SUPPLY AND PERFORMANCE OF WHEAT MARKETS IN DIGELU-TIJO DISTRICT OF OROMIA REGION, ETHIOPIA

Abstract

This study was initiated with the general objective of analyzing the supply and performance of wheat markets in Digelu- Tijo District of Oromia Region, Ethiopia. The specific objectives of the study were to identify wheat market chain and actors’ role, to analyze performance of wheat markets and to identify factors determining supply of wheat by smallholder farmers. In this study, both primary and secondary data were used. A total of 123 sample households, and 24 traders were considered. Producers, assemblers, wholesalers, retailers, cooperatives and processors were found to be important market actors in wheat markets in the study areas. Much of the marketed surplus of wheat was channeled through producers- wholesalers-processors- consumers’ channel. Concentration ratio of the largest four traders trading in Sagure market was 29.65% which indicate that loose of oligopoly market structure. Marketing performance of wheat was analyzed by estimating the marketing margin considering associated marketing costs. Producers obtained average profit of Birr 504.73 per quintal in 2015/16 cropping year from wheat production. Land rent takes the highest share among the producers’ total cost followed by harvesting and input costs. The average total costs incurred by assemblers, wholesalers, and retailers of wheat were 3.84, 13.59 and 5.04 Birr per quintal, respectively. Tobit model was employed to identify factors that determine the supply of wheat by smallholder farmers. The model results showed that six explanatory variables significantly affected the volume of wheat marketed by smallholder wheat producers. Family size, access to credit, off- farm income and livestock holding were negatively and significantly affecting supply. Oxen ownership and perception of farmers towards wheat market price were positively and significantly influence market supply. Based on the study policy interventions like family planning, awareness to farmers to supply wheat to the market when price is fair for them, awareness to farmers on rearing livestock besides farming agricultural crops , encouraging farmers to involve them self in both off-farming and farming activities to improve their live.