VALUE CHAIN ANALAYSIS OF TOMATO IN LAY ARMACHIHO

WOREDA CENTERAL GONDAR ZONE AMHARA REGION ETHIOPIA

A SENIOR RESEARCH PROPOSAL

PREPARED BY:
HIRUT WUBIE
ID NO AGR/825/10

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

A SENIOR RESEARCH PROPOSAL SUBMITED TO THE DEPARTMENT OF

AGRIBUSINESS AND VALUE CHAIN MANAGEMENT TO THE PARTIAL
FULFILLMENT OF THE REQUIREMENTS FOR THE DEGREE OF
BACHELOR SCIENCE IN AGRIBUSINESS AND VALUE CHAIN
MANAGEMENT

BY
HIRUT WUBIE
ADVISORS: MAJOR ADVISOR : GIZACHEW W (Msc)
CO-ADVISOR

JANUARY,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 (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 Statistical Agency

EARO Ethiopian Agriculture and Rearch Organization

FAO Food and Agriculture Organization

ILO International Labour Organization
WAO Woreda Agriculture Office
WHO World Health organization

TABLE OF CONTENTS

III
ACKNOWLEDGMENT.............................................................................................................................II
ABBREVIATIONS AND ACRONYMS...................................................................................................III
LIST OF TABLES.....................................................................................................................................VI
LIST OF FIGURES...................................................................................................................................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..............................................................................................4
2. REVIEW OF LITERATURE................................................................................................................5
2.1.Definition and Concepts related to value chain..................................................................................5
2.2 Supply Chain vs Value Chain.......................................................................................................7
2.3. Major actors in tomato value chain and their roles......................................................................8
2. 4. Vegetable Production and Marketing in Ethiopia............................................................................9
Characteristics of Tomato product.....................................................................................................11
2.5 Value Chain Pereformance Analysis...............................................................................................12
2.6. Empirical literature review............................................................................................................13
3. METHODOLOGY OF THE STUDY...................................................................................................15
3.1 Description of the Study Area..........................................................................................................15
3.2. Sample Techniques and Sample Size Determination......................................................................15
3.2.1. Producers sampling..................................................................................................................15
3.2.2. Wholesalers, assemblers and retailers sampling.................................................................16
3.2.3. Consumers’ sampling..............................................................................................................16
3.3 Type and Sources of Data................................................................................................................16
3.4. Method of Data collection..............................................................................................................17
3.5.Method of Data analysis.................................................................................................................17
4. WORK PLAN and BUDGET BREAKDOWN.....................................................................................19

IV
5 . REFERENCES.....................................................................................................................................21
6. APPENDIX..........................................................................................................................................24

LIST OF TABLES
Table 1:proportional sample size determination of the househould..............................................16

V
Table 2:Work plan and time duration............................................................................................19
Table 3:Budget plan.......................................................................................................................20

LIST OF FIGURES
Figure 1 Diagrammatic representation of value chain concept....................................................................7

VI
VII
 ABSTRACT
Tomato is a vegetable crop that widely grows in the world and regarded as one of the top
priority vegetable. In Ethiopia it is also among the most important vegetable crops its
production has shown marked increases since it become the most profitable crop. The study will
be conducted on the value chain analysis of tomato in lay Armachihoe district to address the
following specific objectives: to identify the actors involved in the tomato value chain with their
roles and to map the tomato value chain ,to estimate the benefit distribution and to identify
constraints and opportunity in each node of tomato value chain.In the study area tomato
production is hampered by the lack of good pre-and post-harvest handling and lack of modern
irrigation and lack of facility to store the product and the bargaining power of the tomato
producer is weak . In this study three stage sampling technique will be used to select sampled
kebele and households. . The traders and consumers will be selected purposively . In this
research both quantitative and qualitative data will be collected from primary and secondary
data source to deal with objectives. The data will be collected by using semi structured
questionnaire , observation and market survey. Data will be analyzed by using descriptive
statistics and value chain analysis.

Key words: market ,tomato, value chain ,

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, 2004).

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)

In Ethiopia, the total area under production reaches 51, 698 hectares and annual production is
estimated to be more than 230,000 tons. The national average of tomato fruit yield in Ethiopia
is very low (7 tons/ha) and compared even to the neighboring African countries like Kenya
(164 q/ha and less than 50% of the current world average yield of 27 tons/ha.Farmers get
lower yield mainly due to diseases, pests and sub-optimal fertilization. There are a number of
factors which limits tomato yield. 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.
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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 (Bellemare and Barret, 2006).

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 vegetable grown crops both
during rainy dry season by small holder farmers, commercial farms and private farms.it offeres
better economic 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% (EIAR, 2000; Workneh et al., 2011). 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 (Kebede, 1991; 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 nature of the product in terms of perishesability on one hand and
lack of organized marketing system on the other resulted in low producers’ price. Involvement of
market intermediaries, lack of proper coordination among the value chain actors, and low
marketing margins are shared among the actors as share to producers and quality and post-
harvest losses are the major problems. 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,

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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 addion activities and benefit share of the actors have not been studied and
documented in the study area. Therefore, conducting this study will help to narrow the
information gap on the to the value chain actors .

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 and to map the tomato value chain
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 their roles in tomato
value chain and how they interact each other ?
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 will 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 and students who are interested in studying value chain and other
related subjects.

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1.6. The scope and limitation of the study
This study will be conducted in Lay armachiho Woreda by collecting data on three sampled
kebeles. The value chain actors in tomato value chain with their roles , interaction
/relationships ,benefit distribution along the value chain and constraints and opportunities in
each node of value chain will be assessed. In undertaking the study the researcher will expect
some constraints that assume to challenge the finding of the study. The study will limit spatially
to make the study more representatives in terms of wider range of area and time horizon. Lack
of well-organized or recorded documents, lack of awareness about the value chain concept will
also limit the finding of the study.

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 2. REVIEW OF LITERATURE

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
(Kolinsky and morris,2002;ILO,2009).

Value chain actors are the chain of actors who directly deal with the products that means
produce, process, trade and own them. Value chain supporters the service provided by various
actors who never directly deal with the product but whose services add value to the product
(Lecture notes, 2015)

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.

To define it in a different context, Kaplinsky and Morris (2000) indicates that the analysis should
constitute following; The entry point of the value chain analysis, Mapping value chains, How
final markets are accessed, 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

5
individuals and groups obtain what they need and want through creating and exchanging
products and values with others Kotler (2003).

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).

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Figure 1 Diagrammatic representation of value chain concept
Supply chain is the set of relationships between suppliers, manufacturers, distributors and
retailers that facilitate the transformation of raw material into final products (Beamon, 1998).

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., 2006)

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

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

2.3. Major actors in tomato value chain and their roles.

Input suppliers: Regarding the delivery of inputs like improved seed, herbicide and pesticide,
Development agents are playing facilitation role in collecting farmers input requirement.. They
also play the same role during input distribution. Most of the time in the study woreda input
suppliers are primary cooperatives who disseminate suitable seed varieties to expand and
promote the development of new tomato varieties.

Producers: Farmers produce tomato and sell to wholesalers and local village markets
Wholesalers: Wholesalers are market participants who buy large quantities of tomato and resell
to other traders. They relatively spend their full time in wholesale buying throughout the year in
and out of the woreda. Each 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. The role of brokers was inclined towards buyers.
Wholesalers mostly get information from friends in Addis Ababa,Bahir dar, and set the daily
price.
Roadside traders: Roadside traders are farmers who collect tomato from farmers at farm gate
for reselling to retailers and consumers. Producer’s sale about 25% of tomato 40 Produce to
roadside traders, and roadside traders re-sell it to wholesalers, retailers and consumers in
roadside market. They play important role and they do know areas of surplus well. They have
capital limitation. There are few roadside traders who compete with wholesalers. When it is
impossible for them to meet quantities of their demand, they employ brokers to collect tomato by
paying a commission.

Brokers: These participants of the system were those who exist between producers and bulk
buyers. They did not handle any product but facilitate the buying and selling activities between
8
farmers, wholesalers, roadside traders and retailers. These people are not permanent brokers
where their main activity is farming in the farming months of the year. All were male and their
age ranged from 18-45 years. These people had a power to suppress the free selling and buying
behavior of the farmers. The main activities that brokers usually do was weighing, registering
amount tomato supplied by each farmer and safeguarding wholesalers.

Retailers: Tomato retailers are 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) and cooperative office and trade and marketing development office is
inefficient to support tomato value chain, it aims to support through providing market
information, strengthening available cooperatives, and organizing new producer’s cooperatives.

2. 4. Vegetable Production and Marketing in Ethiopia

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 for food. The production of vegetables varies
from cultivating a few plants in the backyards, for home consumption, to large-scale production

9
for the domestic and home markets. According to CSA (2003) the area under these crops
(vegetables and root crops) was estimated to be 356,338.82 hectares.

The productivity of crops is very low compared to the potential yield obtained in the research
centers and on farmers’ field technology verification studies. For instance, the productivity of
onion and tomatoes was about 90 and 70 quintals per hectare compared to the potential yield of
400 and 350 quintal per hectare in research centers (EARO, 2002 as cited in Dawit
etal.,2004).Tomatoes- (Lycopersiconesculuntum Mill) is most important and remunerative
vegetable crop in the world. Tomato is a rich source of minerals, vitamins and organic acids;
tomato fruit provides 3-4% total sugar, 4-7% total solids, 15-30mg/100g ascorbic acid, 7.5-10
mg/100ml treatable acidity and 20-50mg/100g fruit weight of lycopene.Theimportance of
cultivated tomato to date is increasing in Ethiopia. It is widely accepted and commonly used in a
variety of dishes as raw, cooked or processed products more than any other vegetables (Lemma,
2002, as cited on Abay, 2007).

Fruits and vegetable production and marketing is not a new sector in Ethiopia marketing of
horticultural crops like tomato,onion and banana had been increased over the last few years with
many market related problems .Fruit and vegetable crops are important both for health and
economy but the amount and mode of production and marketing is still weak in Ethiopia.
Demand for fruits and vegetables consumption tends to grow very rapidly with urbanization
,increased awareness and income of the people . exports of fruits and vegetable products in
Ethiopia have increased from 25,300 tons in 2002/03 to 64,140 tons /10 (Mulunehe ,2016)

The bulk of fresh market tomatoes are produced by small-scale farmers. Farmers are interested in
tomato production more than any other vegetables for its multiple harvests, which result in high
profit per unit area. Tomatoes vary in visible fruit characteristics important for fresh market and
processing values. These include shape, size, color, flesh thickness, number of locules, blossom
end shape and fruit quality. The fruits may be globe shaped (Mar globe), oval or flattened
(Marmande), and pear shaped (Roma VF), which differ in acceptability in the local market,
quality, and storability (Barret and Mutambatsere, 2002).

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Marketing function studies marketing in terms of the various activities that are performed in
getting farm product from the producer to the consumer. These activities are called functions (,
cramers andjenseified, and 1982).According to Sacco based on objectives: logistical, marketing
and economic objectives. Logistical functions are related to the concentration, transport and
preservation of products. Marketing functions are dedicated to classification, packaging,
development of demand and market information. Economic functions include financing, risk
bearing and facilitation of exchange.

Characteristics of Tomato product

Perish ability-as vegetables are highly perishable, they start to lose their quality right after
harvest and continued throughout the process until it is consumed. For this purpose elaborated
and extensive marketing channels, facilities and equipments are vital.

This behavior of vegetables exposed the commodity not to be held for long periods and fresh
produce from one area is often sent to distant markets without a firm buyer or price. Prices may
be negotiated while the commodities are en route, and they are frequently diverted from their
original destination of a better price can be found. Sellers might have little market power in
determining a price. As a result, a great deal of trust and informal agreements are involved in
marketing fresh vegetables. There could not always be time to write everything down and
negotiate the fine details of a trade. The urgent, informal marketing processes often leads to
disputes between buyers and sellers of fresh fruits and vegetables. Producers are normally price
takers and are frequently exposed for cheating by any intermediary (MotiJaleta, 2007).

Price /Quantity Risks- Due to perishable nature and biological nature of production process
there is a difficulty of scheduling the supply of vegetables 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 provide stability (Moraket ,2001).

Seasonality- Vegetables 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

11
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(Minot, 1986).

Product bulkiness- Since water is the major components of the product, it makes them bulky
and low value per unit that is expensive to transport in fresh form every time. This, therefore,
exposed farmers to lose large amount of product in the farm unsold (Morris, 1995).

Ideally, measures commonly recommended for the improvement of vegetables marketing are
better packaging, handling, and transport; sorting by quality; extending the market season and
leveling out gluts and shortages by market delivery planning and storage; developing new
markets; installation of refrigerated transport and processing equipment: and establishing
marketing enterprises( Kotler , 2003).

Bezabih and Hadera (2007) stated that production is seasonal and price is inversely related to
supply. During the peak supply period, the prices decline. The situation is worsened by the perish
ability of the products and poor storage facilities. Along the market channel, 25 percent of the
product is spoiled. From these reviewed literatures severe production seasonality, seasonal price
fluctuations, poor pre-and post-harvest handling, prevalence of pest and diseases, lack of storage
are some of the critical problems encountered vegetable production in Ethiopia.

2.5 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). Market performance can be evaluated by analyzing costs and margins of
marketing agents in different channels. A commonly used measure of system performance
is the marketing margin or price spread. 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.

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:

12
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).

2.6. Empirical literature review

Addisu (2016) conducted study on the value chain analysis of vegetables . 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) state that 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. The study
also, stated that the potato value chain is constrained by shortage of improved and quality
seed, low yield, low irrigation facility, poor disease control, less targeted to seed production,
perishability, storage facility, low skill in post-harvest management, lack of storage facility,
lack of processing facilities, low skill and technology for processing, brokers interference in
the market and traders suppressing of potato price differences.

13
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 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 Br 5 while the urban broker gets 10 Brper 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.

14
 3. METHODOLOGY OF THE STUDY

3.1 Description of the Study Area

Lay armachiho district is found 22 km from centeral gondar,135km from Bahir Dar (The
regional capital city) and 711 km from Addis Ababa. This district is bounded with
Tacharmachihodistrict in North East, GondarzoneSouth 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. Sample Techniques and Sample Size Determination

3.2.1. Producers sampling

The study will use probability (random) sampling techniques. The sample for this study will be
drawn from all actors involved along tomato value chain.Three stages random sampling
procedure will used. In the first stage, Lay armachiho district will be selected purposively based
on tomato production and marketing. In the second stage, out of 33 kebeles of the district, three
producers kebeles namely Janicaw,Robit and Shumera kebele will be selected randomly. In the
3rd stage, from three kebeles of tomato producers will be listed out with the help of development
agents and 90 sampled household heads will be selected randomly based on proportional
sampling to size . The sample size is determined by using Yemane (1967)

Where N is population of the district tomato producer

n is the sample size

e is margin of error which is 10%

15
 N 4000
n= 1+ N ¿ ¿ = 1+ 4000(0.1)
2 =97 HHS

Table 1:proportional sample size determination of the househould

Name of kebele Number of tomato producers Proportion Sample size

Janicaw 1200 0.3 29
Robit 1500 0.375 37
Shumera 1300 0.325 31
Total 4000 1 97

Source: pre survey data of WAO (2020)

3.2.2. Wholesalers, assemblers 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 10 traders will be selected.

3.2.3. Consumers’ sampling

The consumers’ survey will used to understand the demand for the products. The survey will be
taken from three major receiving kebeles and 5 sampled consumer will be selected purposively

3.3 Type and Sources of Data

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

16
3.4. Method of Data collection
The data for this study will be collected both from primary and secondary sources. Primary data
will be used in order to get firsthand information from respondent .Primary data data will be
collected by using semi structure interview schedule ,personal observation , group discussion
and conducting market assessment. Secondary data will be gathered through reviewing,
examination of document, reports and records of published and unpublished documents.

3.5.Method of Data analysis

The data will be analyzed by using descriptive statistics , value chain analysis and pereformance
analysis.

Descriptive statistics such as mean , percentage , frequency and standard deviation will be used
in the process of examining socio-economic and demographic characteristics of sampled
households and traders, gross margin and marketing margin of farmers and other market
intermediaries in the form of table . The qualitative data will be analyzed qualitatively in the
form of narration according to the objectives of the research.

Value chain analysis

It is used to understand the behavior of the chain actors and the relationships exist among the
chain actors ,flow of products , information and financial flow along the value chain . value
chain map is the standard tool to show these information.

Pereformance analysis
Estimates of the marketing margins are the best tools to analyze performance of market.
Total Gross Marketing Margin (TGMM) is always related to the final price paid by the end buyer
and is expressed as a percentage (Mendoza, 1995).

Consumer price− producer price

TGMM¿
Consumer price
∗100 (1)
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:
Consumer price−gross marketing margin
GMMP= ∗100 (2)
Consumer price
17
 Or GMMP= 1-TGMM Where, TGMM is total gross marketing margin
GMMP is the gross marketing margin of producer
To calculate the benefit share of each actor the same concept will be applied with some
adjustments.
To analyze margins, first Total Gross Marketing Margin (TGMM) will be calculated as depicted
in Equation (1). Then, marketing margin at a given stage ‘i’ (GMMi) will be calculated as:
SPi−PPi
GMMi=
TGMM
(3)
Where, SPi is selling price at ith link and ppi is purchasing price at ith link

18
 4. WORK PLAN and BUDGET BREAKDOWN
I will perform all of the tasks within a given time schedule in order to be efficient and effective.
The task start from submission of title to the submission of research and presentation of the
research. This time schedule shows the tasks and the time in which each stage of the research is
going to be conducted within a given or limited time. This schedule shows the time each activity
of the research is going to be conducted with a given time. It is as follow

Table 2:Work plan and time duration

The proposed plan for completing our research is tabled as bellow;
no Activity Novemb december January February March April may June
1 Title 
selection
2 First draft 
proposal
writing
3 Second draft 
proposal
writing
4 Proposal 
presentation
5 Quessionnair 
design
6 Data 
collection
7 First draft 
research
writing
8 Writing final  
research
9 Submission 
final draft
10 Presentation 

Table 3:Budget plan

19
 No Description Days Measurement Unit cost Total cost in
/amount ETB
1 Transportation 3 Number of 150 450
trip
2 Stationary material
Paper 1 1 packed A4 200 200
paper
Pen 3 Number 10 30
Pencil 3 Number 3 9
Notebook 1 Number 80 80
Total cos for stationary 319
3 Communication cost 150
4 Cost to print the 50 sheets Number of 1 50
document page
5 Cost for photocopy 150 Page 1 150
6 Contingency cost (10) 112
1,231 ETB

5 . REFERENCES

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Kumasi metrópolis of Ghana. Journal of Development and Agricultural Economics , 2
(12), 432-440.

20
Abay Akalu. (2007). Vegetable Market Chain Analysis: The Case of Fogera Woreda in ANRS of
Ethiopia. MSc Thesis, Haramaya University, Haramaya, Ethiopia.

Addisu Hailu. (2016). value chain analysis of vegetables the case of Ejere district west Shewa
zone oromia regional state Msc thesis Haramaya university , Ethiopia .

Armstrong G. (2004). Marketing channels India. Newdelhi India. .

Barakade A , Lokhande T, and Todkari G. (2011). Economics of Onion Cultivation and its
Marketing Pattern in Satara District of Maharashtra. International Journal of
Agriculture Sciences :3(3):110-117. .

Barrett, C.B., and E. Mutambatsere. (2002). Agricultural markets in developing countries

Cornell University. 12p. .

Bezabih Emana and Mengistu Nigussie. (2011). Potato Value Chain Analysis and Development
in Ethiopia Case of Tigray and SNNP Regions.International Potato Center (CIP-
Ethiopia), ILRI, Addis Ababa, Ethiopia. . International Potato.

Bezabih, E., and Hadera, G. (2007). Constraints and opportunities of horticulture production
and marketing in eastern Ethiopia. Dry Lands Coordination Group Report No
46.Grensen 9b Norway 90p.

Central statistical Agency (CSA). (2016). Statisticalreport on farm management

practice,livestock and implements. CSA, AddisAbaba, Ethiopia. 2016;Part II.

Central Statistical Authority (CSA). (2003). Statistical Report on Area and Production of Crops.
Part II-A. Addis Ababa, Ethiopia. .

Cramer, G.L. and Jensen, W. (1982). Agricultural Economics and Agribusiness, 2nd
Edition.McGraw Hill Book Company, USA. 222p.

CSA (Central Statistical Agency). (2009). Agricultural survey report on area and Production of
major crops (private peasant holdings, Meheher season 2016/17(2009 EC)). Addis
Ababa, Ethiopia, Statistical Bulletin 584. Vol I.

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Dawit, A., Abera D., Lemma D., and Chemdo A.,. (2004). Domestic vegetable seed production
and marketing. Research Report No 5. EARO, Ethiopia. 17p .

Eskindr Alebachew. (2015). Value chain analysis of Ethiopian coffee from farmers to
exporters.M.Sc thesis submitted to school of commerce, Addis Ababa University.

FAO (Food and Agriculture Organization),. (1993). Promoting private sector involvement in
agricultural marketing in Africa. Agricultural Services Bulletin No 106.Rome. Italy. 77p .

Feller, A., D. Shunk and T. Callarman. (2006). Value chain versus supply chain. Discussion
Paper on Concepts of the Value Chain and the Supply Chain in a more Comprehensive
and Integrative manner, March 2006, BP Trends.

Fleming K. (2005). Value added strategies: taking agricultural products to the next level.
Honolulu (HI): University of Hawaii. .

Geetha K,S. (2011). Value chain analysis of tomato A study in karnataka university of
agricultural sciences ,Bengaluru.

Getachew Beshargo. . (2002). Cattle Marketing in Western Shewa. MSc Thesis, Alemaya
University, Alemaya, Ethiopia.

Heltberg, R. and Tarp, F. (2001). Agricultural Supply Response and Poverty in Mozambique.
Paper presented at the conference on “Growth and Poverty, University of Copenhagen,
Copenhagen. 25-26 May 2001. Institute of Economics.

ILO (International Labour Organization). (2009). Local value chain development for decent
work. A guide for development practitioners, government and private sector Initiatives
Geneva, Switzerland, International Labor Organization.

Islam M.S, Miah T.H. and Haque M.M. (2001). Marketing system of marine fish in Bangladish.
Journal of Agricultural Economics, 24(2): 127-142.

Kaplinsky R. and Morris M. (2001). A Handbook for Value Chain Research. Institute of
Development Studies, University of Sussex, Brighton, United Kingdom.

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Kaplinsky, R., and M. Morris. (2001). A Handbook for Value Chain Research, IDRC.
Ottawa,Canada.

Kotler P. (2003). Management 11th Edition Pearson Education Inc,USA.

Mendoza G. (1995). A Premier on Marketing Channel and Margins. Lyme Rimer Publishers
Inc., USA.

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countries. Working Paper No 31.MSU International Development Papers. Michigan
State University, Michigan, USA. 86p .

Morris, M.L (1995). Rapid Reconnaissance Methods for Diagnosis of Sub sector Limitation:
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Agricultural Markets in Developing CountriesMoti Jaleta (2007). Econometric Analysis
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marketing of fruits and vegetables at Logia ,Northern Ethiopia , journal of marketing
and consumer research .

Netherlands Development Agency. (2012). ValueChain analysis of potato, onion and tomatoin
five GRAD Woredas of SouthernNations Nationalities and People’s Region(SNNPR). Era
Agrilink PLC.

Thakur, D.S., Harbans, L., Thakur, D. R., Sharma, K.D. and Saini, A.S. (1997). Marker Supply
Response and Marketing Problems of Farmers in the Hills, Indian Journal of
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Row.

23
 6. APPENDIX
Interview schedule for producers

Dear respondents:

The purpose of this questionnaire is to collect information on 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.

Thank you in advance for your cooperation

Part I : Demographic information

Name of respondent___________________________

2. Address of respondent: Woreda ______________, kebele _____________________

3. Sex respondent, A. Male B .Female

4. Age of the respondent: ________

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

6. Religion, A. Orthodox B. Muslim C. Protestant D. others_________________

7. Educational status A. Illiterate B. Literate

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

Part II: socio economic data

9. Total land size _________ ha or _______ timad or _________ kada

10 . land allocated to tomato production _______ ha ______timad _____ kada

11. What types of tomato you produced?

A. Determinate B. Indeterminate.

24
12. How many boxes you produced in one year?

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

13. How many quintal of tomato you produce per year? ___________

14. 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

15. What transportation you use to transport tomatoes?

A. Cart B. Donkey C. By back

16. Do you think which profitable is high?

A. processed tomato C. fresh tomato

17, what are the major constraints which affect your tomato production?

A. Shortage of land B. Shortage of water C. Lack of an improved variety

18. For what purpose do you produce tomato? A. For market B. For holiday C. for wedding
ceremony D. for home consumption E. others---------------------

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

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

A. Yes B. No

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

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

23. If you say yes, what type of problems you face? What are these proplems ?

24. what opportunities available for tomato production and marketing?

25. what are the constraints in tomato marketing?

25
26. How much cost you incur for tomato production ?

27. how much cost you incure for tomato marketing ?

28. what is the selling price of a kg of tomato ?

Interview schedule for tomato traders

Part I. Demographic data

1. Name of trader ___________________________

2. Address of respondent: Woreda ______________, kebele _____________________

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. Religion, A. Orthodox B. Muslim C. Protestant D. others_________________

7. Educational level______________

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

Part II :Marketing aspect

1. What is a form of your business? A. Sole proprietor ship B .Partner ship C. Union

2. How long you have engaged in tomato trading? __________ year

3. Type of trade 1. Wholesaler 2. Retailers 3. Assemblers 4 other specify _______
4. Total quantity of tomato you purchased per year?_____________ quintal
5. From whom you purchase? A. Producers B.Rural collectors C Wholesalers
6. What is the total amount of tomato you purchase in boxes?

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

8 . What is your total revenue of 1boxes of tomato ?

26
 9 From where do you buy?
10 . Where do you sell?
11 . what is your cost of marketing for a quintal / box of tomato product?
12 What is the selling price of a kg/box of tomato ?________ birr
13 What is your total revenue obtained from a quintal / box of tomato_________ birr
14 Total quantity of tomat you sold per year __________ quintal --------------box

15. what are the opportunities available for tomato marketing?

________________________________________________________________________

16. What determine the purchasing cost of the product?

A. Customer influence B. Central market available price

C. Competitor action D. Other, specify _______________________

17. Do you have positive feeling for your tomato value chain activity?

A. Yes B. No

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

______________________________________________________________________________

19, what are the major marketing problems of tomato?

A. Price fluctuation B. Perish ability of the product C. Seasonality of the product

20, from where do you get pricing information?

A. From news letter B. From radio C. From internet D. Have information

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

A. Yes B.No

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

27
 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

23. how you are satisfied by your business?

A. Very satisfied B. Satisfied C. Not satisfied at all

Interview schedule for 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. Religion, A. Orthodox B. Muslim C. Protestant D. others_________________

7. Educational status A. Illiterate B. Literate

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

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

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

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

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

13. How much you pay for agent? __________

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

28
16. From whom you purchase? A. Producers B.Rural collectors C. Wholesalers D.Retailers

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

18. From where did you buy?

19. What are the constraints you face in the purchasing of tomato ?

20. What are your opportunities of purchasing?

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

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

29