Value chain analysis of malt barley (hordeum vulgarel.): the case Of lemu bilbilo woreda, east arsi zone, oromia national Regional state of Ethiopia

Abstract

This study was conducted at LemuBilbilo district of Oromia region with the aim of analyzingmalt barley value chain with specific objectives of identifying value chain actors and drawing its map, analyzing the performance of actors, analyzing the market orientation determinants of malt barley producers and identifying the challenges and opportunities of malt barley value chain. The data were collected from both primary and secondary sources. Primary data were collected from150 randomly selected producers, 15collectors, 9 grain whole sellers, 2 brokers,4 primary cooperatives; one union, one malt factory, one beer factory, three beer distributors ,12 retailers and 10 consumers while secondary data were collected from published and unpublished documents. Descriptive statistics and econometric model of ordinary least square (OLS) method was used to analyze the data using STATA software.Market orientation index was used as dependent variables to investigate producers` market orientation determinants in malt barley production. The findings of the study revealed that, input suppliers, malt barley producers, cooperatives, union, collectors, grain wholesalers, processors, beer distributors, retailers and consumers are main actors of malt barley value chain. The performance of actorsin malt barley value chain revealed that, about 42.33% and 29.84% of the margin is shared by malt factory and producers respectively while local collectors, grain wholesalers, cooperatives and union shared 5.87%, 7.96%, 5.87% and 8.13% of the total margin respectively. About 50.98% of the net marketing margin is shared by producers followed by malt factory (22.15%), Union (9.49%), grain wholesaler (9.45%), rural collectors (5.21%) and cooperatives (4. 72%).The chain is governed by malt factory and Brewery Company who have capital advantage over the other chain actors. The econometric result revealed that, literacy of household head, family size, land size allocated, farming experience, oxen owned, access to improved seed, access to credit service, productivity of wheat and agricultural input cost significantly affects market orientation of malt barley producers. Shortage of good and improved malt barley seed, shortage of chemicals for emergency disease occurrence, high cost of inputs and high interest rate, mixed seed with other varieties, poor linkage with value chain actors, lack of capital to purchase inputs, diseases and pest attacks, presence of unlicensed traders,limited function of cooperatives, lack of appropriate storage facility, unequal dissemination of market information, shortage of malt barley and lack of laboratory sampling test are the constraints whereas high demand for malt barley production, high demand for malt barley by different factories, availability of different buyers and or users of the product, its potential for value addition, favorable land and climatic condition in the area of production, presence of value chain supporters and enabling policy environment; and high productivity potential are the major opportunities of malt barley value chain in the study area. Therefore, policy aiming at increasing farmers’ access to credit, access to improved seed, developing and improving infrastructure, facilitating adult education, improving cooperative development and strengthening linkages of actors are recommended to enhance the development of malt barley value chain and farmers’ market orientation in malt barley producers at LemuBilbilo district of east Arsi zone in Oromia National regional state of Ethiopia.