MARKET CHAIN ANALYSIS OF RED PEPPER: THE CASE OF BOKE WOREDA, WEST HARARGHE ZONE, OROMIA NATIONAL REGIONAL STATE OF ETHIOPIA

Abstract

This study attempted to analyze the red pepper market chain in Boke district, the area is known for its potential production of red pepper. However, the market chain of red pepper was not well understood. The objectives of this study were to analyze the structure, conduct, and performance of the red pepper market, identify market chain actors and their respective roles, and analyze the determinants of red pepper supplied to the market. Data for the study were collected from both primary and secondary sources. The primary data were collected by a household survey using a pre-tested structured questionnaire and key informant interviews using checklists. The data was collected from 313 farmers, 15 traders. The identified red pepper market chain actors in the study area include producers, rural collectors, retailers, wholesalers, and consumers. Six market channels were identified for red pepper marketing. The highest total gross margin was 11.62%, and the highest gross marketing margin of producers was 95.94%. The result of the market concentration ratio of Bedesa market and Boke Tiko market (51.94) shows that red pepper transactions in the study area were operating under a strong oligopolistic market structure. The results of the two-stage least squares regression model showed that the quantity of red pepper supplied to the market was significantly and positively influenced by the endogenous quantity of red pepper produced. In addition, distance from the nearest market, none/off-farming income, land allocated for red pepper, credit, training, farm experience, and education level significantly affect the volume of red pepper supplied to the market. Therefore, based on the findings of the study policy interventions need to be made to increase the capacity through training, farm experience, providing adult education opportunity program, enhance the production of red pepper, road infrastructure development, providing credit access, invest on on/none farm income and manage livestock.