VALUE CHAIN ANALAYSIS OF TOMATO IN LAY ARMACHIHO

WOREDA, CENTERAL GONDAR ZONE, AMHARA REGION, ETHIOPIA

SENIOR RESEARCH REPORT

BY

HIRUT WUBIE

ID NO AGR/825/10

DECEMBER, 2020
BURIE, ETHIOPIA
 VALUE CHAIN ANALAYSIS OF TOMATO: IN CASE OF LAY
ARMACHIHO WOREDA, CENTERAL GONDAR ZONE, AMHARA
REGIONAL STATE,ETHIOPIA

A SENIOR RESEARCH REPORT SUBMITED TO DEBREMARKOS

UNIVERSITY, BURIE CAMPUS DEPARTMENT OF AGRIBUSINESS
AND VALUE CHAIN MANAGEMENT

IN PARTIAL FULFILLMENT OF THE REQUIREMENTS FOR THE

DEGREE OF BACHELOR SCIENCE IN AGRIBUSINESS AND VALUE
CHAIN MANAGMENT
�

BY
HIRUT WUBIE

ADVISOR : GIZACHEW W (MSc)

DECEMBER, 2020
BURIE, ETHIOPIA

I
 ACKNOWLEDGMENT
First of all, I would like to thank God who give me health, strength, and support to accomplish
everything successfully . Next I would like to thank my advisor Gizachew.W (MSc) with his
unlimited and continuous advice, guidance, provision and contribution of different materials
which help me to accomplish this task. I also extend my deepest gratitude to my respected
parents who have played the crucial role in terms of providing the financial services and other
related services throughout my education life.

II
 ABBREVIATIONS AND ACRONYMS

CSA Central Statistics Agency

EARO Ethopian Agriculture and Research
Organization
FAO Food and Agriculture Organization
ILO International labour Organization
WAO Woreda Agriculture Office
WHO World Health Organization
TGMM Total Gross Marketing Margin

TABLE OF CONTENTS

III
ACKNOWLEDGMENT.............................................................................................................................II
ABBREVIATIONS AND ACRONYMS...................................................................................................III
LIST OF TABLE......................................................................................................................................VI
LIST OF FIGURE.....................................................................................................................................VII
ABSTRACT...............................................................................................................................................VIII
1. INTRODUCTION...................................................................................................................................1
1.1. Background of the Study..................................................................................................................1
1.2. Statement of the Problem..................................................................................................................2
1.3. Objectives of the Study.....................................................................................................................3
1.3.1. General objective.......................................................................................................................3
1.3.2. Specific objectives.....................................................................................................................3
1.4.Research Questions............................................................................................................................3
1.5. Significance of the Study..................................................................................................................3
1.6. The scope and limitation of the study..............................................................................................3
2. LITERATURE REVIEW......................................................................................................................5
2.1.Definition and Concepts related to value chain..................................................................................5
.................................................................................................................................................................7
2.2 Supply Chain vs Value Chain...........................................................................................................7
2.3 Status of Vegetables Production and Marketing in Ethiopia..............................................................8
2.3.1 Characteristics of Tomato product.............................................................................................9
2.4 Value Chain Pereformance Analysis.................................................................................................9
2.5. Empirical literature review............................................................................................................10
3. METHODOLOGY OF THE STUDY...................................................................................................12
3.1 Description of the Study Area..........................................................................................................12
3.2. Sampling Techniques and Sample Size Determination...................................................................12
3.2.1. Producers sampling..................................................................................................................12
3.2.2. Wholesalers and retailers sampling...................................................................................13
3.2.3. Consumers’ sampling...................................................................Error! Bookmark not defined.
3.3 Type and Sources of Data................................................................................................................13
3.4. Method of Data collection..............................................................................................................14
3.5.Method of Data analysis.................................................................................................................14
4. RESULTS AND DISCUSSION........................................................................................................15

IV
 4.1. Households and farm characteristics...............................................................................................15
4.2 Socio economic and demographic characteristics of traders............................................................16
4.2 Major actors in tomato value chain and their roles..........................................................................16
4.3. Marketing channels and Pereformance analysis.............................................................................17
4.3.1 Tomato marketing channels......................................................................................................17
4.3.2.Marketing Margin.....................................................................................................................18
4.4. Production and Marketing Problems and Opportunities.................................................................20
4.4.1. Production and marketing problems........................................................................................20
4.4.2. Production and marketing opportunity.........................................................................................21
5.Summary, Conclusions and Recommendation........................................................................................23
5.1.summary and Conclusion.................................................................................................................23
5.2. Recommendations..........................................................................................................................23
6. REFERENCES..................................................................................................................................25
7. APPENDIX.......................................................................................................................................27

LIST OF TABLE

V
Table 1: Difference between supply chain and value chain.........................................................................8
Table 2: proportional sample size determination of sampled producers....................................................13
Table 3:Socio demographic characteristic of households..........................................................................15
Table 4: Characteristics of sampled traders...............................................................................................16
Table 5: Marketing margin of value chain actors......................................................................................19
Table 6: major production problem……………………………………………………………………………………………………….21

Table 7: major marketing proplem…………………………………………………………………………………………………………22

VI
 LIST OF FIGURE

Figure 1:Diagrammatic representation of value chain concept....................................................................7

Figure 2:tomato marketing channels..........................................................................................................18

VII
 ABSTRACT

Tomato is a vegetable crop that widely grows on the world and regarded as one of the top
priority vegetable. In Ethiopia, it is also among the most important vegetable crops . Enhancing
tomato producers to reach market and actively engaging in the tomato value chain is the key
issue nedded in the study area. The study was conducted on the value chain analysis of tomato in
layarmachiho district to address the following specific objectives: to identify the actors involved
in tomato value chain with their roles, to estimate the market performance of tomato and to
identify constraints and opportunities in each node of value chain. Two stage sampling
procedures was applied to select sampled households. Traders and consumers were selected
purposively. Both qualitative and quantitative type of data were collected from primary and
secondary sources of data to address the objectives. The data was collected by using semi
structured questionnaire, observation and market survey. Tomato value chain actors in the study
area include input suppliers like agriculture office, wholesalers, retailers and consumers. Poor
product handling, pest and disease, drought, lower price , pershiability of the product are some
of the problems in tomato production and marketing. From the marketing margin analysis
producers share 44.4% of the end price . Therefore, good coordination should exist to increase
the bargaining power of producers in the market.

Keywords:market,tomato,valuec hain, supply

VIII
 1. INTRODUCTION

1.1. Background of the Study

Tomato is one of the most widely grow vegetable in the world and regarded as one of the top
priority vegetable. Tomato contributes to healthy, because it is rich in minerals, essential
amino acids, sugars and dietary fibers and is considered to be fairly high in vitamins
with potential for better quality processing. The popularity of tomato is rising among
consumers ,not only because of its good taste , but also because it contains high level of
the vitamin C, and beta carotene which are anti-oxidants that promote good health. World
tomato production in 2011 was about 14 6 million tons of fresh fruit from an estimation
5.5 million hectares and with a yield potential of up to 48.1 tons/ha. In Ethiopia it is
also among the most important vegetable crops and its production has shown a marked
increase since it became the most profitable crop providing a higher income to small
scale farmers compared to other vegetable crops (Million and Belay, 2009).

Ethiopia has a variety of vegetable crops grown in different agro ecological zones by
small farmers, mainly as a source of income as well as food. The production of vegetables
varies from cultivating a few plants in the backyards, for home consumption, to large-
scale production for the domestic and home markets (CSA,2009 ).It is estimated that an
average Ethiopian consumes less than a 100 g of vegetables and fruits (combined) a day.
This is not enough to maintain a healthy lifestyle and much below the levels of per
capita daily consumption of vegetables/fruits suggested by the WHO. Such low levels
of vegetables production and consumption result in a society being significantly vitamins-
deprived (SNV,2012)

These include the lack of improved well performing varieties poor fruit setting due to heavy
rains and excessively high temperatures, pests and disease. The most important factors
responsible for the low productivity of tomato are disease and insect pest. Among those
disease , early and late blight of fungal diseases are the most destructive and wide spread
diseases of solanaceous vegetables in tropical sub-tropical and temperate region of the
world and also in Ethiopia (Barrett and Mutambatsere, 2005).

1
Analysis of vegetable vegetable value chain constraints bothe in rural and urban households
are vitale to improve the whole vegetable value chain through upgrading and improvement of
the current value chain.It could have significant contribution to improve household income
,nutrition and food security(Munguzwem and Tschirley,2006)

1.2. Statement of the Problem

In Ethiopia tomato is one of the most important and widely grown crops both during rainy and
dry season by small holder farmers, commercial farms and private farms.it offeres better
economic return for many farmers in Ethiopia especially when it is grown in wet season. It is
mainly produced under irrigation during off season because under rainy season it is
susceptible to a disease complex and it is perishable in nature. Productivity of tomato varies
upon the cultural and the management practices employed as well as the varity used for
production (Desalegne, 2016)

Growing and marketing of tomato produce in Ethiopia is complicated by high postharvest

losses, which are about 30% .This high loss is due to packaging, storage facilities and poor
means of transportation such as human labor, donkeys and mules, public transport and rented
trucks ( Samira et al., 2011). According to the same study, along the vegetable channel, 25
percent of the product is spoiled. Lay Armachiho woreda is one of the tomato producing areas
in centeral Gondar zone . The study area is mainly constrained by seasonality. The
development of tomato production in Lay armachiho district was severely hampered by the
lack of good pre and post-harvest handling, lack of facilitated storage and lack of modern
irrigations. The other problem is a problem of disease, insect and pest that infect the tomato
and lack of improved well performing varieties. Also tomato value chain can be constrained
by many factors. Key constraints include high transaction costs, market imperfection, lack of
technology, lack of access to credit, perishability of the products and the prevalence of staple
foods that are only slightly traded (World Bank, 2008). These constraints may result in either
exclusion of smallholders from market or unequal distribution of benefits.
Even though tomato is economically and socially important, tomato value chain actors and
their roles ,tomato value chain constraints and opportunities,benefit share of the actors have
not been studied and documented in the study area. Therefore, This study help to narrow the

2
information gap by assessing tomato value chain and its performance . it may contributes
towards improvement of strategies for reorienting value chain system

1.3. Objectives of the Study

1.3.1. General objective

The general objective of this study is to analyze tomato value chain in study area.

1.3.2. Specific objectives

1. To identify tomato value chain actor with their roles
2. To estimate the market pereformance of tomato in the district
3. To identify the constraints and opportunities in each node of value chain

1.4.Research Questions
The study attempted to answer the following questions:

1. Who are tomato value chain actors, what are their respective roles in tomato value
chain ?
2. Who gets more benefit along the tomato value chain ?
3. What are the constraints and opportunities along tomato value chain ?

1.5. Significance of the Study

This study is generate valuable information to producers, traders, consumers, and marketing
agents to make their respective decisions. It enables to enhance the production and utilization
of tomato at large scale to improve the livelihood of the producers and other actors and to
bring economic development for the study area as well as for the nation as a whole. It can also
serve as a reference for researchers,extention workers and students who are interested in
studying value chain and other related subjects.

1.6. The scope and limitation of the study

Due to lack of organized information the study was conducted in Lay armachiho Woreda,
centeral Gondar zone, Amhara region, Ethiopia by collecting data on three sampled
kebeles.The value chain actors in tomato value chain with their roles ,benefit distribution

3
along the value chain and constraints and opportunities in each node of value chain was
assessed.. The study was limit spatially to make the study more representatives in terms of
wider range of area coverage.

4
 2. LITERATURE REVIEW

2.1.Definition and Concepts related to value chain

Value chain is the full range of activities required to bring a product or service from
conception through the intermediary phases of production involving combination of physical
transportation and the input of various producer serves ,delivery to final consumers and final
disposal after use (Kaplinsky and morris,2002;ILO,2009).

Value chain actors: The term value chain actor summarizes all individuals, enterprises and
public agencies related to a value chain; in particular the enterprises performing the basic
functions of a value chain, typical operators include farmers, small and medium enterprises,
industrial companies, exporters, wholesalers and retailers and the providers of support
services. Certain government agencies at the macro level can also be seen as value chain
actors
if they perform crucial functions in the business environment of the value chain in question
(GTZ, 2007).

Value addition is created at different stages by different actors throughout the value chain.
Value added may be related to quality, costs, delivery times, delivery flexibility,
innovativeness (Eskindr ,2015). Value addition is the act of adding value to a product,
whether the value chain actor has produced the initial product or not and it involves taking
any product from one stage to the next stage (Fleming, 2005).

Value Chain Analysis is a method for accounting and presenting the value that is created in a
product or service as it is transformed from raw inputs to a final product consumed by end
users. Analysis must constitute; identifying a market segment to assess, Analyzing the
channel, Mapping the Framework of the value chain, quantifying and establishing the
benchmark performance, nalyzing performance gap.

Kaplinsky and Morris (2001) indicates that the analysis should constitute following; The entry
point of the value chain analysis, Mapping value chains, How final markets are accessed,

5
Standardizing the efficiency of production, The power structure of value chains, Upgrading in
value chains.

Market is a point, or a place or sphere within which price-making force operates and in
which exchanges of title tend to be accompanied by the actual movement of the goods
affected (Barakade et al. 2011). Marketing is widely a social and managerial process by
which individuals and groups obtain what they need and want through creating and
exchanging products and values with others Kotler (2010).

Market chain is the flow of commodities from producers to consumers that brings into place
economic agents who perform complementary functions with the aim of satisfying both
producers and consumers (Islam et al., 2001).Market channel is a business structure of
dependent firms which shows the flow of commodities from its production place to the
consumer with the aim of moving products to their last consumption destination. This process
can be short or long which depends up on the kind and quality of product marketed
(Armstrong, 2004).

Marketed surplus is that quantity of the produce which the producer farmer actually sells in
the market irrespective of his requirements for family consumption, farm needs, feeds,
payment in kind and others (Shah and Makwana,2013) . Marketable surplus is the quantity of
the produce left out after meeting the farmers’ consumption and other utilization requirements
and in kind payment obligations such as gifts, donation, charity, etc) (Thakur et al., 1997)

Tomato is one of the most popular vegetable in the tropics and sub tropics grown all over the
world (Geetha,2011).

6
Figure 1:Diagrammatic representation of value chain concept

2.2 Supply Chain vs Value Chain

The Primary difference between a supply chain and a value chain is a fundamental shift in
attention from the supply base to the customer. Supply chain focuses on merging supplier and
production processes, improving efficiency and reducing waste while value chain focus on
creating value in the eyes of the customer. The difference in their usage is often lost in
language expression employed in the business and research literature (Feller et al., 2008)

According to literature, it is quite obvious that both value and supply chains deal with the
interplay of firms and processes that are needed to deliver products to an end user and they
both aim at identifying opportunities for and constraints against increasing productivity. It
therefore becomes difficult to clearly distinguish between these two concepts.

Mayer-Stamer and Waltring (2007) argue that the two concepts were primarily the same but
the choice of one depends on the direction to which the researcher’s analysis is focused.

7
However close, the distinction is between these two concepts, and some other researchers
have tried to differentiate these two concepts.

Table 1: Difference between supply chain and value chain

Description Supply chain Value chain

Information sharing Little/none Extensive
Value focus on Cost/price Quality
Product type Similar product Differentiated product
Marketing system Market push /supply push Demand pull/ market pull
Relationship among actors Independent Interdependent
Philosophy Self optimization Chain optimization
Goal Different Common
Source : Waltring ,2007

2.3 Status of Vegetables Production and Marketing in Ethiopia

Ethiopia‟s diversified agro‐climatic condition makes it suitable for the production of a broad
range of fruits, vegetables and herbs. The wide range of altitude, ranging from below sea
level to over 3000m above sea level, gives it a wide range of agro ecological diversity
ranging from humid tropics to alpine climates, where most types of vegetable crops can be
successfully grown. Holders living near to urban centers largely practice vegetable farming.
Most vegetables are not commonly practiced by the rural private peasant holders, hence the
small volume of production recorded as well evidenced by the survey results (CSA,
2015).vegetable production is is practiced both under rainfed and irrigation system.the
irrigated production system is become increase because of the increament of commercial
farms and development of small scale irrigation schems(Bezabih et al., 2014)

In the growth and transformation plan of Ethiopia 2010/11-2014/15/, exports of goods are
expected to grow by 36.6% in 2010/11 and with the annual average growth rate of 28.4% in
the remaining period.

Ethiopia has a real potential for theproduction of fruit and vegetable which can be competitive
in the international market and earn foreign exchange that could contribute much to the
development of the sector (FDRE,2010).

Fresh and processed fruits and vegetables have a large domestic market in Ethiopia,
significantly higher than the exported volumes. The size of the Ethiopian population is

8
currently estimated at about 80 million. This is a strong indication of the existence of large
potential demand for fresh fruit and vegetable crops in the country. The other customer of
Ethiopian fresh fruits and vegetables is processing plants, i.e., wineries, tomato processing
plants and vegetable canning factories which require grapevine, tomato and various types of
vegetables for processing (EIA, 2012).

2.3.1 Characteristics of Tomato product

Perishability-as tomato are highly perishable, they start to lose their quality right after
harvest and continued throughout the process until it is consumed. Producers are normally
price takers and are frequently exposed for cheating by any intermediary (Moti, 2007).

Price /Quantity Risks- Due to perishable nature and biological nature of production process
there is a difficulty of scheduling the supply of tomato to market demand. The crops are
subjected to high price and quantity risks with changing consumer demands and production
conditions. Unusual production or harvesting weather or a major crop disease can influence
badly the marketing system. While food-marketing system demands stable price and supply, a
number of marketing arrangements like contract farming prsovide stability (Moraket, 2017).

Seasonality- tomatoes have seasonal production directly influencing their marketing.

Normally they have limited period of harvest and more or less a year round demand. In fact,
in some cases the cultural and religious set up of the society also renders demand to be
seasonal. This seasonality also worsened by lack of facilities to store (Abay, 2007).

2.4 Value Chain Pereformance Analysis

Market performance can be evaluated by analysis of costs and margins of marketing agents in
different channels. A commonly used measure of system performance is the marketing
margin or price spread (Getachew, 2002). Performance of the market is reflection of
the impact of structure and conduct on product price, costs and the volume and quality of
output (Cramers and Jensen, 1982).Margin or spread can be useful descriptive statistics if
it used to show how the consumer‟s price is divided among participants at different
levels of marketing system.

9
Marketing costs refers to those costs, which are incurred to perform various
marketing activities in the shipment of goods from producers to consumers. Marketing cost
includes:
Handling cost (packing and unpacking, loading and unloading putting inshore and taken out
again), transport cost, product loss (particularly for perishable fruits and vegetable), storage
costs, processing cost and capital cost (interest on loan), market fees, commission and
unofficial payments (Heltberg and Tarp, 2001).
Marketing margin:Marketing margin refers to the difference between the price paid to the
first seller (farm-gate price) and the price paid by the final buyer (retail price) (Abankwah et
al., 2010).

2.5. Empirical literature review

Addisu (2016) conducted study on the value chain analysis of tomato . He identified the
following actors :input suppliers, producers, rural collectors , wholesalers, processors
,retailers ,consumers . facilitators are the actors who are not directly involved in the product
transaction but they provide different support for the value chain actors which include
provision of different service or credit ,research and development ,infrastructure and
information .

Bezabih and Hadera (2007) statethat horticultural production gives an opportunity for
intensive production and increases samall holder farmers participation in the market.they also
identified other problems such as poor know how about product storing ,grading ,packing and
transportation promlem.According to Bezabih and Mengistu (2011) study on potato value
chain analysis in Tigray and SNNP region indicate that production of potato is both for seed
as well as consumption. The major potato value chain actors include input (seed,
fertilizer, fungicide, farm implement) suppliers, producers, wholesalers, brokers, retailers
and consumers.

Bezabih and Hadera (2007), identify three types of brokers: the farm level broker, local
broker and urban broker exist. Each has their one separate task where the farmer level broker
identifies plots with good produces and links the producer witha local broker. The local

10
broker in turn communicates with the farmer and conveys the decisions made to the urban
broker or collector. In this process the producer have contact with local agents and do not
have direct contact with the other intermediaries. The third broker, urban broker, gets the
information from ultimate buyers and sets the price. Here neither the farmer nor the traders set
actual prices for the products. The farm level and local brokers get Birr 5 while the urban
broker gets 10 Birr per quintal. If there are several brokers in an area, they negotiate not to
compete on the price offered by the broker. The changes in the value of products as they
move away from production along the marketing channel to the consumer is the increased
utility by making the goods available rather than adding value in terms of increased shelf life
or safety.

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 3. METHODOLOGY OF THE STUDY

3.1 Description of the Study Area

Lay armachiho district is found 22 km from centeral Gondar,112km from Bahir Dar (The
regional capital city) and 711 km from Addis Ababa. This district is bounded with Tach
armachiho district in North East, Gondar zone South East and wogera district in southeast .
The district has a total land area of 2207.2 KM, the average altitude of the district is estimated
to be 1689m a.s.l. (ranged 728-2832 m.a.s.l). The average rain full estimated to be 1689.4 mm
(ranged 713-2832) and the average temperature is 18.87ºc (ranged13-24ºc) the topography of
the woreda is 76% plan 10% mountain 7% undulating and 7% valley, the climate condition is
1% high land, 77.23% mid altitude and 21.77% lowland. The total of the woreda is 72.739
and 46.6% of the woreda is cultivated.

3.2. Sampling Techniques and Sample Size Determination

3.2.1. Producers sampling

The sample for this study was drawn from all actors involved along tomato value chain. Two
stages random sampling procedure was used to select sampled tomato producers . In the first
stage, out of 33 kebeles of the district, three producers kebeles namely Janicaw, Robit and
Shumera kebeles were selected randomly. In the second stage, from three kebeles of tomato
producer's 98 sampled household heads were selected randomly based on proportional
sampling to size . The sample size is determined by using Yemane (1967) formula. In the
woreda 4000 farmers produce tomato product.

N
n = 1+ N ¿ ¿

Where, n= the sample size of the study

N= total household producing tomato the sampled district.

e= designated error 10% (0.1)

n = is the total number of respondents in sample kebele

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 N 4000
n = 1+ N ¿ ¿ =
1+ 4000(0.1)
2 =98 HHs

Table 2: Proportional sample size determination of sampled producers

Name of kebele Number of Proportion Sample size

producer

Janicaw 1200 0.30 29

Robit 1500 0.38 37

Shumera 1300 0.32 32

Total 4000 1 98

Source: woreda agricultural office (2020)

3.2.2. Wholesalers and retailers sampling

Most of the time it is difficult to determine the sample size of traders due to the absence of
data related to the number and list of traders in the trade and industry office. Therefore it is
better to identify the market in which tomato is highly traded. Then by using purposive
sampling method and 15 traders(5 wholesalers and 10 retailers) were selected.

3.3 Type and Sources of Data

Both the qualitative and quantitative data were collected from primary and secondary sources
of data to deal with objectives . The primary data was collected by using two types of
interview (one from farmers and the other from traders).The primary data collected from
farmers were focused on analysis of value chain. Moreover, the interview for traders includes:
types of traders (wholesalers, retailers, local collectors, etc.), source of market information;
demographic characteristics. The primary data is from rural parts of Lay armachiho woreda
households and collected by using semi-structured interview and secondary data is obtained
from the past research papers and different written materials like: books, magazines,
newspapers and different reports of the district agriculture office .

13
3.4. Method of Data collection

The data for this study were collected both from primary and secondary sources. Primary data
were used in order to get first hand information from respondent .Primary data were collected
by using semi structure interview, personal observation, group discussion and conducting
market assessment. Secondary data were gathered through reviewing, examination of
document, reports and records of published and unpublished documents.

3.5.Method of Data analysis

The data was analyzed by using descriptive statistics , value chain analysis and pereformance
analysis. Descriptive statistics such as mean and percentage were be used in the process of
examining socio-economic and demographic characteristics of sampled households and
traders, gross marketing margin of farmers and other market intermediaries in each node of
value chain. value chain map was used to show the flow of the product and interaction or
linkages of value chain actors along the chain.The qualitative data was analyzed qualitatively
in the form of narration according to the objectives of the research.

14
 4. RESULTS AND DISCUSSION

In this section the main results of the study were presented and discussed. Mainly it consists
three sections. The first section presents the demographic and socio economic characteristics
of sampled respondents. In the second part the value chain actors with their roles and value
share were discussed and finally the challenges and opportunities in each node of value chain
were presented.

4.1. Households and farm characteristics

As shown in the table below most of the respondents were male headed . it indicates that the
participation of females in the tomato production is limited. It needs attention to increase the
participation of females in tomato production in the area. About 86.7% of the households
were literate it helps to adopt different technology like improved tomato variety, fertilizer
application and helps to implement good agricultural practices in tomato production. Majority
of the respondents (94.9% ) were married. About 66,3% of the producers were ranged
between the age of 15-45 years . it implies that the tomato production needs active labour
force in the production process.

Table 3:Socio demographic characteristic of households

List of variables Item Frequency Percent

Sex Male 80 81.6
Female 18 18.4
Education level Illiterate 13 13.3
Literate 85 86.7
Martial status Single 5 5.1
Married 93 94.9
Age Below 15 0 0
15-45 65 66.3
46-65 33 33.7
Above 65 0
Source: Survey result, 2020

15
4.2 Socio economic and demographic characteristics of traders

As indicated in the table below the participation of femal in tomato trading is better than male
and most of the traders (80%) were literate traders. The mean age of the trader is 35 and the
minimum and maximum age of the raders ranged from 25- 45 years. In indicates that the
tomato trading business needs active labour force. The mean age of the trader is 4.5 years it
indicates that the traders in tomato business is not considered as permanent work.

Table 4: Characteristics of sampled traders

List Item Frequency Percent

Sex Male 4 26.6
Female 11 73.4
Education level Literate 12 80
illiterate 3 20
Martial status Married 14 93.3
Single 1 6.7
Max Min Mean SD
Age 45 25 35 14.14
Experience 7 2 4.5 3.5
Source survey result, 2012

4.2 Major actors in tomato value chain and their roles.

Input suppliers: In the area the agriculture office is the main input suppliers for tomato
production .this inputs include improved seed, herbicide and pesticide

Producers: Farmers produce tomato and sell to wholesalers and local village markets like
roadside market. Out of 98 respondents 65% of the sample households answered that they
sold to wholesalers, allow 35% to roadside market. They transport tomato to the nearest
market Mutulu using animal carts and smaller percentage of products uses head/backload, and
vehicles. The study show that 60% of the sample households use animal carts, 32% of them
use trucks and the rest 8% use head/backload.

Wholesalers: Wholesalers are market participants who buy large quantities of tomato and
resell to other traders. They purchase tomato at farm gate, from mutulu market from roadside
traders and producers in a larger volume than any other marketing actor does. They relatively
spend their full time in wholesale buying throughout the year in and out of the woreda. Each

16
wholesaler uses Isuzu trucks as a transportation vehicle; if the amount of tomato supplied to
the market is large. Otherwise, they purchase other vegetable crops like onion together with
tomato to fill the truck.

Retailers: Tomato retailers in purchase tomato directly from producers or roadside traders
and sell to consumers. This is one of the final links in the chain that delivers tomato to
consumers. They are very numerous as compared to others and their function is selling tomato
to consumers in small volumes after receiving large volumes from roadside traders,
wholesalers and producers.

Consumers: From the consumer point of view, the shorter the market chain, the more likely
is the retail price going to be low and affordable. They are individual households and large
consumer like restaurant, hotels, and cafe. They buy the commodity for their own
consumption. Consumers’ consumption patterns/demand structure, purchasing power and
traditions/norms are assumed to largely affect the potential market for agricultural
commodities.

Supportive actors: Value chain supporters or enablers provide support services and represent
the common interests of the value chain operators. They remain outsiders to the regular
business process and restrict themselves to temporarily facilitating a chain upgrading strategy.
Typical facilitation tasks include creating awareness, facilitating joint strategy building and
action, and the coordination of support activities (like training, credit, input supply, etc) and
facilitating market. The main supporters of the tomato value chain in the study area are
woreda’sOffice of Agricultural (WOA), cooperative office, trade and marketing development
office they aims to support through providing market information, strengthening available
cooperatives, and organizing new producer’s cooperatives.

4.3. Marketing channels and Pereformance analysis

4.3.1 Tomato marketing channels

Tomato producers sell their product through different channels. Four tomato marketing
channels were identified in the study area. In the production year of 2012 ,it was estimated
that 650 quintals of tomato were supplied to the market by the sampled producers. As
indicated in the following channel retailers are the major recivers of tomato product and small
17
share of the tomato product (8.5%) sold to consumers directly. It indicates that the existence
of weak linkage between producer and consumer in the area. The shortest channel is essential
for the farmer. Because as the channel increases the middleman buy from farmer at low
price,due to this farmer isin the disadvantageous position .For both consumer and farmer the
shortest channel essential. The middleman buys from farmer at low price and sells to the
consumer at high price.

Channel 1: producer consumer (55Qt)

Channel 2: producer wholesaler retailers consumers (220Qt)

Channel 3: producer retailers consumers (300Qt)

Channel 4: producer wholesaler consumer(75Qt)

Producers 650 qt

45.4% 46.2%
Wholesalers Retailers
74.6%
8.5% 100% 25.4%

Consumers
Figure 2:tomato marketing channels

4.3.2.Marketing Margin
Estimates of the marketing margins are the best tool to analayze performance of market. Total
Gross Marketing Margin (TGMM) is always related to the final price paid by the end buyer
and is expressed as apercentage (Mendoza,1995).

To analyze margins, first Total Gross Marketing Margin (TGMM) will be calculated Then,
marketing margin at a given stage ‘i’ (GMMi) will be calculated as:

18
 Consumer price− producer price
TGMM = ∗100
Consumerprice

900−400
TGMM = ∗100=55.5%
900

Producers’ gross marketing margin (GMMp): it is the proportion of the price paid by
consumers that belongs to the producers.
Mathematically, producers ‘share can be expressed as:

GMMP= 1-TGMM Where, TGMM is total gross marketing margin

GMMP is the gross marketing margin of producer

100-55.5=44.5%

Table 5: Marketing margin of value chain actors

Actors Average purchasing Average selling price Gross marketing

price (ETB) (ETB) margin
Producers - 400 44.5
Wholesalers 400 700 33.3
Retailers 700 900 22.2

900−400
TGMM = ∗100 =55.5%
900

As seen from Table 4 ;margins for tomato value chain actors,the total gross marketing margin
was 55.5%. Producers share was 44.4% of the price paid by consumers. The lower producers
share is due to the involvement of different market participants and wholesalers and retailers
share 33.3% and 22.2% of the total gross marketing margin respectively. Due to this traders
become discourage to involve in tomato marketing activities.

4.4. Production and Marketing Problems and Opportunities

A number of production and marketing problems as well as opportunity of production and

marketing were identified. For sake of clear understanding problems are divided into
marketing and production problems.

19
4.4.1. Production and marketing problems
4.4.1.1.Production problems

In the study area, there are different production problem that cause low profitability of the
product.

Table 6: Major Production Problem in the Study Area

Production problem Number of Percent
respondent
Lack of improved variety 50 51
Shortage of water 25 25.5
Disease and insect pest 20 20.4
Lack of financial 3 3.1
Totally 98 100

Source survey result 2020

As shown in the above table, 51% due to lack of improved variety, 20.4% due to disease and
insect pest. Next to this, , 25.5%, and 3.1% are due to shortage of water and lack of financial
respectively. According this status majority of tomato production affected by lack of
improved variety .

4.4.1.2. Marketing problems

Table 7: marketing problem on tomato value chain;

There are different marketing problem in the study area.

Problem Number of respondent Percent

Imperfect pricing system 45 8.2

Lack of standard 25 25.5

20
 Lack of coordination 20 20.4
Perishability 8 45.9
Total 98 100
Source survey result 2020

As respondent responses on the above table, 8.2% of tomato marketing problem is due to
imperfect pricing system, 25.5% due to lack of standard, 20.4% due to lack of coordination .
As the result observed 45.9% of tomatoes affected by perish- ability or deterioration, so these
problem has effect on all tomato value chain and it also incur into cost respondents at all
chain.

4.4.2. Production and marketing opportunity

4.4.2.1.Production opportunities

Availability of rainfall and ground water, irrigation, fertilizer use. The survey result shows
that most of the producers intend to expand tomato production due to the above opportunities.
The Woreda also naturally endowed though they have some production and marketing
opportunity.

4.4.2.2.Marketing opportunities

On the other hand, availability of market demand throughout the year, growing number of
buyers, high experience in tomato trade and growing price were some of the opportunities of
tomato by most of the producers. The study result shows that 61.36% of the producers
intended to expand tomato sale due to the above opportunities and also market access are
another opportunities with 85.23% of the marketing activity of the woreda.

The Woreda was not only with problems but it had also opportunities, the trend in the growth
of production and marketing tradition in the area was one that drew attention. The natural
advantage of proximity to air condition and availability of rain throughout the year are still the
opportunities, which could facilitate commercialization in the Woreda. The existence of good
policy framework in agricultural development manifested by employing development agents
at each Kebele, and infrastructure development could facilitate vegetable production and

21
marketing. The increasing use of mobile telephone and wireless telephone are also the other
infrastructural advantages to improve system.

5. Summary, Conclusions and Recommendation

5.1.summary and Conclusion

This study was aimed at analayzing value chain of tomato in lay armachiho district.The study
focused on specific objectives of identifying actors and their roles, analyzing the performance
of actors in the value chain and identify opportunity and constraints. Most of the producers
were male headed . it needs attention to increase the participation of females in tomato
production and marketing activities.

Tomato value chain analaysis in the study area revealed that the main value chain actors are
input supplier,producer,wholsaller, retailer and consumer. Gross marketing analaysis shows
that total gross marketing margin was 55.5% and producers share was 44.5% of the price paid

22
by consumers.The linkage and relationship among chain actor is weak. Generally the
production and productivity of tomato value chain in study area is poorly developed.

The development of tomato production in Lay armachiho district was severely hampered by
the lack of good pre and post-harvesthandling, lack of facilitated storage and lack of modern
irrigations. The other problem is a problem of disease, insect and pest that infect the tomato
when tomato and lack of improved well performing varieties. There is also the major
marketing problems in the study area are; perishability of the product, price fluctuation and
seasonality of the product is the main problem
5.2. Recommendations
There is many problem and challenge that discussed in the result and discussion part. Then
recommendations are as follows:

 There is a problem of poor packaging, handling,and transport and sorting of the

product.For this problem;strengthening provison of training on proper management of
tomato is necessary.
 There is also a problem of disease and insect pest that infect the product. For this
problem the farmer shoud be use resistance varieties and use of pesticide..
 Problem of lack of improved seed variety, the agricultural office at different level
should be supply best seed that can resist disease.
 For perishability of the product, the farmer can use cool storage and can convert fresh
tomato into processed tomatoes.

23
 6. REFERENCES

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Addisu Hailu. (2016). Value chain analysis of vegetables: The case of Ejere district, West ShoaZone,
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Barakade A. , Lokhande T., and Todkari G. (2011). Economics of Onion Cultivation and its
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Barrett, C.B., and Mutambatsere, E. (2005). Agricultural markets in developing countries.

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Vegetables Seed Systems and Policy in Ethiopia. Addis Ababa, Ethiopia.

Bezabih, E., and Hadera, G. (2007). Constraints and opportunities of horticulture production and
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CSA (Central Statistical Agency). (2009). Area and production of crops annual statisticalbulletin,
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CSA (Central Statistics Agency). (2015). Agricultural sample survey report on area andproduction of
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EIA (Ethiopia Investment Agency). (2012). Investment Opportunity Profile for the Productionof
Fruits and Vegetables in Ethiopia. Addis Ababa, Ethiopia.
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thesis submitted to school of commerce, Addis Ababa University.

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2014/15. Volume II, Policy Matrix, Minister of Finance and EconomicDevelopment, Addis
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ILO(International Labour Organization) (2009). Local value chain development for decent work. A
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7. APPENDIX

Questionnaire to be filled by farmers

Dear respondents:

The purpose of this questionnaire is to collect information tomato value chain for a research
project work, so, be sure that there is nothing behind the study all your response will be kept
secret (confidential) hence you are kindly requested to fill the questionnaire given below.
Your response is possible.

26
Thank you in advance for your cooperation

 Personal information (ALL RESPONDENTS)

1. Name of respondent___________________________

2. Address of respondent: Kebele______________, Woreda_____________________

3. Sex respondent, A. Male B .Female

4. Age of the respondent: ________

5. Marital status, A. Single B. Married C. Divorced

6. Educational status A. Illiterate B. Literate

7. If literate, level of education in grade: _________

8. What types of tomato you produced?

A. Determinate B. Indeterminate.

9. How many boxes you produced in one year?

A. less than 50 B. 50-100 C. More than 100

10. What types of problem you face when you produce?

A. inadequate rain fall B. lack of demand C. lack of capital D. lack of improve seed

11. What transportation you use to transport tomatoes?

A. Cart B. Donkey C. By back

12. Do you think which profitable is high?

A. processed tomato C. fresh tomato

13.what are the major constraints which affect your tomato production?

A. Shortage of land

27
B. Shortage of water
C. Lack of an improved variety
14. For what purpose do you produce tomato? A. For market B. For holiday C. for
wedding ceremony D. for home consumption E. others---------------------

15. Who took to the market? A. you yourself B. hired labor C. family labor D. others

16. Do you think that there were good conditions for tomato the market?

A. Yes B. No

17. If you say yes, what are they? A. attractive price B. easy access to the market. C. market
information D. others

18. Do you face a problem in the market? A. Yes B. No

Questionnaire to be filled by tomato Traders

1. Personal information (ALL RESPONDENTS)

Name of respondent___________________________

2. Address of respondent: Kebele______________, Woreda_____________________

3. Age A. 15-25 B. 26-45 C. 46-65 D. Above 65

4. Sex. A .Male B .Female

5. Marital status, A. Single B. Married C. Divorced

6. Educational level______________

A. illiterate B. Grade 1-4 C. Grade 5-8 D .Grade 9-12

7. What is a form of business? A. Sole proprietor ship B .Partner ship

C. Union
8. Do you have positive feeling for your tomato value chain activity?

A. Yes B. No

28
9. If your answer for Q 3 is not what is the reason behind?

___________________________________________________________________________
______________________________

10.what are the major marketing problems of tomato?

A. Price fluctuation

B. Perish ability of the product

C. Seasonality of the product

11. from where do you get pricing information?

A. From news letter

B. From radio

C. From internet
D. Have information

12. Do you think that the above sources of information are sufficient?

A. Yes B.No

If you how please specify ________________________

13. How can the prices of tomato affects your business activity?

A. Because it is difficult to adjust supply and demand of the product since its price is
subject to fluctuation from time to time.

B. Because the trade of other activities is also influenced by tomato price if any

C. It never affects my business activity

14. The system of your value chain exchange is

29
 A. Equal exchange B. Unequal exchange.

15. If your answer is unequal exchange for Q9, why?

Specify_____________________________________________________

16. How tomato market has been impacted up on the other trade?

______________________________________________________________

17. When you buy tomato from farmers based on what quality?

A .shape C.Size C. Color D. all

18. What so your follow to determine purchasing cost of the product?

A. Customer influence B. Central market available price

C. Competitor action D. Other, specify _______________________

19. Is the trade of tomato value chain affected by the other trade of products?

A. Yes B. No

If yes how, please specify _______________________________________

20. What value chain problems you face when to buy tomato?

_______________________________ _______________

21. It is eventually observed that the tomato price fluctuated from time to time do you think
that it affects your business?

A. Yes B. No

22. If your answer is yes to what extent?

A. little bit Very seriously B. Serious C. Do not know

30
23. What is your over all comment regarding your business?
___________________________________________________________________________
___

24. What is the purchasing price .of1 boxes tomato?

25. What is the selling price of 1 boxes of tomato?

26. What is your total cost of marketing?

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27. What is your total profit of marketing?

28. From whom you purchase? A. Producers B.Rural collectors C.Both

29. What is the total amount of tomato you purchase in boxes?

30. To whom you sell? A. Retailers B. Consumers C. Both

31. What is your total revenue of 1boxes?

32. From where do you buy?

33. Where do you sell?

34. What are your constraints of marketing?

35.What are your opportunities of marketing?

Questionnaire to be filled by consumer

1. Name of respondent___________________________

2. Address of respondent: Kebele______________, Woreda_____________________

3. Sex respondent, A. Male B. Female

4. Age of the respondent: ________

5. Marital status, A. Single B. Married C. Divorced

6. Educational status A. Illiterate B. Literate

7. If literate, level of education in grade: _________

8. Do you know about tomato production? A Yes B. No

9. Do you visit the market? A. yes B. No

10. If yes, who visit? A. yourself B. relative C. family D. friend D .others

11. How often you visit? A. weekly B. Monthly C .yearly

12. How much you pay for agent? __________

32
13. What is the purchasing price of 1KG of tomato? inBirr.

17. From whom you purchase? A. Producers B.Rural collectors C. Wholesalers

D.Retailers

18. What is the total amount you purchase? In KG

19. From where did you buy?

20. What are your constraints of purchasing?

21. What are your opportunities of purchasing?

22. Which season of the year the price of tomato is highest?

23.Which season of the year the price is lowest?

33