Market Chain Analysis of Teff Production in Abeshege Woreda of South Ethiopia

Abstract

This research attempted to analyze the market chain of teff in Abeshege woreda of South Ethiopia specifically assessed, the Teff marketing participants, their roles and linkages in Abeshege Woreda and analyzing the determinants of teff supply. Primary data were collected from160 teff producers and 43-grain traders based on two-stage random sampling method. Multiple linear regression models were employed to estimate the determinants of teff supply. The results of the study indicated that out of the total teff produced by sample farmers, 86.2% of teff were marketed. Urban assemblers, regional wholesalers, and regional retailers bought 40%, 37.4% and 16.5% of the teff marketed respectively. Dere lafto sample market was inefficient, characterized by the oligopolistic market structure. The major barrier to entering into the market was a shortage of capital. Licensing and years of trading experience did not hinder entry into teff trading activities. Moreover, the markets were overwhelmed by information asymmetry with the low degree of market transparency. Although trading of teff is profitable across all sample farmers and traders, problems like oligopolistic market structure and information asymmetry made the trading business uncompetitive and inefficient. Among the different variables hypothesized to determine the supply of teff, the econometric result showed that four variables such as quantity produced, access to market information, access to extension service and sex of the household head significantly affected the volume of teff supplied to the market. Moreover, three variables namely quantity produced, access to credit and price of other (pepper) crop significant at 1%, 5% and 10% respectively affected the volume of teff supplied to the market. As hypothesized, all variables took a sign as expected. The study recommends providing policies that improve teff production capacity by identifying new technologies create stable demand for surplus production would enhance farmers’ decision in marketable surplus. Strengthening Institutions that convey reliable and timely market information required by all market participant. Strengthening the existing extension system through training in a way to serve grassroots level producers in all aspect is important. The number of farmers and traders who accessed credit is very limited; therefore, financial institutions should design a mechanism to address the challenges of financial access to smallholder farmers and traders. Eventually, policies that strengthen the bargaining power of cooperative are vital in order to reduce the market inefficiency created due to oligopolistic nature of the market structure.

Keywords: Market chain, Teff, Determinants

DOI: 10.7176/RJFA/13-21-02

Publication date: November 30^th 2022