MARKET CHAIN ANALYSIS OF TEFF (ERAGROSTIS TEF): THE CASE OF SHASHAMANE DISTRICT OF OROMIA NATIONAL REGION STATE, ETHIOPIA

Abstract

In Ethiopia, teff (Eragrostis tef) is an important cereal crop, particularly in Shashamane district as source of food and cash income for majority of the smallholder farmers. However, the supply of teff in the study area still cannot satisfy the existing market demand and also efforts to enhance smallholders’ participation in cereal market in general and teff in particular, through surplus production have been made, but there is dearth of information on the status of market participation and market outlet choice particularly in Shashamane district. The aim of this study was to analyze teff market chain in Shashamane district. Both primary and secondary data were used for study; primary data were collected from 202 randomly selected teff farmers, 22 teff traders and 28 consumers through structured questionnaire. Both descriptive statistics and econometric models were used for data analysis. Producers, rural collector, wholesalers, retailers, processors and consumers were the main chain actors on teff market in the study area. The structure of the teff market was weak oligopoly with four firms’ concentration ratio of 36.78%. Teff market conduct deviated from competitive market norm in that some traders were price makers and the price was affected by individual firms. Performance of teff market was analyzed using marketing margins based on costs incurred and gross profit generated by teff market chain actors. Six teff market channels were identified. Total gross marketing margin is highest in channel V (producer-rularcollector-wholesaler-central wholesaler-consumer) which was 50% and lowest in channel IV (producer-wholesaler-retailers- consumer) which was 36%. Producer’s share was highest in channel IV which accounts 64% from the total consumer’s price. Hence, from the result of market structure, conduct and performance analysis it is possible to conclude that teff market in the study area was inefficient. Double hurdle model was used to identify the determinants of market participation decisions and extent of market participation and Multivariate probit model was used to identify the determinants of market outlet choices. Double hurdle model regression results showed that, educational level, livestock owned, land under teff, number of contact with agricultural extension agents had significant positive effect on market participation decision, while sex of household head, family size, distance to nearest market had significant and negative effect. Extent of market participation was affected positively and significantly by land under teff, while it was significantly and negatively affected by family size and non-farm income. The multivariate probit model result indicated that educational level, family size, livestock owned, equines owned, land under teff , distance to the nearest market and current market prices of teff significantly influenced teff producers’ choice of alternative market outlets. The probability of choosing wholesalers, consumers, collectors and retailers outlets was 49.49%, 30.51%, 36.93% and 49.18%, respectively. A wholesaler is the most likely chosen market outlet while consumers were the less likely chosen market outlet. Therefore, strategies aiming at promoting teff producers market efficiency, market participation and extent of participation and market outlet choices should focus on strengthening the technical, resource base, infrastructural and institutional capacity building of smallholder farmers