Value Chain Analysis Of Vegetables: The Case Of Yayu And Hurumu Districts Of Iluababor Zone, Ethiopia

Abstract

Ethiopia has a diverse climate and altitude conditions which are conducive to the production of different horticultural crops. Despite a favorable condition in the country, small-scale vegetable producer farmers are not benefiting from the available opportunities due to low market participation. This study was aimed at analyzing the vegetable value chain in Yayu and Hurumu districts of Ilubabor zone focusing on kale and tomato crops. The specific objectives of the study were to identify actors and their roles in the value chain, to estimate marketing margins of each actor and identifying determinants of market participation decision and level of participation of farm households in the vegetable market. The study used both primary and secondary data. The primary data were collected through personal interviews from a total of 161 respondents (120 producers, 25 traders and, 16 consumers) using questionnaires. Value chain analysis approach was used to identify major value chain actors and their roles. The major vegetable value chain actors in the study area are input suppliers, producers, collectors, wholesalers, retailers and consumers. Five and four marketing channels were identified for tomato and kale, respectively. Market margin analysis was carried out to estimate value captured by each actor. The highest total gross margin was about 25% in channel III for kale and 33.33% in channel IV for tomato. The highest producers share in kale and tomato marketing channels are 85% and 80% both in channel II. Producer received the maximum profit when they sell directly to consumers. From traders, collectors received the highest (21.05%) marketing margin in channel IV for kale and wholesalers received the highest (28.57%) in channel V for tomato. The Heckman first stage model result showed that four variables such as education level of household head, irrigation access, participation in non-farm activity and quantity produced significantly affect the probability of kale market participation decision while family size, production experience, participation in non-farm activity and quantity produced significantly affect the tomato market participation decision. Heckman second stage model indicated that age of household head, family size and quantity produced significantly influence the kale level of market participation of producers while extension contact, quantity produced and perception of lagged price were among determinants which affect significantly tomato producer’s level of market participation. Policy implications drawn from the study findings include the need to strengthen the provision of extension service, strengthen education level of household heads, arranging experience sharing program for producers, improving farmer’s knowledge and experience on vegetable production and improving productivity, providing irrigation facility