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

Abstract

The study was aimed to analysis the market chain and to identify factors affecting farmer’s participation decision and the level of participation in the groundnut markets in Fedis district. Quantitative and qualitative data types were collected from both primary and secondary data sources for the study. Methodologically, this study used cross-sectional data gathered from sample households during a single cropping season in 2022-2023. A multi-stage sampling procedure was used to draw 151 Groundnut producers from three kebeles and 21 traders from Boko and Harar market. Descriptive statistics and econometric models were used to analyze the data. Double hurdle model was used to identify factors influencing decisions to participate in the groundnut market and the level of participation. Concentration ratio four was employed in measuring the market structure, conduct and performance of groundnut markets. The survey results show that farmers supply 776 quintals of groundnut to the market through identified seven market channels. Rural collectors 55.6%, wholesalers 31%, retailers 7%, roadside traders 2%, and consumers 4.4% of the marketed groundnut in the study area. The results of structure-conduct-performance analysis showed a lose oligopoly market structure at Boko and Harar markets with four firms’ concentration ratios (CR4) of 46.01%. Groundnut marketing is profitable in the study area, though there are barriers to enter into groundnut markets manifested by competition with unlicensed traders and a lack of working capital. Results of the first double hurdle revealed that non-farm income, oxen ownership, frequency of extension contact, membership in cooperatives and access to market information had significant effect on market participation and second double hurdle results revealed that, land size, credit taken, lagged price and non-farm income had significant effect on groundnut supply (level of participation) in the groundnut market at the household level in the study area. The findings have an implication for all the concerned body and they should have to develop strategies to address the abovementioned factors in order to improve smallholder market participation decision and level of participation in the groundnut market at the household level.