ANALYSIS OF RED PEPPER VALUE CHAIN: THE CASE OF WENBERMA DISTRICT, WEST GOJAM ZONE OF AMHARA NATIONAL REGIONAL STATE, ETHIOPIA

Abstract

Pepper is an important cash crop for its contribution to income generating, employment opportunity and improvement of food security to majority of the rural household. However, enhancing pepper producers to reach market and actively engage in the pepper value chain is a key issue needed in the study area. This study was undertaken to map red pepper value chain actors and identifying their roles and linkage; analyzing marketing margins across the channel; analyzing determinants of market supply and identifying determinants of market outlet choices in the study area. The study was based on the survey of 130 farmers, 30 traders and 20 consumers. Producers took the highest marketing profit in channel I(producers-consumers) which is 1299.89Birr/qt and lower marketing profit in channel II (producers-district retailers-consumers) which was 804.6Brr/qt. From traders, Baltina took the highest market profit in channel III (producers- wholesalers-baltina-consumers). Total gross marketing margin were highest in channel III (producers-wholesalers-baltina-consumers) which was ETB 64. The value chain analysis revealed that the major pepper value chain actors were input suppliers, pepper producers, local collectors, district retailers, wholesalers, Baltina(processors) and consumers whereas input supply, production, marketing and consumption are the major value chain activities. Woreda office of agriculture, cooperatives, ACSI and NGOs (AGPs) are pepper value chain supporters. The result of 2SLS indicated that market supply of pepper was significantly affected by quantity of pepper produced; pepper farming experience, one year lagged price and family size. The estimation result of multivariate probit model showed that the likelihood of sampled households to select wholesale, district retail, local collectors and consumers outlet were 63%, 54%, 51% and 48%, respectively. The joint probability of success and failure to select all market outlets was 0.06% and 0.04%, respectively. The multivariate probit model result also indicated that quantity of pepper produced, pepper farming experience, extension contact, year of schooling, bargaining power of the producer; post harvest value addition, market distance and livestock ownership were significantly influenced pepper producer choices of market outlet. Even though, the study area has high potential for pepper production, there are constraints starting from input supply to marketing of red pepper. Therefore, this study underscores enhancing farmers bargaining power through cooperative; strengthen institutional services and infrastructure development for policy implication.