MARKET CHAIN ANALYSIS OF GROUNDNUT: THE CASE OF BABILE DISTRICT, EAST HARARGHE ZONE, OROMIA NATIONAL REGIONAL STATE, ETHIOPIA

Abstract

This study was initiated with the main objective of analysing the market chain of groundnut specifically assesses the structure-conduct-performance of groundnut market and analyse the determinants of marketed surplus of groundnut farmers. Multi-stage random sampling technique was used to select 138 smallholder farmers from three kebeles of the district and 20 traders were selected from Babile, Harar and Jigjiga markets purposively for the survey. The data were analyzed using descriptive statistics and econometrics model. Concentration ratio (4-firm), price setting strategy and marketing margin were employed in measuring the market structure, conduct and performance of groundnut markets. The survey results show that farmers supply 612.92 quintals of groundnut to the market through identified twelve market channels. Wholesalers, village collectors, urban assemblers, retailers, roadside traders and consumers respectively purchased 54.36%, 10.01%, 19.94%, 7.92%, 5.71% and 2.06% of the marketed groundnut in the study area. The study reveals existence of strongly oligopoly market type in groundnut market with concentration ratio of 64.19% and also 52.17% producers and 55% buyers indicate that selling price is set by buyers and testified buyers had the power to set price. Result of multiple linear regression model revealed that land allocated to groundnut, access to credit, lagged price and quantity of groundnut produced significantly affected the market supply of groundnut. The study suggests that there should be appropriate interventions by the government and private institutions with the aim of enhancing farmers bargaining power by establish agriculture price information center, increasing farmer’s productivity through introducing modern technology and improved varieties, and providing training on financial management.