Wheat Value Chain Analysis in Agarfa District, Bale Zone, Oromia Regional state, Ethiopia

Abstract

Value-adding to agricultural commodity is a means to increase farm incomes and to regenerate rural economy. Although farmers are the primary producers and actors of wheat, they were not able to share from the growing market benefit of the product in Ethiopia.This study was aimed at analyzing value chain of wheat in Agarfa district of Bale zone with the specific objectives of identifying wheat value chain actors and their respective functions, analyzing marketing margin of wheat value chain actors and identifyingthe determinants of wheatsoldvolume to the market by producers. The data were obtained from both primary and secondary sources. The primary data for this study were collected from 201 farmers, 68 wheat traders, 6 wheat processors and 15 wheat consumers following appropriate sampling procedures. Descriptive statistics and Two Stage Least Squares of econometric modelwere used to analyze the data. Margin analysis was used to estimate the share by each actor involved in wheat value chain. Value chain analysis result of the study showed that input suppliers, producers, assemblers, wholesalers, retailers, processors, cooperatives and consumerswere the main wheat value chain actors in the study area. Whereas, office of agriculture and natural resources, office of trade and industry, micro finance institutions, cooperatives office, NGOs and bankswere the main supporting actors. Due to limited capital capacity of farmer primary cooperatives and union, producers are not governing the value chain. Hence, they are price takersand the whole wheat value chain is governed by processor.The results of margin analysis revealed that 22.29% and 26.80% share of margin and profit were captured by wheat producers and 36.63% and 34.76% share of margin and profit were captured by wheat processorsrespectively.This shows that the producers are not adequately benefiting from the further value adding profit. The rest actors (cooperatives, assemblers, wholesalers and retailers) were received sharemarginof8.89%, 9.99%, 12.21% and 9.99% respectively and profit margin of 4.87%, 6.82, 12.26%, and 15.46% in the same order. The result of Two Stage Least Squares indicated that quantity of wheat produced, sex, memberships to cooperative, lag price of wheat, family size and farming experience significantly influenced volume of wheat soldto market. Policy implications drawn from the study findings include the need to improve the input supply system, improving farmers’ know how and experience on wheat production, encouraging females productivity,improving productivity of wheat, strengthening the linkage among wheat value chain actors, encouraging farmers to be member of cooperative,concerning bodies should provide last year price information inthe market,strengthening poor profit share and strengthening family planning programs to reduce the amount of wheat consumption at household level.