Abstract:
Markets are important for economic growth and sustainable development of a given
country. However, in the absence of well-functioning markets, agricultural production
can experience several drawbacks. With the main objective of examining vegetables
marketing system in Kombolcha district of eastern Hararghe zone, Oromia region,
Ethiopia, primary data from 123 randomly selected vegetable farmers and time series
data from CSA were used. Descriptive statistics and econometric models were used
to analyze data. Heckman two stage model was used to analyze the determinants of
vegetables marketed surplus. To measure market integration between Kombolcha and
Jigjiga markets of Eastern Ethiopia, this study followed the most widely used test
called Engle Granger counteraction test and Error-Correction Model (ECM). The
result of descriptive analysis shows that out of the total sample households 70 were
market participants while the remaining 53 were non-participants. The first stage
estimation result of Heckman two stage model shows that Age, total land holding,
frequency of irrigation extension contact and family size are the factors that are
positively and significantly affecting both potato and cabbage market participation
decision in Kombolcha district. However, education and non-farm income of the farm
households are found to affect potato and cabbage marketed surplus adversely. The
co-integration test results revealed that Kombolcha and Jigjiga potato and cabbage
markets are co-integrated indicating the positive long run relationship between the
two markets. In addition, granger causality test confirmed that Jigjiga cabbage
market have been playing the leading role in price formation and affects Kombolcha
cabbage price setting during the specified study period Therefore, to increase
marketed surplus of vegetables, introduction of modern technologies for the efficient
use of the irrigation water, controlling disease and pest practices should be promoted
to increase production. In addition, strengthening the supportive activities such as
information centers and input supply systems, building the asset base of the producers
would also boost vegetable surplus and market performance. Moreover, practicing
efficient extension system, updating the producer’s knowledge and skill with improved
production, handling, storing and marketing system that enables to increase benefits
of producers are the way forward.
