ANALYSIS OF LIVE SHEEP MARKET CHAIN: THE CASE OF LEGAMBO DISTRICT, SOUTH WOLLO ZONE, AMHARA NATIONAL REGIONAL STATE, ETHIOPIA

Abstract

Sheep production is playing a vital role in the economic and nutritional contribution of the country in general and legambo district in particular. Nevertheless, the production is not market-oriented and the marketing systems are not well-functioning. In light of the problems, this study was initiated to evaluate the market chain of live sheep in Legambo district. The study used both primary and secondary data. The data were collected from randomly selected 267 sample households and 28 sample traders in the year 2020. The data were analyzed using descriptive statistics and econometric models such as Heckman two-stage selection model and Multivariate probit model. The study indicated that producers, collectors, small-scale traders, large-scale traders, hotel and restaurants and ultimate consumers are the major market actors in the study area. In the structure-conduct-performance analysis, the HHI (1048.29) indicates that live sheep marketing in the study area is less concentrated. Lack of capital and lack of skill are the main barriers to entry to the market. Giving a better price and providing a better quality of sheep were the main purchasing and selling strategies of traders in the study area. The result indicated that long market channel resulted in low price share of producers. The probit estimation of Heckman first stage model revealed that extension contact, other livestock, use of veterinary service, access to market information, membership to agricultural cooperative, distance to the market and income from non-sheep activities significantly influence farm market participation decision. Heckman second stage estimation revealed that inverse Mill’s ratio, extension contact, other livestock, use of veterinary service, distance to the market, income from non-sheep activities and access to market information had significant effect on sheep market supply. Multivariate probit model result shows that age, sex, family size, credit, education level, selling price, market information, distance to the market, other livestock and number of sheep owned were found to have a significant effect on market outlet choices. Thus, the study recommended that development of market infrastructures, promote farmers’ cooperative, encourage market-oriented production thereby improve the inefficient functioning of the marketing system.