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

Abstract

Groundnut plays a significance role in enhancing food security and generates income for the poor farmers of Ethiopia. This research attempted to analyze value chain of groundnut in Fedis district, Oromia region of Ethiopia. Specifically, the study aimed to identify the main groundnut value chain actors, their roles and relationships, to examine the market performance of groundnut; and to identify factors that affect marketing channel choices. Data for the study were collected from both primary and secondary sources. The primary data were generated by a household survey using a semi-structured questionnaire and key informant interview using checklists. The study employed data collected from 152 groundnut producers, 8 local assemblers, 4 wholesalers, 2 cooperatives, 1 groundnut processors and 10 retailers using purposive and random sampling techniques. Descriptive statistical analysis and econometric model were employed to achieve the study objectives. Result obtained from descriptive statistical analysis revealed that the major groundnut value chain actors were input suppliers, producers, cooperatives, local assemblers, wholesalers, retailers, processors and consumers. Six market channels were identified and the highest total gross marketing margin was 56.67% in wholesalers and the highest gross marketing margin of producers’ share was 69.07% in retailers. The results of multivariate probit showed that amount of groundnut supply, access to market information, education level, trust to buyers, groundnut production experience and distance to nearest market were among the factors which affect significantly groundnut producers’ choice of alternative market outlets in the study area. Therefore, the finding of the study suggest strengthening the linkage /interaction among value chain actors, increasing the production and productivity of groundnut, strengthening farmers cooperatives, expanding the accessibility of market infrastructure and encouraging education.