PERFORMANCE OF VEGETABLE MARKET: THE CASE OF KOMBOLCHA DISTRICT, EAST HARARGHE ZONE OF OROMIA REGIONAL STATE, ETHIOPIA

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.