Analysis of marketed surplus of coffee by smallholder farmers in Jimma zone, Ethiopia

Abstract

The generation of marketed surplus and its transfer from agricultural sector to non-agricultural sector is crucial for achievement of self-sustaining economic growth. In order to expand the leading role agriculture plays in economic growth and poverty reduction, smallholder farmers need to improve their marketed surplus. A higher marketed surplus would help farmers to participate in a high value markets by increasing their level of income. The objective of this paper is to estimate the marketed surplus of coffee by smallholders and to identify its underlying determinants. A stratified multi-stage random sampling procedure was hired and a total of 152 smallholder farmers from six kebeles were randomly and proportionately sampled to collect both secondary and primary sources. The result of econometric analysis from OLS marketed surplus model revealed that sex, coffee farming experience, access to credit, perception of farmers towards the adequacy of extension service on marketing, perception of farmers towards current price of coffee, membership to coffee cooperative, and non- and/or off-farm income significantly affected marketed surplus of coffee. The findings imply that offering farmers a fair price, providing adequate credit and extension services, improving marketing infrastructures, building farmers’ experience, encouraging farmer’s business diversification besides farming, improving farmer’s linkage with cooperatives, and paying attention to female households are needed to increase coffee marketed surplus.

Key words: - Marketed surplus, Coffee, Multiple linear regression