Market chain analysis of coffee in kercha district, guji zone of oromia Ethiopia

Abstract

This study has analyzed the coffee marketing chain particularly the case of kercha woreda, West Guji Zone, Oromia Region. Coffee is a major cash crop which is mainly produced as an export crop. The basic objectives of the study were to identify coffee marketing channels, to analyze structure, conduct and performance of coffee market and identify the determinants of household coffee supply in kercha district. Data were generated by individual interview using structured questionnaires. Multiple linear regression econometric model was used to analyze the determinants of coffee market supply. The market channel analysis of the commodity identified six marketing routes. The main market participants for coffee marketing of the district were coffee producers, collectors, wholesalers, cooperatives, union, retailers, ECX and consumers. Result from analysis of degree of market concentration in kercha, guracho and bedessa markets indicates that the coffee markets were characterized as strongly oligopolistic markets with the buyers’ concentration values 73.2%, 78.28% and 78.86%, respectively. The coffee marketing performance result reveals that 41.4% and 35.66% of total gross marketing margin were added to coffee price in channel I and channel II respectively. Out of the total gross marketing margin, 6.2% was captured by coffee collectors, while 35.2% goes to wholesalers in channel I and out of the total gross marketing margin in channel II, 35.66% goes to wholesalers. The results of econometric analysis using OLS model shows that among the 12 hypothesized variables only five variables (size of coffee land , lagged coffee price of 2014/15, coffee farming experience, Extension contact and family size) were found to be the significant variables influencing coffee marketed supply of the district positively. Major problems of production and marketing in the study area were poor market infrastructure, coffee disease, poor market information, traders market power, lack of draying bed, land scarcity, lack of credit service and presence of informal traders. Based on the study results, policy interventions required to raise marketed supply of coffee in the study area are