Determinants of Coffee Farmers Market Outlet Choice: The Case of Bench Maji Zone, Ethiopia

Abstract

Access to market in the form of different channels for coffee farmers is crucial for exploiting the potential of coffee production to contribute to increased cash income of rural households. Identifying factors affecting market channel decision is therefore important. This paper reports on the findings of a study to investigate determinant factors that influence these choices among coffee farmers in general and member and nonmember coffee growers in particular in Bench Maji Zone South Western Ethiopia. Using stratified random sampling 132 smallholder coffee farmers were selected across purposively selected 16 coffee cooperatives in Bench Maji Zone of South Western Ethiopia. Farmers sell their produce through different but limited market channels. The study found out that the main marketing channels existing in the area were coffee marketing cooperatives, private traders, neighboring cooperatives, and informal traders. Coffee farmers can choose to sell all, a proportion or nothing of their coffee cooperatives through any of these channels. One would expect that member coffee farmers deliver their coffee to their own cooperatives and nonmember farmers expected to deliver their coffee to private traders. However this is not the case in the study. Rather the study revealed that 42% of member coffee farmers sell their coffee to private traders and in opposite direction a 46% of nonmember coffee growers deliver their coffee to coffee cooperatives. The question why is this happening and what determines their selling decisions of coffee farmers? Tobit regression is made and the regression results for member farmers revealed that factors such as education, proportion of land allocated to coffee, proportion of off farm income to total income, cooperatives performance, satisfaction on cooperatives performance, and second payment affected market outlet choice while age of the household head, proportion of off farm income and access to training has positively influenced nonmember coffee growers’ buyer selection decision. Finally the study confirmed the continued viability of coffee marketing cooperatives as suppliers of coffee to coffee buyers in the study area. The results have important implications for the management and future of cooperatives, as well as for the assessment of their development impacts.