Analysis of Grain Traders’ Performance in Ethiopia: The Case of Contribution of Social Capital

Abstract

This article examines the performance of 206 grain traders in 20 markets found in Amhara, Tigray, Oromiya and SNNPR of Ethiopia. The study adopts Fafchamps and Minten (1999) approach and used multiple regression model. The study identified that financial capital (working capital), social capital (using intermediary at the time of sale and customer relationship), human capital (farming experience) and transaction cost (having mobile, Oromiya and SNNPR) affected traders’ performance. The findings suggested adding working capital through different means (like access to credit through micro finance institutes, banks, etc.) with planned and market assessment, establishing licensed and well organized brokerage strengthen traders business relationship with regular customers in a formal or informal way, farmer-trader linkages are recommended through the dissemination of information (e.g. workshops) and training on quality and production management, establish and strengthen, a reliable, permanent,  public domain market information and other infrastructure are important to enhance traders performance, in turn encourage farmers to produce more and maximize benefit from grain market.

Keywords: Ethiopia, social-capital, performance, customer-relationship, marketing-margin