VALUE CHAIN ANALYSIS OF WARE POTATO: THE CASE OF TIYO DISTRICT, ARSI ZONE, OROMIA NATIONAL REGIONAL STATE, ETHIOPIA

Abstract

The study was aimed at analyzing ware potato value chain in Tiyo district. The objectives were identifying ware potato value chain actors, linkages and their roles; estimating marketing margin; identifying determinants of market participation and extent of participation; and determinants of marketing channel choices. A two-stage random sampling procedure was employed to select 126 households from 5 kebeles. The data were collected from both primary and secondary sources. The data were analyzed using descriptive and econometric methods. Value chain analysis of ware potato indicated that core value chain functions were input provision, production, trading and consumption. The study result revealed that ware potato value chain in the study area was operating in a number of constraints that have direct impact on farmers. The major constraints were limited input supply, unavailability of improved seed, prevalence of diseases, low output price, and lack of sound support services. Furthermore, due to absence of strong value chain system, market intermediaries get a lion shares. A post-harvest value addition practice performed by actors was very limited and not well developed. The chain was governed by collectors who have local knowledge and business mobility advantage than the other chain actors. Comparing the estimated costs and benefit shares of the actors, farmers were less advantageous because of the highest costs they incur. The market participation decision of farmers is found to be affected by age of the household head, frequency of extension contacts, and access to credit services whereas variables like being male, lagged price of ware potato, use of improved seed variety and total cultivated land affected it positively. Regarding the extent of participation, age of household head appeared to negatively determine it. Furthermore, education level of the household, lagged price, use of improved seed and access to credit services seemed to motivate households increase the supplied quantity. According to the survey result, ware potato in the area was handled by different actors and producers in the study area had different marketing channel alternatives. Sales of ware potato to wholesaler, collector, and retailer market were the dominant ones. Multinomial logit model results show that volume supplied to market was found to affect the likelihood of selling to wholesaler positively; distance to all weather roads and lagged price of potato are negatively related with the likelihood of selling to wholesaler by the producers. Likewise, farmers who were older, with no access to market price information and had frequent extension visits do prefer selling to collectors whereas experience in potato growing and engagement in non/off-farm activity positively affected the likelihood of the household to choose retailer as marketing outlet. Therefore, policy aiming at systematic approach to ware potato value chain, enabling producers being part of chain actors, development of market and social infrastructures, and effective extension service are recommended for the chain development and upgrading.