing the growth potential that
horticulture presents; will require concerted action throughout the supply chain, based on
reliable information and collaboration between the private and public sectors. Value chain
analysis is essential to understand relationships and linkages among buyers and suppliers
and a range of market actors in between (Wenz and Bokelmann, 2011).

A review of literature in agro-industry value chain in Ethiopia indicates that the sector
faces many challenges due to limited market outlets, limited efforts in market linkage
activities and poor market information among actors (Dereje, 2007; Kaleb, 2008; Dendena
et al., 2009). Correspondingly, Mamo (2009) argued that small scale, dispersed and
unorganized producers are unlikely to exploit market opportunities as they cannot attain
the necessary economies of scale and lack bargaining power in negotiating prices.

Development need of vegetables is poorly addressed in Ethiopia. But these days efforts
have been stepped up to improve and support the sector. With this line, the current Growth
and Transformation Plan (GTP) prioritize intensive production and commercialization of
horticulture as a sector for attention. Thus, the development policy initiates the need to
accelerate the transformation of the sub-sector from the subsistence to business oriented
agriculture. But, the existing constraints of production, post-harvest handling and
marketing such as: - input utilization, productivity, packing, warehousing cold storage and
distribution have played their deterring role on production, trade, and consumption of
vegetables in Eastern Ethiopia (Bezabih and Hadera, 2007).

The production of horticultural crops is a major element of the farming system in the
eastern part of Ethiopia such as in East Hararghe Zone and some part of West Hararghe

Zone. In the areas where irrigation water is available and farmers have better agricultural
marketing networks, horticulture production is a major source of cash income for the
households and one of the major sources of livelihood for a large number of transporters,
middlemen and traders in the area (Bezabih and Hadera, 2007). The lack of a shift from
subsistence to commercial farming in spite of such comparative advantage may have
different reasons like high risks, high transaction costs, limited food markets, limited
insurance options and limited access to credit or in general the problem in the value chain.

In spite of the fact that markets are crucial in the process of agricultural
commercialization, transaction costs and other causes of market imperfections could limit
the participation of farm households in different markets (Sadoulet and de Janvry, 1995 as
cited in Moti, 2007). This implies that markets could be physically available but not
accessible to some of the farm households. Value chain analysis is essential to explain the
connection between all the actors in a particular chain of production and distribution and it
shows who adds value and where, along the chain. It helps to identify pressure points and
make improvements in weaker links where returns are low (Schmitz, 2005).

Problems in the vegetables value chain hinder the potential gains that could have been
attained from the existing opportunities. In this regard, vegetable value chain analysis is an
interesting process that has not been investigated much in the study areas. Both buyers and
sellers in the study areas usually do not play collective roles towards one another and there
are no vegetable processing activities. Under such circumstances, a study that focused on
production problems, marketing problems, and roles and responsibilities of actors can play
significant role towards the improvements of the existing system.

Value chain analysis of horticultural crops conducted by Bezabih (2008) in Kombolcha


Woreda identified different production and marketing problems and the gross margin
obtained by different actors. However, the study on factors affecting vegetable market
supply, factors affecting market outlet choice and the benefit share of different actors in
the value chain were not done in the study areas. So, this study was proposed to
investigate the value chain analysis of major vegetables produced in Kombolcha and
Habro Woredas of East and West Harerghe Zones. Therefore, this study would help to
find the weakest link of the chain and to narrow the information gap on the subject.

1.3. Research questions

The study tries to answer the following questions:


1. How are production and marketing support services of vegetables functioning?
2. What constraints do farmers encounter to supply vegetables to the market?
3. What are the alternative vegetables market channels in the study areas?
4. What are the key factors affecting farmers vegetable market outlet choice decision?
5. What does vegetable value chain look like and who is more benefiting from
vegetable value chain?
6. What are the opportunities and constraints of vegetable value chains in the study
areas?

1.4. Objectives of the Study

The general objective of the study is to analyze the value chains of vegetables in the study
areas. The specific objectives of the study are:
1. To identify vegetable value chain and examine the performance of actors in the
chain;
2. To analyze the determinants of vegetable supply to the market in the study areas;
3. To identify marketing channels vegetables and factors affecting outlet choice
decisions of vegetable producers.

1.5. Scope and Limitations of the Study

This study was conducted in two Woredas and important information were collected from
sample households and marketing actors involved in the subsector organization in the
study areas. Hence, the study was limited spatially as well as temporally to make the study
more representative in terms of wider range of area, and time horizon. Furthermore, since
Ethiopia has wide range of diverse agro-ecologies, institutional capacities, organizations
and environmental conditions, the result of the study may have limitations to make
generalizations and make them applicable to the country as a whole. However, it may be
useful for areas with similar context with the study areas.

1.6. Significance of the Study


The study analyzed the entire vegetables value chain from input supplier to the consumer
within the country and from input supplier to exporter for exported vegetables. It also
provides a holistic picture of existing challenges, opportunities and entry points in the
vegetables value chain. Moreover, this study provides information on the determinants of
vegetables supply to the market, the determinants of market outlet choice decisions,
marketing margin, benefit share of actors, and identifies opportunities and constraints of
vegetables value chain in the study areas. Therefore, it could shed light on required efforts
to enhance the production and utilization of vegetables at larger scale to bring about
economic development in the area. The information generated could also help a number of
organizations including: research and development organizations, traders, producers,
policy makers, extension service providers, government and non-governmental
organizations to assess their activities and redesign their mode of operations and
ultimately influence the design and implementation of policies and strategies. It could also
help different actors to identify and analyze new ways of stimulating innovation.

1.7. Organization of the Thesis

With the above brief introduction, the remaining part of the thesis is organized as follows.
Chapter 2 presents review of literature on value chain analysis from different sources.
Subsequently, description of the study area and methodologies are presented in Chapter 3.
In Chapter 4, both descriptive and econometric results are presented and discussed in
detail. Chapter 5, summarizes the main findings of the study and draws conclusion and
appropriate recommendations.

2. LITERATURE REVIEW
In this part of the study the basic concepts of value chain, concepts guiding agricultural
value chain, benefit of value chain in agricultural sector, markets and marketing, market
channel, market performance, measuring value chain, developing value chain towards the
benefit of the poor, market deriving development in vegetable value chain, status of
vegetable production in Ethiopia and empirical reviews would be discussed.

2.1. Definitions and Concepts in Vegetables Value Chain Analysis


Industry chains are classified as either supply or value chains.

The following

definitions within the general term industry chain are used:

Supply chain: It is taken to mean the physical flow of goods that are required for raw
materials to be transformed into finished products. Supply chain management is about
making the chain as efficient as possible through better flow scheduling and resource use,
improving quality control throughout the chain, reducing the risk associated with food
safety and contamination, and decreasing the agricultural industrys response to changes in
consumer demand for food attributes (Dunne, 2001).

Value chain: It is taken to mean a group of companies working together to satisfy market
demands. It involves a chain of activities that are associated with adding value to a product
through the production and distribution processes of each activity (Schmitz, 2005). An
organizations competitive advantage is based on their products value chain. The goal of
the company is to deliver maximum value to the end user for the least possible total cost to
the company, thereby maximizing profit (Porter, 1985).

A value chain is the full range of activities required to bring a product from conception,
through the different phases of production and transformation. A value chain is made up of
a series of actors (or stakeholders) from input suppliers, producers and processors, to
exporters and buyers engaged in the activities required to bring agricultural product from
its conception to its end use (Kaplinsky and Morris, 2001). Bammann (2007) has
identified three important levels of value chain.

Value chain actors: The chain of actors who directly deal with the products, i.e.
produce, process, trade and own them.

Value chain supporters: The services provided by various actors who never directly
deal with the product, but whose services add value to the product.

Value chain influencers: The regulatory framework, policies, infrastructures, etc.

The value chain concept entails the addition of value as the product progresses from input
suppliers to producers and consumers. A value chain, therefore, incorporates productive
transformation and value addition at each stage of the value chain. At each stage in the
value chain, the product changes hands through chain actors, transaction costs are
incurred, and generally, some form of value is added. Value addition results from diverse
activities including bulking, cleaning, grading, and packaging, transporting, storing and
processing (Anandajayasekeram and Berhanu, 2009) as shown in Figure 1 for the case of a
typical agricultural value chain.

Figure 1. Typical agricultural value chain and associated business development services.
Source: Adapted from Anandajayasekeram and Berhanu (2009).
Value chains encompass a set of interdependent organizations, and associated institutions,
resources, actors and activities involved in input supply, production, processing, and
distribution of a commodity. In other words, a value chain can be viewed as a set of actors
and activities, and organizations and the rules governing those activities.

Value chain management is about creating the added value at each link in the chain and a
sustainable competitive advantage for the businesses in the chain. How value is actually

created is a major concern for most businesses. Porter (1985) indicates that value can be
created by differentiation along every step of the value chain, through activities resulting
in products and services that lower buyers costs or raise buyers performance. In much of
the food production and distribution value chain, the value creation process has focused on
commodities with relatively generic characteristics, creating relatively small profit
margins.

2.1.1. Market chains versus value chains

The terms production chain, supply chain, market chain and value chain are often used
interchangeably, but in fact there are some important differences (Table 1). In its simplest
definition, the terms production chain, supply chain, market chain are synonymously used
to describe all participants involved in an economic activity which uses inputs and services
to enable a product to be made and delivered to a final consumer. A value chain is
understood as a strategic network between a numbers of independent business
organizations. According to Hobbs et al. (2000), a value chain is differentiated from a
production/supply chain because participants in the value chain have a long-term strategic
vision, disposed to work together, oriented by demand and not by supply, shared
commitment to control product quality and have a high level of confidence in one another
that allows greater security in business and facilitates the development of common goals
and objectives.

Table 1. Enterprise relations: production chain versus value chain


Factors

Production market chain

Value market chain

Information flow

Little or none

Extensive

Principal focus

Cost / price

Value / quality

Strategy

Basic product (commodity)

Differentiated product

Orientation

Led by supply

Led by demand

Organizational structure

Independent actors
Competitiveness of the
enterprise

Independent actors
Competitiveness of the
market chain

Philosophy
Source: Hobbs et al. (2000).

The goal of a value chain is to optimize performance in that industry using the combined
expertise and abilities of the members of the chain. Successful chains depend on
integration, coordination, communication and cooperation between partners with the
traditional measure of success being the return on investment (Dunne, 2001; Bryceson and
Kandampully, 2004).

2.1.2. Major concepts guiding agricultural value chain analysis

There are four major key concepts guiding agricultural value chain analysis
(Anandajayasekeram and Berhanu, 2009; Kaplinsky and Morris, 2000). These are
effective demand, production, value chain governance, and upgrading.

2.1.2.1. Effective demand

Agricultural value chain analysis views effective demand as the force that pulls goods and
services through the vertical system. Hence, value chain analysis need to understand the
dynamics of how demand is changing at both domestic and international markets, and the
implications for value chain organization and performance. Value chain analysis also
needs to examine barriers to the transmission of information in the changing nature of
demand and incentives back to producers at various levels of the value chain (MSPA,
2010).

2.1.2.2. Production

In agricultural value chain analysis, a stage of production can be referred to as any


operating stage capable of producing a saleable product serving as an input to the next
stage in the chain or for final consumption or use. Typical value chain linkages include
input supply, production, assembly, transport, storage, processing, wholesaling, retailing,
and utilization, with exportation included as a major stage for products destined for
international markets. A stage of production in a value chain performs a function that
makes significant contribution to the effective operation of the value chain and in the
process adds value (Anandajayasekeram and Berhanu, 2009).

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Producing the required amount effectively is a necessary condition for responsible and
sustainable relationships among chain actors. Thus, one of the aims of agricultural value
chain analysis is to increase the quantity of agricultural production. Understanding the
mechanisms of the agricultural production greatly help to design appropriate policy that
bring more gain to farmers and the whole society at large. For a long time, sector analyses
have been used to measure the different economic aspects of production. However, sector
analyses have not been without weaknesses. In particular, sector analysis tends to be static
and suffers from the weakness of its own bounded parameters. Such analysis struggles to
deal with dynamic linkages between productive activities that go beyond that particular
sector (Kaplinsky and Morris, 2000). By going beyond the traditional narrow focus on
production, value chain analysis scrutinize interactions and synergies among actors. Thus,
it overcomes several important limitations of traditional sector assessments.

2.1.2.3. Value chain governance

Governance refers to the role of coordination and associated roles of identifying dynamic
profitable opportunities and apportioning roles to key players (Kaplinsky and Morries,
2000). Value chains imply repetitiveness of linkage interactions. Governance ensures that
interactions between actors along a value chain reflect organization, rather than
randomness. The governance of value chains emanate from the requirement to set product,
process, and logistic standards, which then influence upstream or downstream chain actors
and results in activities, roles and functions.

It is important to note that governance and coordination sometimes appear as synonymous


or interchangeable terms in the literature. Already in the 1980s, Williamson (1979, 1985)
used the term governance to define the set of institutional arrangements in which a
transaction is organized. As Gereffis work on Global Comodity Chains and the role of
governance appeared, the term coordination took on a new meaning, basically, the vertical
organization of activities. The application of contract/private ordering/governance leads
naturally into the reconceptualization of the firm not as a production function (in the
science of choice tradition) but as a governance structure (Williamson, 2002).

According to Raikes et al. (2000), trust-based coordination is central for goods and
services, whose characteristics change frequently, making a standardized quality

11

determination for the purposes of industrial coordination difficult. This applies to the
manufacturing industry as well as agri-food chains. It is possible to identify in one
industry several coordination forms used by different firms where the choices rely on the
trust existent between the firms.

Value chains can be classified into two based on the governance structures: buyer-driven
value chains, and producer-driven value chains (Kaplinisky and Morris, 2000). Buyerdriven chains are usually labor intensive industries, and so more important in international
development and agriculture. In such industries, buyers undertake the lead coordination
activities and influence product specifications. In producer-driven value chains which are
more capital intensive, key producers in the chain, usually controlling key technologies,
influence product specifications and play the lead role in coordinating the various links.
Some chains may involve both producer and buyer driven governance. Yet in further work
(Humphrey and Schmitz, 2002; Gibbon and Ponte, 2005) it is argued that governance, in
the sense of a clear dominance structure, is not necessary a constitutive element of value
chains. Some value chains may exhibit no governance at all, or very thin governance. In
most value chains, there may be multiple points of governance, involved in setting rules,
monitoring performance and/or assisting producers.
Chain governance should also be viewed in terms of richness and reach, i.e., in terms
of its depth and pervasiveness (Evans and Wurster, 2000). Richness or depth of value
chain governance refers to the extent to which governance affects the core activities of
individual actors in the chain. Reach or pervasiveness refers to how widely the governance
is applied and whether or not competing bases of power exists. In the real world, value
chains may be subject to multiplicity of governance structure, often laying down
conflicting rules to the poor producers (MSPA, 2010).

2.1.2.4. Value chain upgrading

Upgrading refers to the acquisition of technological capabilities and market linkages that
enable firms to improve their competitiveness and move into higher-value activities
(Kaplinsky and Morris, 2000). Upgrading in firms can take place in the form of process
upgrading, product upgrading, functional upgrading and chain upgrading. Upgrading
entails not only improvements in products, but also investments in people, knowhow,

12

processes, equipment and favorable work conditions. Empirical research in a number of


countries and sectors (e.g. Humphrey and Schmitz, 2000; Humphrey, 2003; Humphrey
and Memedovic, 2006) provide evidence of the importance of upgrading in the
agricultural sector.

2.1.3. Market and marketing

Market can be defined as an area in which one or more sellers of given products/services
and their close substitutes exchange with and compete for the patronage of a group of
buyers. Originally, the term market stood for the place where buyers and sellers are
gathered to exchange their goods, such as village square. A market is a point, or a place or
sphere within which price making force operates and in which exchanges of title tend to be
accompanied by the actual movement of the goods affected (Backman and Davidson,
1962). The concept of exchange and relationships lead to the concept of market. It is the
set of the actual and potential buyers of a product (Kotler and Armstong, 2003).
Conceptually, a market can be visualized as a process in which ownership of goods is
transferred from sellers to buyers who may be final consumers or intermediaries.

2.1.3.1. Marketing efficiency

Efficiency in marketing is the most used measure of market performance. Improved


marketing efficiency is a common goal of farmers, marketing organizations, consumers
and society. It is a commonplace notation that higher efficiency means better performance
whereas declining efficiency denotes poor performance. Most of the changes proposed in
marketing are justified on the grounds of improved efficiency (Kohls and Uhl, 1985).

2.1.3.2. Marketing channel

Formally, a marketing channel is a business structure of interdependent organizations that


reach from the point of product or origin to the consumer with the purpose of moving
products to their final consumption or destination (Kotler and Armstong, 2003). This
channel may be short or long depending on kind and quality of the product marketed,
available marketing services, and prevailing social and physical environment (Islam et al.,
2001).

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2.1.3.3. Marketing Performance

Market performance can be evaluated by analyzing costs and margins of marketing agents
in different channels. A commonly used measure of system performance is the marketing
margin or price spread. Margin or spread can be useful descriptive statistics if it used to
show how the consumers price is divided among participants at different levels of
marketing system (Mendoza, 1995).

Marketing costs: Marketing costs are the embodiment of barriers to access to market
participation by resource poor smallholders. It refers to those costs, which are incurred to
perform various marketing activities in the transportation of goods from producer to
consumers. Marketing costs includes handling cost (labour, loading and unloading, costs
of damage, transportation and etc) to reach an agreement, transferring the product,
monitoring the agreement to see that its conditions are fulfilled, and enforcing the
exchange agreement (Holloway et al., 2002).

Marketing margin: It is a commonly used measure of the performance of a marketing


system (Abbot and Makeham, 1981). It is defined as the difference between the price the
consumer pays and the price that is obtained by producers, or as the price of a collection of
marketing services, which is the outcome of the demand for and supply of such services
(Cramers and Jensen, 1982; William and Robinson, 1990 and Holt, 1993). The size of
market margins is largely dependent upon a combination of the quality and quantity of
marketing services provided the cost of providing such services, and the efficiency with
which they are undertaken and priced. For instance, a big margin may result in little or no
profit or even a loss for the seller involved depending upon the marketing costs as well as
on the selling and buying prices (Mendoza, 1995).

Under competitive market conditions, the size of market margins would be the outcome of
the supply and demand for marketing services, and they would be equal to the minimum
costs of service provision plus normal profit. Therefore, analyzing market margins is an
important means of assessing the efficiency of price formation in and transmission through
the system. There are three methods generally used in estimating marketing margin: (1)
detailed analyses of the accounts of trading firms at each stage of the marketing channel
(time lag method); (2) computations of share of the consumers price obtained by

14

producers and traders at each stage of the marketing chain; and (3) concurrent method:
comparison of prices at different levels of marketing over the same period of time
(Mendoza, 1995; Scarborough and Kydd, 1992).

2.1.3.4. Measuring value chain


A fundamental aspect of global value chain research is how value itself, is
conceptualized and measured. According to Gereffi (1999) profit, value addition and price
markups are indications of income shares across value chain actors. Valueadded shares
can be calculated for different links in the chain. A second way to calculate value added is
to look its distribution by each value chain actors of vegetable market and decomposing
for each actor to get approximations of each value-added share. Marketing margin is the
difference between the value of a product or a group of products at one stage in the
marketing process and the value of an equivalent product or group of products at another
stage. Measuring this margin indicates how much has been paid for the processing and
marketing services applied to the product(s) at that particular stage in the marketing
process (Smith, 1992).

2.2. Benefit of Value Chain in Agricultural Sector

It is an innovation that enhances or improves an existing product, or introduces new


products or new product uses. This allows the farmer to create new markets, or
differentiate a product from others and thus gain an advantage over competitors. In so
doing, the farmer can ask a higher premium (price) or gain increased market share or
access. Adding value does not necessarily involve altering a product; it can be the
adoption of new production or handling methods that increase a farmers capacity and
reliability in meeting market demand. Value-added can be almost anything that enhances
the dimensions of a business. The key is that the value-adding activity must increase or
stabilize profit margins, and the output must appeal to the consumer (AAFC, 2004).

Value chain is useful as a poverty-reduction tool if it leads to increase on and off farm
rural employment and income. Increased agricultural productivity alone is not a sufficient
route out of poverty within a context of globalization and increasing natural resource
degradation. A focus on post-harvest activities, differentiated value added products and

15

increasing links with access to markets for goods produced by low-income producers
would appear to be the strategy open to smallholders (Lundy et al., 2002).

Traditionally, little attention has been paid to the value chains by which agricultural
products reach final consumers and to the intrinsic potential of such chains to generate
value added and employment opportunities. While high-income countries add nearly
US$185 of value by processing one tone of agricultural products, developing countries add
approximately US$40. Furthermore, while 98 percent of agricultural production in highincome countries undergoes industrial processing, barely 38 percent is processed in
developing countries. These indicate that well developed agro-value chains can utilize the
full potential of the agricultural sector (UNIDO, 2009).

In the process of preparing an agro-industrial master plan for Ethiopia, a prioritization


process was conducted for several commodities to identify those offering the highest
prospects for growth (UNIDO and FAO, 2009). Group 1: Commodities that are highly
important to the economy due to the large population involved in their production and to
their contribution to national food security. This group includes: (i) cereals (wheat, maize,
teff and barley); (ii) oilseeds (sesame, Niger seed, linseed and rapeseed); (iii) coffee; and
(iv) sugar. Group 2: Commodities that are of importance to the economy, due to the
number of people involved in production, processing and marketing as well as to their
contribution to food security. This group includes: (i) dairy products; (ii) meat; (iii) tea;
and (iv) fruit and vegetables. Group 3: Commodities that entail a competitive advantage
for Ethiopia. This group includes: (i) honey; (ii) pulses; (iii) spices; and (iv) grapes/wine.

2.3. Developing Value Chain Systems towards the Benefits of the Poor

In recent years, the pro-poor growth approach has become one of the key concerns of
developmental organizations. The focus of the approach lies in the promotion of economic
potentials of the poor and disadvantaged groups of people (OECD, 2006). The main aim is
to enable them to react and take advantage of new opportunities arising as a result of
economic growth, and thereby overcome poverty (Berg et al., 2006). The promotion of
value chains in agribusiness aims to improve the competitiveness of agriculture in national
and international markets and to generate greater value added within the country or region.
The key criterion in this context is broad impact, i.e. growth that benefits the rural poor to

16

the greatest possible extent or, at least, does not worsen their position relative to other
demographic groups. Pro-poor growth is one of the most commonly quoted objectives of
value chain promotion. In recent years, the need to connect producers to markets has led to
an understanding that it is necessary to verify and analyze markets before engaging in
upgrading activities with value chain operators. Thus, the value chain approach starts from
an understanding of the consumer demand and works its way back through distribution
channels to the different stages of production, processing and marketing (GTZ, 2006).

The value chain approach seeks to identify long-term solutions to reduce the vulnerability
of developing countries to fluctuating world market prices or trade shocks. It does not just
focus on adding value to existing traditional commodity exports (in other words,
diversifying the same product), but also on promoting alternative products. Another
characteristic of the approach is that it does not solely concentrate on functional
dimensions such as supplying appropriate inputs, or applying good agricultural processing,
handling and distribution practices. It emphasizes the importance of institutional
arrangements, or rather governance issues, along the value chains that link and coordinate
producers, processors and distributors of a certain product. Moreover, this aspect covers
authority and power relationships that determine how financial, material and human
resources are allocated and flow within the chain (Gereffi et al., 1994). Dynamic value
chain systems respond to market shifts by developing and transferring knowledge to
intermediaries and producers, so that they can adapt and maintain a competitive market
position over time. Vibrant value chain systems grow and continuously incorporate new
businesses, generating ever-increasing jobs, income, and assets. In this manner, value
chain systems can have the potential to significantly reduce poverty for large numbers of
poor people (Alexandra and Mary, 2006).

2.5. Development of Market-Driven Vegetable Value Chain

The value chain approach considers both the added value of a product and an insight into
the actors roles and relations. The value chain approach analyses a products development
process from input supply through production and processing level, transport, trade and
marketing, to consumption. Despite the fact that, earlier work on agriculture concentrated
mainly on improving the supply side of the respective value chains e.g. production

17

conditions and output, recent studies have also paid attention to the demand side (Diao,
2007). Here the value chain analysis concentrates on both ends of the chain corresponding
with the two sides of a market.

The development of the domestic markets of vegetables is strongly determined by factors


on the supply side; example soils, aridity, agricultural knowledge, competition, weather,
and market infrastructure as well as on the demand side example increase in population,
urbanization, and income-elasticity. As vegetables are highly perishable commodities
there are many difficulties during the marketing process. Natural occurrences such as
aridity, the composition of soils, and the weather are mainly responsible for creating
opportunities and constraints on the supply side of the market. Seasonality strongly
influences the supply side of the vegetable production. Production of vegetables in rain fed
is highly affected by seasonality (high and low supply on the markets), which is mainly
influenced by the climate and weather conditions. Those farmers who have access to
irrigation can operate more independently of the seasons (Koenig et al., 2008).
Furthermore, the importance of market co-ordination and market participation have been
highlighted and described as one of the most important constraints responsible for the poor
performance of vegetables (Dorward et al., 2005). According to estimations by Kelley and
Byerlee (2004) some 60% of the African rural population lives in areas of good
agricultural potential, but with poor market access. Only 22% live in areas of good
agricultural potential and good market access and 18% suffer from poor market access and
poor agricultural potential.

Agricultural potential and market access alone cannot make farmers profitable.
Availability of market infrastructure (storage, transport, etc) is important for farmers to
avoid flooding of markets and enables them to increase their profit by selling in times of
low supply. Due to seasonality, market prices fluctuate depending on the quantity and the
quality of the products on the markets. Especially on the wholesale and retail markets
prices also fluctuate even during one day. Often the limited availability of storage is the
reason that traders and retailers try to sell all their produce by the end of one day, even if
they achieve only a low price. In times of high supply, traders benefit more; in times of
low supply farmers can sell everything they harvest for good prices (Koenig et al., 2008).

18

2.6. Status of Vegetable Production in Ethiopia

Ethiopia has a variety of vegetable crops grown in different agro ecological zones by small
farmers, mainly as a source of income as well as food. The production of vegetables varies
from cultivating a few plants in the backyards, for home consumption, to large-scale
production for the domestic and home markets. According to CSA (2012) the area under
these crops (vegetables and root crops) was estimated to be 359,950.13 hectares with a
total production of 24,267,581.58 tons in the year 2011/12. Root and tuber crops are by
far the dominant product group. Potatoes (32%) stand out as the important products,
followed by taro/Godere (19%), garlic (12%), and onions (nearly 12%). Potatoes are
mostly found in the Amhara Regional State (51%) and Oromia (33%). Among small-scale
producers of vegetables, Ethiopian cabbage (Kale) takes the higher almost 50%, followed
by red pepper with a share of 31%, and green pepper 10%.
Smallholder vegetable farms are based on low input low output production systems. The
use of improved seeds and planting material of high yielding varieties and other inputs
such as fertilizer and plant protection materials is not common in the smallholder sector.
Technical training and extension services on improved crop husbandry techniques are not
available. As a result average productivity levels are low in the small scale farming sector
(EHDA, 2011).

2.7. Review of Empirical Studies

2.7.1. Value chain approach

There are a number of studies that have employed the value chain approach to agricultural
commodities. Fitter and Kaplinsky (2001) used a value chain analysis to examine intercountry distributional outcomes of the global coffee sector by mapping input-output
relations and identifying power asymmetries along the coffee value chain. Their study
showed that returns to product differentiation taking place in the face of globalization do
not accrue to the coffee producers. They also found that power in the coffee value chain
was asymmetrical. At the importing end of the chain, importers, roasters and retailers
compete with each other for a share of value chain rents but combine to ensure that few of
the rents return to the farmer or the producer country.

19

Value chain study conducted on off-season vegetables by USAID (2011) in Nepal


indicated that the subsector faces some challenges such as unavailability of quality
planting materials, lack of knowledge among the producers of the proper usage of
fertilizers and pesticides as well as poor soil fertility management, lack of irrigation
facilities, labor shortage, postharvest loss due the perishable nature of vegetables, limited
access to reliable market information, unorganized market center, limited collection
centers, and lack of proper packaging and transportation facilities. The study
recommended short-term and long term infrastructural and institutional innovation to
reduce the above challenges.

Ponte (2002) also used a value chain analysis to examine the impact of deregulation, new
consumption patterns and evolving corporate strategies in the global coffee chain on the
coffee exporting countries in the developing world. The study concluded that the coffee
chain was increasingly becoming buyer-driven and the coffee farmers and the producing
countries were facing a crisis relating to changes in the governance structure and the
institutional framework of the coffee value chain.

Horticulture value chain study conducted in Eastern parts of Ethiopia identified different
problems on the chain (Bezabih, 2008). The major constraints of marketing identified by
the same study include lack of markets to absorb the production, low price for the
products, large number of middlemen in the marketing system, lack of marketing
institutions safeguarding farmers' interest and rights over their marketable produces (e.g.
cooperatives), lack of coordination among producers to increase their bargaining power,
poor product handling and packaging, imperfect pricing system and lack of transparency
in market information communications.

Dereje (2007) used value chain approach to study the competitiveness of Ethiopian coffee
in the international market. The study indicates that Ethiopian farmers have low level of
education, large family size with small farmland and get only 3% of the retail price in the
German market. Thus, policy intervention was suggested to improve farmers
performance.

Value chain study conducted on mango by Dendena et al. (2009) indicated that the
subsector faces some challenges. Among others: highly disorganized and fragmented

20

industry with weak value chain linkages, long and inefficient supply chains, inadequate
information flows and lack of appropriate production are explained as the major problems.
The study recommended institutional innovation to reduce the above challenges.

2.7.2. Determinants of marketable surplus

The study of marketable surplus turned out to be very vital for agricultural based countries
because the transition of smallholder farmers towards commercial production is
determined by it. Getachew (2009) has noted that the transition of the small-scale sector
towards commercial production will ultimately be determined by the ability and
willingness of producers to provide a commodity. Similarly, Mamo (2009) argued that the
development of markets, trade and the subsequent market supply that characterize
commercialization are fundamental to economic growth.

There are a number of empirical studies on factors affecting the marketable surplus of
agricultural commodities. Ayelech (2011) identified factors affecting the marketable
surplus of fruits by using OLS regressions. She found that fruit marketable supply was
affected by; education level of household head, quantity of fruit produced, fruit production
experience, extension contact, lagged price and distance to market.

Abay (2007) applied Heckman two-stage model to analyze the determinants of vegetable
market supply. Accordingly, the study found out that marketable supply of vegetables
were significantly affected by family size, distance from main road, number of oxen
owned, extension service and lagged price.

According to Wolday (1994) marketable supply of agricultural product could be affected


by different factors including the size of land holding, the output level, family size, market
access, price, inputs, formal education, oxen number, accesses to extension and credit
services, distance to market, time of selling, access to labor and age. In sum, empirical
evidences indicate that marketable supply approach has become an important framework
to analyze economic agents in agricultural sector. In this study an attempt was made to
identify factors affecting the marketable supply of vegetables.

21

2.7.3. Determinants of market channel choices

Regarding factors affecting channel choices of the households, different researchers used
multinomial logit and probit for categorical marketing system for different agricultural
commodities.
A study by Ferto and Szabo (2002) identified variables influencing producers decision for
channel choices. The analysis was based on a survey among three supply channels of fruit
and vegetable producers in Csongrad, Hungary in respect the choice of marketing channels
which are wholesalers, marketing cooperative and producers organization channel. A
multinomial logit model was applied to reveal on the determinants influencing these
choices among various supply channels. Farmers decisions with respects to supply
channels were influenced differently by transaction costs, and producers sell to wholesale
market were strongly and negatively affected by the farmers age, information costs, and
negatively by the bargaining power and monitoring costs. The probability that farmers sell
their product to marketing cooperative is influenced by the age and information costs
positively, whereas by the asset specificity and bargaining power negatively.

Rao et al. (2010) confirmed that educational level of the operator, off-farm employment,
own means of transportation and age of operator had positive effect where as household
size was negatively associated with supper marketing channel choices. In second stage
second stage of treatment model, off-farm employment and own means of transportation
affected income of vegetables growers positively. Furthermore, dummy variable for
channel choices were positive and significant. This indicated that supplying vegetable to
supermarket channels rendered better income gain over spot marketing channel. On the
other hand, ownership of livestock negatively influenced income of vegetables growers
supplying traditional or spot marketing channel.

Jari and Fraser (2009) identified that market information, expertise on grades and
standards, contractual agreements, social capital, market infrastructure, group participation
and tradition significantly influence household marketing behavior. The study uses
multinomial regression model to investigate the factors that influence marketing choices
among smallholder and emerging farmers.

22

Bongiwe and Masuku (2012) identified that age of the farmer, quantity of baby corn
produced and level of education were significant predictors of the choice to sell vegetables
to NAMBoard market channel instead of selling to other-wholesale market channel. The
age of the farmer, distance from production area to market, membership in farmer
organization and marketing agreement were significant determinants of the choice to use
non-wholesale market channel over other-wholesale market channel. The study uses
descriptive and multinomial logistic regression analyses to investigate factors that
influence market channel choices.

Mamo and Degnet (2012) identified that gender and educational status of the household
head together with household access to free aid, agricultural extension services, market
information, non-farm income, adoption of modern livestock inputs, volume of sales, and
time spent to reach the market have statistically significant effect on whether or not a
farmer participates in the livestock market and his/her choice of a market channel. The
study uses binary logit and multinomial logit to explore the patterns and determinants of
smallholder livestock farmers market participation and market channel choice using a
micro-lever survey data from Ethiopia.

23

3. RESEARCH METHODOLOGY
This chapter discusses the research methodology used in the study including location and
description of the study areas, data types and data sources, methods of sampling, methods
of data collection and analysis.

3.1. Description of the Study Areas


This study was undertaken in Eastern Ethiopia in two major vegetable growing Woredas
(namely Kombolcha and Habro Woredas of Oromia Regional State) which are known in
vegetables production (Figure 2). Description of each Woreda is given below.

Kombolcha Woreda: Kombolcha is one of the nineteen Woredas found in East Hararghe
Zone of Oromia Regional State, Ethiopia. The Woreda is composed of 19 rural kebeles
and 1 urban kebele. Komblocha Woreda is located about 542 kms southeast of Addis
Ababa and 16 kms northwest of Harar town, the capital of East Hararghe Zone of Oromia
Region. The Woreda is strategically located between the two main cities Harar and Dire
Dewa. In addition, due to its proximity to Djibouti and Somalia, the Woreda has access to
potential markets in the area.

The Woreda had total population of about 157,444, of which 77,659 were females in
2011(CSA, 2010). About 45.1%, 53.0% and 1.9% of the total population were young,
economically active and old age, respectively. Average family sizes for the Woreda was
4.9 persons per household. The crude population density of the Woreda is estimated as
517 persons per km2.
Lowland and midland agro-ecological zones characterize the Woredas climate. The
Woreda receives mean annual rainfall of 600-900 mm, which is bimodal and erratic in
distribution. The main rainy season in the Woreda is from February to mid-May and from
July to end of August. The economy of the Woreda is dominated by traditional cash crop
farming mixed with livestock husbandry. The major crops produced in the Woreda include
sorghum, maize, vegetables (potato, cabbage, beetroot, and carrot), chat, groundnut, coffee
and sweet potato (KWOoARD, 2012).

24

Figure 2. Geographical location of the study areas

Habro Woreda: Habro is one of the twelve Woredas found in West Hararghe Zone of
Oromia Regional State, Ethiopia. The Woreda is composed of 32 rural kebeles and 5
urban kebeles. Habro Woreda is located about 410 kms southeast of Addis Ababa and 78
kms from Chiro town, the capital of West Hararghe Zone of Oromia Region in the western
central part of West Hararghe Zone. Gelamso town is the administrative seat of the
Woreda.

The Woreda had the population of about 214,591, of which 103,472 were females in
2011(CSA, 2010). Young, economically active and old age populations accounted for
45.3%, 52.4% and 2.3%, respectively. An average family size for rural area was 4.76
persons. The crude population density of the Woreda is estimated as 288.8 persons per
km2.

25

The altitude of the Woreda stretches between 1500 and 2000 m.a.s.l. Habro classified into
dega (18%), woinadega (57%) and kola (25%) agro climatic zones. Sorghum, maize, teff,
haricot bean, barley, wheat and vegetables (potato, tomato, cabbage, onion, shallot, and
carrot) are the dominant crops in the Woreda (HWOoARD, 2012).

3.2. Types, Sources and Methods of Data Collection

The study used information on different variables such as data on vegetable production,
vegetables marketed, prices of vegetable supplied, distance to Woreda market, distance to
all weather roads, age of the household head, extension service, educational status of the
household head, family size, access to market information, credit facility, and type of
sellers and buyers. Survey was made to obtain these information.

The secondary data were collected from Central Statistical Authority (CSA), Bureau of
Agriculture and Rural Development (BoARD), Capacity Building for Scaling Up of
Evidence Based Best Practices in Agricultural Production in Ethiopia (CASCAPE) project
and other sources. Primary data were collected using informal and formal surveys, and
from key informants. The informal survey used Rapid Market Appraisal (RMA) technique
using checklists. The formal survey was undertaken through formal interviews with
randomly selected farmers, traders and consumers using a pre-tested semi-structured
questionnaire for each group.

3.3. Sampling Procedure and Sample Size

For this study, in order to select a representative sample a multi-stage random sampling
technique were implemented to select vegetables producer kebeles and sample farm
households. In the first stage, with the consultation of Woreda agricultural experts and
development agents, out of 19 and 32 kebeles of Kombolcha and Habro Woredas 7 and 5
vegetables producer kebeles were purposively selected based on the level of production. In
the second stage, from the identified or selected rural kebeles, 4 sample kebeles namely
Bilusuma and Eegu from Kombolcha Woreda, and Harochercher and Bareda from Habro
Woreda were selected randomly. In the third stage, using the household list of the sampled
kebeles 162 sample farmers were selected randomly based on proportional to the
population size of the selected kebeles (Table 2).

26

Table 2. Sample size distribution in the sample rural kebeles


Name of Woreda

Name of selected
kebeles

Total number of
vegetable producers

Number of sample
households

Bilusuma

214

53

Eegu

178

44

Harochercher

150

37

Bareda

113

28

Kombolcha

Habro
Total
655
Source: Own computation from OoARD and kebele adminstaraion data

162

For this study, data from traders and consumers were also collected. The sites for the
trader surveys were market towns in which a good sample of vegetable traders existed.
The lists of wholesalers were obtained from the respective Woreda Office of Trade and
Industry (OoTI) and for other traders there is no recorded list. From 55 wholesalers, 12
wholesalers were selected randomly. In addition, 18 retailers and 7 collectors were
randomly selected constituting a total of 37 traders from Melkarafu, Harar, Gelemso,
Karakurikura and Wachu markets. Furthermore, 18 and 12 consumers were interviewed
from Kombolcha and Habro Woredas, respectively by selecting randomly.

3.4. Methods of Data Analysis

Descriptive statistics, inferential statistics and econometric analysis were used to analyze
the data collected from vegetable producers, traders and consumers.

3.4.1. Descriptive and inferential statistics

These methods of data analysis refer to the use of percentages, means, standard deviations,
t-test, 2-test, F-test and maps in the process of examining and describing marketing
functions, facilities, services, and household characteristics.

3.4.1.1. Value chain analysis

As products move successively through the various stages, transactions take place between
multiple chain actors, money and information are exchanged and value was progressively

27

added. The analysis of vegetable value chains highlights the need for enterprise
development, enhancement of product quality, and quantitative measurement of value
addition along the chain, promotion of coordinated linkages among producers and
improvement of the competitive position of individual enterprises in the marketplace.
Moreover, individual enterprises may feed into numerous chains; hence, which chain (or
chains) was/were targeted depends largely on the point of entry for the research inquiries
(Kaplinsky and Morris, 2001). The following four steps of value chain analysis were

applied to this study:

1. Mapping the value chain to understand the characteristics of the chain actors and the
relationships among them, including the study of all actors in the chain, of the flow of
vegetables through the chain, of employment features, and of the destination and
volumes of domestic and foreign sales. This information can be obtained by
conducting surveys and interviews as well as by collecting secondary data from
various sources.
2. Identifying the distribution of actors benefits in the chain. This involves analyzing the
margins and profits within the chain and therefore determined who benefits from
participating in the chain and who would need support to improve performance and
gains. In the prevailed context of market liberalization, this step is particularly
important, since the poor involved in value chain promotion were the most vulnerable.

3. Defining upgrading needed within the chain. By assessing profitability within the
chain and identifying chain constraints, upgrading solutions could be defined. These
may include interventions to: (i) improve product design and quality and move into
more sophisticated product lines to gain higher value and/or diversify production; (ii)
reorganize the production system or invest in new technology to upgrade the process
and enhance chain efficiencies; (iii) introduce new functions where in the chain to
increase the overall skill content of activities; and (iv) adapt the knowledge gained in
particular chain functions in order to redeploy it.

4. Emphasizing the governance role. Within the concept of value chain, governance
defines the structure of relationships and coordination mechanisms that exist among
chain actors. By focusing on governance, the analysis identified actors that may

28

require support to improve capabilities in the value chain, increase value added in the
sector and correct distributional distortions. Thus, governance constituted a key factor
in defining how the upgrading objectives could be achieved.

Following the above procedure, the main aspects of vegetable value chain analysis was
done by applying some quantitative and qualitative analysis. First, an initial map was
drawn which depicts the structure and flow of the chain in logical clusters. This exercise
was carried out in qualitative and quantitative terms through graphs presenting the various
actors of the chain, their linkages and all operations of the chain from pre-production
(supply of inputs) to consumption. After having developed the general conceptual map of
the value chain, the next step is analyzing the chains economic performance and benefit
share of actors.

3.4.1.2. Analysis of vegetable value chain performance

Estimates of the marketing margins are the best tools to analyse performance of market.
Marketing margin was calculated by taking the difference between producers and retail
prices. The producers share is the commonly employed ratio calculated mathematically
as, the ratio of producers price to consumers price. Mathematically, producers share can
be expressed as:

(1)

where: PS= Producers share


Pp= Producers price
Cp = Consumer price
MM = marketing margin

The above equation tells us that a higher marketing margin, diminishes producers share
and vice versa. It also provides an indication of welfare distribution among production and
marketing agents.

29

Calculating the total marketing margin was done by using the following formula.
Computing the Total Gross Marketing Margin (TGMM) is always related to the final price
paid by the end buyer and is expressed as a percentage (Mendoza, 1995)

(2)

where, TGMM=Total gross marketing margin.

Net Marketing Margin (NMM) is the percentage over the final price earned by the
intermediary as his net income once his marketing costs are deducted. The equation tells
us that a higher marketing margin diminishes the producers share and vice-versa. It also
provides an indication of welfare distribution among production and marketing agents.

(3)

From this measure, it is possible to see the allocative efficiency of markets. Higher NMM
or profit of the marketing intermediaries reflects reduced downward and unfair income
distribution, which depresses market participation of smallholders. An efficient marketing
system is where the net margin is near to reasonable profit.

To find the benefit share of each actor the same concept was applied with some
adjustments. In analyzing margins, first the Total Gross Marketing Margin (TGMM) was
calculated. This is the difference between producers (farmers) price and consumers
price (price paid by final consumer) i.e.
TGMM = Consumers price Farmers price

(4)

Then, marketing margin at a given stage i (GMM i) was computed as:

(5)

where, SPi is selling price at ith link and PPi is purchase price at ith link.

30

Total gross profit margin also computed as:

TGPM=TGMM-TOE

(6)

where, TGPM is total gross profit margin, TGMM is total gross marketing margin and
TOE is total operating expense.

Similar concept of profit margin that deducts operating expense from marketing margin
was done by Dawit (2010) and Marshal (2011).
Then profit margin at stage i is given as:

(7)

where, GPMi =Gross profit margin at ith link


GMMi =Gross marketing margin at ith link
OEi =Operating expense at ith link
TGPM=Total gross profit margin

3.4.2. Econometric analysis

3.4.2.1. Market supply model

In order to expand the leading role agriculture plays in economic growth and poverty
reduction, smallholder farmers need to improve their marketable surplus. A higher
marketable surplus can help farmers to participate in a high value markets by increasing
their level of income. Therefore, investigating the nature of marketable surplus is a major
component of agro-value chains.

In this study, multiple linear regression model was used to analyze factors affecting farm
level vegetables supply to the market in the study areas because of all vegetable producers
participate in the market. This model is also selected for its simplicity and practical

31

applicability (Greene, 2000). Econometric model specification of supply function in


matrix notation is the following.

(8)

where: Y = quantity of vegetables supplied to market


X ' = a vector of explanatory variables

= a vector of parameters to be estimated


U = disturbance term

3.4.2.2. Market outlet choice model

A multinomial logit (MNL) model was applied to explain inter household variation in the
choice of a specific marketing outlet. This study assumes that farmers decision is
generated based on its utility maximization. This implies that each alternative marketing
outlet choice entails different private costs and benefits, and hence different utility, to a
household decision maker. The analytical model is constructed as follows. Suppose that
the utility to a household of alternative j is Uij, where j = 0, 1, 2. From the decision
makers perspective, the best alternative is simply the one that maximizes net private
benefit at the margin. In other words, household i will choose marketing oulet j if and
only if Uij > Uik,

. It is important to note that households utility cannot be

observed in practice. What a researcher observe are the factors influencing the households
utility such as household and personal characteristics and attributes of the choice set
experienced by the household. Based on McFadden (1978), a households utility function
from using alternative j can then be expressed as follows:
U (Choice of j for household i) = Uij = Vij + ij
where,
Uij is the overall utility,
Vij is an indirect utility function and
ij is a random error term.
The probability that household i select alternative j can be specified as:

32

(9)

Pij = Pr (Vij + ij > Vik + ik )


Pij = Pr (ik < ij + Vij Vik ,

(10)

Assuming that the error terms are identically and independently distributed with type i
extreme value distribution, the probability that a household chooses alternative j can be
explained by a multinomial logit model (Greene, 2000) as follow:

Pij

exp( j X ij )
J

exp(
j 0

(11)

X ij )

where,
Xij is a vector of household of the ith respondent facing alternative j
j is a vector of regression parameter estimates associated with alternative j.

Following equation (11) above, we can adapt the MNL model fitting to this study as
follow:

(12)

where,
i represents ith farm household, and i=1,2,3,,162.
j represents different marketing outlets, j=0 for sale to wholesalers, j=1 for sale to
collectors and j=2 for sale to retailers.
P represents the probability of vegetables marketing outlet j to be chosen by farm
household i;
CHOICEij = j means that vegetables marketing outlet j is chosen by farm household i;
Xi is independent variables

It is a common practice in econometric specification of the MNL model to normalize


equation (11) by one of the response categories such that j = 0. In this regard, the MNL
model can alternatively be specified as follow:

33

Pij

exp( j X ij )

(13)

J 1

exp(
j 1

X ij )

The coefficients of explanatory variables on the omitted or base category are assumed to
be zero. The probability that a base category will be chosen can be calculated as follows:

Pij

(14)

J 1

1 exp( j X ij )
j 1

The marginal effects of the attributes on probability of choice are determined by


differentiating equation (11):

, for j= 1, 2.J

(15)

where,
Pj is the probability that farmers choose market outlet j
j is a vector of regression parameter estimates associated with alternative j .
In the case of this study, farmers have three market outlets to sell most of their vegetable
produce, J = 3, and the alternatives j = 1, 2, 3, represent sale outlets to wholesalers, to
collectors and to retailers, respectively. The dependent variables (the marketing outlet
(CHOICE) chosen) in the analysis are measured by the probability of selling vegetables to
either of these markets. According to the survey result, three main different marketing
outlets were identified. These include sales to wholesalers (0=Wholesaler); sales to
collectors (1=Collectors) and sales to retailer (2=Retailers).

The model predicts the relative probability that a producer would choose one of the three
categories based on the nature of the explanatory variables. For this analysis, the market
outlet Wholesaler was used as comparison base because this outlet was chosen by the
majority of vegetable selling farmers in trading their vegetables. Econometric analysis of
the data was done with Sata 11 software.

34

It is important to check multicollinearity, hetroschedasitcity and endogeneity problems


before running the model. Multicollinearity problem arises due to a linear relationship
among explanatory variables; and becomes difficult to identify the separate effect of
independent variables on the dependent variable because there exists strong relationship
among them (Gujarati, 2003). Variance inflation factors (VIF) technique was employed to
detect multicollinearity in explanatory variable. According to Gujarati (2003) VIF (X j)
can be defined as:

(16)

where, Rj is the multiple correlation coefficient between Xj and other explanatory


variables. If the value of VIF is 10 and above, the variables are said to be collinear.

If there is heteroscedasticity problem in the data set, the parameter estimates of the
coefficients of the independent variables cannot be BLUE. Therefore, Breusch-Pagan test
of heteroscedasticity was employed for detecting heteroscedasticity in this study.

The problem of endogeneity occurs when an explanatory variable is correlated to the error
term in the population data generating process, which causes, the ordinary least squares
estimators of the relevant model parameters to be biased and inconsistent. The source of
endogeneity could be omitted variables, measurement error and simultaneity (Maddala,
2001). Both Hausman test and Durbin-Wu-Hausman (DWH) test was applied to check the
presence of endogeneity. In the case of Huasman test if there is little difference between
OLS and IV estimators, then there is no need to instrument, and we conclude that the
regressor was exogenous. If instead there is considerable difference, then we need to
instrument and the regressor is endogenous (Cameron and Trivedi, 2009). In the case of
just one potentially endogenous regressor with the coefficient denoted by , the Huasman
test statistics is:

(17)

is 2(1) distributed under the null hypothesis that the regressor is exogenous.

35

In the case Durbin-Wu-Huasman (DWH) test the error term from the first stage added on
the structural equations. i.e

, where v1 is the error term

from the first stage equation (Davison, 2000).

Both test results of endogeneity show that quantity of potato produced is endogenous
variable for potato supply to the market. This problem can be overcome by using two
stages least square (2SLS) method. The method involves two successive applications. The
first stage is made by regressing the suspected endogenous variables over the predetermined or pure exogenous variables to get their predicted values. Then the predicted
values of the endogenous variables in the first stage are used to estimate the supply
equation. Here quantity of fertilizer used (Fert) was used as instrument to quantity of
potato produced. This instrumental variable was selected from the available variables by
checking the correlation between endogenous variable and the instruments and the model
was specified as:

Y (VPS) =f( Age, Sex, DMkt, Land, AExte, MInfo, NOFI, (QPron=QFert), Credit, HEduc,
Family, TLU, VFExp)

(18)

where, VPS is volume of potato supplied to the market, QPron is amount of potato
produced and QFert is amount of fertilizer applied in quintal.

MNL model is only applicable if the conditions of Independent Irrelevant Alternative


assumption is fulfilled (Green, 2003). IIA implies that the decision between two
alternatives is independent from the existence of more alternatives. The validity of IIA
assumption can be also tested using Hausmans specification test. Following (Green,
2003) the statistics is given as:

(19)
where, s indicates estimators based on the restricted (constrained) subsets, f indicates
estimators based on the full set of choices (Unconstrained). Therefore,
respective coefficients, and

and

and

are the

are the respective estimated covariance matrices.

36

3.5. Hypothesis, Variable Selection and Definition

In the course of identifying factors influencing vegetable supply to the market and
market channel choice decisions, the main task is exploring which factors potentially
influence and how (the direction of the relationship) these factors are related with the
dependent variables.
3.5.1. Dependent variables

Volume of Vegetable Sales (VVS): It is continuous dependent variable used in the


multiple linear regression model equation. It was measured in quintal (100kg) and
represents the actual supply by vegetable farm household to the market in the survey year.

Marketing Outlet (MktO): In the analysis it is measured by the probability of selling


vegetables to either of the markets. The outlet choices might be along farmers decision
involving in three alternative markets. It is represented in the model as Y0 for household
who choose to sell vegetables mainly to wholesalers, Y1 for producers that mainly sell
their vegetables to collectors and Y2 for producers who mainly sell vegetables for retailers.

3.5.2. Independent variables

Age of Household Head (Age): It is a continuous variable and measured in years. Aged
households are believed to be wise in resource use, on the other hand young household
heads have long investment horizon and it is expected to have either positive or negative
effect on volume of vegetable sales. Adugna (2009) who found that age of the household
head have negative effect on the elasticity of onion supply to the market. This variable is
also expected to have relationship with outlet choice decision of vegetable producers.
Bongiwe and Masuku (2012) found that age of the farmers was significant determinant of
the choice to use non-wholesale market channel over other-wholesale market channel.

Distance to Nearest Market (DMkt): It is the distance of the vegetables producer


households from the nearest market and it is measured in hours of walking time. The
closer the market, the lesser would be the transportation charges, reduced walking time,
and reduced other marketing costs, better access to market information and facilities. In

37

this study distance to nearest market is hypothesized to affect volume of vegetables sales
negatively. Similar issue was studied by Ayelech (2011) on fruit market in Goma woreda
identified that poor market access has significant and negative effect on quantity of
avocado and mango supplied. Also those households who are close to market were
assumed to have more probability to choose better market outlet. In this study, distance
from market is hypothesized to influence the decision of farmers to choose the wholesalers
market outlet.

Sex of the Household Head (Sex): A dummy variable taking zero if female and one if
male for variable to be considered. Sign could not be attached with the variable. Tshiunza
et al. (2001) determined that male farmers tended to produce cooking banana for market
and therefore participated in banana market more than female farmers participate. Further,
study conducted by Awol (2010) indicated negative relation between sale volume of
poultry and male-headed household. It is also expected to have relationship with outlet
choice decision of vegetable producers. Mamo and Deginet (2012) found that sex of the
household head has statistically significant effect on whether or not a farmer participates
in the livestock market and his/her choice of a market channel.

Access to Market Information (MInfo): This was a variable expected to influence


market supply positively. The variable was considered dummy. Assign one if a farmer got
information and zero if not. Farmers marketing decisions are based on market price
information, and poorly integrated markets may convey inaccurate price information,
leading to inefficient product movement. Therefore, it is hypothesized that market
information is positively related to market supply of vegetables. Again, business decisions
are based on dynamic information such as consumer needs and market trends (CIAT,
2004). Therefore those who have access to dynamic information will produce more
vegetables for market. Muhammed (2011) who found that if wheat producer gets market
information, the amount of wheat supplied to the market increases. It is also hypothesized
that market information is related to wholesale marketing outlet

Woreda Dummy (Woreda): This variable is a dummy taking the value zero if the
Woreda is Kombololch and one if the Woreda is Habro, which consists of a number of
characteristics of the Woredas. This is related to the difference between Woredas in access
to information, access to market, production potential and etc. This variable influences

38

quantity of vegetable sales either positively or negatively and is hypothesized to have


relationship with outlet choice decision of vegetable producers.

Credit Access (Credit): This is a dummy variable taking the value one if the household
takes loan and zero otherwise, which indicates credit taken for vegetables production.
Access to credit would enhance the financial capacity of the farmer to purchase the inputs,
thereby increasing vegetable production and market share size. Therefore, it is
hypothesized that access to credit would have positive influence on level of production
and sales. Alemnewu (2010) and Muhammed (2011) who found that if pepper and teff
producer gets credit, the amount of pepper and teff supplied to the market increased. It is
also hypothesized that access to credit would have influence on wholesale market outlet
choice decisions. Urquieta (2009) found that access to loan was significant determinant of
market channel choice.

Income from Non/Off Farming Activities (NOFI): It is a dummy variable measured in


terms of whether the household obtained income from off and non-farming activities. It is
one if the household is involved in non/off farm activities and zero otherwise. This income
may strengthen farming activity on one side and may weaken it on the other side. But for
this study it is assumed to have inverse relation with volume of vegetable sales. Rehima
(2006) who found that if pepper producer have non-farm income, the amount of pepper
supplied to the market decreases. Again, farmers who gain more income from non/off
farm income want to supply their vegetable to any nearest market outlet with low price
than to go far. Hence, off/non farm income is hypothesized to influence market outlet
choice decision of vegetable producers.

Access to Extension Service (AExte): A dummy variable taking a value of one if


vegetables producer household has access to extension service and zero otherwise and
representing extension services as a source of information on technology. It is expected
that extension service widens the households knowledge with regard to the use of
improved technologies and has positive impact on vegetable sale volume. Therefore, this
variable is hypothesized to influence volume of vegetable sales positively. Ayelech (2011)
found that if fruit producer gets extension, the amount of fruits supplied to the market
increases. Access to extension is also assumed to have direct relation with market outlet
choice of vegetable producers.

39

Education of the Household Head (HEduc): It is a dummy variable measured in terms


of whether the household has a formal education or not which takes a value one if a
household have formal education and zero otherwise. Education broadens farmers
intelligence and enables them to perform the farming activities intelligently, accurately
and efficiently. Moreover, better educated farmers tend to be more innovative and are
therefore more likely to adopt the marketing systems. Formal education enhances the
information acquisition and adjustment abilities of the farmer, thereby improving the
quality of decision making (Fakoya et al., 2007). Therefore, this variable is hypothesized
to influence volume of vegetable sales positively. Astewel (2010) found that if paddy
producer gets educated, the amount of paddy supplied to the market increases, which
suggests that education improves level of sales that affects the marketable surplus.
Education is also hypothesized to influence the probability of market outlet choice of
vegetable producers.

Vegetable Farming Experience (VFExp)): It is the total number of years a farmer stays
in production of vegetables. A household with better experience in vegetable farming is
expected to produce more amounts of vegetables and, as a result, he is expected to supply
more amounts of vegetables to market. Farmers with longer farming experience are
expected to be more knowledgeable and skillful (Ayelech, 2011).Therefore, this variable
is hypothesized to positively influence vegetable marketable surplus.

Land Size (Land): This refers to the total area of land that a farm household owned in
hectares. In agriculture, land is one of the major factors of production. The availability of
land enables the owner to earn more agricultural output which in turn increases the
marketable supply (Desta, 2004). Therefore, land holding and marketable supply are
expected to have direct relationship.

Livestock (TLU): This is a continuous variable measured in tropical livestock unit.


Farmers who have a number of livestock are anticipated to specialize in livestock
production so that they allocate large share of their land for pasture. Study by Rehima
(2006) on pepper marketing showed that TLU showed a negative sign on quantity of
pepper sales. On the otherhand, it is assumed that household with larger TLU have better
economic strength and financial position to purchase sufficient amount of input (Kinde,

40

2007). But for this study TLU is hypothesized to influences volume of vegetable sales
negatively.

Quantity of Vegetables Produced (QPron)): It is continuous variable measured in


quintals. This variable is expected to have a positive contribution to vegetable producers
market supply. A marginal increase in vegetable production has obvious and significant
effect in motivating market supply. Therefore, this variable is hypothesized to have a
positive effect on marketable surplus. Abay (2007); Adugna (2009) and Ayelech (2011)
found that the amount of tomato, papaya, avocado and mango produced by farming
households has augmented marketable supply of the commodities significantly.

Family Size (Family): Family size of a respondent is a continuous variable measured in


terms of number of family members in the household. As vegetable production is labour
intensive activity, vegetable production in general and market supply of vegetable
products in particular is a function of labour. Accordingly, families with more household
members tend to have more labor which in turn increase vegetable production and then
increase vegetable market supply. On the other hand, family size also decreases market
supply because high proportion of the product would be used for consumption. But for this
study family size was expected to influence positively the volume of vegetable supply to
the market. Gezahagn (2010) who found that family size have positive effect on the
households gross income from groundnut production.

Adult Equivalent (AEqu): Family size of a respondent is a variable (continuous variable)


measured in adult equivalent. Vegetable production and marketing is labour intensive
activity, since vegetable is bulky product in nature. Accordingly, families with more
household members tend to have more labor which in turn increases the choice of better
market outlet. Baltenweck et al (2006) found that the higher the number of adults in the
household, the more likely that private trader channel and coop/private processor channel
will be selected than individual customers.

Membership to any Cooperative (MCoop): It is binary variable and takes the value of
one if the household is membership of any cooperatives engaged in any business,
otherwise zero. Thus cooperatives improve understanding of members about market and

41

strengthen the relationship among the members. Therefore, it is expected to be associated


with market outlet choice decision of vegetable producers.

Ownership of Market Transport Facilities (OTran): Specifically vehicles, carts and


transport animals would be used to measure the availability of produce transportation
facilities by households. In cases where households owned transportation facilities, the
variable took the value of one, and zero if the household did not own any form of transport
facility. This variable is expected to have influence on the market outlet choice of
vegetable producers. The availability of transportation facilities helps reduce long market
distance constraint, offering greater depth in marketing choices (Jagwe, 2007).

Post Harvest Value Addition (VAdd): It is a dummy variable measured in terms of


whether the household practices value adding activities on his vegetable products or not. It
takes a value one if a household practice value adding activities and zero otherwise.
Farmers who practice better post harvest handling like (washing, cutting, separating
quality product, etc) have better relationship with wholesaler and have high probability to
sell to wholesaler. Therefore, it is hypothesized that the ability to add value influences
outlet choice decisions of vegetable producers.

42

4. RESULTS AND DISCUSSION


This chapter presents the major findings of the study. It has five main sections. The first
section deals with descriptive and inferential statistics of the sample households. The
second section presents value chain analysis of vegetables which includes value chain
map, actors and their roles, and value chain governance. The third section presents
marketing channel and performance analysis of the value chain which includes marketing
channels, marketing costs and margins, and benefit shares of actors in the value chain.
The fourth section presents results of econometric analysis which contains the
determinants of market supply of vegetables by using OLS and the determinants of outlet
choice of vegetable producers by using MNL model. The fifth section deals with the
constraints and opportunities of vegetable production and marketing in the study area.

4.1. Descriptive Results

4.1.1. Demographic characteristics of sample households

Tables 3 and 4 present demographic and socioeconomic characteristics of the sample


respondents. The total sample size of farm respondents handled during the survey was
162. Of the total sample respondents, 93.85% were male-headed households and only
6.15% were female-headed in Habro Woreda and 91.75% were male-headed households
and 8.25% were female-headed in Kombolcha Woreda. Average household heads age was
38.5 and 34.6 years in Habro and Kombolcha Woredas, respectively. Age of the household
head in the two Woredas has significant difference at 1 percent significance level. With
regards to educational status of the two Woredas, 47.42% and 52.31% were literate in
Kombolcha and Habro, respectively. The average family size of the total sample
respondents was found to be 6.7 and 5.4 persons in Habro and Kombolcha Woredas,
respectively. Family size also showed variation at 1 percent significance level.

Farming was the main occupation and source of livelihood for all sample farmers (100%)
in both Woredas. Majority of respondents from Habro Woreda have been practicing mixed
crop livestock production relative to Kombolcha Woreda. However, in addition to the

43

farming activities, some respondents (8.6%) have also engaged in non-farm activities like
in small trading activities and 5.7% in off- farm activities.

Table 3. Demographic and socioeconomic characteristics of samples (categorical


variables)
Kombolcha(N=97)
Variables

Habro (N=65) Total (N=162)

Items
N

Female

8.25

6.15

12

7.4

Male

89

91.75

61

93.85

150

92.6

Illiterate

51

52.58

31

47.69

82

50.62

Literate

46

47.42

34

52.31

80

49.38

Married

90

92.8

63

96.7

153

94.44

Unmarried

2.1

1.5

1.85

Divorced

3.1

1.85

Widowed

2.1

1.5

1.85

Cooperative
s

Yes

14

14.4

14

21.5

28

17.2

No

83

85.6

51

78.5

134

82.8

Non/off
farm income

Yes

12

12.37

11

16.92

23

14.20

No

85

87.63

54

83.08

139

85.80

Sex

Education

Marital
Status

2-test

0.25

0.37

2.2

1.37

0.66

N is number of respondents
Source: Own computation from survey result, 2012
Table 4. Demographic and socioeconomic characteristics of samples (continuous
variables)
Kombolcha (N=97)
Variables

Habro (N=65)

Total (N=162)
t-test

Mean

SD

Mean

SD

Mean

SD

Age

34.6

8.9

38.5

8.2

36.1

8.8

-2.8***

Family size

5.4

2.4

6.7

2.6

5.9

2.5

-3.2***

Experience

11.3

7.2

4.3

2.1

8.5

6.7

7.6***

Note: *** is statistically significant at 1% probability levels. SD is standard deviation.


Source: Own computation from survey result, 2012

44

The average years of farming experience related to vegetable production was 11.3 and 4.3
years in Kombolcha and Habro Woredas, respectively. There was significant difference in
vegetables production experience in the two Woredas at 1% significant level. Most (85.6
and 78.5 percent) of the respondents have not been a member of any cooperatives from
Kombolcha and Habro Woredas, respectively.

4.1.2. Production overview

Landholding of the sample respondents ranges from 0.13ha to 2ha with an average of
0.91ha per household in Habro Woreda and from 0.06ha to 3ha with an average of 0.39 ha
per household in Kombolcha Woreda. In terms of allocation, 0.13ha (33%) and 0.17ha
(18.6%) were allocated to vegetables production in Kombolcha and Habro Woredas,
respectively (Appendix Table 5). There was a significant difference in land allocation to
agricultural production at 1% significant level due to high population density, land size is
small in Kombolcha Woreda compared to the land holding in Habro Woreda and hence
the area allocated to crop production is small compared to Habro Woreda.

Table 5. Type of vegetable crops produced by sample households

Variables

Kombolcha(N=97)

Habro(N=65)

Total(N=162)

2-test

Tomato

65

100

65

40.12

Onion

1.03

12

18.46

13

8.02

16.06***

Potato

71

73.2

71

43.83

Cabbage

38

39.18

28

43.08

66

40.74

0.24

Carrot

37

38.14

37

22.84

Shallot

2.06

1.23

Beet root

14

14.43

14

21.54

28

17.28

1.37

Note: *** statistically significant at 1% significance level.


Source: Own computation from survey result, 2012
Some households produce combinations of vegetable types and others produce one type of
vegetable. In Habro Woreda almost all of sample households produce tomato (100 %) and
in Kombolcha Woreda majority of sample households produce potato (73.2%) (Table 5).

45

There was a significant difference in vegetable production in the two Woredas. This is
may be due to difference in agro ecology and natural resources between the Woredas.
Tomato, potato and cabbage are the dominant vegetables produced by sample households
in the study areas. Therefore, most of the analysis focused on these vegetables.

The average vegetables productivity in Kombolcha Woreda is higher than Habro Woreda.
In Kombolcha Woreda the mean productivity of potato and cabbage was 84.9 and 88.2
qt/ha, respectively and in Habro Woreda the mean productivity of potato and cabbage was
57 and 74.3qt/ha (Table 6). In both Woredas the average yield is lower than the national
average which is 104.2 and 91 for tomato and cabbage, respectively, and higher than the
national average which is 82.8qt/ha for potato (CSA, 2012). There are significant
differences in productivity between the Woredas and there are also huge differences in
productivity among the households.

Table 6. Mean productivity of vegetables per hectare


Kombolcha
Variables

Habro

Total
t-test

Mean

SD

Mean

SD

Mean

SD

Tomato (N=65)

56.97

20.82

56.97

20.82

Potato (N=71)

84.87

32.10

84.87

32.1

Cabbage (N=66)

88.22

26.36

74.34

20.74

82.12

24,87

2.32**

Note: ** is statistically significant at 5% probability.


Source: Own computation from survey result, 2012

4.1.3. Means of livelihood

The respondents depend on different means of income generation strategies where khat
and grain production were major sources of income for the majority of the producers in
Kombolcha and Habro Woredas, respectively. For this reason, about 42.3% and 76.9% of
the respondents earned their living from khat and grain production as a primary source in
Kombolcha and Habro Woredas, respectively. Vegetables production is also considered as
the second major means of livelihood in both Woredas (Appendix Table 6). Similarly,
potato and tomato were the principal vegetable crops that support the livelihood of

46

farming households in Kombolcha and Habro Woredas followed by cabbage, carrot and
beetroot.

4.1.4. Producers characteristics by the level of market supply

Vegetable producers sell different amount of vegetables in the market depending on


different demographic and socioeconomic characteristics of the household. In average
vegetable producers market supply were 14.02, 16.84 and 20.16 quintals of tomato, potato
and cabbage, respectively in 2011/12 production season. Here, producers were divided
into two according to their level of market supply by using the average market supply as
reference. The study shows that majority of the vegetable producers market supply were
below the average supply of the sample households i.e. 35, 48 and 40 households supply
below the average from 65, 71 and 66 tomato, potato and cabbage producers, respectively.

Tables 7 and 8 present demographic and socio-economic characteristics of sample


respondents across the level of market supply. The study indicated that farmers in
Kombolcha supply to the market better than those in Habro. Chi-square test result also
showed that there was significant difference in market supply between the Woredas at less
than 5% significant level. The reason for the difference is may be the difference in
vegetables production experience and market access of the Woredas. In addition, the level
of vegetable production and access to market information have significance difference
among those vegetable suppliers below the average and above the average at less than 1%
significant level. This implies that households who produce large quantity of vegetables
sell large quantity than households who produce low quantity. Therefore, improving
production and productivity of farmers is crucial to achieve the objective of
commercialization.

47

Table 7. Statistical test of continuous variables by the level of market supply


Tomato (N=65)
Below mean
(N=35)

Above Mean
(N=30)

Mean

SD

Mean

SD

Age

37.7

8.5

39.4

7.7

Family

6.4

VFExp

3.7

1.5

DMkt

0.97

Land
TLU

Variables

Potato (N=71)
t-test

Below mean
(N=40)

Above mean
(N=31)

Mean

SD

mean

SD

-0.63

33.4

9.7

35

3.1

-0.99

5.28

2.1

6.1

4.8

2.3

-2.3**

7.3

5.66

0.9

0.81

0.8

0.76

0.86

6.7

2.8

7.9

4.5

-1.3

3.2

2.2

3.9

1.9

-1.4

Cabbage (N=66)
t-test

Below mean
(N=48)

Above mean
(N=18)

t-test

Mean

SD

Mean

SD

-0.74

36.23

8.05

34.39

8.25

0.82

2.8

-1.4

6.4

2.57

5.28

2.42

1.6

10.65

6.6

-2.29**

6.90

5.45

4.2

-1.48

0.35

0.88

0.36

-0.32

0.67

0.51

0.47

0.18

1.62

3.55

5.86

3.85

2.13

-0.27

6.91

6.05

3.78

3.55

2.06**

2.72

1.67

3.25

1.39

-1.4
3.12
-10.96
QPron
14.3
5.5
25.5
6.7 7.3*** 11.88
4.47 29.23 9.15
13.94
***
Note: ***, ** and * are statistically significant at 1%, 5% and 10% probability level, respectively.

2.02

3.72

0.97

5.73

43.33

44.11

-1.2
4.57***

Source: Own computation from survey result, 2012

48

Table 8. Statistical test of dummy variables by the level market supply


Tomato (N=65)
Variables

Items

Male
Sex

HEduc

Woreda

MInfo

Credit

Below
mean
(N=35)
N
%
31

88.57

Above Mean
(N=30)
N

30

100

Female

11.43

Literate

19

54.29

15

50

Illiterate

16

45.71

15

50

Kombolcha

Habro

35

100

30

100

Yes

12

34.29

23.33

No

23

65.71

23

76.67

Yes

16

45.71

11

36.67

No

19

54.29

19

63.33

Yes

35

100

30

100

AExte

Potato (71)
2

-test

3.65*

0.12

11.7***

0.54

Below
mean
(N=40)
N
%

Above
mean
(N=31)
N
%

37

29

92.5

-test

93.55

7.5

6.45

19

52.5

17

54.84

21

47.5

14

45.16

40

100

31

100

10

25

29

93.55

30

75

6.45

10

3.23

36

90

30

96.77

39

97.5

26

83.87

No

Cabbage (N=66)

0.03

0.38

33.15***

1.22

Below
mean
(N=48)
N
%

Above mean
(N=18)
N

43

89.58

18

100

10.42

25

52.08

14

77.8

23

47.92

22.2

24

50

14

77.8

24

50

22.2

33

68.75

16

88.9

15

31.25

11.1

11

22.92

16.67

37

77.08

15

83.33

43

89.58

18

100

10.42

4.19**
1

2.5

16.13

Note: *** and * are statistically significant at 1% and 10% probability level, respectively.
Source: Own computation from survey result, 2012

49

2-test

2.03

3.58*

4.14**

2.78*

0.31

2.03

4.1.5. Producers characteristics by marketing outlets

In this study, three major vegetable market outlets were identified as alternatives to
farmers to sell majority of their vegetable products. These were wholesalers which
accounts for 38.89% of total sells followed by, retailers (30.86%) and collectors (30.2%).
Although the role of agricultural cooperatives in smallholder farmers marketing is
recognized as vital, no single household reported cooperatives as alternative market outlet
in their vegetable marketing. This should be seen as serious policy concern for the
government and other relevant stakeholders in this sector.

Tables 9 and 10 present demographic characteristics of sample respondents across


marketing outlets. The study indicated that the majority farmers in Kombolcha sales
vegetables to wholesalers while those in Habro sales their vegetable to retailers. ANOVA
test result also showed that there was also significant difference in outlet choice between
the Woredas at less than 1% significant level. The reason for the difference is the
existence of high market intermediaries in Kombolcha Woreda and the difference in
vegetables production and marketing access of the Woredas.

Table 9. Producers by demographic characteristics across marketing outlets

Variables

Wholesaler
(N=63)

Collectors
(N=49)

Retailers
(N=50)

Total
(N=162)

F-test

Mean

SD

Mean

SD

Mean

SD

Mean

SD

Age

34.52

9.2

35.71

9.2

38.54

7.3

36.12

8.8

3.05*

Family

5.19

4.87

2.5

5.74

2.4

5.26

2.3

1.86

DMkt

0.77

0.62

0.95

0.61

0.75

0.59

0.82

0.61

1.62

Note: *** and * are statistically significant at 1% and 10% probability level, respectively.
Source: Own computation from survey result, 2012

50

Table 10. Percentage of producers by demographic characteristics across marketing outlets

Variables

Sex

HEduc

Marital
Status

Woreda

OTran

MCoop

Items

Wholesaler
(N=63)

Collector
(N=49)

Retailer
(N=50)

Total
(N=162)

Male
Female

59

39.33

44

29.33

47

31.33

33.33

41.67

25

12

7.41

Illiterate

29

35.37

25

30.49

28

34.15

82

50.62

Literate

34

42.5

24

30.0

22

27.5

80

49.38

Married

62

98.41

42

85.71

49

98.00

153 94.44

Unmarried

100

1.85

Divorced

100

1.85

Widowed

33.33

33.33

33.33

1.85

Kombolcha

51

52.58

43

44.38

3.09

97

59.88

Habro

12

18.46

9.23

47

72.31

65

40.12

Yes

32

19.75

33

20.37

25

15.43

90

55.56

No

31

19.14

16

9.88

25

15.43

72

44.44

Yes

14

8.64

2.47

10

6.17

28

17.28

F-test

150 92.59
0.40

0.55

2.59*

94.33***

1.99

2.11
No
49 30.25 45 27.78 40 24.69 134 82.72
Note: *** and * are statistically significant at 1% and 10% probability level, respectively.
Source: Own computation from survey result, 2012

4.2. Value Chain Analysis

4.2.1. Value chain map of vegetables in Habro and Kombolcha Woredas

According to McCormick and Schmitz (2002), value chain mapping enables to visualize
the flow of the product from conception to end consumer through various actors. It also
helps to identify the different actors involved in the vegetable value chain, and to
understand their roles and linkages. Consequently, the current value chain map of
vegetables in Habro and Kombolcha Woredas is depicted in Figure 3.

51

Cons
umpt
ion

Consumers

Exporters

Marketing

Banks
Wholesalers

Retailers

OoTI
Collectors

Haramaya
University

Produ
ction

Woreda
Farmers

Administration

Input
suppl
y

Informal Credit
BoARD

Cooperatives

Private

NGOs

Suppliers

Vendors

OCSI

Actors

Functions

Represents physical flow of inputs and products


Represents two way flow of information and technologies
Represents one way flow of information
Represents the flow of much of products

Figure 3. Value chain map of vegetables


Source: Own sketch from survey result, 2012

52

Enablers

4.2.2. Actors and their role in vegetable value chain

The value chain map highlighted the involvement of diverse actors who are participated
directly or indirectly in the value chain. According to KIT et al. (2006), the direct actors
are those involved in commercial activities in the chain (input suppliers, producers,
traders, consumers) and indirect actors are those that provide financial or non-financial
support services, such as credit agencies, business service providers, government, NGOs,
cooperatives, researchers and extension agents.

4.2.2.1. Primary actors

The primary actors in vegetable value chain in Habro Woreda were seed and other input
suppliers, farmers, traders and consumers but in Kombolcha Woreda it includes exporters.
Each of these actors adds value in the process of changing product title. Some functions or
roles are performed by more than one actor, and some actors perform more than one role.

Input Suppliers

At this stage of the value chain, there are many actors who are involved directly or
indirectly in agricultural input supply in the study area. Currently OoARD, primary
cooperatives/ union and private input suppliers are the main source of input supply.
Vegetables growing farmers also participated in this stage especially for potato seed
supply in Kombolcha Woreda, and World Vision Ethiopia is also participated in such
activity in Habro Woreda. All such actors are responsible to supply agricultural inputs like
improved seed varieties, fertilizers, herbicides, pesticides and farm implements which are
essential inputs at the production stage. For major vegetables produced in Habro and
Kombolcha Woredas, the majority of the sample producers used their own seed (Table
11). Regarding fertilizers, some farmers used only organic fertilizer (manure and compost)
while some farmers used both inorganic and organic fertilizers depending on the land size
allocated to vegetable, vegetable type produced and the soil fertility status as perceived by
the farmers. Pesticides are supplied mostly by private vendors.

53

Table 11. Source of vegetable seeds for sample respondents

Source of
seed

Habro
Tomato (N=65)

Kombolcha

Cabbage (N=28)

Potato (N=71)

Cabbage (N=38)

Own seed

13

20.00

21.43

71

100

14

36.84

Local market

40

61.50

10

35.71

21.05

OoARD

12

18.50

14.29

Cooperatives

7.14

16

42.11

NGOs

21.43

Source: Own computation from survey result, 2012.


In Habro Woreda 61.5% of sample farmers used tomato seed from local market which is
unknown quality and only 18.5% of the sample farmers get tomato seed from OoARD. In
Kombolcha Woreda all sample respondents use own potato seed for production. The
reason indicated for not using improved seed from known source were unavailability of
improved seed, shortage of supply and its high price. In Kombolcha Woreda 86.8% and all
of sample respondents applied fertilizer to cabbage and potato field, respectively (Table
12). In Habro Woreda 75% of the sample respondents applied fertilizer to tomato and
cabbage field. In both Woredas the rate of fertilizer application was low. The reason
indicated for not using fertilizer to vegetable field and low rate of fertilizer application was
high fertilizer price.

Table 12. Chemical fertilizer use by sample respondents


Kombolcha

Habro

Total

Fertilizers
use

Tomato
(N=65

Yes

49

75.38

49

75.38

No

16

24.62

16

24.62

Potato
(N=71)

Yes

71

100

71

100

No

Cabbage
(N=66)

Yes

33

86.84

21

75

54

81.82

No

13.16

25

12

18.18

Crop type

2-test

1.52

Source: Own computation from survey result, 2012

54

Producers

Vegetable growers are the major actors who perform most of the value chain functions
right from farm inputs preparation on their farms or procurement of the inputs from other
sources to post harvest handling and marketing. The major value chain functions that
vegetable growers perform include ploughing, planting, fertilization, irrigating, weeding,
pest/disease controlling, harvesting and post harvest handling.

The diverse agro-climatic conditions can make growing vegetable crops highly costeffective and competitive, and provide vast opportunities in study areas. Unfortunately,
these opportunities have not been exploited by the farmers due to the lower price they
receive for their produce in the markets, as well as bearing the cost of post-harvest losses.
Vegetables production in these two Woredas was based on rainfed and irrigation system.
In Kombolcha and Habro Woredas 76.29% and 87.69% of the respondents, respectively
use irrigation for vegetable production. Sole cropping is the most popularly practiced
production system in Habro and Kombolcha Woredas, respectively. In Kombolcha
Woreda 33% of producers intercrop vegetables with other crops and almost all producers
reported that they practice sole cropping in Habro Woreda (Table 13).

Table 13. Cropping systems, value addition and irrigation use

Variables
Cropping
system
Value
adding
Irrigation

Items

Kombolcha
(N=97)

Habro (N=65)

Total (N=162)

Sole

65

67.01

64

98.46

129

79.63

Inter

32

32.99

1.54

33

20.37

Yes

36

37.11

35

53.83

71

43.83

No

61

62.89

30

46.15

91

56.17

Yes

74

76.29

57

87.69

131

80.86

No

23

23.71

12.31

31

19.14

2-test

23.82***

4.4**

3.27*

Note: *** and ** are statistically significant at 1% and 5% significance level,


respectively.
Source: Own computation from survey result, 2012

55

Post harvest handling, which includes different activities like sorting, grading, packing,
storing, transportation, loading and unloading, is done by the farmers themselves or traders
or brokers. If vegetables are sold at the farm gate which is the case in Kombolcha Woreda,
all aforementioned activities are performed by the buyer (traders or broker). Most of the
farmers use sacks, underground storage and ground floor of their residential house as a
store in Kombolcha and sacks and boxes as store in Habro Woreda. There are high
postharvest losses due to improper harvesting, handling, packaging and poor facilities to
market. The result of the sample farmers survey shows that 34%, 25.4% and 20.2% of
tomato, potato and cabbage damaged before it reach to market (Table 14). Survey result
also shows that 43.8% of sample producers conduct sorting and grading of vegetables by
separating damaged and undamaged vegetables, cleaning and cutting when needed before
they take it to the market (Table 13). Means of transportation varies among Woredas but
predominately producers use pack animals and vehicles (Appendix Table 7).

Table 14. Post-harvest loss of vegetables in percent of production


Kombolcha

Habro

Total

Variables

t-test
Mean

SD

Mean

SD

Mean

SD

Tomato (N=65)

34

15.5

34

15.5

Potato (N=71)

25.4

14.5

25.4

14.5

23

18.3

16.6

10.2

20.2

15.5

1.7*

Cabbage (N=66)

Note: ** is statistically significant at 5% probability level.


Source: Own computation from survey result, 2012

In Habro Woreda, most of producers transport their vegetables to the nearby markets.
However, in Kombolcha Woreda, traders also go to the farmers field and negotiate about
price, purchase it and eventually transport mostly potato product to urban markets. There
is significant difference between the two Woredas in market place use at 1% significant
level due to the difference in market access and vegetable types produced between the
Woredas (Appendix Table 8).

56

Collectors/Assemblers

These are traders in assembly markets who collect vegetables from farmers in village
markets and from farms for the purpose of reselling it to wholesalers and retailers. They
use their financial resources and their local knowledge to bulk vegetables from the
surrounding area. They play important role and they do know areas of surplus well.
Collectors are the key actors in the vegetable value chain, responsible for the trading of
33.5, 33 and 25.8 percents of tomato, potato and cabbage, respectively from production
areas to wholesale and retail markets in the study areas. The trading activities of collectors
include buying and assembling, repacking, sorting, transporting and selling to wholesale
markets.

Brokers/Middle Men

Brokers play an important role in linking farmers to market and other stakeholders of the
commodity chain while the ability of market accession of farmers is limited and market
demand requires an improvement in quantity amount as well as diversity of products type.
The brokers sometimes go beyond facilitation of transaction and tend to control and fix
prices, create price symmetry and make extra benefits from the process in addition to
convincing the producers to sale their vegetables at the prices set by wholesalers. More
over brokers are divided in to village level brokers, urban brokers and commission agents.
Village level brokers facilitate transaction by convincing farmers to sale his vegetables
and facilitating the process of searching good quality and quantity vegetables to traders
and urban brokers. Commission agents are brokers working for specific traders.

Wholesalers

Wholesalers are mainly involved in buying vegetables from collectors and producers in
larger volume than any other actors and supplying them to exporters, retailers and
consumers. They also store product, usually for a maximum of three days. Survey result
indicates that wholesale markets are the main assembly centers for vegetables in their
respective surrounding areas. They have better storage, transport and communication
access than other traders. Almost all wholesalers have a warehouse in a market either self

57

owned or rental basis. They are located in Melkarafu, Harar, Karakurikura and Gelmiso
market towns but the number of wholesalers in Melkarafu market are higher than all other
market towns.

Retailers

Retailer involvement in the chain includes buying of vegetables, transport to retail shops,
grading, displaying and selling to consumers. Retailers are key actors in vegetables value
chain in both Woredas. They are the last link between producers and consumers. They
mostly buy from wholesalers and sell to urban consumers. Sometimes they could also
directly buy from the producers. Consumers usually buy the product from retailers as they
offer according to requirement and purchasing power of the buyers. Retailers can be
divided in to urban and rural in the case of tomato in Habro Woreda because of the reason
that tomato is not traded in large scale. Rural retailers are based in village market and
mainly purchase tomato from farmers, and sell to consumers and urban retailers. Urban
retailers purchase from framers and rural retailers in village market and sale to urban
consumers.

Exporters

Exporters are identified in Melkarafu vegetables market and they are exporting their
vegetables to Somalia. Almost all vegetable types were exported to Somalia from
Melkarafu market. Vegetables are mostly exported by Somalian exporters who come to
Melkarafu market to buy vegetables.

Vegetable consumers

Consumers are those purchasing the products for consumption. About three types of
vegetable consumers were identified: households, restaurants and institutions which give
services such as higher education institutions, hospitals, etc. The private consumers are
employees, and urban and rural dwellers who purchase and consume vegetables with an
average income of Birr 18,905 and 17750 per annum and purchase vegetables by 24.4%
and 16.14% of their incomes in Kombolcha and Habro Woredas, respectively (Appendix

58

Table 9). Private consumers purchase vegetables directly from producers, retailers and
wholesalers though most of the consumers purchase from retailers. Farmers also make
important segment of the rural consumers since they consume part of their produces. The
survey result also showed that, on average, 8% of tomato, 13.88% of potato and 9.4% of
cabbage produced in 2011/12 were consumed by the producers. Institutions purchase their
product from wholesaler who has the capacity to supply sustainably based on contractual
agreements.

Consumers prefer medium, sphere shape, red color and strong tomato; medium size potato
with smooth skin and free from damage; and medium size and green cabbage. In general
consumers have their own quality criteria to purchase vegetables.

4.2.2.2. Supporting actors

Such actors are those who provide supportive services including training and extension,
information, financial and research services. According to Martin et al. (2007), access to
information or knowledge, technology and finance determines the state of success of value
chain actors. OoARD, primary cooperatives, micro finance, NGOS and Haramaya
University are main supporting actors who play a central role in the provision of such
services.

Training and Extension Services

DAs and OoARD were the main sources of vegetables training in both Woredas. The
survey result revealed that 67% and 84% of sample respondents participated in vegetable
training that were organized in the last three years in Kombolcha and Habro Woredas,
respectively (Table 15). The result shows that most of the trainings were given on fertilizer
application and the other trainings such as crop management, harvesting and post harvest
handling are given in composition. Trainings were not given on vegetables marketing and
seed preparation.

Regarding extension service, among the total sample farmers 81.44% have been taken
extension services on the vegetables value chain in Kombolcha Woreda and all of sample

59

respondents in Habro Woreda (Table 15). OoARD through its DA backed by the Woreda
subject matter specialists is the major actor who provides information and advisory service
on vegetable production and management practices (Appendix Table 10). Furthermore,
sample farmers indicated that they are getting information particularly of input availability
and price from primary cooperatives and kebele administration.

Table 15. Access to services by sample respondents

Variables

Training

Extension
Market
Information
Credit
Input access
problems

Items

Kombolcha
(N=97)

Habro (N=65)

Total (162)

Yes

65

67

55

84.62

120

74.03

No

32

33

10

15.38

42

25.97

Yes

79

81.44

65

100

144

88.89

No

18

18.56

18

11.11

Yes

52

53.61

35

53.85

87

53.70

No

45

46.39

30

46.15

75

46.30

Yes

6.19

27

41.54

33

20.37

No

91

93.81

38

58.46

129

79.63

Yes

82

84.54

65

100

147

90.74

No

15

15.46

15

9.26

2-test

6.28**

13.57***

0.001

29.98***

11.08***

Note: *** and ** are statistically significant at 1% and 5% probability level, respectively.
Source: Own computation from survey result, 2012
Financial services

In the study area, cooperatives, Oromia Credit and Saving Institution (OCSI) and
individual lenders have been identified as a potential source for credit both in kind or on a
cash basis. The survey result showed that only 6.2 and 41.5 percent of sample respondents
from Kombolcha and Habro Woredas, respectively took credit (Table 15). Most of the
respondents reasons for not participating in credit market were religious which is related
to taking or giving interest. Sources of credit for traders are also the same as producers
except some big traders get credit from banks.

60

With regard to credit source out of 33 sampled farmers who took credit, 22 farmers took
credit from OCSI, 5 farmers from service cooperatives, 3 from traders and relatives and
the remaining took credit from more than one sources (Appendix Table 11).

4.2.3. Value chain governance

The dominant value chain actors play facilitation role. They determine the flow of
commodities and level of prices. In effect they govern the value chain and most other
chain actors subscribe to the rules set in the marketing process. The study result indicates
that the exporters and wholesalers assisted by the brokers are the key value chain
governors. Melkarafu market is heavily dependent on Somalia for vegetables export, and
therefore the vegetables value chains are highly influenced by the export to Somalia. In
most cases, the business relations between the various operational actors are of free market
exchange and uncoordinated. Due to the lack of a proper market information system and
minimal bargaining power, farmers are forced to sell their product at the price offered by
traders. Traders in Kombolcha Woreda usually refer to Somalia markets for price fixation
and in Habro Woreda price is fixed by wholesalers. There is no vertical linkage between
value chain actors but there is horizontal linkage between traders. In some cases, there are
conflicts among the traders regarding payment and failure to keep their commitment.
Overall, the governance of the vegetables value chain is buyer driven with minimum trust
between various actors. Traders are always complaining that the farmers are not providing
quality product while farmers are blaming the traders for offering low prices. The
smallholder farmers are not organized and are not governing the value chain. Hence, they
are price takers and hardly negotiate the price due to fear of post harvest loss, in case the
product is not sold. The value chain governance is similar both in the Kombolcha and
Habro Woredas.

4.3. Marketing Channels and Performance Analysis

4.3.1. Marketing channels

A marketing channel is a business structure of interdependent organizations that reach


from the point of product origin to the consumer with the purpose of moving products to

61

their final consumption destination (Kotler and Armstrong, 2003). The analysis of
marketing channels is intended to provide a systematic knowledge of the flow of the goods
and services from their origin (producer) to the final destination (consumer). Since the
channels to different vegetables were different the analysis was done on tomato, potato
and cabbage, majorly produced vegetables in the study area.

4.3.1.1. Tomato marketing channel

Nine main alternative channels were identified for tomato marketing. It was estimated that
3062.8 qts of tomato were marketed in Gelemiso, Wachu, Harar, Karakurikura and
Melkarafu markets in 2011/12. From the total quantity marketed 911.6 qts of tomato are
supplied by sample respondents. The main marketing channels identified from the point of
production until the product reaches the final consumer through different intermediaries
were depicted in Figure 4.

As can be understood from Figure 4 the main receivers from producers were collectors,
rural retailers and consumers with an estimated percentage share of 33.48%, 29.03% and
17.24%, respectively. On top of this, channel comparison was made based on volume that
passed through each channel. Accordingly, the channel of producer collector
wholesalerurban retailer consumer carry on the largest followed by producer
consumer; and producer rural retailers urban retailer consumer that carry a volume
of 235.73Qt, 157.16Qt and 155.34Qt in that order.

I.

Producers Consumers (157.16Qts)

II.

Producers Rural RetailersConsumers (109.3Qts)

III.

ProducersUrban RetailersConsumers (111.12Qts)

IV.

ProducersRural RetailersUrban RetailersConsumers (155.34Qts)

V.
VI.
VII.
VIII.
IX.

ProducersCollectorsUrban RetailersConsumers (27.22Qts)


ProducersWholesalers Consumers (11.17Qts)
ProducersWholesalersUrban retailersConsumers (62.31Qts)
ProducersCollectorsWholesalersConsumers (42.25Qts)
ProducersCollectorsWholesalersUrban RetailersConsumers (235.73Qts)

62

Producers (911.6Qts)
29.03%
17.24%

12.19%

8.06%

Collectors

Rural
Retailers
41.3%

33.48%

91.08%

Wholesalers

58.7%

84.8%

Urban

15.2%

8.92%

Retailers
100%

Consumers
Figure 3: Tomato market channel
Figure 4. Tomato market channel
Source: Own sketch from survey result, 2012

4.3.1.2. Potato marketing channel

Seven main alternative channels were identified for potato marketing. It was estimated that
149,219.2qts of potato were marketed in Melkarafu, Harar, Karakurikura, Wachu and
Gelemso markets in 2011/12. From the total quantity marketed 1207qts of potato are
supplied by sample respondents. From the quantity supplied by sample farmers around
15.4 qts traded outside the Woreda market and the remaining quantities flow through the
identified channel to consumers and exporters. The main marketing channels identified
from the point of production until the product reaches the final consumer through different
intermediaries were depicted in Figure 5.

As can be understood from figure 5 the main receivers from producers were collectors and
wholesalers with an estimated percentage share of 32.95% and 52.2%, respectively.
According to volume of potato passed to different channels, the channel of producer
wholesaler exporter carry the largest volume followed by producer collector

63

wholesaler exporter; and producer retailer consumer that carry a volume of 614.3qts,
315.6qts and 112.3qts in that order.

I.
II.

Producers Consumers (67Qts)


ProducersRetailersConsumers (112.3Qts)

III.

ProducersWholesalers Exporters (614.3Qts)

IV.

ProducersWholesalersRetailersConsumers (6.3Qts)

V.
VI.
VII.

ProducersCollectorsRetailersConsumers (74Qts)
ProducersCollectorsWholesalersExporters (315.6Qts)
ProducersCollectorsWholesalersRetailersConsumers (3.2Qts)

Producers (1207Qts)
5.55%

9.3%

52.2%

32.95%

Collectors

1.5%

Wholesalers

18.6%
1%

Retailers
100%

Consumers

97.5%

Exporters
Figure 5. Potato market channel
Source: Own sketch from survey result, 2012

64

Traders outside the woreda

81.4%

4.3.1.3. Cabbage marketing channel

Nine main alternative channels were identified for cabbage marketing. It was estimated
that 73,455.2qts of cabbage were marketed in Melkarafu, Harar, Karakurikura, Wachu and
Gelemso market in 2011/12. From the total quantity marketed 1330.5qts of cabbage was
supplied by sample farmers. From the total quantity around 27.87qts traded outside the
Woreda market and the remaining quantities flow through the identified channels to
consumers and exporters. The main marketing channels identified from the point of
production until the product reaches the final consumers through different intermediaries
were depicted in Figure 6.

As can be understood from Figure 6 the main receivers from producers were collectors,
wholesalers and retailers with an estimated percentage share of 25.8%, 31.6% and 29.4%,
respectively. According to volume of cabbage passed to different channels, the channel of
producer retailer consumer carry the largest volume followed by producer wholesaler
exporter; and producer consumer that carry a volume of 390.6qts, 265.2qts and
176.16qts in that order.

I.
II.

Producers Consumers (176.16Qts)


ProducersRetailersConsumers (390.63Qts)

III.

ProducersWholesalersConsumers (37.89Qts)

IV.

ProducersWholesalers Exporters (265.21Qts)

V.
VI.
VII.

ProducersWholesalersRetailersConsumers (101.87Qts)
ProducersCollectorsRetailersConsumers (84.31Qts)
ProducersCollectorsWholesalersConsumers (23.26Qts)

VIII. ProducersCollectorsWholesalersExporters (162.81Qts)


IX.

ProducersCollectorsWholesalersRetailersConsumers (62.54Qts)

65

Producers (1330.5Qt)
13.24%

29.36%

31.64%

25.76%

75.4%

3.8%

Wholesalers
24.2%

Retailer
100%

9%
63%

Consumers

24.6%

Traders outside the woredas

Collectors

Exporters
Figure 6. Cabbage market channel
Source: Own sketch from survey result, 2012

4.3.2. Performance of vegetables market

The performance of vegetable market was evaluated by considering associated costs,


returns and marketing margins. The methods employed for analysis of performance were
channel comparison and marketing margin. The analysis of marketing channels was
intended to provide a systematic knowledge of the flow of goods and services from its
origin of production to final destination (ultimate consumers). The estimated volume of
production of tomato, potato and cabbage were about 1266.1, 1391 and 1449 quintals,
respectively from which about 911.6qts, 1207qts, and 1330.5qts of tomato, potato and
cabbage, respectively were sold.

The distribution of costs and gross income at different levels is important in the business
of vegetables. Being highly bio-degradable, fresh vegetables require greater attention
during harvesting, packaging and transporting from the point of production to the final

66

market. The marketing cost of the vegetables mainly involves the cost of post-harvest
activities incurred before reaching the consumer. This includes cost of harvesting and
packaging (material and labor costs), handling (sorting, cleaning, grading, loading, and
unloading), and transportation and tax costs. Generally, these components constitute a
large share in the total margin between the final retailer price and the cost of production.
The margin calculation is done to show the distribution throughout the various actors as
vegetables move from production to collectors, wholesalers, retail markets, and finally to
consumers.

Marketing margin can be used to measure the share of the final selling price that is
captured by a particular agent in the value chain. The relative size of various market
participants gross margins can indicate where in the marketing chain value is added
and/or profits are made. In order to calculate the marketing margin of an agent, the
average price of vegetables for that particular agent was taken. For instance, the buying
price of consumers was obtained by taking the average purchasing price of consumers. In
order to measure the market share of each agent, the marketing channel where all agents
have participated was selected. Marketing margins, associated costs and benefit share of
value chain actors and marketing margins through different main channels was presented
bellow.

4.3.2.1. Tomato market performance

Marketing costs and benefit shares of actors in tomato value chain

Table 16 indicates different types of marketing cost related to the transaction of tomato by
collectors, wholesalers, rural retailers and urban retailers; and the benefit share of each
marketing actors. The arrangement of marketing cost revealed that perishability loss is the
highest cost for each marketing agents. This is due to the perishable nature of tomato.
Thus, the cost of loss is the highest amount followed by packing material cost and
transportation cost.

67

Table 16. Tomato marketing costs and benefit shares of actors


Items (Birr/Qt)

Produc
ers

Collec
tors

Whole
salers

Rural
Retailers

Urban
Retailers

Horizontal
Sum

Purchase Prices

450

540

550

650

2190

Production cost

261.20

261.20

6.50

6.50

38

14.20

21

10

18

12.50

75.70

Loss

35

25

21.50

27

32.50

141

Overhead cost

4.45

4.55

11.30

21.50

43.80

Packing material

25

25

25

25

25

125

1.67

1.67

7.34

Total marketing cost

85.20

85.45

71.05

89.47

99.67

430.84

Total cost

346.40

85.45

71.05

89.47

99.67

692.04

Sale Prices

476.7

662.50

750

775

900

3564.2

Market margin

215.5

212.5

210

225

250

1113

% share of margin

19.4

19.1

18.9

20.2

22.5

100

Profit margin

130.3

127.05

138.95

135.53

150.33

682.16

19.9

22

100

Marketing cost
Labor
Transport

Tax

% share of profit
19.1
18.6
20.4
Source: Own computation from survey result, 2012

Each of the tomato value chain actors adds value to the product as the product passes from
one actor to another. In a way, the actors change the form of the product through
improving the grade by sorting, cleaning or washing or create space and time utility.
Compared to farmers, traders (collectors, wholesalers and retailers) operating expense is
half (50%) but their profit margin is more than three fourth of that of farmers. That means
by simply buying from the farmers and selling to consumers, traders took above 80% of
the total profit margin. While farmers, doing all the work of producing tomato and bearing
the associated risks, took only 19.4% of the profit margin. This disproportionate share of
benefits is the reflection of power relationship among actors. Tomato producers added
19.4% of the total value of tomato in the woreda. Collectors, wholesalers, rural retailers

68

and urban retailers are responsible for 18.6%, 20.4%, 19.9% and 22%, respectively. The
price change from producers price to consumer price is 88.8%.

Marketing margins of tomato in different channels

Marketing margins of tomato in the nine channels for each group of market players are
given below in Table 17. GMMp, GMMc, GMMrr, GMMur and GMMw are gross
marketing margins of producers, collectors, rural retailers, urban retailers and wholesalers,
respectively. NMMc, NMMrr, NMMur and NMMw are net marketing margins of
collectors, rural retailers, urban retailers and wholesalers, respectively.

Table 17. Marketing margins of actors in different marketing channel of tomato


Marketing
Margins

II

III

IV

VI

VII

VIII

IX

TGMM

47.1

46.7

50

50

40

46.7

43.7

50

GMMp

100

52.9

53.3

50

50

60

53.3

56.3

50

GMMc

27.8

18.7

16.7

GMMrr

47

27.8

GMMur

46.7

22.2

22.2

22.2

22.2

GMMw

40

24.4

25

11.1

NMMc

18.3

8.1

7.2

NMMrr

36.5

17.8

NMMur

35.6

11.1

12.9

14.3

14.2

NMMw

31

16.4

19.7

6.4

Source: Own computation from survey result, 2012

The total gross marketing margin (TGMM) is the highest in channel IV, V and IX which is
about 50 %. Rural retailers, urban retailers and wholesalers have got the highest gross
marketing margin in channel II, III and VI, respectively whereas wholesalers have got the
lowest marketing margin in channel IX.
Without considering channel I (producers sell directly to consumer) producers share
(GMMp) is highest (60%) from the total consumers price in channel VI and lowest in

69

channel IV, V and IX (50%) because of the involvement of collectors and rural retailers in
this channel that purchase relatively at a lower price from producers in their locality.
NMM are somewhat high in channel II, III and VI as the rural retailers, urban retailers and
wholesalers directly purchase from producer and sell it to the end buyers who are
consumers.

4.3.2.2. Potato market performance

Marketing costs and benefit share of actors in potato value chain

Table 18. Potato marketing costs and benefit shares of actors


Producers

Collectors

Wholesalers

Retailers

Horizontal
Sum

Purchase Prices

362.50

458.33

522.33

1343.16

Production cost

277.46

Item (Birr/Qt)

277.46

Marketing cost
Labor

11.80

10.50

12.33

7.47

42.1

Transport

14.60

19

14.25

12.50

60.35

Loss

22.70

16.50

9.75

19.50

68.44

2.63

5.80

19.60

31.03

8.50

8.50

8.50

8.50

34

1.67

5.67

60.6

59.13

52.63

69.24

241.6

Total cost

338.06

59.13

52.63

69.24

519.06

Sale Prices

380

533.50

633.33

800

2346.83

102.54

171

175

277.67

726.21

% share of margin

14.2

23.5

24.1

38.2

100

Profit margin

41.94

111.87

105.76

208.43

468

22.6

44.5

100

Overhead cost
Packing material
Tax
Total marketing cost

Market margin

% share of profit
9
23.9
Source: Own computation from survey result, 2012

70

Table 18 indicates different types of marketing cost and margin related to the transaction
of potato by producers, collectors, wholesalers and retailers with the same cost
arrangement as tomato value chain. Potato value chain in Kombolcha Woreda has the
same value adding behavior as tomato value chain in Habro Woreda. Farmers in potato
value chain gets lower profit margin relative to tomato value chain. Compared to farmers,
traders (collectors, wholesalers and retailers) operating expense is almost one third
(34.9%) but their profit margin is more than nine tenth of that of farmers. That means by
simply buying from the farmers and selling to consumers, traders took 91% of the total
profit margin. While farmers, doing all the work of producing potato and bearing the
associated risks, took only 9% of the profit margin. Collectors, wholesalers, and retailers
are responsible for 23.9%, 22.6% and 44.5%, respectively. The price change from
producers price to consumer price is 110.5%.

Marketing margins of potato in different channels

Marketing margins of potato in the seven channels for each group of market players are
given in Table 19. GMMp, GMMc, GMMr and GMMw are gross marketing margins of
producers, collectors, retailers and wholesalers, respectively. NMMc, NMMr and NMMw
are net marketing margins of collectors, retailers and wholesalers, respectively.

Table 19. Marketing margins of actors in different marketing channel of potato


Marketing Margins

II

III

IV

VI

VII

TGMM

62.5

46.4

53.1

62.5

57.1

62.5

GMMp

100

37.5

53.6

46.9

37.5

42.9

37.5

GMMc

33.4

28.6

25

GMMr

62.5

25

29.1

GMMw

46.4

28.1

28.6

12.5

NMMc

29.9

24.6

19.9

NMMr

55

19.8

21.2

NMMw

45.1

26.9

27.2

11.3

Source: Own computation from survey result, 2012

71

The total gross marketing margin (TGMM) is the highest in channel II, V and VII which is
about 62.5 %. Collectors, retailers and wholesalers have got the highest gross marketing
margin in channel V, II and III, respectively whereas wholesalers have got the lowest
marketing margin in channel VII.
Without considering channel I (producers sell directly to consumer) producers share
(GMMp) is highest (53.6%) from the total consumers price in channel III and lowest in
channel II, V and VII (37.5%) because of the involvement of middlemen in these channels
that purchase relatively at a lower price from producers in their locality. NMM are
somewhat high in channel II and III as the wholesalers and retailers directly purchase from
producers and sell it to the end market i.e. consumer or exporter .

4.3.2.3. Cabbage market performance

Marketing costs and benefit share of actors in cabbage value chain

Table 20 indicates different types of marketing cost and margins related to the transaction
of cabbage by cabbage producers, collectors, wholesalers and retailers where the
arrangement of costs are the same with tomato and potato value chain. Cabbage value
chain has the same value adding behavior as the other vegetables. Farmers in cabbage
value chain gets higher profit margin relative to tomato and potato value chain. Compared
to farmers, traders (collectors, wholesalers and retailers) operating expense is less than
half (45.5%) but their profit margin is more than half of that of farmers. That means by
simply buying from the farmers and selling to consumers, traders took 57.4% of the total
profit margin. While farmers, doing all the work of producing cabbage and bearing the
associated risks, took 42.6% of the profit margin. Collectors, wholesalers and retailers are
responsible for 16.7%, 15.7% and 25%, respectively. The price change from producers
price to consumer price is 71.4% which is lower relative to other vegetables.

72

Table 20. Cabbage marketing costs and benefit share of actors


Items (Birr/Qt)

Producers

Collectors

Wholesalers

Retailers

sum

Purchase Prices

337.50

425

450

1212.5

Production cost

142

142

10.60

10.50

12.33

7.67

41.1

Transport

17

14

11

7.25

49.25

Loss

31

22

14.75

27.50

95.25

Overhead cost

1.55

0.8

16.6

21.95

8.50

8.50

8.50

8.50

34

1.67

5.67

Total marketing cost

70.10

58.55

49.38

69.19

247.22

Total cost

212.10

58.55

49.38

69.19

389.22

Sale Prices

350

450

525

600

1925

Market margin

208

112.50

100

150

570.5

% share of margin

36.5

19.7

17.5

26.3

100

137.90

53.95

50.63

80.81

323.29

15.7

25

100

Marketing cost
Labor

Packing material
Tax

Profit margin

% share of profit
42.6
16.7
Source: Own computation from survey result, 2012

Marketing margins of cabbage in different channels

Marketing margins of cabbage in the nine channels for each group of market player are
shown below Table 21. GMMp, GMMc, GMMr and GMMw are gross marketing margins
of producers, collectors, retailers and wholesalers, respectively. NMMc, NMMr and
NMMw are net marketing margins of collectors, retailers and wholesalers, respectively.

73

Table 21. Marketing margins of actors in different marketing channel of cabbage


Market
Margin

II

III

IV

VI

VII

VIII

IX

TGMM

37.5

36.4

36.4

41.7

45.8

40.9

45.8

45.8

GMMp

100

62.5

63.6

63.6

58.3

54.2

59.1

54.2

54.2

GMMc

25

18.2

16.7

16.7

GMMr

37.5

16.7

20.8

16.7

GMMw

45.4

36.4

25

22.7

29.2

12.5

NMMc

16

8.3

7.6

7.6

NMMr

25.5

4.6

8.8

4.6

12.8

20.1

3.4

26.5
NMMw
35.6
15.9
Source: Own computation from survey result, 2012

The total gross marketing margin (TGMM) is the highest in channel VI, VIII and IX
which is about 45.8%. Retailers and wholesalers have got the highest gross marketing
margin in channel II and III, respectively whereas wholesalers have got the lowest
marketing margin in channel IX.
Without considering channel I (producers sell directly to consumer) producers share
(GMMp) is highest (63.6%) from the total consumers price in channel II, III and IV, and
lowest in channel VI, VIII and IX (54.2%) because of the involvement of middlemen in
these channels that purchase relatively at a lower price from producers in their locality.
NMM are somewhat high in channel II and III as the retailers and wholesalers directly
purchase from producer and sell it to the end market i.e. consumer or exporter.

4.4. Econometric Model Outputs

4.4.1. Determinants of vegetables market supply

Vegetables are produced for market and consumption and are important cash crops in
Habro and Kombolcha Woredas. According to the result of this study, all sample
households are good suppliers of the vegetables to the market. Analysis of factors
affecting farm level marketable supply of vegetables was found to be important to identify

74

factors constraining vegetables supply to market. The analysis was done separately. The
numbers of tomato, potato and cabbage producing farmers were 65, 71 and 66,
respectively. Multiple linear regression models were employed to identify the factors. For
the parameter estimates to be efficient, unbiased and consistent assumptions of Classical
Linear Regression (CLR) model should hold true. Hence, multicolliniarity, endogeniety
and heteroscedasticity detection test were performed using appropriate test statistics.

The command robust (in Stata) was used to correct for heteroscedasticity. There is no
multicollinearity problem since VIF results are less than 10 (Appendix Table 1).
Endogeniety test results show that quantity of potato produced is endogenous variable for
potato supply to the market (F=10.1(p=0.002)) and there is no endogeneity problem for
cabbage (F=0.46(p=0.50)) and tomato (F=0.66(p=0.42)) supply to the market. The reason
for the existent of endogeneity problem in the case of potato is may be the usage of potato
for household consumption more than any other vegetables. This problem can be
overcome by using two stages least square (2SLS) method for potato market supply.

Fourteen explanatory variables were hypothesized to determine the household level


marketable supply of vegetables. In the first stage of 2SLS method, access to market
information, vegetable farming experience, sex of the household head, age of the
household head and amount of fertilizer application affects positively and significantly the
amount of potato produced where as access to extension service reduces the quantity of
potato produced (Table 22). The possible reason for the negative sign of extension may be
is due to the fact that the countrys extension system was cereal based and it is not area
specific. In Kombolcha Woreda, farmers have great experience in vegetables production
but the extension emphasizes on cereals to ensure food self sufficiency. It is also
justifiable given the limited training that extension officers receive, and their involvement
in many non extension activities such as input distributions, collection of loans and taxes.
Therefore, extension service given to the farmers may push them to produce more cereal
crops and this in turn reduces potato quantity produced and supplied to the market due to
land shortage. This result is in line with Jema (2006) where extension visit significantly
and negatively affected technical efficiency of vegetable producers in Kombolcha and
Haramaya districts. Secondly, determinants of quantity of vegetable supplied to the market
were presented in Table 23.

75

Table 22. Factors affecting potato production


Variables

Coef.

Robust Std.Err.

P>|t|

1.190***

0.337

3.53

0.001

Land

.306

0.260

1.18

0.243

HEduc

.276

2.026

0.14

0.892

TLU

-.016

0.674

-0.02

0.981

AExte

-16.765***

5.010

-3.35

0.001

Family

.110

0.563

0.19

0.846

Credit

2.983

4.224

0.71

0.483

NOFI

3.213

2.889

1.11

0.271

MInfo

5.540**

2.543

2.18

0.034

DMkt

-.176

2.718

-0.06

0.949

Sex

4.070*

2.267

1.8

0.078

Age

.164*

0.097

1.69

0.097

QFertIV

.225**

0.110

2.05

0.045

_cons

10.487*

5.730

1.83

0.072

VFExp

R2

60.27

8.5***

71

Note: Dependent variable is amount of potato produced in quintal. ***, ** and * are
statistically significant at 1%, 5% and 10%, respectively. QFert is an instrument for
quantity of potato produced.
Source: Own computation from survey result, 2012

Vegetable Farming Experience (VFExp): It affects potato market supply positively and
significantly at less than 10% significance level. The result suggests that as farmers have
high potato production experience the amount of potato supplied to the market increased
through its effect on potato production in the first stage (Table 22). Thus, the result
implied that, as farmers experience increased by a year, potato supplied to market
increased by 0.57qt. This is in line with Abay (2007) who illustrated as farmers
experience increased the volume of tomato supplied to the market increased.

76

Table 23. Determinants of vegetables quantity supplied to the market

Vari
able

Potato

Cabbage

Tomato

Coef.

Std.
Err.

Coef.

Std.
Err.

Coef.

Std.
Err.

QPron

.470***

0.208

2.25

.973***

0.005

201.64

.756***

0.055

13.72

VFExp

.569*

0.319

1.79

.015

0.043

0.35

.094

0.178

0.53

Land

.203

0.125

.004

0.050

0.12

.096

0.163

0.59

HEduc

-.184

0.888

.255

0.384

0.66

-.560

0.782

-0.72

Woreda

1.62
0.21
-

-3.001***

0.811

-3.7

.137

0.342

-.051

0.105

-0.49

-.115

0.206

-0.56

AExte

-7.889**

3.883

.366

0.533

0.69

Family

.215

0.254

0.4
2.03
0.85

.100

0.081

1.24

.075

0.166

0.45

Credit

3.109

1.969

1.58

-.010

0.456

-0.02

.424

0.680

0.62

NOFI

.140

2.039

0.07

.822**

0.349

2.35

-.615

1.057

-0.58

MInfo

3.075**

1.570

-.354

0.510

-0.69

2.360***

0.704

3.35

DMkt

-1.234

1.255

-.243**

0.363

-2.67

.493

0.520

0.95

Sex

1.425

1.582

1.96
0.98
0.9

-.238

0.358

-0.66

1.597

1.410

1.13

Age

.051

0.039

1.3

-.012

0.026

-0.47

.027

0.045

0.61

_cons

4.284

3.954

1.08

.027

0.862

0.03

-5.838***

1.938

-3.01

TLU

R2
F/Chi2
N

88.04

99.81

88.81

360.41***

5304.4***

35.96***

71

66

65

Note: Dependent variables are amount of tomato, potato and cabbage sold in quintal. ***,
** and * are statistically significant at 1%, 5% and 10%, respectively. Std.Err is robust.
Access to extension and Woreda dummy was excluded from tomato and potato supply
model result due to multicollinearity.
Source: Own computation from survey result, 2012

Access to Market Information (MInfo): It affected marketed supply of potato and


tomato positively and significantly at 5% and 1% significance level. On average if a potato
and tomato producer gets market information, the amount of potato and tomato supplied to
the market increase by 3.1 and 2.4 quintals, respectively. This suggests that access to

77

market information reduces farmers risk aversion behavior of getting a market and
decreases marketing costs of farmers that affects the marketable surplus. The implication
is that obtaining and verifying information helps to supply more quantity of vegetables.
This is in line with Mohammed (2011) who illustrated access to market information by
farming households increase marketable supply of teff significantly in Halaba especial
Woreda.

Distance from the Nearest Market (DMkt): It affects cabbage marketable surplus
negatively and significantly at less than 5% significance level as expected. The result
shows that as the distance from the nearest market increased by one feet hour the quantity
of cabbage supplied to the market decreased by 0.24qts. This is may be due to the reason
that as the distance to the market center increases transportation cost increases; since
cabbage is highly perishable and bulky product its loss and other marketing costs
increased. This is in line with Ayelech (2011) who indicated that distance to market
caused market surplus of avocado to decline in Gomma Woreda.

Woreda Dummy (Woreda): As the Woreda becomes Habro, it influences volume of


cabbage sales significantly and negatively at less than 1% significance level. Habro
Woreda as compared to Kombolcha Woreda, the volume of cabbage sales decreased by
about 3qts, being other variables held constant. This is may be due to the difference in
access to markets, access to infrastructures and difference in socio-economic
characteristics of the two Woredas. In addition, the reason may be is the difference in size
of land holding and population density of the two Woredas. Since, Kombolcha Woreda is
highly populated; the size of household land holding is low which forces farmers to
produce high value and short period crops like vegetables compared to Habro Woreda.

Access to Extension Service (AExte): It was negatively and significantly associated with
potato sale volume at less than 5% significant level. The result shows that on average, if
potato producer gets extension service the amount of potato supplied to the market
decreased by 7.9qts. The possible reason for the negative sign may be is due to the
negative effect of extension on potato production in the first stage (Table 22). Therefore,
extension service given to the farmers reduces potato quantity produced and this in turn
reduces potato supplied to the market.

78

Non/Off Farm Income (NOFI): It influences volume of cabbage supply significantly and
positively at less than 5% significance level. This is because most of non/off farm
activities that are farmers participating in are pity cash trading and productive safety net
programs (PSNP). Farmers participating in pity cash trading were business oriented
farmers and they produce vegetables completely for market and farmers participated in
PSNP obtained agricultural inputs as gifts and have better cabbage productivity than
others. The result showed that if cabbage producers have non/off farm income, cabbage
supply increased by 0.82qt compared to farmers who do not have non/off farm income.

Quantity Produced (QPron): As hypothesized, the regression result shows that quantity
produced significantly affected potato, cabbage and tomato quantity supplied to the market
at 1% significance level. The result also implied that, a quintal increase in the quantity of
potato, cabbage and tomato production has caused an increase of 0.47, 0.97 and 0.77qt of
marketable potato, cabbage and tomato. This is in line with Abay (2007); Adugna (2009)
and Ayelech (2011) who illustrated an increase of tomato, mango, avocado and papaya
production by farming households has augmented marketable supply of the commodities
significantly.
4.4.2. Determinants of vegetable market outlet choices

The MNL model as specified in section 3.4.2.2 with three choices, was tested for the
independence of irrelevant alternatives (IIA) assumption based on Hausman test
(Appendix Table 2). The hypothesis that all the coefficients except the constant are zero is
rejected at 1 percent level based on the Wald test. The model explained 41.4% of the
variation in market choice among vegetables producing farmers. The possible
heteroscedasticity and multicolleaniarity problems are also corrected. The command
robust (in Stata) was used to correct for heteroscedasticity. There is no multicolleaniarity
problem because the result of VIF is less than 10 for all variables (Appendix Table 1).

Table 24 below presents the coefficients from multinomial logit regression on the existing
alternative marketing outlets in the sample and the marginal effects. According to Green
(2012), the coefficient values measures the expected change in the logit for a unit change
in the corresponding independent variable, other independent variables being equal. The

79

sign of the coefficient shows the direction of influence of the variable on the logit. It
follows that a positive value indicates an increase in the likelihood that a household will
change to the alternative option from the baseline group. The result showed that some of
the variables were significant at both market outlets while some others were significant in
one marketing outlet but not in the other outlet. Compared to the base category
(wholesalers) access to extension service, post harvest handling, owning transport facility
and membership to any cooperative determined the selection of collector as market
options while the variables access to extension service, educational level of household
head, owning transport facility and woreda dummy affected the choice of retail outlet.

The results of the estimated marginal effects are discussed in terms of the significance and
signs on the parameters. The positive estimated coefficients of a variable indicates that the
probability of the producers being in either supplying to collector market outlet or retailer
market outlet relative to supplying to wholesaler market outlet increases as these
explanatory variables increase. The implication is that the probability of the producers to
be on these outcomes is greater than the probability of being wholesaler outlet (the base
category). The negative and significant parameter indicates the probability of using
wholesale outlet is higher than the probability of being in the two alternatives. Estimates
not significantly different from zero indicate that the explanatory variable concerned does
not affect the probability of the producers decision to use wholesaler outlet category than
in the other two categories. The result of the MNL and marginal effects and their possible
explanations are presented below.
The alternative wholesaler was used as a base category (bench mark alternative). This
implies that the discussion of the results focuses on the impact of the explanatory variables
on a use of collectors and retailers category relative to use of wholesalers (the base
category).

80

Table 24. Coefficients and marginal effects of Multinomial Logit Model for the choice of marketing outlets
Collectors
Variables

Retailers

Robust
Std.Err.

-.212

.724

-0.29

VAdd

-1.485***

.537

HEduc

.473

AExte

Collectors

Retailers

Robust
Std.Err.

dy/dx

Robust
Std.Err.

dy/dx

Robust
Std.Err.

6.483***

1.073

6.04

-.331

.074

-4.45

.860

.048

18.06

-2.77

.061

.658

0.09

-.305

.094

-3.24

.058

.065

0.89

.480

0.99

-1.162*

.668

-1.74

.144

.101

1.43

-.139

.083

-1.67

-1.585**

.746

-2.12

-3.780**

1.511

-2.50

.043

.166

0.26

-.558

.253

-2.21

NOFI

-.683

.663

-1.03

-.337

.885

-0.38

-.124

.117

-1.06

-.013

.085

-0.15

MInfo

.728

.503

1.45

-.844

.638

-1.32

.185

.098

1.89

-.117

.090

-1.30

Credit

-.189

.772

-0.24

-.777

.714

-1.09

-.017

.160

-0.11

-.062

.059

-1.06

OTran

-.834*

.478

-1.75

1.023*

.607

1.68

-.140

.099

-1.41

.072

.069

1.05

AEqu

-.131

.132

-0.99

-.183

.140

-1.31

-.021

.027

-0.80

-.014

.012

-1.15

-1.402**

.650

-2.16

-.492

.692

-0.71

-.234

.095

-2.47

-.011

.065

-0.17

DMkt

.547

.435

1.26

-.711

.553

-1.29

.144

.087

1.66

-.093

.066

-1.41

Sex

-.134

.867

-0.15

1.489

1.356

1.10

-.065

.196

-0.33

.098

.062

1.56

Age

.031

.032

0.97

.047

.037

1.27

.005

.006

0.80

.004

.003

1.16

_cons

.096

1.409

0.07

-1.629

1.936

-0.84

Woreda

MCoop

Coef.

Coef.

Wholesale outlet is base outcome. dy/dx is marginal effect. N=162, LR 2 (30) = 92.5***, Pseudo R2=0. 41. Log likelihood = -103.75. ***,
**and * are statistically significant at 1%, 5% and 10%, respectively.
Source: Own computation from survey result, 2012

81

Access to Extension Service (AExte): The variable was negatively and significantly
associated with use of collector and retailer outlets at less than 5% significance level.
Other things being equal, the likelihood of using collector and retailer outlet would be
lower by 4.3% and 55.8%, respectively for households having extension access relative to
using wholesale outlet. Farmers access to extension service increased the ability of
farmers to acquire important market information as well as other related agricultural
information which in turn increases farmers ability to choose the best market outlets for
its product. This result is in line with Mamo and Degnet (2012) who found agricultural
extension services in the form of visit of farmers by extension officers tended to increase
the probability of selling directly to consumers in livestock market channel choice of
farmers in Ethiopia.

Owning Transport Facility (OTran): This variable influenced the choice of collector
outlet negatively and significantly; and choice of retailer outlet positively and significantly
at 10 % significance level. Ownership of transport facilities by farmers decreased the
probability of choosing collectors outlet by 14% and increase the probability of choosing
retailer outlet by 7.2% compared to base category. This might be due to the reason that,
farmers who have transport facility could supply their product to local market center and
sell to wholesalers or retailers directly by getting better price which might go to the
collectors. This shows that the availability of transportation facilities helps reduce long
market distance constraint, offering greater depth in marketing choices.

Woreda Dummy (Woreda): Woreda dummy was positively and significantly related
with retailer outlet at 1% significance level. As the Woreda becomes Habro, the
probability of choosing retail outlet increased by 86% compared to the base category.
These shows the interference of intermediate traders was low in Habro Woreda compared
to Kombolcha Woreda. The reason may be is the most dominantly produced vegetable in
Habro Woreda is tomato and traders are not participated in tomato market compared to
other vegetables. This forced tomato producers to sell to retailers in the market.

Post Harvest Value Addition (VAdd): It was negatively and significant related with
collector market outlet at less than 1% significance level. Farmers who have practiced
better postharvest handling chooses wholesaler market outlet relative to collector outlet.

82

The result shows that as farmers practice value adding activities the probability of
choosing collector outlet decreased by 30.5% compared to base category. The most
probable reason might be is related to the quality of the product i.e. wholesalers seek
better quality vegetables to sell to exporters or to get better market and they have better
relationship with those farmers supplying better quality product.

Educational Level of Household Head (HEduc): It was negatively and significant


related with retail outlet choice at less than 10% significance level. The result also
confirmed that, if the household head is educated the probability of choice of retail outlet
decreased by 13.9% relative to wholesaler outlet. Education is believed to give individuals
with the necessary knowledge that can be used to collect information, interpret the
information received, and make productive and marketing decision. Education is related
with the wholesale market outlet because as the education level increases farmers ability
to post harvests handling activities increases and strengthen the linkage with wholesalers.

Membership to any Cooperatives (MCoop): Membership in any cooperative determines


farm households market outlet choice decision. As hypothesized the coefficients for this
variable is negatively and significantly related with collector outlets at 5% significance
level. This result indicated that those households who were members of cooperatives the
probability of choosing collector outlet decreased by 23.4% compared to base category.
This is mostly related to the reality that those multipurpose cooperatives passing down
production and market information they accessed directly or indirectly to their members.

4.5. Challenges and Opportunities in Vegetables Value Chain

A number of challenges, opportunities and entry points for further technological,


institutional and organizational innovation for upgrading the value chain in the study area
were identified by the different value chain actors. In this subsection, the major constraints
and opportunities are briefly discussed.

83

4.5.1. Production constraints

There are factors that hinder the production of vegetables products in the study area. The
majority of the sample producers indicated seed shortage, pesticide shortage, diseases,
insects, drought and frost as major constraints of vegetables production. The major
constraints of vegetables production are discussed below in Table 25.

Table 25. Major production constraints of vegetable producers


Tomato (N=52)

Potato (N=71)

Lack of pesticides

11.54

20

28.17

10

17.86

Lack of seed

11

21.15

18

25.35

12

21.43

Diseases

17

32.69

19

26.76

16

28.57

Insects

10

19.23

7.04

13

23.21

Drought

5.77

8.45

5.36

Frost

9.79

4.23

3.57

Major constraints

Cabbage (N=56)

Source: Own computation from survey result, 2012

Limited access to and supply of agricultural inputs

The most important physical inputs for vegetable production are improved seeds,
fertilizers, pesticide/herbicides and irrigation water. Research and extension services,
information and appropriate technological support are non-physical inputs that are equally
important for higher yields. Among the total sample of respondents, 90.7% replied limited
access and supply of inputs as their production problem (Table 15). This is caused mainly
due to absence of vegetable seed multiplying and distributing agency, shortage of supply,
high input price, inappropriate delivery mechanisms and delayed supply. Delay in input
supply happened because of prolonged chain of input supply especially for improved
seeds and chemical fertilizers.

84

Diseases and pests

This was directly related to agricultural input access problem. Unavailability of pesticide
and herbicides mainly create these problems in addition to the problem of accessing to
improved and diseases resistance seeds. This shows most farmers are using poor quality
seeds, as high quality seeds are often not available at planting time and are expensive. The
other reason for this problem is the problem of management skill. Inadequate farmer skills
and knowledge on production and farm management creates such problems. This is mainly
related with poor extension service in the areas.

Natural factors

Natural factors such as drought, frosts, rainfall, water supply and flood are often beyond
the control of farmers and institutions. Despite the availability of irrigation water for some
respondents, the utilization is traditional leading to inefficient water use.

4.5.2. Production opportunities

Availability of irrigation water, its effect in generating income in short period, its better
productivity in small land, its use as cash income source or livelihood consumption,
increasing price and its continuous demand in the market were some of the opportunities
of vegetables by most of the producers. The survey result shows that 92.6% of the
producers intend to expand vegetables production due to the above opportunities
(Appendix Table 12).

The Woredas are also naturally endowed though they have some production and
marketing constraints. Some of the potentials to mention are the following. The Woredas
are very suitable to produce not only vegetable products but also other market oriented
commodities of cereal, pulses and/or animal production. Of the potential crops, tropical
fruits like papaya, mango, banana, orange and avocado; and cereals like sesame, teff,
sorghum, maize, rice and improved local animals for milk and meat production are some
of the available potentials. On top of this, relatively fertile arable land and abundant
underground water potential are some to mention.

85

Government suitable agricultural policies designed to support farmers at the grass-root


level especially emphasis given for horticultural production in Growth and Transformation
Plan (GTP) is the other opportunity dimension. The deployment of development agents at
each kebeles based on their academic back ground are also important policy dimensions.
Furthermore, provision of infrastructure facilities like roads, telecommunication, power
supply and financial institutions are the infrastructural advantages that facilitate the
production and marketing of vegetables in the study area. There are also various
organizations such as Haramaya University, World Vision Ethiopia and Action Aid
Ethiopia that provide production inputs and technical services to the farmers.
4.5.3. Marketing constraints

Almost all vegetable producer farmers responded that there were market problems in their
area (Table 26). The major vegetable marketing constraints are related with nonavailability of market/limited access to market, low price of product, lack of storage, lack
of transport, low quality product that cannot meet consumers demand and perishability.

Again all traders engage in vegetables value chain confirmed that there is marketing
problems in vegetable value chain. The major vegetable marketing constraints mentioned
by traders are related with the limited power of price setting, the problem of supply
shortage, lack of storage facility, problem in information flow, low product quality and
lack of support from concerned bodies (Appendix Table 13). Traders also mention that the
main cause of these problems are high monopolistic power of wholesalers, high travel
distance of export to Somalia, lack of processing and long chain condition of the market.

In addition, data from key informant interview showed that the absence of policy
instrument that governs Ethio-Somalia market route is serious vegetable marketing
problem. Exporters buy the products at farm gate prices and directly sell to end consumers
and consumers in the end market pays very high price to the products, for instance,
exporters bought potato at 6 birr/kg from Melkarafu market and sell at minimum of 30
birr/kg in Somalia market. Exporters also do not secure all these high margins because of
illegal actors through transportation of long journey to Somalia and high perishability

86

losses. This shows that there are high losses in between due to lack of appropriate policy
instruments.

Table 26. Major marketing constraints of vegetable producers


Tomato (N=51)
Major constraints

Potato(N=71)

Cabbage(N=56)

Lack of Market

15.69

13

18.31

15

26.79

Low price of products

20

39.22

32

45.07

24

42.86

Lack of storage

13

25.49

13

18.31

7.14

Lack of transport

5.88

12.68

12.5

Low quality of product

7.84

1.41

3.57

Perishability

5.88

4.22

7.14

Source: Own computation from survey result, 2012

4.5.4. Marketing opportunities

On the other hand, availability of market demand throughout the year, growing number of
buyers, high experience in vegetables trade and growing price were some of the
opportunities of vegetables by most of the producers. The survey result shows that 85.2%
of the producers intended to expand vegetables sale due to the above opportunities
(Appendix Table 12).The natural proximity to market and being found on export center to
Somalia and the main road to Harar and bordering to Somali National Regional State are
the opportunities that enhance level of commercialization to Kombolcha woreda. Habro
woreda also have better market access to Addis Ababa and Chiro town which is the capital
city of West Hararghe zone.

87

5. SUMMARY, CONCLUSION AND RECOMMENDATIONS


5.1. Summary and Conclusion

This study was aimed at analyzing value chain of vegetables in Habro and Kombolcha
Woredas of Oromia region. The specific objectives of the study include identifying
vegetable value chain and examining the performance of actors in the chain; analyzing the
determinants of vegetable supply to the market in the study area; and identifying
marketing channels and factors affecting outlet choice decisions of farm households. The
data were generated from both primary and secondary sources. The primary data were
collected from individual interview using pre-tested semi-structured questionnaire and
checklist. The primary data for this study were collected from 162 randomly selected
households from Habro and Kombolcha Woredas, 37 traders from Melkarafu, Harar,
Gelemiso, Karakurikura and Wachu markets; and from 30 consumers. The analysis was
made using descriptive statistics and econometric model using SPSS and STATA
software. All the sampled households were vegetable producers. Market outlet choice
decision and marketable surplus of vegetables are found to be important elements in the
study of vegetable value chain. Therefore, in identifying determinants that affect the
marketable surplus of vegetables, a multiple regression model was used in the study and
multinomial logit model (MNL) was applied to analyze factors affecting market outlet
choice of farmers for selling vegetables in the study areas. The findings of this study are
summarized as follows.

Of the 162-interviewed vegetable producing households, 93.9% were male headed and the
rest 6.1% were female headed households in Habro Woreda and 91.8% were male headed
and the rest 8.2% were female headed households in Kombolcha Woreda. The average
ages of the sampled respondents were 38.5 and 34.6 years in Habro and Kombolcha
Woredas, respectively. The average family size was 6.7 and 5.4 in Habro and Kombolcha
Woredas, respectively.

Vegetable value chain analysis of the study areas revealed that the main value chain actors
are input suppliers, vegetable producing farmers, wholesalers, retailers, collectors,
exporters and consumers. Vegetable producers, OoARD, primary cooperatives, private

88

pesticides/ herbicide suppliers, Harmaya University and World Vision Ethiopia were the
main actors involved in the production and input supply activities. Collectors were
engaged in purchasing vegetables from remote areas and sell at town markets to
wholesalers. Wholesalers purchase vegetables from farmers and collectors and sell to
retailers, exporters and consumers. Retailers purchase vegetables from producers,
collectors and wholesalers and sell to consumers. There are also governmental and
nongovernmental supportive actors who support vegetable value chain directly or
indirectly. Value chain supporters or enablers provide facilitation tasks like creating
awareness, facilitating joint strategy building and action and, the coordination of support.
The main supporters of the vegetable value chain in the study areas are office of
agricultural and rural development (OoARD), Office of trade and industry (OoTI),
Woreda administrations, Oromia saving and credit institution, Haramaya university,
informal credit suppliers and banks.

Constraints hindering the development of vegetable value chain are found in all the stages
of the chain. At the farm-level, vegetable producers are faced with lack of modern input
supply and high postharvest losses. On marketing side, limited access to market, low price
of product, lack of storage, lack of transport, low quality of product and lack of policy
framework to control the illegal Ethio-Somalia trade route are the major problems.

Vegetables produced in this area passes through several intermediaries, i.e. collectors,
wholesalers and retailers, with little value being added before reaching the end-users. The
intermediate buyers obtain the vegetables from the farmers at a lower price and they sell to
the consumers at a higher price. The average price that sample respondents received for a
quintal of tomato, potato and cabbage was reported to be 476.7, 380 and 350 Br/qts
whereas the price that consumers paid was 900, 800 and 600 Br/qts, respectively. The
research result also indicated the absence of organized institution and system group
marketing, and lack of processing activities have made traders in a better position to
dominate the roost in pricing. Vegetable is highly perishable product and has to reach the
consumer as fast as possible. This hands the power to buyers and due to this its
governance is buyer driven. The study indicates that traders operating expense for tomato,
potato and cabbage were 50%, 34.9% and 45.5% of total value chain expense but their
profit margin is almost 80%, 91% and 57.4% of the total profit margin.

89

The results of the study show a slight difference between total production and marketable
surplus; making vegetables a market oriented product. The result of the multiple
regression model indicates that marketable supply of tomato is significantly affected by
access to market information and quantity of tomato produced; marketable supply of
potato was significantly affected by access to extension service, access to market
information, vegetable farming experience and quantity of potato produced; and
marketable supply of cabbage was significantly affected by non/off farm income, Woreda
dummy, distance to the nearest market and quantity of cabbage produced. The result of
endogenous regression result shows that quantity of potato production significantly
affected by access to extension service, access to market information, vegetable farming
experience, sex of the household head, age of the household head and quantity of fertilizer
application. Therefore, these variables require special attention if marketable supply is to
be increased.

Vegetable producers in the study areas supply their produce through different market
outlets. Farmers were classified into three categories according to their outlet choice
decision: those who have supplied most of their produce to wholesalers (38.89%); those
who have supplied most of their produce to collectors (30.25%); and those farmers who
have supplied most of their produce to retailers (30.86%). The multinomial logit model
was run to identify factors determining farmers market outlet choice decision. The model
results indicated that the probability to choose the collector outlet was significantly
affected by access to extension service, owning transport facility, membership to any
cooperatives and post harvest value addition compared to wholesale outlet. Similarly, the
probability of choosing retailer marketing outlet was affected by Woreda dummy,
educational status of household head, access to extension services and owning transport
facility compared to wholesale outlet. Therefore, these variables require special attention if
farmers margin from vegetable production is to be increased.

5.2. Recommendations

The recommendations or policy implications to be drawn from this study are based on the
significant variables from the analysis of present study. To start with, dissemination of
modern input technologies is essential in increasing the productivity of vegetables. Given

90

that farmers are small-scale and unorganized in the study area, this state of affairs clearly
needs strong government intervention. Not only does it require providing input facilities,
but also their dissemination to ensure optimal access. Effort should also be made to
strengthen farmers cooperative and encourage collective action of farmers to lower
transaction costs to access inputs.

Secondly, the results of econometric analysis indicate that vegetables supply to the market
is positively and significantly affected by access to market information, non/off farm
income, vegetable farming experience and quantity of vegetable produced. Therefore,
these factors must be promoted in order to increase the amount of vegetable marketable
supply. Increasing the production and productivity of vegetables per unit area of land is
better alternative to increase marketable supply of vegetables. Introduction of improved
varieties, application of chemical fertilizers, using of modern technologies, controlling
disease and pest practices should be promoted to increase production. Quantity production
of potato is also positively and significantly affected by vegetable farming experience,
access to market information and quantity of fertilizer application. Strengthening the
supportive activities such as information centers and input supply systems would also
boost vegetable supply. In addition to that, building the asset base of the farmers and
developing the skills what farmers have through experience increases vegetable supply to
the market.

Thirdly, marketable supply is significantly and negatively affected by distance to nearest


market, access to extension service and Woreda dummy. Therefore, strengthening efficient
and area specific extension systems, improving road infrastructure, supporting DAs by
giving continuous capacity building trainings and separating DAs extension work from
other administrative activities increases vegetable supply to the market.

Fourthly, collector outlet choice is negatively and significantly affected by owning


transportation facility, post harvest value addition, access to extension service and
membership to any cooperatives relative to wholesale outlet. Therefore, these factors must
be promoted by developing farmers awareness about marketing and post harvest
handling, developing storage infrastructure and coordinating fragmented producers in to
cooperatives.

91

Lastly, retailer outlet choice is significantly and positively affected by owning


transportation facility and Woreda dummy. Therefore, improving transportation access to
the farmers is essential to make vegetable market efficient in addition to developing road
infrastructures. In addition, government should give special attention to highly perishable
vegetables like tomato marketing that traders are not willing to participate by encouraging
processing activities and providing storage facilities. Retail outlet choice also negatively
and significantly affected by educational level of the household head and access to
extension service. Therefore, these factors must be considered in future intervention.

92

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100

7. APPENDICES

101

Appendix A. Tables

Appendix table 1. The result of multicollinearity test


Variables included in market supply model

Variables included in MNL model

Variable

VIF

1/VIF

Variable

VIF

1/VIF

Woreda

3.13

0.320

AEqu

1.56

0.643

VFExp

2.54

0.394

Woreda

1.51

0.661

Land

2.37

0.422

Age

1.44

0.695

Family

2.13

0.469

Credit

1.39

0.718

AExte

1.95

0.513

VAdd

1.34

0.745

Age

1.88

0.533

MInfo

1.23

0.813

Credit

1.71

0.585

AExte

1.22

0.821

TLU

1.71

0.586

HEduc

1.22

0.823

Minfo

1.59

0.627

MCoop

1.2

0.835

HEduc

1.55

0.644

OTran

1.15

0.873

DMkt

1.33

0.754

Sex

1.15

0.873

Qpron

1.31

0.763

DMkt

1.13

0.883

Sex

1.28

0.782

NOFI

1.07

0.937

NOFI

1.12

0.893

Mean VIF

Mean VIF

1.83

Source: Own computation from survey result,2012


Appendix table 2. Hausman tests of IIA assumption for MNL model
Omitted

chi2

df

P>chi2

evidence

2.389

14

1.000

for Ho

0.000

18

1.000

for Ho

0.368

18

1.000

for Ho

Source: Own computation from survey result, 2012

102

1.28

Appendix table 3. Conversion factors used to compute tropical livestock units (TLU)
Livestock Category

Conversion factor

Calf

0.25

Weaned calf

0.34

Heifer

0.75

Cow or ox

1.00

Horse/mule

1.10

Donkey (adult)

0.70

Donkey (young)

0.35

Camel

1.25

Sheep or goat (adult)

0.13

Sheep or goat (young)

0.06

Chicken

0.013

Bull

0.75

Source: Storck et al., 1991

Appendix table 4. Conversion factor used to compute adult equivalent


Age group year

Male

Female

<10

0.6

0.6

10-13

0.9

0.8

14-16

0.75

17-50

0.75

>50

0.75

Source: Storck et al., 1991

103

Appendix table 5. Mean land allocation of sample households for different crops in
hectare
Kombolcha(N=97)

Habro (N=65)

Total(N=162)

Variables

t-test
Mean

SD

Mean

SD

Mean

SD

Vegetables

0.13

0.08

0.168

0.08

0.14

0.08

-2.12**

Cereals

0.17

0.1

0.62

0.37

0.36

0.34

-10.56***

Khat

0.14

0.1

0.22

0.11

0.16

0.13

-2.65***

Note: *** and ** are statistically significant at 1% and 5% probability.


Appendix table 6. Income sources by woreda
Ranking in
Income sources
Kombolcha

Habro

Khat production

Vegetables production

Grain production

Livestock production

Others

Source: Own computation from survey result, 2012


Appendix table 7. Means of transportation for sample respondents

Variables

Transportations

Items

Kombolcha
(N=97)

Habro
(N=65)

Total (N=
162)

Vehicle

37

38.14

35

53.85

72

44.44

Back of Animals

22

22.68

9.23

28

17.28

Man Power

7.22

10

15.38

17

10.49

14

21.54

45

27.78

Vehicle and
31 31.96
Animals
Note: *** is statistically significant at 1%.
Source: Own computation from survey result, 2012

104

2-test

19.67***

Appendix table 8. Market place for selected vegetables


Variable
s

Kombolcha

Habro

Total

Items
N

Potato
(N=71)

Farm gate

25

35.21

25

35.21

Market

46

64.79

46

64.79

Tomato
(N=65)

Farm gate

3.08

3.08

Market

63

96.92

63

96.92

Cabbage
(N=66)

Farm gate

10.53

3.57

7.58

Market

34

89.47

27

96.43

61

92.42

2-test

26.69***

Note: *** is statistically significant at 1%.


Source: Own computation from survey result, 2012
Appendix table 9. Quantity purchased and income of vegetable consumers
Kombolcha (N=18)

Habro (N=12)

Total (N=30)

Variables
Income
Income proportion

Mean

SD

18,905

6502.78

24.48

5.54

Mean

SD

Mean

17,750.67 2952.5 18,293.88

SD
4817.85

16.14

6.89

19.62

7.45

Amount of vegetables consumed per week


Tomato

0.52

4.11

4.12

3.58

3.12

Onion

1.69

0.7

4.61

2.71

3.23

2.48

Potato

2.82

1.08

3.75

2.05

3.39

1.75

Cabbage

2.42

1.56

3.125

2.23

2.82

1.94

1.14

0.63

1.14

0.63

0.5

2.3

2.17

1.2

2.07

Carrot
Beetroot

Source: Own computation from survey result, 2012

105

Appendix table 10. Source of extension service


Kombolcha (79)
Advisors

Habro (65)

Total (144)

DA and OoARD

31

39.24

46

70.77

77

53.47

Neighbors and friends

3.8

3.08

3.47

Haramaya university

1.54

0.69

16

24.62

61

42.36

45
56.96
DA, and Neighbor and friend
Source: Own computation from survey result, 2012

Appendix table 11. Source of credit by sample farm households in numbers


Kombolcha
(N=6)

Source

Habro (N=27)

Total (N=33

Micro finance

16.67

21

77.78

22

66.67

Cooperatives

50

7.41

15.15

Traders

3.70

3.03

Relatives

33.33

6.06

Micro finance and cooperatives


Source: Own computation from survey result, 2012

11.11

9.09

Appendix table 12. Need of respondents to expand vegetables production and marketing

Variables

Production

Items

Kombolcha
(N=97)

Habr(N=65)

Total (N=162)

Yes

85

87.63

65

100

150

92.59

No

12

12.37

12

7.41

Yes

74

76.29

64

98.46

138

85.19

No

23

23.71

1.54

24

14.81

Sell

Source: Own computation from survey result, 2012

106

2-test

8.78***

15.16***

Appendix table 13. Marketing problems mentioned by traders


Marketing Problems

Items

Price setting power


(N=11)

Yes

11

100

No

Supply shortage
(N=14)

Yes

13

92.86

No

7.14

Lack of storage
(N=18)

Yes

18

100

No

Asymmetric information flow


(N=8)

Yes

100

No

Product quality
(N=15)

Yes

14

93.33

No

6.67

Lack of support from government


(N=8)

Yes

100

No
Source: Own computation from survey result, 2012

107

Appendix B. Interview Schedules

I. Producers Interview Schedules

Instructions for Enumerators:


Make brief introduction before starting any question, introduce yourself to the
farmers, greet them in local ways and make clear the objective of the study.
Please fill the interview schedule according to the farmers reply (do not put your
own feeling).
Please ask each question clearly and patiently until the farmer gets your points.
Please do not use technical terms and do not forget local units.
During the process write answers on the space provided.
Prove that all the questions are asked and the interview schedule format is properly
completed.

I.

General Information

1. Name of Respondent: ____________________________________


2. Zone:

Woreda:

3. Age of the respondent:

4. Sex of the respondent ():

Kebele: ___________ Village: _______


] years
1. [ ] Male

2. [ ] Female

5. Education level of the respondent (): 1. [ ] No formal education


less 3. [ ] 7th to 12th grade 4. [ ] Certificate 5. [ ] Diploma
6. Marital status (): 1. [ ] Married 2. [ ] Unmarried

2. [ ] 6 thgrade or
6. [ ] Degree

3. [ ] Divorce 4. [ ] Widowed

7. Distance of your residence from the nearest market center: [____] hrs walk
8. Distance of your residence to the nearest development center: [____] hrs walk.
9. Distance to all weather road: [

] OR [

] hrs walk

10. What is your major means of income generation? (Rank in order of importance)
1. [ ] Khat

2. [ ] Coffee production

Fruit production

3. [ ] vegetables production

5. [ ] Grain production

Grain trading 8. [ ] Vegetables trading

108

4. [ ]

6. Pulses production 7.

9. [ ] Fruits trading

10. [ ] Pulses

trading

11. [ ] Khat trading

12. [ ] Coffee trading

production

14. [ ] Livestock trading

13. [ ] Livestock

15. [ ] Other (specify)

11. How long have you practiced production of vegetables products?


12. Are you a member of any cooperative? ()

1. [ ] Yes

years

2. [ ]No

If your answer for Q.12 is Yes, what is the name of the cooperative ______________

II.

Household and Resource Data

1. Family size:

] Male [

] Female [

2. Number of working persons (14-64 ages): [


3. Number of children in school: [
5. Do you own arable land? ()

] Male [

] Male [

4. Number of dependents (< 14 and >64 ages): [

] Total
] Female [

] Female [

] Male [

1. [ ] Yes

] Total

] Total

] Female [

] Total

2. [ ] No

6. Total crop land: ______timad _____ ha. (Note: 1 ha = 8 timad or 1 timad = 0.125 ha)
7. Total grazing land:

timad

8. Total irrigable area: ____

ha.
timad _______ ha.

9. What is the size of land used twice in a year? _____ timad


10. Do you have livestock? ()

1. [ ] Yes

ha.

2. [ ] No

11.If your answer for Q.10 is Yes, livestock Number: Oxen/bulls [


[

], Donkeys [

], Calves [

], Goats [

], Sheep[

], Camels [

], Mules [

], Chickens [ ], Bee hives [ ] , Others

12. Do you have your own transportation facilities? ()

1. [ ] Yes

13. If your answer for Q. 12 is Yes, what type? ()

] Vehicle

animals

III.

], Cows/heifers

1. [

],

Horses

2. [ ] No
2. [

] Transport

3. [ ] Cart

Crop Production

1. Crop production during the last cropping season:


No
Crop type
Area -rainfed in timad
Area irrigated in timad
1
Vegetables
2
Cereals
3
Coffee
4
Khat
5
Others (Specify)
2. How many times do you produce vegetables in last production season?

109

3. What type of vegetable crops do you produce? Area and production during last season?
Vegetable
type

Area- production (Timad)


( including area used more
than once)

Produ
ction
(Qt)

%
%
sold consumed

Income generated
from sales (both
seasons), Birr

Tomato
Onion
Potato
Cabbage
Shallot
Beetroot
Carrot
Others
4. Inputs of vegetable crop production during last season? (*Labor requirement includes
for plowing, sawing, weeding, harvesting, transporting, irrigation water application etc).
Crop
type

Seed (kg)
*Labor
(manday) Local Improved

Dap
(qt)

Urea
(qt)

Compost
(in local
unit)

Manure
(in local
unit)

Pesticide
(li or kg)
(specify)

Tomato
Onion
Potato
Cabbage
Carrot
Shallot
Beetroot
Others
(Specify)
5. What is the source of labor used for vegetables production? () (Multiple response is
possible) 1. [ ] Family labor 2. [ ] Labor exchange 3. [ ] Hired labor
6. The source of oxen power (): 1. [ ] Own

2. [ ] Rent

4.[]Cooperation

3. [ ] Other (specify):

7. Oxen power requirement in hours and cost incurred if rented.


Enterprises
Tomato
Onion
Potato
Cabbage
Carrot
Shallot
Beetroot
Other (specify)

Hours

Rate of payment if rented (Birr/day)

110

8. What type of seeds of vegetables do you use? () 1. [ ]Local 2. [ ]Improved 3. [ ] Both


9. If you have ever encountered problems with the use of improved seeds, what type? ()
(Multiple response is possible). 1. [ ] There is germination problem
origin

3. [ ] Low quality (taste)

2. [ ] Unknown

4. [ ] High price 5. [ ] Others (specify) __

10. What type of vegetables production system do you adopt? 1. [ ] Sole cropping 2. [ ]
Mixing different vegetable crops 3. [ ] Mixing with other crops [ ] 4. Others___
11. If you use irrigation for vegetables production, what is source, method, frequency of
use, and costs of irrigation? (* Multiple response is possible).

Crop type

*Sources
Pond
Borehole or
Hand dung
hall
River/spring
Lake

*Methods
Furrow/Over
flooding
Sprinkler
Basin
Bordering

Hours
used per
day for
irrigation
water
application

Total number
of days used
for irrigation
water
application
till harvest

Cost of using
motor pump/
hour ( in Birr)
Own
pump

Rented
pump

Tomato
Onion
Potato
Cabbage
Carrot
Shallot
Beetroot
Others
(specify)
12. What type of farm implements do you use for vegetables production? Give years of
purchase and the price?
Implements/equipments Number
Plough
Hoe
Harrow
Motor pump
Others (Specify)

Years of purchase

Cost of purchase (birr/unit)

13. How is the trend of volume of crops production during the past 5 years? ()
Crop type
Vegetables
Cereals
Others (specify)

Increasing

Decreasing

111

Same

14. If the production increases, what are the reasons? __________________________


15. If the production decreases, what are the reasons? __________________________
16. Would you like to expand vegetables production? () 1. [ ] Yes

2. [ ] No

17. If your answer for Q.15 is Yes, why? ________________________


18. If your answer for Q.15 is No, why?
19. What are the vegetable production constraints on your farm? Rank horizontally (1=
most severe, 2= second severe and etc.)

Crop type

Oxen
Shortag
e

Dis
Inse
Drou
ease
cts
ght
s

We
eds

Fl
o
o
d

Fr
os
t

Seed
short
age

Fertili Lack Other


zer
of
s
shorta pestici (speci
ge
des
fy)

Tomato
Onion
Potato
Cabbage
Carrot
Shallot
Beetroot
Others
(specify)
IV.

Production Services

4.1. Input Supply


1. Have you ever used agricultural inputs (fertilizer, chemicals, improved seeds etc.) for
the production of vegetables? ()

1. [ ] Yes

2. [ ] No

2. If your answer for Q.1 is No, what was the main reason behind? _____________
3. If your answer for Q.1 is Yes, which type and from which source did you get such
agricultural inputs in the vegetables production process? (*Multiple responses is expected)
Crop type

Tomato
Onion
Potato
Cabbage
Carrot
Shallot
Beetroot

*Types
of
inputs
used

*Source
s
1.
2.
3.
4.
5.

Improved seed
Fertilizers
Pesticides/herbicides
Farm implements
Others (specify)

112

1. OoARD
2. Local market
(known sources)
3. Illegal markets
4. Cooperatives
5. NGOs (specify)
6. Research centers
(specify)
7. Haramaya
university
8. Fellow farmers

4. Why did you prefer the chosen sources to get the needed inputs? _________________
5. How did you get the input from the mentioned sources? (*Multiple response is possible)
No.
1
2
3
4

Types of inputs used


Improved seed
Fertilizer
Pesticides/herbicides
Farm implements
(specify)

*How (write the code)

6. Do you always get inputs at the right time? ()

1. [ ] Yes

7. If your answer for Q.6 is No, what are the reasons? ()


Far distance

1.
2.
3.
4.
5.

Through purchase
On credit bases
As gift
Through exchange
Others (specify)

2. [ ]No

1. [ ] Unavailability

2. [ ]

3. [ ] Others (specify)

8. Do you always get inputs in the quantities that you need? () 1. [ ] Yes

2. [ ] No

9. If your answer for Q.8 is No, why? () (Multiple response is possible) 1. [ ] Not
vailable

2. [ ] I am not sure of the benefit 3. [ ]Too expensive 4. [ ] Not

available on time

5. [ ] Cash shortage

6. [ ] Others (Specify) _____

10. Have you encountered problems in accessing these inputs? () 1. [ ] Yes 2. [ ] No


11. If your answer for Q.10 is Yes, what are the problems? (*Multiple response is
possible)
No. Types of inputs used
1
2
3
4
5

*Problems
(write codes)

Improved seed
Fertilizer
Pesticides/herbicides
Farm implements
Others (specify)

1.
2.
3.
4.

Unavailability
Shortage of supply
Costly
Remoteness of input selling
site
5. Others (specify)

12. How did you solve these problems?

4.2. Access to Credit


1. Did you borrow money for vegetables production before? () 1. [ ] Yes

2. [ ] No

2. If your answer for Q.1 is Yes, from where and for what purpose did you collect the
credit? (*Multiple response is possible)
No. Source
1

*Purpose
(write codes)

Micro finance

113

1. Payment for hired labor


2. Purchase of fertilizer and seed
3. Purchase of farm implements

2
3
4
5
6
7
8

4. Payment for rented oxen


5. Purchase of transport animals
6. To rent in land to extend
vegetables production
7. Others (specify)

Cooperatives/unions
NGOs (specify)
Bank (specify)
Trader
Relatives
Iqub/Iddir
Others (specify)

3. If your answer for Q.1 is Yes, have you paid the loan? () 1. [ ] Yes

2. [ ] No

4. If your answer for Q.3 is No, what is the reason? _


5. Did you face any problem in accessing credit? () 1. [ ] Yes

2. [ ] No

6. If your answer for Q.5 is Yes, what was the problem? () (Multiple response is
possible)

1. [ ] Limited supply of credit

3. [ ] Huge bureaucracy

2. [ ] Limited access to transport

4. [ ] Others (specify) ____

7. How did you solve these problems? ________________________

4.3. Information/knowledge flow

4.3.1. Training

1. Have you ever participated in vegetables production system training in the last three
years? ()

1. [ ] Yes

2. [ ] No

2. If your answer for Q.1 is No, why? ___


3. If your answer for Q.1 is Yes, on which aspects, by whom and for how long you have
got the training?
No. Training type
By whom
How long (days) Year
1
Vegetables seed production
2
Crop management
3
Vegetables marketing
4
Pre and post harvest handling
5
Fertilizer/compost application
6
Harvesting
7
Composition of all
4 .Was the training you get easily understandable and practicable? () 1. [ ] Yes 2. [ ] No
5. Were you able to employ the new knowledge you acquired? () 1. [ ] Yes
6. If your answer for Q.5 is Yes, what? _______________________
7. If your answer for Q.5 is No, why?

114

2. [ ]No

4.3.2 Advisory service


1. Did you get advisory service on vegetables production practices before? ()
1. [ ] Yes
2. [ ] No
2. If your answer for Q.1 is No, why? () (Multiple response is possible)
1. [ ] No service provider nearby
2. [ ] Possessed the required information
3. [ ] Availability of contact farmers 4. [ ] Do not have time to get the service
5. [ ] Others (specify)
3. If your answer for Q.1 is Yes, for how long do you get the service? ___________years
4. Who provides the advisory service? () (Multiple response is possible)
1. [ ] Development agents
2. [ ] NGOs (specify) ______
3. [ ] Research centers (specify)
4. [ ] Woreda OoARD experts
5. [ ] Neighbors and friends
6. [ ] Others (specify)
5. How do you get the advisory service? () (Multiple response is possible)
1. [ ] Farm to farm visit by the development agent 2. [ ] experience sharing tour
3. [ ] Visit to demonstration/ model farmers site

4. [ ] Training

5. [ ] Others (specify) ______________


6. How frequent were you visited by development agents last year? ()
2. [ ] Twice per month

1. [ ] Once per month


month

4. [ ] Four times per month

3. [ ] Three times per

5. [ ] Others, specify ___________

1.3.3. Research
1. Source of vegetables production, marketing and consumption research/innovation in
your area? () (Multiple response is possible)
1. [ ] Agricultural Research Center (specify)

2. [ ] NGOs (specify)

3. [ ] Haramaya University

4. [ ] OoARD

5. [ ] Other (specify) _______________


2. Have you ever participated in problem identification and/or research-planning? ()
1. [ ] Yes

2. [ ] No

3. If your answer for Q.2 is Yes, specify the organization and year
Number of times

V.

Marketing

1. Did you sell vegetables before? ()

1. [ ] Yes

115

2. [ ] No

2. If your answer for Q.1 is No, why you did not sell? _______________
3. If your answer for Q.1 is Yes, how much and to whom did you sell your production?
(*Write the codes and multiple result is possible)
Amount
1. Collectors
Amount
*To
sold
2. Consumers
produced(qt)
whom
(qt)
3. Retailers
4. Wholesalers
Tomato
5. Institutions (hotels,
Onion
Universities, etc )
Potato
6.
Cooperatives
Cabbage
7. Exporters
Carrot
8. Processers
Shallot
9. Brokers
Beetroot
10. Others (specify
Others
Crop
type

Whe
re * 1. Farm
gate
2. Market
center
3. Retailing
yourself
4. Others
(specify)

4. To whom do you sell most of your vegetables?


5. Why have you preferred the mentioned buyers/markets to sale your production?
6. To which one of the following marketing center do you have access? ()
1. [ ] Karakurikura

2. [ ]Wacho

3. [ ] Gelmiso

4. [ ]Chiro

Kombolcha

6.[ ] Harar

7. [ ] Diredawa

8. [ ] Other (specify)-

7. Means of transportation used; () (multiple response is possible)


2. [ ] Manpower

3. [ ] Back of animals

5. [ ]

1. [ ] Vehicles

4. [ ] Others (specify) ___

8. If you used vehicles, was it easily accessible? () 1. [ ] Yes

2. [ ] No

9 .If you did not used vehicles, why?


10. How is the trend of price per unit of sales of vegetables during the last 5 years? ()
Crop type
Tomato
Onion
Potato
Cabbage
Carrot
Shallot
Beetroot
11. If increasing, why?

Increasing

Decreasing

The same

12. If decreasing, why?


13. Would you like to expand vegetable selling? ()

1. [ ] Yes

2. [ ] No

14. If your answer for Q.13 is Yes, why? ____________________________


15. If your answer for Q.13 is No, why?

116

16. Do your vegetable products have preferred qualities by buyers? () 1. [ ] Yes 2. [ ] No


17. If your answer for Q.16 is No, what interventions are needed to improve quantity and
quality of vegetable crops production to attract better prices? ___________________
18. Do you consider quality requirement of your customers in your production process?
1. [ ] Yes

2. [ ] No

19. If your answer for Q.18 is Yes, what quality requirement do you consider for;
Tomato

, Onion
, Shallot

, Potato

, Cabbage

,Beetroot

,Carrot

, Others (specify)

20. What was your source of information about quality requirement of your customers?
21. Do you have any value addition on your vegetable products? () 1. [ ] Yes

2. [ ] No

22. If your answer for Q.21 is Yes, what are those value adding activities? (*Multiple
response is possible)
Crop type

Value adding activities*

Tomato
Onion
Potato
Cabbage
Carrot
Shallot
Beetroot
Others

How much it
costs?(Birr/qt)
1.
2.
3.
4.

Cleaning
Cutting
Storage
Others
(specify)

23. Linkage with commercial value chain actors: () (Multiple response is possible)
1. [ ] Retailers
Brokers

2. [ ] Whole sellers
5. [ ] Collectors

4. [ ]

3. [ ] Consumers

6. [ ] Others(specify)________

24. Do you have marketing information in last year? () 1. [ ] Yes

2.[ ] No

25. If your answer for Q.24 is Yes, from whom did you get the market information ? ()
1. [ ] DAs

2.[ ] Kebele administration

3.[ ] Woreda experts

5. [ ] Brokers 6. [ ] Frommm market

4.[ ] Radio

7.[ ] Other s (specify)

26. What type of information did you get? () 1 . [ ] Price information


place information

3.[ ] Buyers information

27. At what time interval do you get the information? ()


3. [ ] Monthly

2. [ ] Market

4.[ ] Other (specify)


1. [ ] Daily

2. [ ] Weekly

4. [ ] Other (specify)

28. Was the information you get is valuable? () 1. [ ] Yes

2. [ ] No

29. Did you know the market prices before you sold your vegetables? () 1. [ ]Yes 2. [ ]No

117

30. Did you know the nearby market price before you sold?() 1.[ ] Yes 2.[ ]No
31. Did you face difficulty in finding buyers when you wanted to sell vegetables? ()
1. [ ] Yes

2. [ ] No

32. If your answer for Q.31 is Yes, due to: () 1. [ ] Inaccessibility of market
Lack

of market information

3. [ ] Low price offered

2. [ ]

4. [ ] Others

33. What are the vegetables marketing constraints? Rank horizontally

Crop type

Lac
k of
mar
ket

Low
price
of
prod
uct

Lac
k of
stor
age

Lac
k of
tran
spor
t

Lack
of
market
inform
ation

Poor
linkag
e with
value
chain
actors

Low
quali
ty of
prod
uct

Low
cons
umer
dem
and

High
mark
et
dista
nce

Pe
ris
ha
bil
ty

Ot
her
s
(sp
eci
fy)

Tomato
Onions
Potato
Cabbage
Carrot
Shallot
Beetroot
Others
(specify)
34. What do you do if you did not get the expected price for your vegetables supply? ()
1. [ ] Took back home
anothermarket on the same day

2. [ ] Sold at lower price

3. [ ] Took to

4. [ ] Sold on other market day

35. Do you have any contract market for your vegetable product? () 1. [ ] Yes 2. [ ] No
36. If your answer for Q.35 is Yes, with whom?
37. Is storage of vegetables production a problem for you? () 1. [ ] Yes

2. [ ] No

38. If your answer for Q.37 is Yes, indicate the total volume of the product damaged in
quintal and then the percentage loss at field and after harvest?
Crop type

Total loss (qt)

% of loss before harvest

Tomato
Onion
Potato
Cabbage
Carrot
Shallot
Beetroot
Others (specify)

118

% of loss after
harvest

39. Average return of vegetable crops.

Crop type

Selling
Packing Loading
price
materia /unloadi
(birr/qt)
l
ng

Total cost (birr/qt)


Da Wei
Trans Bro
mag ght
port
ker
e
loss

Stor
Rev Ta
e
enue x
rent

Tomato
Onion
Potato
Cabbage
Carrot
Shallot
Beetroot
40. Who sets your selling price for vegetables in last season? () 1. [ ]Yourself

2. [ ]

Buyers 3. [ ] Set by demand and supply 4. [ ] Negotiations 5. [ ] Others(specify)

VI.

Non-farm and off-farm activities

1. Do you also purchase and sell vegetable products? () 1. [ ] Yes

2. [ ] No

2. Do you practice trading activities other than trading of vegetables products)? ()


1. [ ] Yes

2. [ ] No

3. How much do you earn from such trading per market day?

birr

4. Number of market days in a month?


5. Did you perform other income generating activities? () 1. [ ] Yes

2. [ ] No

6. If your answer for Q.5 is Yes, what are these sources of income?
7. Did you participate on Productive Safety Net programs (PSNP) as livelihood source?
()

1. [ ] Yes

2. [ ] No

8. If your answer for Q.7 is Yes, who was involved on this program? (Multiple response is
possible) () 1. [ ] Yourself
4.[ ]Your sons

2. [ ] Wife/husband

3. [ ] Your daughters

5.[ ]Other (specify)

9. What were the specific PSNPs you/and any of your family member involved in? ()
(Multiple responses is possible); 1. [ ] Food for work 2 . [ ] Cash for work
4. [ ] Others (specify)
10. What percent of your household expenditure was covered by these income generating
activities cover? _____________

119

Name of enumerator: ______

Signature: _________ Date:

II. Traders Interview Schedule

I.

General Information

1. Name of trader:

Age

2. Address: Region

Zone

3. Type of trade: () 1.[ ] Retailer


4. Marital status ()

Woreda

Town

2. [ ] Wholeseler 4. [ ] Collecters

1. [ ] Single 2. [ ] Married

5. Family size: Male

Sex______

3. [ ] Divorced

Female

5. [ ] Others
4. [ ] widowed

Total

6. Educational level of the respondent


7. Position of respondent in the business (): 1. [ ] Owner- manager
Spouse of owner

3. [ ] Employed manager

2. [ ]

4.[ ] Daughter of the owner

5. [ ] Son of the owner 6. [ ] Relative to the owner


8. How long have you been operating the business?

7.[ ] Other (specify)


years

9. Did you trade alone or in partnership? (); 1. [ ] Alone

2. [ ] Partnership

3.[ ] Other (specify)


10. If partnership, how many are you in the joint venture?

persons.

11. Total number of peoples employed in your business:


Male

Female

Total

Family member
Non family member
total
12. What is your main business? /Put in order of importance and business proportions/
Activity
Wholesaling
Retailing
Assembling
Brokerage
Processer
Exporter
Others (specify)

Business rank

120

13. Do you participate in vegetable trading year round? (); 1. [ ] Yes

2. [ ] No

14. If your answer to Q.13 is No, at what period of the year do you participate? ()
When purchase price becomes low

2.[ ] During high supply

15. Do you practice trading other than vegetables? ()

1. [ ]

3.[ ] Other(specify)

1.[ ] Yes

2. [ ] No

16. If your answer to Q.15 is Yes, what?


17. Number of market days in a week? __________________
18. What was the amount of your initial working capital when you start this vegetables
trade business?

birr.

19. What is the amount of your current working capital? __________________ birr.
20. What is your source of working capital? (); 1. [ ] Own 2. [ ] Loan
4.[ ] Share

3. [ ] Gift

5. [ ] Others (specify)

21.If it was loan, from whom did you borrow? (); 1. [ ] Relative/family
Private money lenders.
Other traders

3. [ ] NGO (specify)

4. [ ] Friend

2. [ ]
5. [ ]

6. [ ] Micro finance institution 7. [ ] Bank 8. [ ] Others

22. How much was the rate of interest? _____ birr for formal,
23. What was the reason behind the loan? ()

birr for informal.

1. [ ] To extend vegetables trading.

2. [ ] To purchase vegetables transporting vehicles/animals.


24. How was the repayment schedule? ()
Semi-annually

1. [ ] Monthly

4. [ ] When you get money

3. [ ] Others

2. [ ] Quarterly

3. [ ]

5. [ ]Others (specify)

25. Is there change in accessing finance for vegetables trade these days? ()
1. [ ] Improved

2. [ ] Deteriorated

3. [ ] No change

26. What mode of transportation did you use? Give in percentage


Mode of transport
Tomato Onion
potato Cabbage Carrot Others (specify
Man power
Animal transport
Vehicle
Cart
Others (specify)
27. Do you carry out any physical treatment to maintain product quality? ()
1. [ ] Yes

2. [ ] No

28. If your answer to Q.27 is Yes, mention;


29. Asset owned;
Asset
Store

No.
Separate house
Residence

121

Mobile telephone
Weighting scale
Shop
Bicycle
motorcycle
Vehicle
Other (specify)
30. Are there entry barriers in vegetable trading? ()

1. [ ] Yes

31. If your answer to Q.30 is yes, what are the reasons? ()


Information collusion

1. [ ] Capital

3. [ ] Administrative problems

with unlicensed traders

2. [ ] No
2. [ ]

4. [ ] Stiff competition

5. [ ] High monopoly with prior control of farmers

6.[ ] Other (specify)


32. Linkage with commercial value chain actors: () (Multiple response is possible)
1. [ ] Farmers

2. [ ] Retailers

5. [ ] Local collectors

II.

3. [ ] Whole sellers

6. [ ] Brokers

4. [ ] Consumers

7. Others(specify)_______

Purchase practice

1. From which market and supplier did you buy vegetables? (*Multiple market area is
possible, ** Multiple answers are possible and write the codes in correspondence to the
market area and other answers should be written in accordance)
Marke
t*
(locati
on
name)

Crop
types

Tomato

Fr
om
**

1.
2.
3.
4.
5.

Producers
Retailers
Wholesaler
Collectors
Cooperative
s
Brokers
Unknowns
Others
(specify)

Quantit
y
purchas
ed (qt)

Aver
age
price
/kg

%age
of
purchas
ed
vegetab
les

Payment
1. Cash
2. Credit
3. Advance
payment

Onion
6.
Potato
7.
Cabbage
8.
Carrot
Shallot
Beetroot
2. From which market do you prefer to buy most of the time?
3. Why do you prefer this market? () 1. [ ] Better quality
3. [ ] Shortest distance

.
2. [ ] High supply

4. [ ] Others (specify)

4. Are all your purchasing centers accessible to vehicles?

122

1. [ ] Yes

2. [ ] No.

5. If your answer to Q.4 is No, what proportions are accessible?


6. How do you measure your purchase? ()
By weighing (kg)

1. [ ] By sack

% .
2. [ ] By basket

3. [ ]

4. [ ] By feresula

5. [ ] Others (specify) ________

7. Who sets the purchase price? () 1. [ ] Myself

2. [ ] Set by demand and supply

3. [ ] Sellers

4. [ ] Other (specify)

8. Who purchase vegetables for you? () 1. [ ] Myself


Commission agent

4. [ ] Family members

2. [ ] Broker
5. [ ] Friends

9. How do you attract suppliers? () 1. [ ] Giving better price


3. [ ] Fair scaling /weighing

6. [ ] Others

2. [ ] By visiting them

4. [ ] Extending credit

6. [ ] Advertizing using influential peoples

3. [ ]

5. [ ] Using brokers

7. [ ] Other (specify)

10. Do you consider quality requirement of your customers in purchasing activities?


1. [ ] Yes

2. [ ] No

11. If your answer to Q.10 is Yes, what quality requirement do you consider for;
Tomato

, Onion

, Potato

Carrot

, Others (specify)

, Cabbage

12. What was your source of information about quality requirement of your customers?
13. Which are the months of the year when prices are lowest?
Onion

, Potato

, Cabbage

Tomato

, Carrot

Tomato

Others (specify)
14. Which are the months of the year when prices are highest?
Onion

, Potato

, Cabbage

, Carrot

15. Is your purchasing price higher than your competitors? ()

, Others

1. [ ] Yes

2. [ ]No

16. If your answer to Q.15 is Yes, what was the reason? () (Multiple answer is possible);
1. [ ] To attract suppliers
competitors

2. [ ] To buy more quantity

4. [ ] To get better quality

17. How many regular suppliers do you have?

3. [ ] To kick

5. [ ] Others (specify)
Producers ________, Collectors _______

, Processors _____, Wholesalers ________, Retailers _________, others


18. Have you ever stopped purchasing due to lack of fund? ()

1. [ ] Yes

2. [ ] No

19. If your answer to Q.18 is Yes, for how long


20. Is obtaining sufficient volume is a problem? ()

1. [ ] Yes

2. [ ] No

21. Have you ever stopped purchasing due to lack of supply? ()

1. [ ] Yes

22. If your answer to Q.21 is Yes, for how long

123

2. [ ] No

III.

Selling Practices

1. To which market and to whom did you sell vegetables. (*Multiple market area is
possible, ** Multiple answers are possible and write the codes in correspondence to the
market area and other answers should be written accordingly)

Crop type

Tomato
Onion
Potato
Cabbage
Shallot
Carrot
Beetroot
Others

%age
Quantity Average share
sold (qt) price/kg of
buyers

1.
To 2.
Market
** 3.
4.
5.
6.
7.

Processer
Retailers
Wholesalers
Exporters
Cooperative
Consumers
Hotels and
organization
8. Brokers
9. Unknowns
10. Others
(specify)

2. How did you sale your produce? ()


broker

1. [ ] Direct to the purchaser

2. [ ] Through

3. [ ] Other (specify)

3. When did you get the money after sale? () 1. [ ] As soon as you sold
some hours

Payment
1. Cash
2. Credit
3. Advance
payment

3. [ ] On the other day after sale

2. [ ] After

4. [ ] Other _________

4. What do you do, if the product is not sold on time? () 1. [ ] Took back home
Took to another market

2. [ ]

3. [ ] Sold it at lower price 4. [ ] Sold on other market day

5. When did you sell? (Give proportion in percentage)


Selling strategy

Tomato

Onion Potato Cabbage Carrot

Others
(specify)

Store and sell when price rises


Sell as soon the purchase
Sell in pieces as buyers comes
Sale before purchase
Other categories (specify)
6. How did you attract your buyers? () 1.[ ] By giving better price relative to others
2.[ ]

By visiting them 3.[ ] By using brokers


Advertizing

4. [ ] By fair scaling

5. [ ]

6. [ ] Others (specify)

7. How many regular buyers do you have?

Wholesalers_____, Consumers_______,

Processors ______, Assembler _____, Retailers _____, exporters

124

, others

8. What is your packaging material? ()


[ ] Basket

1. [ ] Sisal sack

2. [ ] Plastic sack

3.

4.[ ] Others ______

9. Do you know the market prices in different markets (on farm, village market and other
areas) before you sold your vegetables? () 1. [ ] Yes

2. [ ] No

10. What is your source of information? _______________________________


11. What percent of the total produce is sold on local/woreda market? Tomato _____ %,
Onion ______, % Potato

, Cabbage

, %, Carrot

%, others

12. What percent of the produce is sold to domestic market (Chiro, Harar, Diredawa etc)?
Tomato _____ %, Onion ______ %, Potato
%, others (specify)

, Cabbage

, %, Carrot

13. What percent of the produce was exported?

Tomato _____ %, Onion _____

%, Potato

%, others (specify)

, Cabbage

, %, Carrot

14. Do you have other branch shops/ shades to sell your vegetables? () 1. [ ] Yes 2. [ ]No
15. Who sets selling price? ()
3.

[ ] Buyers

1. [ ] Myself

2. [ ] Set by demand and supply

4. [ ] Other (specify)

16. Are there charges (taxes) imposed by government or community officials at the
market? ()

1. [ ] Yes

2. [ ] No

17. If your answer to Q.16 is yes, what are they and what is the basis of payment?
Types of taxes

Amount
Bases of payment
(birr)
Per quintal
Simply on daily bases
Per track bases
Based on purchased value of
products
Based on sales value of products
Others (specify)

18. Do you want to expand vegetables trading? ()

1. [ ] Yes

Rate of payment
(birr)

2.[ ] No

19. If your answer to Q.18 is Yes, why?


20. If your answer to Q.18 is No, why?
21. Indicate your average cost incurred per quintal in the trading process of vegetables.
Cost incurred in birr/qt
Cost components

Tomato Onion

Potato

Purchase price
Labor for packing

125

Cabbage Carrot Shallot Beetroot

Loading/unloading
Transportation fee
Sorting
Storage cost
Loss in transport
and storage
Processing cost
Telephone cost
Watching and
warding
Other personal
expenses
License and taxes
Other cost
(specify)
Total cost
Selling price
Revenue
22. Are there problems on vegetables marketing? () 1. [ ] Yes

2. [ ] No

23. If your answer to Q.22 is Yes, what are the problems?

Problems
Credit
Price setting
Supply shortage
Storage problem
Lack of demand
Information flow
Quality problem
Government policy
Telephone cost
Lack of government support to
improve vegetables marketing
Others (specify)

Toma
to

1.Yes
On Pot Cab
ion ato bage

2. No
Carro
Beet
Shallot
t
root

24. What do you think are the causes of the problems?

V. Marketing Services
1. Is vegetables trading in your locality needs a trading license? () 1. [ ] Yes

126

2. [ ] No

2. If your answer to Q.1 is Yes, how do you see the procedure to get the license? ()
1. [ ] Complicated

2. [ ] Easy

3. Did you have vegetables trade license? ()

1. [ ] Yes

2. [ ] No

4. If you do not have specific vegetable trading license what is your joint trading
license? () 1. [ ] Grain

2. [ ] General

3. [ ] Consumers supply license 4. [ ] Other

5. How much did you pay for vegetables trade license for the beginning? _____birr
6. How much is the yearly renewal payment? ________birr
7. Are you restricted by Woreda or administrative boundary to operate? ()
1. [ ] Yes

2. [ ] No

8. Are there restrictions imposed on unlicensed vegetable traders? ()1. [ ] Yes 2. [ ] No


9. Did you store vegetables before you sold? ()

1. [ ] Yes

2. [ ] No

10. If your answer to Q.9 is Yes, for how long did you store vegetables in the store?
Tomato Onion Potato Cabbage Carrot Shallot

Beetroot

Others
(specify

Maximum
hrs/days
11. Are you organized in any of the following organization? (*Multiple response is
possible)

Organization

1. Yes
2. No

Benefits
If yes, what is the name
of the organization?

Social
association
(iqub, idir
etc)
Market
cooperative

(write
codes)*

Option for benefit


1. Accesses to credit
2. Encourage to save
3. Facilitate joint
marketing
4. Got market information
5. Coordinate purchase
and sale
6. Credibility
7. No benefit
8. Others (specify)

Trade
association

127

III. Consumers Interview Schedule

I.

General Information

1. Name of Respondent: ____________________________________


2. Zone:

Woreda:

3. Age of the respondent:

Kebele: ___________ Village: __________

[_______] years

4. Sex of the respondent ():

1. [ ] Male 2. [ ] Female

5. Education level of the respondent (): 1. [ ] No formal education 2. [ ] 6th grade or


less

3. [ ] 7th to 12th grade

6. Marital status (): 1. [ ] Married

4. [ ] Certificate
2. [ ] Unmarried

5.[ ] Diploma 6. [ ] Degree


3. [ ]Divorce 4. [ ] Widowed

7. Distance to nearest town: [______] OR [______] hrs walk


8. What is your major means of income generation? 1. [ ] Farming
2. [ ] Trade
3.
[ ] Employment
4. [ ] Others _________________
9. How much do you earn per year (estimate based on weekily, monthly
income):______Birr
10. Is vegetables consumed in your family? 1. [ ] Yes
2. [ ] No
11. Experience in vegetable products consumption? _____ years
12. Do you produce and consume or purchase? 1. [ ] Purchase
2. [ ] Produce
13. If you purchase, what is the proportion of your income used for purchase of vegetable
product?
16. If no consumption of vegetables product, why? ________________________
II. Demand for the horticulture products
1. What type of vegetable products purchased for consumption? Please respond to the
following questions. (*Multiple response is possible)

Crop
type

Quantity
purchased
(per
market
day)

No. of
market
day per
weak

Low
price
paid
(birr/kg)

No. of
months
you may
buy at
lower
price

Tomato
Onion
Potato
Cabbage
Carrot
Shallot
Beetroot
Others

128

High
price
paid
(birr/kg)

No. of
months
you may
buy at
higher
price

*From
whom
do you
buy

2. Do you consider any quality requirements to purchase vegetables? 1. [ ] Yes 2. [ ] No


3. If yes, what quality requirement do you consider for; Tomato
, Onion
,
Potato

, Cabbage

, Carrot

, Others (specify)

4. What are the constraints hindering consumption of vegetables? Rank horizontally (1=
most severe, 2= second severe and etc)

Crop
type

Supply Income
Shorta shortag
ge
e

Lack of High
storage price of
at home product

Poor
produc
t
handli
ng

Lack of
market
informati
on

Perisha
bilty

Others
(specif
y)

Tomato
Onion
Potato
Cabbage
Carrot
Shallot
Beetroot
Others
(specify)
5. Do you know the benefits of consuming vegetables product?
1. [ ] Yes 2. [ ] No
6. Do you think there is problem with consumption of vegetables product?
1. [ ] Yes
2.[ ] No
7. Do you prefer packed or fresh vegetables product? 1. [ ] Packed
2. [ ] Fresh
8. What should be done to increase vegetables product consumption?
IV. Checklist for Key Informants Interview

1. Name of the organization: ______________________


2. Role of the interviewee in the organization:
3. Location and contact information: Region/Zone/Woreda/ Kebele/ P.O.Box/telephone
4. Type of the organization: public/private/NGO/CBO.
5. Organizational mission, vision and objectives
6. What is the role of your organization in vegetables value chain in the study area?
7. What are the challenges and opportunities you faced in undertaking those roles assigned
to your organization?
8. Linkage /interaction/ partnership/ coordination between actors

Thank you very much for responding to the questions.

129