Analysis of Dairy Value Chain in Jidda and Abichuf Gnea Districts of North Shewa Zone, Oromia Regional State

Abstract

The study was initiated on analysis of dairy value chain with the objectives of examining the dairy marketing channels and efficiency. Data came from the separate survey of dairy producing households and marketing middlemen. Maximum Likelihood Estimation procedure such as logit model was employed in identifying factors affecting decision to sell dairy products, Tobit model was used in investigating factors affecting decision on volume of dairy sales. Concentration ratios and marketing margin analysis were conducted in examining efficiency. Market participation decision is affected by household demographic and socio-economic characteristics represented by distance to market and urban centers. Volume sale of dairy is affected by intellectual capital represented by distance to district capital. Un concentrated suppliers characterize dairy market; market at the next level is also un concentrated for butter and cheese but concentrated for liquid milk. The dairy processing industries enjoy the highest return while the dairy cooperative gets the lowest margin. The results suggest that production and marketable surplus should be improved and adequate marketing infrastructure like roads and transport facilities should be established between districts and rural areas in the district to support enhanced market participation. With the aim of reducing transactions cost adequate marketing link should be established between the rural producer and urban consumer through institutional arrangements, such as dairy cooperatives. Relaxing the criteria required in obtaining bank and micro credit and forming a well-functioning urban and rural financial system would enable resource poor farm households to participate in dairy market and improve its supply.

Keywords: North Shewa, Econometric model, Value chain and Market channel

DOI: 10.7176/IEL/14-1-01

Publication date: January 31^st 2024