POTATO (SOLANUMTUBEROSUM L.) MARKET CHAIN ANALYSIS: THE CASE OF SEKELA DISTRICT, WEST GOJJAM ZONE, AMHARA NATIONAL REGIONAL STATE, ETHIOPIA

Abstract

For Sekela Woreda smallholder potato producers, potato has significant contribution for consumption at home and in generating cash income. Therefore, enhancing potato producers access to market and linking them to most beneficial outlets is a key issue needed. Hence, this study was aimed to analyzing structure-conduct-performance of potato market, identifying factors affecting market supply of potato as well as factors affecting the market outlet choices of potato producers. Data were collected from both primary and secondary sources. Primary data were collected from randomly selected 130 farm households, 22 traders and 20 consumers. Potato market chain actors in the study area include input suppliers, producers, retailers, wholesalers, processors and consumers. Five potato marketing channels were identified in the study area with major share of volume of potato marketed going through producers to retailers and to consumers channel. Result from analysis of market concentration indicated that potato market characterized by weak oligopolistic market structure with the buyers’ concentration ratio of 37.71%. Lack of capital, licensing problem and seasonal supply were identified as the major entry barrier to potato marketing. Market conduct shows that the price of potato is set by traders while producers are price taker. When it comes to market performance analysis the highest total gross marketing margin was 30.25% when producers sold potato to wholesalers and the lowest total gross marketing margin was 16.11% when producers sell potato to retailers (in channel III). The result showed that potato market in the district deviate from competitive market norm due to lack of perfect market information, price of potato being set by traders, weak oligopolized market structure and barrier to entry to potato market. Multiple linear regression model result indicated that distance to the nearest market, use of improved seed, frequency of extension contact, area of land allocated for potato and yield of potato significantly determined quantity of potato supplied to the market. Multivariate probit model results indicated that experience in potato production, distance to nearest market, land allocated for potato production, quantity of potato supplied to market, frequency of extension contact and amount of credit taken significantly influenced market outlet choice for potato producers. Based on the findings government and other stakeholders need to focus on strengthening improved seed access, strengthening rural-urban infrastructure, expanding market access, improving land management practices and improving yield through strengthening extension service in order to accelerate market chain development.