Review on Market Chain Analysis of Wheat in Ethiopia

Abstract

Wheat is an important industrial and food grain, which ranks second among the most important cereal crops in the world after rice, and traded internationally. The area coverage, production, and productivity of wheat is increasing from time to time steadily, and fluctuating as a result of population growth, changing food preferences and a strong urbanization trend. The main market participants of wheat are producers, processor, assembler, wholesaler, retailers, and consumers, financial institutions, governments, NGO. The market concentration ratio of wheat in Ethiopia is about 31.67%, which indicates the market structure is weakly competitive. Absence of license, lack of enough working capital, higher completion and lack of trading experience are the main barriers of entry in wheat market. The price of wheat produce in the market is determined by the farmer, market through negotiation, and traders. Traders used fair scale-weighing (81.2%), giving better price relative to others (8.24%), giving credit (7.06 %), and visiting their suppliers (3.53%) as a strategy to attract their suppliers. The average marketing cost, profit margin, TGMM and GMM of wheat is 162birr, 177.5 birr/quintal, 30.32% and 14.63% respectively. Shortage of capital, lack of credit access, lack of market information, involvement of cooperatives, presence of unlicensed traders, inadequate market infrastructure higher transportation cost are the main challenges of wheat market. Therefore, strengthening the licensed traders, building market infrastructure and improving access to wheat market information and credit for wheat market participants should be recommended.

Keywords: Wheat, Market, Market Chain, Marketing Margin

DOI: 10.7176/IEL/9-1-02