ONION MARKET CHAIN ANALYSIS: THE CASE OF GEMECHIS DISTRICT, WEST HARARGHE ZONE, OROMIA NATIONAL REGIONAL STATE OF ETHIOPIA

Abstract

Onion plays a significant role in enhancing food security and generates income for the poor farmers of Ethiopia. This study attempted to analyze onion market chain in Gemechis District, Oromia Region of Ethiopia and tries to sort out the marketing problems which discourage smallholder farmers to invest on onion product. Specifically, the study aimed at analyzing the structure, conduct and performance of onion market, to identify market chain actors and their respective roles, to identify the determinants of onion supplied and constraints and opportunities of onion production and marketing. Data for the study were collected from both primary and secondary sources. The primary data were collected by household survey using a pre-tested structured questionnaire and key informant interview using checklists. The data were collected from 176 farmers, 30 traders and 30 consumers. The findings indicate that onion market chain actors identified in the study area include producers, rural collectors, brokers, retailers, wholesalers and consumers. Producers were price takers and hardly bargain the price due to fear of post-harvest losses, in case the product was not sold. Six market channels were identified in onion marketing. The highest total gross margin was 28.57% and the highest gross marketing margin of producers was 91%. The result of the market concentration ratio of Kune market (51.49%) and Chiro market (65.36%) shows that onion transaction in the study area was operating under a strong oligopolistic market structure. The results of two-stage least square regression model showed that quantity of onion supplied to the market was significantly and positively influenced by the endogenous quantity of onion produced. In addition, distance from nearest market, non/off farming income, land allocated for onion and lagged price significantly affect the volume of onion supplied to the market. The study findings suggest the need to strengthen the linkage among market chain actors, enhancing bargaining power of onion producers and reducing the level of oligopolistic nature improving production and volume sales of onion and expanding accessibility of rural infrastructure.