POTATO VALUE CHAIN ANALYSIS: THE CASE OF JELDU DISTRICT, WEST SHEWA ZONE OF OROMIA NATIONAL REGIONAL STATE, ETHIOPIA

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.