Market Chain Analysis of Coffee in Gimbo Woreda, Kaffa Zone, Snnpr, Ethiopia

Abstract

Market chain analysis of coffee production in Gimbo woreda, Kaffa zone, SNNPR, Ethiopia. The study identified the main marketing actors, which are producers, wholesalers, retailers, processors, and consumers. The result of the assessment of the market structure indicated that the four firm’s concentration ratio (CR4) was 39.7%, which show there is a weak oligopoly in the market structure of coffee in the area. Lack of working capital was the main barrier which protects peoples from interring into this business. The survey result indicated that the price-setting technique in the coffee market is largely determined by the benevolence of purchasers. Producers have a low bargaining power to influence price because of their small supply and low access to market (price) information. The study result shows that the majority of coffee producers (64.7%) supply their product to the market at the time when they need money. In evaluating the market performance, the marketing margin analysis result showed that processers (21.74%) take the largest marketing margin in the coffee market chain. The rest 13.04% and 8.70% of marketing margin were received by wholesalers and retailers respectively. Ordinary least square regression was employed to identify factors influencing the level of coffee market participation in the study area. Eleven explanatory variables were hypothesized to analyze factors that affect the level of farmer’s participation in the coffee market. The OLS analysis result shows that Among Eleven explanatory variables, only two variables (Income from off-farm activities and Quantity of coffee produced) were found to significantly affect the level of coffee market participation.

Keywords: Structure-conduct-performance, Market concentration, Marketing Margin, Gimbo woreda

DOI: 10.7176/EJBM/13-9-05

Publication date:May 31^st 2021