Analysis of Market Chains of Forest Coffee in Southwest Ethiopia

Abstract

This study was initiated with the objective of assessing the existing market structure, conduct and Performance of forest coffee; examine its cost and profitability and point out determinants of its Supply and problems in their market chain. Structure-Conduct-performance model and regression analysis were used to analyze the data. The result of the investigation of the market structure indicated that producers, assemblers and wholesalers are the major actors involved in the market chain of coffee. The local coffee Wholesalers’ concentration index (40% for Gera and 29.64% for shebe) revealed that there is a threat of Oligopoly in the market structure of coffee especially in Gera area. The market conduct analysis revealed that price setting mechanism is largely determined by the benevolence of buyers and the existing market force in the producers and exporters market respectively. The margin analysis indicated that exporters take the largest profit margin (50.98%) in the coffee market chain. The ordinary least square regression analysis with R =0.57 also pointed 2 out that price, educational level of households, transportation cost and level of production were found to have a significant impact on the supply of the coffee in the study area.