Abstract:
Jeldu district is known for potato production. However, lower production and productivity,
low output price, high input prices and lack of value chain development were the major
problems constraining the potential benefit from the sector. The purpose of this study was,
therefore, to analyze potato value chain in Jeldu district. The specific objectives of the
study were mapping potato value chain actors, analyze their roles and linkages; identifying
factors affecting quantity of potato supplied to the market; assessing profit margin of
major actors under various marketing channels and assessing constraints and
opportunities of potato value chain. Both primary and secondary data were used. Primary
data were collected from 122 producers, 32 traders and 25 consumers using a pre-tested
questionnaire for each group. Descriptive statistics, value chain analysis and econometric
model were used to analyze the data. The major actors of potato value chain identified
were input suppliers, producers, local collectors, wholesalers, retailers and supportive
actors. Wholesalers play governance role in the study area. Market concentration ratio
and barriers to entry were used to analyze the structure of the market. The conduct of the
market was evaluated by traders’ price setting strategies, purchasing and selling
strategies. Five potato marketing channels were identified in the study area. Total Gross
Marketing Margin was highest (57.14%) in channel IV and lowest (22.22%) in channel II.
Producers’ share (GMMp) was highest (77.78%) in channel II and lowest (42.86%) in
channel IV. From traders, wholesalers received the highest (52.86%) marketing margin in
channel III and 47.14% in channel IV. Local collectors received the lowest marketing
margin which was 11.11% and 10% in channels V and IV, respectively. Lack of irrigation
facility, disease and pests, high input cost, weak extension services, delay of fertilizer
distributions, poor quality seed and adverse weather condition are production constraints
identified in the study area. Low output price, poor road infrastructure, limited credit
services, shortage of capital, lack of continuous supply throughout the year, and high
transportation costs are marketing constraints hindering potato value chain development
in the study area. Results of the two-stage least squares (2SLS) regression confirmed that
four variables namely education level, quantity of potato produced, membership to
cooperatives and area allocated to potato production affected quantity of potato supplied
to the market significantly and positively. Contrary to this, livestock holding affected
quantity of potato supplied to the market significantly and negatively. Based on the
findings, the study suggests that the government and stakeholders should focus on
developing irrigation facility, distributing quality inputs, fertilizers and chemicals timely,
assisting and encouraging establishments of cooperatives and memberships, identifying
and disseminating high yielding and disease resistant potato seed varieties, strengthening
the provision of formal and informal education, improving rural infrastructure and
promoting coordination among value chain actors.