Abstract:
This study was conducted to analyze value chains of potato in Farta district, Amhara Region.
The objective of the study was to analyze the value chains of potatoes in the study area. To
address these objectives, both primary and secondary data were used. Primary data were
collected from123 producers, 30 traders and 13 consumers by using pre-tested questionnaires.
Secondary data were collected by reviewing documents from different sources. To evaluate
efficiency of potato markets in the study area, market structure, conduct and performance
approach was used. Heckman two stage econometric model was used to analyze the
determinants of potato market participation and quantity of sale. The major potato value
chain actors in the district were; producers, traders, chain supporters, chain enablers and
consumers. The chain is governed by wholesalers’ due to their financial advantage. In the
study area four largest value chain actors handled 49.18% of the total quantity of potato
purchased. The result indicated that potato markets characterized by a weak oligopolistic
market structure. Competition, trade license, and capital were the main barrier to entry in to
potato market. The result from marketing margin, 47.11% of total gross marketing margin
was added to potato price in the value chain. Out of the total gross marketing margin, 19.5%
was taken by local collectors, 11.9 by wholesalers and 15.6% was taken by retailers. Even
though all value chain actors received positive profit, barriers to entry, oligopoly market
structure, misconduct in price setting were indicators for market performance of potato was
inefficient. The results of econometric analysis using Heckman two stage model, in the first
probit estimation result indicated that distance to the nearest market, family size, oxen owned
by farmers, access to market information, size of land allocated for potato production, and
quantity of inorganic fertilizer used were found to be the significant variables affecting the
decision to market participation positively except family size. In the Ordinary Least Square
estimation result education level of the farmers, farming experience, number of extension
contact, size of land allocated for potato and quantity of inorganic fertilizer used were found
to be the significant variables influencing quantity of potato market supply positively. Major
constraints for production and marketing in the study area were identified. Shortage of quality
and improved, seed, diseases, pests and natural factors, lack of capacity in post-harvest
management system, too much competition between traders, lack of market information, and
lack of policy framework in price setting strategy were production and marketing constraints
of potato. The finding of the study indicated the need to access improved inputs, strengthening
supply of new varieties that are disease resistant, establishment of proper storage facility,
follow up of misconduct in price setting facilitate access to market information service,
facilitating conditions which can promote the market to be competitive so as to reduce market
inefficiency created by oligopolistic market