Abstract:
This study identifies factors affecting commodity supply and incentives in each functional node
of the wheat value chain, and evaluates the impact of industrial policy on regional economy.
Mixed sampling techniques (random, census and purposive) were applied to select sampling
units. Interview schedules, informal group discussion and observation were used to collect
primary data from actors. Multiple linear regression, ordinal logistic regression, computable
general equilibrium models, and social accounting matrix multiplier analysis were used to
analyze the data. Marketed surplus of wheat was significantly influenced by landholding size,
road distance, crop rotation, tractor use, fertilizer used, extension service and cost of wheat
production. The governance structure, incentive mechanisms, transaction attributes and trust
affect actors’ incentives at each functional node of the wheat value chain. Particularly, wheat
producers’ incentives significantly increased with extension services, governance structure,
economies of scale and wheat price information. The computable general equilibrium models
results indicate that the industrial policy has a positive impact on the components of the
regional economy. The results of social accounting matrix multiplier analysis indicate that
agricultural and service sectors had relatively the highest output, income and employment
multipliers. Shock injections into regional wheat value chain brought about much higher
changes in wheat processing industries output, urban and rural households’ consumption of
wheat and wheat products. The finding supports industrial policy as a base for
industrialization and economic growth in developing countries if the industries operate at
their full capacity. The study suggests a combination of incentives with disciplines approach to
promote industrialization. GO and NGOs should work for betterment of input markets to
address unfair incentives, poor coordination, low raw materials and final products supply at
each functional node of the wheat value chain.
