DETERMINANTS OF COMMERCIALIZATION AND MARKET OUTLET CHOICES OF TEF: THE CASE OF SMALLHOLDER FARMERS IN DENDI DISTRICT OF OROMIA, CENTRAL ETHIOPIA

Abstract

In Ethiopia, tef is an important cereal crop, particularly in Dendi district it is source of food and cash income for majority of the smallholder farmers. However, the supply of tef in the study area still can’t satisfy the existing market demand and the farmers are not benefited from the market price. This study was aimed at analyzing the commercialization level and factors affecting the commercialization and market outlet choices of tef producers in Dendi district. The study largely uses primary data that were collected from 210 randomly selected farmers, 20 tef traders and 32 consumers in the district through structured and semi-structured questionnaire. Both descriptive statistics and econometric models were used. Tobit model and Multivariate probit model were used to identify the determinants of commercialization and market outlet choices, respectively. Results of the descriptive statistics indicated that 12.38% of sample households are subsistent, 3.33% are less-commercial, 43.81% are semi-commercialized and 40.48% are commercialized farmers. The average commercialization level of tef producers in the district was 46%. Six tef marketing channels are identified in the district. The result of Tobit regression model revealed that educational level, livestock owned, land under tef, agricultural extension, sex of household head, household size and off/non-farm income significantly affected commercialization level of tef producers. The probability of tef producers to be commercial is 99.9%. The multivariate probit model result indicated that educational level, household size, livestock owned, equines owned, land under tef, distance to the market and current market prices of tef significantly influenced tef producers’ choice of alternative market outlets. The probability of choosing wholesalers, consumers, collectors and cooperatives outlets is 64.4%, 41.6%, 39.1% and 51.1%, respectively. Wholesalers is the most likely chosen market outlet while collectors are the less likely chosen market outlet. The joint probabilities of households to jointly choose the four market outlets was 4.1% which is lower than the likely of not choosing all market outlets which is 5.2%. Therefore, strategies aiming at promoting tef producers’ commercialization and market outlet choices should focus on strengthening the technical, resource base, infrastructural and institutional capacity of smallholder farmer