Abstract:
Wheat market in Dembecha district experienced in poor market linkage, disproportional
benefit share, and inadequate market supply and market alternatives. This study was aimed
to analyze value chain actors’ interaction and their role, wheat market structure-conduct
and performance, factors affecting market supply and market outlet choices of smallholder
wheat producers in Dembecha district of West Gojjam zone. The study used cross-sectional
data collected from a sample of 130 farm households selected through two-stage sampling
techniques. Additionally, thirty traders, two bakers, one processor, four cooperatives and
ten consumers were used to collect the data. Descriptive statistics and econometric models
were used to analyze the data. Result from functional and institutional approach of value
chain analysis showed that input providers, producers, cooperatives, collectors,
wholesalers, retailers, and processors were found to be important wheat value chain
actors. Market concentration ratio (CR4) at district level was found to be 39.78 percent
and there were observed barriers to entry into wheat market. These structural
characteristics indicate oligopolistic market structure of wheat market at District level.
Buying, selling, and pricing strategies, which are indicators of market conduct, showed
deviation of wheat market from competitive market norms. Analysis of marketing margins
indicated that from total gross marketing margin processors received the highest (39.72%)
marketing margin and retailers received the least marketing margins (4.85%) in wheat
value chain. Wheat market is also characterized by relatively good producers’ share when
they sale to consumers, collectors and wholesalers but they incurred high operating cost
which reduces their profit level. Even though, wheat market in the study area deviate from
competitive market norms as a result of oligopolistic market structure and conduct,
profitability analysis of wheat market showed all market actors operated at profitable
level. The results obtained from OLS regression analysis indicated that the quantity of
improved seed varieties used, quantity of wheat produced, educational level of the
household heads, lagged market price of wheat and frequency of extension contact ware
significantly affecting the market supply of wheat positively as expected. The multivariate
probit model results also revealed that the quantity of wheat sold, distance from nearest
market nearest market, sex of household head, ownership transport facilities, non/off farm
income, cooperative membership and bargaining power determine a market outlet choice
decision of wheat producers in the study area. Encouraging producers to use
recommended improved seed, strengthening provision of education and infrastructural
development, strengthening extension service and increasing farmer’s awareness on
different market outlet wheat produce to enhance producers benefit are recommended to
strengthen wheat value chain development.