FACULITY OF AGRICULTURAL AND ENVIRONMENTAL SCIENCE

DEPARTMENT OF AGRICULTURAL ECONOMICS

RESEARCH ON DETERMINANTS OF MARKET PARTICIPATION IN SMALL
HOLDER SORGHUMPRODUCER IN GONDER ZURIA WOREDA, AMAHARA
REGIONAL STATE, ETHIOPIA

SUBMITTED BY: GROUP 1

Group member ID No

1. WOLDIE FIREW………………………………………………………………….455/11
2. YOHANS GEBEYEHU……………………………………………………………453/11
3. TSEGAYE KIBIRET………………………………………………………………..04065/09
4. BELAYNESH…………………………………………………………………………04116/09

ADVISOR: GEDEFAW K

April 3, 2021

DEBRE TABO, ETHIOPIA

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ACKNOWLEDGEMENT

First, we would like to thank to the almighty God for providing the opportunity for what we have
achieved and his mercy. Secondly we would like to thanks our academic year advisor Taye
Melse (MSc) who give as orientation related with our research and advice in the work of this
research, lastly we would like to thanks our entire group member who participate in the work of
this document and our entire classmate student.

Table of Contents

ii
ACKNOWLEDGEMENT...............................................................................................................ii

List of table.....................................................................................................................................vi

LIST OF ABBREVIATIONS AND ACRONOMY....................................................................viii

ABSTRACT.....................................................................................................................................ix

1. INTRODUCTION.......................................................................................................................1

1.1. Background...........................................................................................................................1

1.2. Statement of the Problem......................................................................................................2

1.3 Objectives of the study..........................................................................................................3

General Objective....................................................................................................................3

1.4 Research questions.................................................................................................................3

1.5 Significance of the study.......................................................................................................3

1.6 Scope and limitations of the study.........................................................................................4

2. LITERATURE REVIEW............................................................................................................5

2.1 Theoretical Literature review................................................................................................5

2.1.1 Market participation........................................................................................................5

2.1.2 Market.............................................................................................................................5

2.1.3 Marketing........................................................................................................................6

2.1.4 Smallholder producers (farmers)........................................................................................6

2.2 Empirical literature review....................................................................................................7

2.2.1 Sorghum Production in Ethiopia....................................................................................7

2.3.2 Smallholder farmers’ marketing problem analysis.........................................................7

2.3.1Low and unstable grain supplies......................................................................................8

2.3.2Storage.............................................................................................................................8

2.3.3 Farmers’ limited capacity for collective action..............................................................8

2.3.4 High processing costs for small grains...........................................................................8

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 2.3.5Unreliable markets...........................................................................................................9

2.3.6 Highly competitive international markets......................................................................9

2.3.7Lack of finance................................................................................................................9

2.3.8High transaction costs (search costs)...............................................................................9

2.3.9Access to information and marketing of sorghum...........................................................9

2.4 Conceptual framework of variables selected for the study..............................................11

3. RESEARCH METHOD............................................................................................................12

3.1 Description of study area.....................................................................................................12

3.2 Sampling size.......................................................................................................................13

3.3 Sampling techniques............................................................................................................13

3.4 Data type and sources..........................................................................................................13

3.5 Data collection methods and tools.......................................................................................13

3.6 Methods of data analysis.....................................................................................................14

3.6.1 Descriptive Statistics....................................................................................................14

3.6.2 Econometric analysis....................................................................................................14

3.8 Definitions of variables........................................................................................................16

4. RESULT AND DISCUTION....................................................................................................21

4.1 Percentage market position of sample household................................................................21

4.3 Proportion of household characteristics by market participation status..............................21

4.4 Mean of household characteristics by market participation status......................................23

4.5 Test of Econometric Analysis Problems..............................................................................25

4.5.1 Multicolinearity Problem..............................................................................................25

4.6 Econometric Result..............................................................................................................26

4.6.1 Determinants of sorghum market participation............................................................26

4.5.2 Marginal effects of significant explanatory variable....................................................29

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 4.6 The Outlet choice of sorghum producer..............................................................................31

4.7 The Problems in production and marketing of Sorghum.....................................................32

5. CONCLUSION AND RECOMMENDATION........................................................................34

5.1 Conclusion...........................................................................................................................34

5.2 Recommendation.................................................................................................................34

REFERANCE................................................................................................................................36

Appendix1......................................................................................................................................40

APPENDIX-2................................................................................................................................45

List of Figure

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Figure 1: Conceptual frame work..................................................................................................11
Figure 2: Map of the study area.....................................................................................................12

List of tabl

Table 1: Description of the selected variables..............................................................................20

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Table 2: Percentage market position of sample household...........................................................21
Table 3: Proportion of household characteristics by market participation status..........................23
Table 4: Mean of household characteristics by market participation status..................................25
Table 5: maximum likelihood estimates of Tobit model...............................................................27
Table 6: Effects of changes in the significant explanatory variable..............................................29
Table 7: Outlet choice analysis of sorghum of sorghum producer................................................32
Table 8: analysis of the Problems in production and marketing of Sorghum...............................33
Table 10: Variance inflation factor for continuous variable..........................................................40
Table 11: Contingency coefficient.................................................................................................40
Table 12: Tobit regression.............................................................................................................41
Table 13: Marginal effects after Tobit (probability of participation)............................................42
Table 14: Marginal effects after Tobit (intensity).........................................................................43
Table 15: Conversion factors to estimate Tropical Livestock Unit equivalent.............................44
Table 16: Conversion factor used to compute adult equivalent rate.............................................44

LIST OF ABBREVIATIONSAND ACRONOMY

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AE adult equivalent
BSL below sea level
CSA Central Statistical Agency
DV Dependant variable
GDP Gross Domestic Product
FAO Food and Agricultural Organization
FDRE Federal democratic republic of Ethiopia
MASL meter above sea level
MoFED Ministry of Finance and Economic Development
PPS probability proportional to size
TLU total livestock unit
UNDP United Nations Development Program
VIF Variance Inflation Factor

(+) Positively
% Percent

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 ABSTRACT

Sorghum is not generally traded in international markets or even in local markets in many
countries. Therefore, smallholder farmers seldom have an assured market in the event of
surplus production. So that Small scale farmers across the world frequently consider
marketing of their agricultural produce as being one of their major challenges. Therefore
objectives of this study were the determinants of participation, level (intensity) in sorghum
marketing, sorghum market out let choice and identifying the Problems in production and
marketing of Sorghum of smallholders in Gondar zuria woreda. Smallholder farmers’
marketing was analysis different determinants. To analysis those determinants a three stage
sampling method were employed to select two Kebele and 40 farm households out of 37
Kebele in Gondar zuria. House hold interview schedule was developed for collecting data
for the study from the sampled farm households. Both primary and secondary data were
collected for the purpose of this study. The primary data were collected at household level
from people involved in production and sorghum marketing. Secondary data were collected
from internet, reports, books, journals, articles, and working papers. For the purpose of this
study, both quantitative and qualitative data were collected. For the analysis of the collected
data, statistical software known as STATAwas used to compute the data. Descriptive
statistics and Tobit model were used for analyzing data. The output from the study indicates
that 23 (57%) of the sampled farm households were market participant, whereas the
remaining 17 (43%) were non participant. The Tobit result indicates that age, education,
amountproduced, and access to credit were significantly affects decision to participation and
intensity of sorghum marketing. Different problems were faced in production and marketing
of sorghum. So that the government and other bodies should give attention and tiring to
minimizing the problems in the study are. The amount of produce influenced market
participation positively. Hence, policies should improve farmer’s sorghum production
capacity through Introduction of technology to consider the possibility of selection varieties
of improved seed and other subsidies including fertilizers for better production in kebeles
and provision of public infrastructures.

Key words: determinants,markets,participation,Smallholder,Tobit

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 1. INTRODUCTION

1.1. Background

Agriculture has been the mainstay of the Ethiopian economy for several centuries. It is still the
dominant sector being contributing 42% of the total GDP (CSA, 2010). According to (MoFED,
2006), the sector employed more than 83% of the population, and was the source of over 90 % of
export revenues. It also provides raw materials for more than 70% of the country’s industries.
With in the sector, 60% of the agricultural GDP comes from crop production, whereas, 30% and
7% of it is generated from livestock and forestry sectors respectively (World Bank, 2007).

Therefore, it is palpable that countries like Ethiopia, which are comparatively endowed with
unskilled labor and arable land, would find it relatively easier to follow an agricultural
development path. According to (World Bank 2008), escaping poverty traps in many developing
countries such as Ethiopia depends on the growth and development of the agricultural sector.
Ethiopian governments have focused on promoting technology-led initiatives to enhance
productivity, particularly in smallholder agriculture (Gebresilassie, 2006; FDRE, 2010).

Crop production is a subsector on which the country has unfailingly depended on to bring about
a livelihood transformation of the poor. Currently, the government is undertaking a strategy of
improving agricultural productivity primarily through agricultural intensification, involving an
increased use of inputs, including seeds of improved crop varieties (McGuire, 2005; Byerlee et
al., 2007).

Sorghum is also the most widely cultivated and consumed cereals in Ethiopia. According to
(CSA, 2008), it ranks third after maize and tef in total production, after maize in yield per hectare
and after tef and maize in area harvested. The crop is also the most important crop in Amhara
region, being the second crop in terms of area coverage next to tef. In Kobo district, sorghum has
a vital role of achieving food security. The crop is one of the leading traditional food crops in the
area. It is also a multipurpose crop, being utilized in different forms where the grain is used for
making “Injera” (large round pancake made from fermented dough) and“Tella” (local beverage

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drinks). It is also consumed in boiled and roasted forms. Sorghum is also essential source of feed
for livestock where the stalk is used to feed animals in dry season.

.In southern Africa, they are grown with limited water resources by a multitude of rural
smallholder farmers, usually without the application of major inputs like fertilizers (Chisi et
al.1997). Sorghum being drought tolerant has an adaptive advantage and lower risk of failure
than other cereals in such environments. With the exception of a few countries such as Sudan,
these crops are consumed by disadvantaged groups and hence the reason for being referred to as
"poor people's crops".
Sorghum is not generally traded in international markets or even in local markets in many
countries. Therefore, smallholder farmers seldom have an assured market in the event of surplus
production. Small grains have been important staples in the semi-arid tropics of Africa and Asia
for centuries. These crops have traditionally provided food, employment, and income for a
substantial portion of the population, particularly smallholder producers. It will continue to be
major food crops in Africa, particularly in Nigeria and Sudan, which account for about 39
percent of Africa’s sorghum production (Tariq & Sawandi, 2003). Though small grains have
good potential for domestic and industrial uses, they have to compete with maize.

1.2. Statement of the Problem

Since independence, agriculture has been the backbone of Ethiopian’s economy. It is mostly
characterized by rural small scale farmers who take a portion of 90% of total food producers and
despite the important role played by these farmers in feeding the nation, they remain the poorest
section of the Ethiopian society (CSA, 2010). Even if hopes for growth and poverty reduction
through agri-business are huge, they face various factors while marketing of their farm produce
which influence them in different ways.
It should be understood that without good marketing the farmers was not be able to sell or trade
hence they was not reap maximum returns from their produce. This means they was never
improve from their poor living conditions assuming that farming is their only activity. Small
scale farmers across the world frequently consider marketing of their agricultural produce as
being one of their major challenges. Many studies have been conducted on other factors that
influence the marketing of agricultural produce by small scale farmers but less has been done

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concerning marketing of sorghum produce among small holder farmers. Even though means of
Accessing information by farmers’, means of linking farmers to market, getting of extension
services, road infrastructureare critical and important factors in marketing of sorghum produce,
not only these other production and marketing problem and their market out let choice of small
scale sorghum producer was not identifying before and there was less study which has been
conducted in Teda kebele of Gondar zurai district, in relation to these factors.
Therefore this research focused on these factors and the influence they have on small scale
sorghum farmers in marketing of their farm produce in Gondar zuria district bearing in mind
thateven though this commodity is of higher demand because of its diverse use, the lives of the
producers who are the farmers in the rural areas of Gondar zuria remain unchanged in some parts
of larger Gondar zuria community Teda location being a case in this research project.

1.3 Objectives of the study

General Objective

 To assess the determinants of market participation among small scale sorghum

producers in Teda Kebele, in Gondar zeria woreda, Ethiopia.

Specific Objectives

 To determine the factor influencing participation and extent of participation in

marketing of sorghumin Teda Kebele.
 To identifying the choice of sorghum market out lets in Teda Kebele
 To identifying the Problems in production and marketing of Sorghum

1.4 Research questions

1. How is the current level of participation of smallholders in sorghum marketing?

2. What are the factors that influence the participation of smallholders in sorghum marketing?
3. What is the choice of sorghum market out lets of small holder producer?
4. What are the Problems in production and marketing of Sorghum?

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1.5 Significance of the study

The result of this study would expect to be useful for the government policy makers, donors,
producers and marketing firms for their decisions. The study had tried to identify some important
and policy relevant variables in smallholders’ participation and supplies by smallholders in
sorghum marketing.
The government and producers can promote their efforts influencing these variables at the
desired level of proportion, so as to improve the smallholder’s participation in sorghum
marketing and volume crop products supplies in the market. This was contribute to the overall
regional and national efforts aimed at poverty reduction and food security and subsequently
fostering development in the country’s strategy framework of agricultural development led-
industrialization.

1.6 Scope and limitations of the study

This study was conduct only in Teda Kebele in North Gondar of Amahara regional state;
therefore, this study was focus on assessment of determinants of market participation in small
holder producers in study area.
The finding of this study was not generalizing all Kebele. It is clear that research was not being
free from some limitation. The research was limit financial resource, transportation, shortage of
time and materials constraints was made. It is impossible to extend the study away from this
Kebele; on the other hand, same respondents are reluctant to give accurate information about
their back ground and they fear to give correct information on sensitive issues.

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 2. LITERATURE REVIEW

2.1Theoretical Literature review

2.1.1 Market participation

Various definitions of market participation have been suggested by different authors. Some
Authors consider market participation as any market related activity which promotes the sale of
Produce (Key et al., 2000; Holloway & Ehui, 2002; Lapar et al., 2002). Market participation can
be referred to as commercialization (Latt & Nieuwoudt, 1988). It can also be described as an
Individual’s or household’s economic transactions with others, in cash or kind (Von Braun et al.,
1991). Staal et al. (1997) mentioned that a low proportion of products exchanged in the market
reflect limited market participation. With the three possible states of buying, selling or not
trading, Goetz (1992) defines market participation using household purchases and sales.
Volumes of produce traded are used to determine market participation. In an agricultural market
economy, market participation or commercialization occurs mainly when farmers stop being
mostly subsistence farmers and become profit-oriented. Market participation is in that case
defined as earnings from market activities (Makhura et al., 1997; Makhura, 2001).

The various market participation definitions and measurements do not rule out quantity or
Produce sold or sales volumes. In this study, both the presence of sales and the volume of sales
will use as a measure for market participation. This is because market participation for
Subsistence smallholder farmers is directly related to generation of a marketable surplus; which
In turn depends on productivity levels.

2.1.2Market

The market can be categorized into local and international market. Local market refers to a set of
Actual and potentials buyers within a given geographical area where the seller is also located.
The Target boundary may be a village, district, town, province, country or specific region. The
international market refers to a set of actual and potential consumers beyond geographic
boundaries and in most cases outside the national borders. Cross-border issues like tariffs,
custom procedures, trade agreements, for example, are taken into account (Kotler, 2003).

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2.1.3 Marketing

Marketing is defined by the American Marketing Association as an organizational function and

set of processes for creating, communicating and delivering value to customers and for managing
Customer relationships in ways that benefit the organization and its stakeholders. The social
definition of marketing is that marketing is a societal process by which individuals and groups
obtain what they need and want through creating, offering and freely exchanging products and
services of value with others. The role of marketing is to deliver a higher standard of living.
Managerial definition of marketing describes marketing as the art of selling products (Kotler,
2003).

2.1.4 Smallholder producers (farmers)

The word smallholder farmer embraces a wide spectrum of all small-scale indigenous producers
In Africa (Hungwe, 2006). Smallholder farmer means different things depending on the country
One is looking at. Within a South African context, smallholder farmers are black farmers most of
Who reside in former homelands (Machethe & Mollel, 2000).
Various terms have been used in literature to define smallholder farmers. These include; small
scale farmers, peasant farmers, resource-poor farmers, subsistence farmers, food deficit farmers,
household food security farmers and emerging farmers. The main criteria used by various writers
to classify farmers as smallholder farmers include land size, purpose of production (i.e. whether
for home consumption or market), income level (i.e. whether poor or rich), and in South Africa
racial group (i.e. whether one is white or black and thus historically advantaged or
disadvantaged, respectively) (Machethe & Mollel, 2000).
Smallholder farmers are a heterogeneous group whose resources, livelihood patterns and income
Sources are quite diverse (Machethe & Mollel, 2000; FAO & UNDP, 2001; Machethe et al.,
2004; Maltsoglou & Tanyeri-Abur, 2005). Smallholder farmers are the people who make up the
great bulk of the population in most southern African countries. These small holdings are often
found in poorer areas, less favorable for agricultural production (Hungwe, 2006.)

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2.2 Empirical literature review

2.2.1Sorghum Production in Ethiopia

Sorghum (Sorghum bicolor L. Moench) is the fourth most important cereal crop globally
following wheat, rice and maize. It is a staple food for more than 500 million people in the semi-
arid tropics of Africa and Asia and more than 80% of the world area of production is confined to
these two continents (Masresha et al., 2011). It is primarily a crop of resource-poor small-scale
farmers and is grown predominantly in low-rainfall, arid to semi-arid environments. The crop is
typically produced under adverse conditions such as low input use and marginal lands. In sub-
Saharan Africa, over 100 million people depend on sorghum as staple (Serna-Saldivar and
Rooney, 1995; Smith and Frederiksen, 2000). It is well adapted to a wide range of precipitation
and temperature levels and is produced from sea level to above 2000 m.a.s.l. Due to its drought
tolerance, this crop is grown in eastern Africa where agricultural and environmental conditions
are unfavorable for the production of other crops.
All lines of evidence point to the north-east quadrant of Africa, mainly Ethiopia, as the centre of
domestication of sorghum (Tanto and Demissie, 2000; McGuire, 2005). Therefore, the greatest
genetic diversity for both cultivated and wild forms of sorghum are found in Ethiopia and the
surrounding eastern African countries. It is the second most important staple cereal crop after
maize in the region, making a huge contribution to the domestic food supply chain with a total
acreage of 8,199,741 ha. Sorghum is also one of the leading traditional food crops in Ethiopia
comprising 15-20% of the total cereal production in the country (Wortmann et al., 2006).
Sorghum grows in a wide range of agro ecologies most importantly in the moisture stressed parts
where other crops can least survive and food insecurity is rampant (Asfaw, 2007). According to
(CSA, 2008), sorghum ranks third after maize and tef in total production, after maize in yield per
hectare and after tef and maize in area harvested.

2.3.2 Smallholder farmers’ marketing problem analysis

Although there could be alternative marketing channels for smallholder farmers, there are some
Technical, social and economic constraints which need to be addressed before these farmers can
fully benefit from any market channel. For smallholder farmers to be able to participate in the
market, there are a number of policy areas that combine to create an overall policy environment

7
that need to be addressed (Jayne et al., 2007). Historically, there have been constraints to
improving smallholder participation in markets and some of them are as outlined below.

2.3.1Low and unstable grain supplies

In most developing countries, including Ethiopia, grain supply by smallholder farmers is

unstable. This is mostly because of low population density and low scale of production.

Assembling small quantities of grain from many smallholder farmers raises marketing costs
(Jacobs, 2008).

2.3.2Storage

Smallholder’s producers are required to store some of their crops like maize in order to benefit
from the present market opportunities. In a liberalized market, prices of commodities are
determined by the prevailing levels of supply and demand on the market. Thus, for agricultural
commodities, prices tend to be very low just after harvesting, which calls for farmers to store
their commodities for later sale (Jacobs, 2008; Omoti et al., 2009). However, storage facilities
for most smallholder farmers are not good and big enough to store commodities for later sale.
There is therefore need for smallholder farmers to improve on their storage structures for them to
benefit from this market opportunity (Masanganise, 2002)

2.3.3 Farmers’ limited capacity for collective action

Farmers in rural areas are often held back by the daily stress of getting essential supplies and
Transporting their produce to markets. Smallholder farmers rarely form part of marketing trusts
(Jacobs, 2008). The fact that they produce small quantities makes transportation expensive for
Individual farmers hence a need for collective action.

2.3.4 High processing costs for small grains

The high processing costs are exacerbated by the need to clean the poor quality grain to
industrial and commercial standard specifications. Grain quality is more variable in sorghum and
millet than in maize. The range of varieties grown and traded is more variable than maize in
terms of color, size, shape, hardness and keeping quality. Mixed grains cause mill extraction

8
rates to decline. If a consistent type of grain is sought, marketing costs may increase (Rohrbach&
Kiriwaggulu, 2001).

2.3.5Unreliable markets

Smallholder farmers are also reluctant to invest in crops whose product prices are not reliable. It
is common to see smallholder farmers in marginal areas dedicating large tracts of land to maize
Cropping yet they hold a huge comparative advantage in small grains (sorghum, millet, etc)
which are adaptable to their semi-arid agro-ecological conditions (Jayne et al., 2007).

2.3.6Highly competitive international markets

International agricultural markets are highly competitive, even large scale commercial farmers
are struggling. Smallholder farmers may not be able to survive. International donors try to
convince African governments of the virtues of liberalization and open markets, but then
subsidize their agriculture and affect world prices for African crop exports and imports in the
process (World Bank, 2001).

2.3.7Lack of finance

Farmers have limited cash resources to purchase enough inputs for cropping especially fertilizer
and seed. Because of this, the demand for inputs by smallholder farmers is very low and
uncertain especially after drought. This makes manufacturers to produce less as they also require
security for their money and cannot predict ex ante whether the cropping season (therefore
demand for inputs) will be good or not (Poulton et al., 2002; Jayne et al., 2007).

2.3.8High transaction costs (search costs)

Smallholder farmers operate under high transaction costs due to lack of information, which
creates higher risks. The poor are especially hit by such constraints, as they usually are poor in
Information, including the ability to collect and analyze markets and other types of economic
Information (Jayne et al., 2007; Jacobs, 2008).

2.3.9Access to information and marketing of sorghum

In spite of how important agriculture is to economic development, small-scale farmers continue

to be poor and are not well connected to markets (Aina, 2007). Schemermeier and Light Foot,

9
(2007) Argue that small-scale farmers are oppressed and do not get a reasonable share of the
final consumer price due to poor access to marketing information. Rural farmers mainly receive
marketing formation from their fellow farmers’ through word of mouth Gordon and Kindness,
(2001) .Poor access to marketing information has left rural farmers exploited by other players
inthe chain. Rural farmers often are not aware of the prices of what they produce at distant
markets. The poor access to information motivates the traders and middlemen to visit the
Farmers at their homes and local markets and make purchases there. Mainly the farmers
negotiate based on the prices proposed by the traders or middlemen. Traders and middlemen take
advantage of the farmers based on the farmer’s lack of knowledge concerning market prices,
poverty level and weak bargaining power influenced by illiteracy and low social status
(Lightfoot and Scheuermeier, 2007). Intermediaries time and again ignore market rule and their
pricing lacks transparency (Rao, 2007). Marketing information that is disseminated to farmers
may not fulfill its objectives (Robbins and Ferris, 2004). The farmers in Zambia indicated that
information needed for decision-making by small scale farmers included; gross margins for a
particular farm produce, possible markets, stability of the produce in the market, availability and
price of inputs and projected transportation costs for inputs (Mushigwani, et al, 2002).Some
studies revealed that farmers who are benefitting from the price information services would be
interested in other information as well, such as weather forecasts, advice on crop production and
marketing and use of appropriate seeds and fertilizers (Awasthi, 2007).
Terero, (2011) proposed that one way to link farmers to markets is by improving physical
infrastructure such as; information technology that connects smallholders to markets and
reducing transaction costs and minimizing risk. Agricultural Stakeholders including small scale
farmers use different ICT applications and tools at different stages of agricultural value chains,
from pre-production to advisory services, marketing and consumption. The use of mobile phones
for marketing by small scale farmers is substantial. Donovan (2011) reported that mobile phones
help to increase income, improve efficiency of marketing, reduce transaction costs and present a
great opportunity for new interventions.). This finding reflects the evidence that farmers
equipped with information have stronger bargaining power and can access number of markets at
the same time.

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2.4 Conceptual framework of variables selected for the study

Market participation of smallholder farmers producers is affected by numerous factors,

including demographic factors, (sex, age, educational level, family size), socioeconomic factors,
(sorghum production experience), farm factors, (farm size ) and institutional factors (credit
accesses, extension, ) are factors affect market participation and marketed surplus of sorghum
smallholder farmers . These factors could have positive or negative effects, which could either
improve or cause a decline in the welfare of the farmers. In this study, 15 independent variables
and one dependent variable was selected to prove the hypotheses set for this study hoping that
they will address the objectives and they are presented as follows in the figure.

Increase level of
participation
Figure 1: Conceptual frame work

Increase households income

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 3. RESEARCH METHOD
3.1 Description of study area

This study was conducted in Amhara national regional state central Gondar zone in Gondar zuria
district particular, place called Teda Kebele. Teda kebele is one of the pre- urban kebele of
Gondar zuria woreda. It is located about 23km of South of North Gondar zone. The main
economic activities of Gondar zuria districts are mainly crop production and livestock rearing,
the major crops that produce or cultivated this area include teff, maize, barley, sorghum, nigger,
pea, chick pea and others. The livestock husbandry of this area is cattle, sheep goat, mule,
donkey and others. This area categorized under “weinedega” agro climatic zone and the altitude
of the area 2500 m.a.s.l and 1500m b.s.l. The soil type of the area is red, black and brown. The
annual temperature of the area is 25-30 degree Celsius and the annual rain fall is about 1800-
2000mm.

Study area

Source regional bureau of agriculture and rural development Office

Figure 2: Map of the study area

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3.2 Sampling size

The size of sample depends up on precisions desires and there are no single rules that can be
used to determine sample size, but the large sample is much more likely to represent active of the
population. For this study 40 household, was used, in the study area.

3.3 Sampling techniques

When selecting sample respondents at Gondar zuria District, multi stage sampling technique was
employ. In the first stage, out of 37 sorghum producer rural kebeles, 10 kebeles that are the
major sorghum producers was select purposively since they produced beneficiary or dominantly.
In the second stage, from 10 kebeles 2 kebeles was select randomly that are comfortable for
information access about them participation. In the third stage, based on a complete list of the
name of all sorghum producer farmers obtained from Development Agent during 2020/2021
production year, households was select from lay Teda and tach Teda, using probability
proportional to size (PPS) purposively sampling technique.

3.4 Data type and sources

Both primary and secondary data was collect for the purpose of this study. The primary data was
collect at household level from people involved in sorghum marketing. Primary data was collect
from the sampled respondents on different issues such as household characteristics, household
resource, transaction costs, and distance to market and all other variables hypothesized as they
influence smallholders’participation in sorghum marketing in Teda, amahar region, and.
Secondary data was collect from internet, reports, books, journals, articles, and working papers.

3.5 Data collection methods and tools

For the purpose of this study, both quantitative and qualitative data was collected. To generate
data on social, institutional, and economic house hold interview schedule was employed. The
house hold interview schedule was administered with the help of enumerators. The enumerator
was trained on methods of data collection and interview techniques. To generate qualitative data,
interview with male and female headed households was conduct.

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3.6 Methods of data analysis

3.6.1 Descriptive Statistics

The main descriptive indicators that are t-test and Chi square to investigate the relative difference
between market participants and non-market participants of sorghum marketing. This method of
data analysis refers to the use of, percentages, means, and standard deviations in the process of
examining and describing marketing facilities, and household characteristics.

3.6.2 Econometric analysis

Econometric analysis used for processing the data obtained from the survey. The appropriate
econometric models that can help to identify the factors affecting the amount of sorghum sold to
the market (intensity) and the market participation is Tobit.

Yi=β i x i +ε i… … … … … … …(1)
Where εi ~ N
i=1,2,…………,n.
Yi = A continuous variable that house hold sold to market
βј = Parameters to be estimated in the model
Xi= Explanatory variables that can affect amounts of sold
εi =error term and it is normalized
, and normally distributed (with correlation coefficient, ρ)
So to investigate determinants of sorghum market participation and amount of sell Tobit model
was used. Because of the restrictions put on the values taken by the regressed, this model can be
called limited dependent variable regression model. The data have a censored sample as
dependent variable, that is household didn’t participate (sold) even if they produce of sorghum
from the total samples, the data are censored, and Tobit estimation is relevant. If zero values of
dependent variables were the result of rational choice of farmers, a Tobit model would be more
appropriate (Abrar, 2004). Thus, maximum likelihood Tobit estimation (Tobin, 1958) was used
in the analysis of participation. One can concern with the model; recall that in a Tobit with left-
censoring at zero.
m
yi∗¿ βo +∑ βixi+ μi i=1, 2 ............ m
i=1

14
Where y=y* if y*>0, y=0 if y*≤0 and y=max(y*, 0)
Where
Y*i = market participation of sorghum or amount of sold (dependent variable)
ß 0 = an intercept
ß i = coefficients of ith independent variable
Xi = independent variable, and 'i' is 1, 2, 3…., m
Ui = unobserved disturbance term
The model parameters are estimated by maximizing the Tobit likelihood function of following
form;
1 Yi− βXi −βiXi
L=∏ y∗¿0
δ
f (δ )
∏ y∗≤ 0 F (
δ )
Where f and F are respectively, the density function and cumulative distribution function of Yi*
∏ yi*>0 means the product over those i for which yi*>0, and ∏yi*≤0 means the product over
those i for which yi* ≤0.
As cited in Maddala (1997), Johnston and Dinardo (1997), proposed the following techniques to
decompose the effects of explanatory variables into probability and intensity effects.
Thus, a change in X (explanatory variables) has two effects. It affects the conditional mean of
Yi* in the positive part of the distribution, and it affects the probability that the observation will
fall in that part of the distribution. Similar approach is used in this study.
1. The marginal effect of an explanatory variable on the expected value of the dependent variable

∂ E (Yi)
is: =F( z) βi
∂(xi)
βixi
Where ,is denoted by z, following Maddala, (1997)
σ
2. The change in the probability of market participation as independent variable Xi changes:
∂F (z) β
=f ( Z)
∂ xi δ
3. The change in intensity with respect to a change in an explanatory
Variable among sellers:
( yi/ y∗¿ 0)
∂E =βi ¿)2]
∂ xi

15
Where, F (z) is the Cumulative Normal Distribution of z, f (z) is the value of the derivative of the
normal curve at a given point (i.e., unit normal density), z is the Z score for the area under
normal curve, βi is a vector of Tobit Maximum Likelihood estimates and σ is the standard error.
The parameter estimates of the above model may not be Best Linear Unbiased Estimator (BLUE)
when some of the assumptions of the Classical Linear Regression (CLR) models are violated,
thus, it is important to check the presence Multicolinearity among the variables that affect
sorghum participation in the area. There are two measures that are often suggested to test the
existence of Multicolinearity. These are: Variance Inflation Factor (VIF) for association among
the continuous explanatory variables and Contingency Coefficients (CC) for dummy variables.
To detect Multicolinearity problem for continuous variables, variance inflation factor (VIF)
define.
1
VIF=
1−Rj 2
As a rule of thumb, Gujarati (2004) states that if the VIF value of a variable exceeds 10, which
will happened ifRj2 (explained variation) exceeds 0.90, then, that variable is said to be highly
collinear. Therefore, for this study, variance inflation factor (VIF) is used to detect
Multicolinearity problem for continuous variables. On the other hand, contingency coefficient is
used to check Multicolinearity of discrete (dummy) variables. It measures the relationship
between the raw and column variables of a cross tabulation. The formula for contingency

χ2
coefficient is as follows
CC= 2
√
χ +N
Where, CC is contingency coefficient,
χ 2 is chi-square value and
N is total sample size.
The decision criterion with the contingency coefficient is that if the value of CC is greater
than0.75, the variables are said to be collinear (CC > 0.75).

3.8Definitions of variables

The variables used in the analysis were operational zed as follows

Dependent Variable:

16
Amount sorghum sold in marketing (AMTSOLD): Is a continuous variable that represents the
level of market participants of the household in thesorghummarket that is regressed in the
Tobit model estimation procedure.
Participation (decision to participation) insorghum market indicates that the house hold
whether participates or not. So that variable takes the value of one where they participate and it
takes the value of zero for the household who did not participate insorghummarket.
Independent variables:

The following independent variables are hypothesized to influence the participation in sorghum
marketing of smallholders.
Age of the household head (AGEHH): Age is a continuous independent variable
operationalised as the number of years the respondent was interview. Age may have important
role in the participation, production process and plan alternative source of income for the family.
Household head has the capacity to decide all rights against his property; therefore, age was
hypothesizing to positively influence the sorghum marketing participation.Different works also
hypothesized age similarly Mathenge et al. (2010)

Sex of the household head (SEXHH): sex is dichotomous variable of being either male or
female. In mixed farming system, both men and women take part in livestock management.
Culturally women are responsible to drive income from processing and marketing of crops,
therefore, it was be postulate to have a positive effect onsorghum marketing participation.

Family size (FAMSYZ): Family size is a continuous independent variable to the number of
members in the family including children, adults and dependent. Measured in terms of adult
equivalent (Stock, 1991) was included in the model as a variable explaining variation in market
participation. Families with more household members tend to have more labour. Production in
general and marketable surplus in particular is a function of labour. Thus, family size
wasexpected to have positive impact on market participation but larger family size requires
larger amounts for consumption, reducing marketable surplus.

Education of the household head (EDUHH). The educational level of the individual is
dummywhich is one of the important factors preparing the individual to receive and utilize new
information to be more productive. It is assumed that the level of education of the household

17
head was positively affecting the participation in sorghum marketing.Different works also
hypothesized education status similar (yallew, 2016).

Livestock ownership (TLU): Livestock are permanent and a semi-permanent asset for farmers
in the study areawhich is continues. Their purpose is multi-dimensional ranging from being as
factor of production to a symbol of prestige. The study hypothesized that livestock amount
would have a positive relationship with the participation and intensity as those livestock owner
farmers could have enough to produce sorghum and can participate. A tropical livestock unit is
used to measure the ownership of livestock by sample households. The unit is composite
measure of livestock amount composed from each type of livestock species to ease the analysis
of the subject for readers.Based on strocket al. (1991) the livestock population number was
converted into tropical livestock unit (TLU)

Distance to market (DISMKT) is the distance from the home of the respondents to the nearest
market in kilo meter. The closer the market ,the lesser would be the transportation charges,
reduced transaction costs, reduced trekking time, and reduced other marketing costs, better
access to market information and facilities. This improves return to labor and capital and
increase farm gate price and the incentives to participate in economic transaction. For this
research it was expected to have positively effect.

Distance to main road (DISMROAD): is the distance in kilo meter from home of the
respondents up to asphalt road. Most of sorghum production is found in rural areas while the
demand and profitable market is found in the urban.

Access to marketing information (MKTIFO): is dummy variable refers getting the required
and useful information about the price and other conditions related to sorghum marketing.
Information is the driving force of marketing activities. Schemermeier and Light Foot,(2007)
Argue that small-scale farmers are oppressed and do not get a reasonable share of the final
consumer price due to poor access to marketing information. Therefore, well informing about
sorghum marketing ahead of time wasexpected to have its own impact on participation in
sorghum marketing.For these research it was hypothesized that positive effect.

18
Cultivated farm size (FARMSYZ) it is continuous which indicates the amount of land operated
in the survey year measured in hectare. From literature, the effect of farm size on participation.
Some of the literatures argue that farm size affect participation positively. For this research it
was hypothesized that positively effect.

Credit use (ACSSCREDIT) the accessibility of credit from appropriate sources helps farmers to
increase their participation in market. Hence, credit is hypothesized to influence participation of
use of improved sorghum varieties positively.Different works also hypothesized Access to credit
similarly (Pender and Dawit, 2007) this variable is dummy which takes 1 if the farmer obtained
credit and, 0 otherwise.
Experience in sorghum (EXP.PRODS) this variable is measured in terms of the number of
years of experience in sorghum of the household head which is continues; it is expected to have a
positive effect on marketing participation and sales amount.

Proportion of sorghum area (LANDFORSO) it is the share of sorghum area in the survey year
from the total cultivated farm land. The more the share of the sorghum area, the more attention
the farmers give to the crop and the more likely they participate in higher extent.

Offfarm (OFFINCOM)activities areforms of remittances obtained by household head, spouse

and other household members. Through improving liquidity, this income makes the household
more able to expand production and/or purchase from market. It also strengthens the household
position in coping with different forms of risks and e economic transactions.

Training: Farmers’ participation in research activities was also hypothesized to positively

explain sorghum participation and intensity as it determines their knowledge and information
level sorghum market and production. On-farm training and field visit are usually major
strategies used as a means of increase production and dissemination by extension system and
agricultural research centers. Therefore, for the interest of this study, farmers who either
participate in on-farm trials or field visit are considered as research participants.

Amount produce: it is continuous variable which indicates the amounts of production of

sorghum in small holder farmers.Assembling small quantities of grain from many smallholder

19
farmers raises marketing costs (Jacobs, 2008).The more they produces they freely participate in
market. So it hypothesized that have positive effect on participation of sorghum marketing.

Table 1: Description of the selected variables

Expected effect on(DV)

Participation Market
Variable Measurement
supply(amount of
sold)

Age of the household Continuous (+) (+)

head (year)

Sex of the household Dummy ( 1 if (+) (+)

head male 0 female)
Family size (AE) Continuous(AE) (+) (+)
Education of Dummy(1if (+) (+)
household head literate 0
illiterate )

(+)
(+)
amount to produced Continuous(quint
al)
distance to main road Continuous(KM) (+) (+)
Distance to market continuous (+) (+)
Access to marketing Dummy(1 yes 0 (+) (+)
information no)
Cultivated farm sizes Continuous(hecto (+) (+)
r)
Credit use Dummy(1 yes 0 (+) (+)
no)
Proportion of sorghum Continuous (+) (+)
area (hector)

20
experience of sorghum Continuous(year) (+) (+)
production
off farm income Dummy(1 yes 0 (+) (+)
no)
livestock Continuous(TLU) (+) (_)
training Dummy(1 yes 0 (+) (+)
no)

4. RESULT AND DISCUTION

This chapter presents descriptive results of the marketing and production problems of sorghum;
the out lets choice of sorghum market and socio-economic characteristics in relation to
probability and extent of participation. It also provides empirical results of the Tobit model with
explanation of significant variables.

4.1 Percentage market position of sample household

The distribution of sorghum producer farm households on their position in sorghum market
indicated that about 57% of the sample households were participant and the remaining 43 were
non-participant sample households.

Table 2: Percentage market position of sample household

Description Frequency % of the sorghum market participation of small holder

Participant 23 57
Non 17 43
participant
Source; survey data 2019

4.3 Proportion of household characteristics by market participation status

Education level of the household head: The results in Table 3 show that among market
participants, 37.5 were illiterate, 20 were literate. Among non-market participants, 2.5 % were
illiterate, 40 % were literate. The result of chi-square shows that Education level of the
household head was statistically significant. This implies that the education status of the
household heads has influences on market participation.

21
The access to Training the household head: The survey results shows that 40 % were not access
training and 60 % of the sample respondents were access training. In terms of market
participation, 37.5% of participant were not access training and 20% of participant were access
training .On the other hand, 2.5 % of non-market participants were not access training headed
households, while 40 % of non-participant were access to training The chi-square test in table 6
shows that Access to training is statistically significant. The implication shows training had more
relevant for participation to sorghum marketing as compared to those who are not access to
training.

Access to credit: in the study area credit has a great role in sorghum market participation and for
producing and selling large amount of sorghum. It services as for bought inputs for production.
Mostly the credit access is from Amahara credit and saving institution (ACSI).From the results
of chi 2 about 37.5% were not get access to credit whereas 62.5 % get access to credit. Among
market participant about 20% get access to credit and 37.5 % were not get credit. In the study
area mostly the non-participant was get credit (42.5%).it affects market participation statically.

Off farm: the chi 2 indicates about50 % of house hold head were had off farm income.interms of
market participation about 47.5 %were no off farm income and only 10% had off farm income.
In the study area the non-market participants of house hold head had 40% were had off farm
income. Whereas only about 2.5 had not get off farm income.

22
Table 3: Proportion of household characteristics by market participation status

Description Participant Non Over all χ2-

participant value
Sig.

Fre % fre % fre %

Sex Female 7 17.5 8 20 15 37.5 1.15 0.283**
Male 16 40 9 22.5 25 62.5
Education illiterate 15 37.5 1 1.2 16 40 14.33 0.00*
Literate 8 20 16 40 24 60
Training Yes 18 45 7 17.5 25 62.5 5.74 0.017**
No 5 12.5 10 25 15 37.50
Market information Yes 19 47.5 12 30 31 77.50 0.81 0.368**
No 4 10 5 12.5 9 22.50
Access to credit Yes 8 20 17 42.50 25 62.50 17.74 0.000*

No 15 37.50 0 0.00 15 37.50 17.74 0.00*

Off farm Yes 4 10.00 16 40 20 50 23.01 0.00*

No 19 47.5 1 2.5 20 50
Source;surveydata2019

4.4 Mean of household characteristics by market participation status

Age of the household head The survey results shows the mean and standard deviation of age of
participants of the respondent farm households was 50.39and 10.2 respectively. Whereas the
mean and standard deviation age of non participant was 31 and 5.77 respectively. The result of t

23
– test in table 5 shows Age of the household head was statistical significant that means there is
mean difference of age between participant and non participant.
Family SizeIn terms of family size, the result indicates that the average family size of market
participants were 5.24 in AER, while for non-market participants 2.33 in AER. The result of T-
test showed that family size is statistically significant meaning that family size between market
participants and non-market participants were has effect on market participation.

Total livestock holdingthe survey results shows the mean and standard deviation livestock
holding participants of the respondent farm household’s was7.65 and 3.67 TLU respectively.
Whereas the mean and standard deviation livestock holding of non participant was 3.09&1.29
TLU respectively. Livestock is the most important asset for small holder farmers in the study
area. It is used as a source of food, and income. Moreover, livestock is an indicator of wealth and
prestige in the community. In the study area, the sample households have livestock, which
includes cattle, sheep and got (small ruminant) and poultry. Based on strocket al. (1991) the
livestock population number was converted into tropical livestock unit (TLU), to facilitate
comparison between the two groups. The result of t-test shows that number of livestock owned
was statistically significant. This indicated that there is mean difference between market
participant and non-market participant farmers. On the other hand the mean of participant is
greater than that of non participant which means the market participants had more livestock than
non-market participants.

Experience of sorghum productionthe survey results shows the mean and standard deviation of
experience of sorghum production of participant the respondent was 24.33 and 10.55
respectively. Whereas the mean and standard deviation non participant was 6.35 and 4.86
respectively. The result of t – test in table 4showsExperience of sorghum productionof the
household head was statistical significant that means there is mean difference of Experience of
sorghum production between participant and non-participant.

Farm size the survey results show the mean and standard deviation of the farm size of the house
hold participants of the respondent farm households was 2.08 and 0.91 respectively. Whereas the
mean and standard deviation farm size of the house hold non participant was 0.68and 0.29
respectively. The result of t – test in table 4 shows farm size of the household head was statistical

24
significant that means there is mean difference of farm size between participant and non-
participant. Proportion of farm size for sorghum the survey results show the mean and standard
deviation of the farm size for sorghum of the participants of the respondent farm households was
0.66 and 0.33 respectively. Whereas the mean and standard deviation farm size for sorghum the
house hold non participant was 0.2and 0.18 respectively. The result of t – test in table 5 shows
farm size of sorghum the household head was statistical significant that means there is mean
difference of farm size for sorghum between participant and non-participant.

Table 4: Mean of household characteristics by market participation status

Variables Participants Non participant

Mean Std. Mean Std. Dev. T Sig
Dev. value
Age 50.39 10.02 31 5.77 7.14 0.0000*
Adult equivalent 5.24 2.17 2.33 .7677162 -5.30 0.0000*
Livestock 7.65 3.67 3.04 1.29 -4.95 0.0000*
Distance to market 3.62 2.03 3.22 2.05 -0.62 0.5418
Distance to main 2.75 1.55 2.34 1.68 -0.75 0.4590**
road
Experience of 24.33 10.70 6.35 4.86 -6.44 0.0000*
sorghum
production
Farm size 2.08 0.91 0.68 0.29 -6.10 0.0000*
Proportion of farm 0.66 0.43 0.2 0.18 -4.15 0.0002**
size for sorghum
Source; surveydata2019

4.5Test of Econometric Analysis Problems

4.5.1 Multicolinearity Problem

To study determinants of participation in sorghum marketing, data gathered from 40 farmers

were subjected to Tobit regression analysis. The statistical software used for analyzing the data
was Stata 14. Prior to running the Tobit regression model, both the continuous and dummy
explanatory variables were checked for the existence of multi-co linearity problem. The problem
arises when at least one of the independent variables is a linear combination of the others. The

25
existence of multi-co linearity might cause the estimated regression coefficients to have the
wrong signs and smaller t-ratios that might lead to wrong conclusions. There are two measures
that are often suggested to test the presence of multi-co linearity. These are: Variance Inflation
Factor (VIF) for association among the continuous explanatory variables and contingency
coefficients for dummy variables Gujarati (2003). Multicolinearity problems among the
hypothesized explanatory variables were tested. The VIF results of each continuous variable
were found to be less than 10. (Appendix table 8)

Goodness of fit

The techniques used to assess the goodness of fit of a model are, pseudo R2 and prob>chi2. This
means that as the table 5 shows, the pseudo R2 (0.58) is between 1 and 0 and the prob>chi2
(0.000) is significant at 1% significant level. So that this indicates that the model is good or
adequate. The test is used to accept or reject the alternative hypothesis “the model adequately
describes the data. If the significance level of the test is less than 0.05, it indicates that the
alternative hypothesis is rejecting and the null hypothesis is accepted. In the case of this study,
the significance level of the test was found to be less than 0.05 as shown in the Table 6 so that
the model is good or adequate.
Model output

Using the Tobit model was appropriate to identify determinants of probability and intensity of
sorghum market participation. 15 variables were hypothesized to explain determinants of
decision and extent of sorghum market participation of smallholder farmers. Out of these four of
the variables were found to be significant. These were education, amount produced, market
information access to credit.

4.6 Econometric Result

4.6.1 Determinants of sorghum market participation

After test the econometric Problems just go economic result. Accordingly the Econometric
Result of Determinants of sorghum market participation is shown below tables (table 5and 6).

26
Table 5: maximum likelihood estimates of Tobit model

Variables Coef. Std. t P>t

Err.

Age* 0.07 0.04 1.85 0.076

Education ** -1.00 0.45 -2.21 0.036

Adult equivalent 0.03 0.13 0.20 0.842
Tropical livestock unit -0.13 0.09 -1.51 0.142
Distance to market 0.09 0.19 0.45 0.653
Distance to main road -0.40 0.27 -1.48 0.150
Experience -0.05 0.04 -1.40 0.174
Farm size 0.05 0.34 0.13 0.894
Land for sorghum 1.00 0.67 1.51 0.144
Amount produced *** 0.39 0.11 3.48 0.002
training 0.08 0.38 0.21 0.835
Market information 0.64 0.39 1.63 0.116
Access to credit** -0.87 0.44 -1.97 0.059
Off-farm income -0.81 0.57 -1.42 0.169
_cons -0.54 1.30 -0.41 0.685

/sigma 0.66 0.10 0.45

Source the survey 2019

Tobit regression Number of obs = 40

LR chi2 (14) = 81.00
Prob > chi2 = 0.0000
Log likelihood = -28.713749 Pseudo R2 = 0.5851

Note: Dependent variables: - is amount to sold

Left Censored is indicates that sample as dependent variable that is household didn’t participate
(sold) even if they produce of sorghum that they restricted from decision to participation and
sold in the marketing of sorghum because of small amounts of production restricted. Due to this
the left censored indicates non participant.

27
Uncensored, indicates that the small holders who produced and participated in market that is not
restricted from decision to participation and sold. The right-censored observations indicates that
those small holders who are not totally produced and participating in marketing of sorghum.
(Refer appendix table 12 of Tobit regression model.)

Left-censoredobservations,uncensored observationsand right-censored observations of house

hold described the table below.

left-censored observations at uncensored observations right-censored observations

amount of sold <= 0

17 23 0

Source the survey 2019

4.5.2Marginal effects of significant explanatory variable

Table 6: Effects of changes in the significant explanatory variable

Variable Change Change in Change in extent of

probability participation
among the
dy/dx dy/dx
whole
dy/dx
Age* 0 .07 0.01 0 .06
Education** -1.00 -0.12 -0.90
Adult equivalent 0. 03 0 .00 0.02

28
Tropical livestock -0.13 -0.02 -0.11
unit
Distance to market 0.088 0.01 0 .07
Distance to main -0.40 -0.05 -0.34
road
Experience -0.05 -0.01 -0.05
Farm size 0.05 0.01 0.04
Land for sorghum 1.00 0.13 0.84
Amount 0. 39 0.05 0.33
produced***
Training 0.08 0.01 0 .07
Market information 0.63 0 .13 0 .49
Access to credit** -0.87 -0.10 -0.75
Off-farm income -0.81 -0.12 -0.67
Source the survey 2019

***, ** and * are statistically significant at 1%, 5% and 10% significance level respectively.

Dy/dx is for discrete change of dummy variable from 0 to 1

Age: Age was measured in years as a continuous variable. Previous studies report mixed results
on the relationship between age and market participation. For example, Mathenge et al. (2010)
found that the age of the household head had a positive and significant effect on market
participation of marginalized and poor smallholders in Kenya. It was one of the explanatory
variables, which had positive relationship with the probability of market participation and extent
of participation. The result showed that, on average, an increase age per year increases the
probability of sorghum market participation by 1% and each additional age per year increase the
extent of sorghum market participation increased by 0.06 for the extent of sorghum market
participation of producers at 10% of significance level.thise result indicates that as small holder
producers age increased their experience and asset holding capacity increase so that as their
experience increase their production capacity increases so it increase their participation and
amounts of sold.
Education of the household head (EDUHH): It was one of dummy variable which had
negative relationship with the probability of market participation and extent of participation. The
result indicated that, on average, the small farmer producers were educated (literate) the
probability sorghum marketing participation were decreasing by 12% and the extent of sorghum

29
market participation also decreased by 0.90quintal.but it was not with similar (yallew, 2016)
since his result was positive. This implies thatwhen the peoples more and more educated they
move to do secondary or industrial activities rather they participated in sorghum market. Were
small holder producers more educated the do not participate in sorghum marketing since they
moves another investment and business activities. Totally we concluding that the small holder
producer in the study area were more educated they needs technological and modernized
production and marketing system, but due to different environmental and geographical effect can
not apply technologies. The educated farmers can not produced through traditional plough
system there at this time there were no participate and sold the sorghum rather they search other
alternative activities.
Amount produced: was measured in quintal as a continuous variable. It was one of the
explanatory variables, which had positive relationship with the probability of market
participation and extent of participation. The result showed that, on average, an increase amount
produced increases the probability of sorghum market participation by 50% and each additional
amount of produced increase the extent of sorghum market participation by 0.33 for the extent of
sorghum market participation of small holder producers in the study area. It is similar with that
of the work of assembling small quantities of grain from many smallholder farmers’ raises
marketing costs (Jacobs, 2008).this indicates that as the small holder producers were small
amount raise cost of market and production. So that to sold enough amounts the small holder
producer first produced sorghum beyond consumption. Since they supply to market from it lefts
from consumption.

Access to credit: credit was one of the explanatory variables, which had negative relationship
with the probability of market participation and extent of participationwhich is oppose with
hypothesized and Different works (Pender and Dawit, 2007). The result indicated that, on
average, Farmers having access to credit for sorghum marketing were decreasing the probability
of market participation by 10% and 0.75 quintal for the extent of sorghum market participation.
This implies that the amount of credit access had no a vital role for market participation and
market extent of sorghum.becuse of that the small holder sorghum producer in the study area
where get credit accesses directly they do not use for purchasing of agricultural inputs like seed
and fertilizer rather used for non-farming and off farming activities. Like trade, bee hives,
fattening activities, and diary.
30
4.6 The Outlet choice of sorghum producer

The out let choice indicates that for whom to distribute the sorghum productions. Just different
consumers were found in Teda kebele to consume the sorghum. Among them farmers, whole
sellers, rural consumers, urban consumers, retailers and for self-consumption. From table 8
analysis result indicates most of the small holder producer farmer’s use for their home
consumption. In the study area about 42 % of the small holder producer uses their home
consumption. Just these indicate that the non-participants were not selling their sorghum
production. Largely About 22.5% were the rural consumers. That is the small holder farmers in
the study area were sell their sorghum for rural consumer. In study area there was no much more
whole sellers (5%) and retailers (2.5%).because most of the small holder producer farmers
produce small amounts of sorghum and less participant in market. in small extent just about 10%
were farmers, since farmers were use for seed.

Table 7: Outlet choice analysis of sorghum of sorghum producer

For whom sell(out lets) Freq. Percent

Farmers 4 10.00
Whole seller 2 5.00
Rural consumer 9 22.50
Urban consumer 7 17.50
Retailer 1 2.50
Self-consumed 17 42.50
Total 40 100.00
Source the survey 2019

4.7 The Problems in production and marketing of Sorghum

There are different problems were exist in the production and marketing of Sorghum in the study
area of small holderproducers farmers. From table 9 results indicates that poor soil conservation
activities were the dominant problem in lay Teda and tach Teda kebele sorghum producer
farmers. These poor soil conservation activities also lead for decrease fertility of the soil. About
82.2 % of small holder producers in the study area were faced a problem of Poor soil
conservation activities. Due to these about 72.2 % of the observed farmers were faced a problem

31
 of low fertility of the soil in the study area. In the study area infrastructure problems (80%) and
transport problems (72.5) are also other marketing related problems of small holder sorghum
producers. In the study area just demand for sorghum is high relative to other problems low
demand for sorghum is low. Only 33.33 % were faced by this problem.The infrastructure (road,
communication device) is dominant marketing problem in the study area (80%) were faced in
such problems. this indicates that there is low provision of public infrastructures in the study
area.

Table 8: analysis of the Problems in production and marketing of Sorghum

Main Problems Yes (%) No (%)

Low fertility of the soil 72.5 27.5
Poor soil conservation activities 82.5 17.5
Shortage of rain 57.5 42.5
Seed shortage 50 50
Shortage of land 65 35
weed infestation 52.5 47.5
Price fluctuation 52.5 47.5
Lack of transport 72.5 27.5
Lack of infrastructure (road, communication device) 80 20
Low demand 33.33 66.6
Source the survey 2019

32
 5. CONCLUSION AND RECOMMENDATION
5.1 Conclusion

The study was conducted in Gonder zuria woreda (kebele of lay Teda &tach Teda), Amhara
regional state. The main purpose of this study was to examine the factors determining sorghum
market participation of smallholder farmers. Data were obtained both from primary and
secondary sources. The primary information was collected by house hold interview schedule
from 40 sample households who produced sorghum in the year 2019 through formal sample
survey. Moreover, secondary data were extracted from relevant sources to supplement the
primary data.The descriptive statistics revealed that about 57% were market participant and the
rest 43% of the sample households were non-market participant in sorghum market. According
to Tobit model analysis from the significant variablesage, amount produced, are positively affect
the amount of sold and decision of sorghum marketing by small holder farmers at 5%. The
Education of the household head and access to credit are negatively affect the amount of sold and
decision of sorghum marketing by small holder farmers at 10% and 5%respectivly.In the study
area most of the participant was sold to rural consumer since it was tested Outlet choice of
sorghum producer. Different problems were faced in production and marketing of Sorghum the
most marketing related problemis Lack of infrastructure (road, communication device).

5.2 Recommendation

Based on the findings obtained from econometrics analysis of the study, the following
recommendations are made:
 The age of house hold has positively relation with participation to decision and amount to
sell so that the government should encourages the old age production stages.
 The amount of produce influenced market participation positively. Hence, policies should
improve farmer’s sorghum production capacity through Introduction of technology to

33
 consider the possibility of selection varieties of improved seed and other subsidies
including fertilizers for better production in kebeles where it is feasible is recommended.
 The education of house hold has negative effects on participation to decision and amount
to sell so that the government should giving informal education like training through
extension agents rather giving formal education since if small holder producer farmers
were more educated they moves to service sector area and non farming.
 The government and other concerned bodies should pay due attention to promote
production systems and develop formal sorghum and sorghum product marketing
Systems in study area. Especially in the area dissimilation of information about the
pricing, demand and supply of sorghum in study area should be addressed.The
government should be give awareness for long time to develop their skill to market
activity, Provision of technical skills training in sorghum market, processing and
marketing is recommended.
 Different marketing problems like poor soil conservation Low fertility of the soil Lack of
transport Low fertility of the soil were faced in the production and marketing of
Sorghum. So that the government should be aware the small holder farmers through by
training and assemble them to conserve the soils. not only this but all so government
should be facilitating the infrastructures like road ,communication system for a sustained
amount of production and amounts of sold of sorghum
 In the study area there is lack of infrastructures so that government should provision the
infra structures. Since it was one of marketing related problem.

34
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Appendix1

Table 9: Variance inflation factor for continuous variable

Variable VIF 1/VIF

Farm size 6.92 0.144408
Distance to market 6.81 0.146841
Distance to main 5.83 0.171624
road

Adult equivalent 5.43 0.184232

Experience 5.17 0.193481
Landfor sorghum 4.45 0.224955
Amount produced 4.05 0.246734
Livestock 3.38 0.295475
Mean VIF 5.26

Table 10: Contingency coefficient

. corr eduhh training extservice acsscredit offincom
(obs=40)

eduhh training extser~e acsscr~t offincom

eduhh 1.0000
training -0.3162 1.0000
extservice . . .
acsscredit 0.3162 -0.0667 . 1.0000
offincom 0.5103 -0.2582 . 0.6713 1.0000

Tobit regression
Log likelihood = -28.713749
Number of obs = 40
LR chi2 (14) = 81.00
Prob > chi2 = 0.0000

39
Pseudo R2 = 0.5851

Table 11: Tobit regression

Amount to sold Coef. Std. Err. t P>t [95% Interval]

Conf.
age . . 1.85 0.076 -.0078847 .
0693754 037586 146635
5 5
Education -1.00041 . - 0.036 -1.929754 -.07106
452119 2.21 5
3
Adult equivalent . . 0.20 0.842 -.2348492 .
0254284 126623 285706
2 1
Tropical livestock -.130482 . - 0.142 -.3077804 .
unit 1 086254 1.51 046816
3 2
Distance to market . . 0.45 0.653 -.3065813 .
0871183 191531 480817
9 8
Distance to main -.403714 . - 0.150 -.963263 .
road 3 272216 1.48 155834
4 5
Experience -.054709 . - 0.174 -.1351436 .
039130 1.40 025725
8 5
Farm size . . 0.13 0.894 -.6566094 .
0459072 341769 748423
2 8
Land for sorghum 1.00616 . 1.51 0.144 -.3678626 2.38019
6 668455 6
1
Amount produced . . 3.48 0.002 .1609113 .

40
 3935443 113174 626177
2 2
training . . 0.21 0.835 -.6930589 .
0791828 375689 851424
9 4
Market . . 1.63 0.116 -.1686244 1.44213
6367558 391811 6
6
Access to credit -.870356 . - 0.059 -1.777592 .
7 441363 1.97 036878
3 6
Off-farm income -.810932 . - 0.169 -1.987727 .365863
572502 1.42
1
_cons -.536782 1.3067 - 0.685 -3.222743 2.14917
8 0.41 8
/sigma . . . .8679749
6575176 102385 447060
9 4

17 left-censored observations at amtsold <= 0

23 uncensored observations

0 right-censored observations

Marginal effects after Tobit

y = Linear prediction (predict)

= 1.1614096

Table 12: Marginal effects after Tobit (probability of participation)

Variable dy/dx Std. z P>z [ 95% C.I. ] X

Err.
41
age .0693754 . 1.85 0.065 -.004293 .143043 42.15
0375
9
Education -1.00041 . -2.21 0.027 -1.88655 -.114272 .6
4521
2
Adult .0254284 . 0.20 0.841 -.222748 .273605 4.004
equivalent 1266
2
Tropical -.1304821 . -1.51 0.130 -.299537 .038573 5.68845
livestock unit 0862
5
Distance to .0871183 . 0.45 0.649 -.288277 .462514 3.45125
market 1915
3
Distance to -.4037143 . -1.48 0.138 -.937249 .12982 2.563
main road 2722
2
Experience -.054709 . -1.40 0.162 -.131404 .021986 16.7
0391
3
Farm size .0459072 . 0.13 0.893 -.623948 .715763 1.48687
3417
7
Land for 1.006166 . 1.51 0.132 -.303981 2.31631 .462913
sorghum 6684
6
Amount .3935443 . 3.48 0.001 .171727 .615362 3.9
produced 1131
7
training .0791828 . 0.21 0.833 -.657156 .815521 .625
3756
9
Market .6367558 . 1.63 0.104 -.131181 1.40469 .775
information 3918
1
Access to -.8703567 . -1.97 0.049 -1.73541 -.0053 .625
credit 4413
6
Off-farm -.810932 . -1.42 0.157 -1.93302 .311152 .5
income 5725

42
(*) dy/dx is for discrete change of dummy variable from 0 to 1

Marginal effects after Tobit

y =E (amtsold|amtsold>0) (predict, e (0,.))

= 1.2187476

Table 13: Marginal effects after Tobit (intensity)

Variable dy/dx Std. z P>z [ 95% C.I. ] X

Err.
age . .03083 1.89 0.05 -.00227 .118596 42.15
0581617 9 2
Education -.8545757 .37229 - 0.02 - -.12490 .6
2.30 2 1.58425 6
Adult .0213183 .10613 0.20 0.84 -.18668 .229326 4.004
equivalent 1 9
Tropical -.109391 .07041 - 0.12 -.24739 .028609 5.6884
livestock 1.55 0 1 5
unit
Distance to .0730367 .15897 0.46 0.64 -.23853 .384611 3.4512
market 6 8 5
Distance to -.338459 .22091 - 0.12 -.77143 .094515 2.563
main road 1.53 5 3
Experience -.045866 .03248 - 0.15 -.10952 .017796 16.7
1.41 8 8
Farm size .0384869 .28714 0.13 0.89 -.52429 .601264 1.4868
3 7
Land for .8435325 .56799 1.49 0.13 -.26971 1.95677 .
sorghum 8 46291
3
Amount .3299329 .10054 3.28 0.00 .132887 .526979 3.9
produced 1
training .0661044 .31083 0.21 0.83 -.54311 .675322 .625
2 3
Market .4890004 .27143 1.80 0.07 -.04299 1.021 .775
2 7
Access to -.7490587 .36921 - 0.04 - -.02542 .625
credit 2.03 2 1.47269 4
Off-farm -.671571 .45382 - 0.13 - .217904 .5
income 1.48 9 1.56105

43
(*) dy/dx is for discrete change of dummy variable from 0 to 1

Table 14: Conversion factors to estimate Tropical Livestock Unit equivalent

Animal Category TLU Animal Category

Calf 0.25 Donkey (young)
Weaned Calf 0.34
Heifer 0.75 Sheep and Goat
(adult)
Cow and Ox 1.00 Sheep and Goat
(young)
Horse 1.10 Chicken
Donkey (adult) 0.7

Table 15: Conversion factor used to compute adult equivalent rate

Age Group (years) Male Female

< 10 0 0
10 – 13 0.2 0.2
14 – 16 0.5 0.4
17 – 60 1.0 0.8
> 60 0.7 0.5
Source: Storcket at. (1991)

44
 APPENDIX-2

COLLEGE OF AGRICULTURE AND ENVIRONMENTAL SCIENCE

DEPARTMENT OF AGRICULTURAL ECONOMICS

QUESTIONNAIRE ON DETERMINANTS OF PARTICIPATION ON SORGHUM

MARKETIN
Household interview schedule
1. Name of Kebele Administration ____________________
2. Distance of the house to the nearest market centre ___ Km
3. Distance of the house to the nearest development agents’ office? _____Km
4. Distance of the house to the asphalt road (to access car transport)? _____Km
5. Sex of household head ______0=Female, 1 =Male
6. Age of household ____________Years
7. Educational status (√) 0. [illiterate ] Cannon read and write 1. [literate ] Just can read and
write
8. How many of children are in school__________

9. Family size(in adult equivalent)

Age in years <10 10-13 14-16 17-60 >60

Number of Male
Number of Female

10. How long have you practiced production of sorghum products?_______________ years
11. Total crop land 2018 production season: ______timad _____ ha. (Note: 1 ha = 4 timad or 1
timad = 0.25 ha)
12. livestock Number: Oxen/bulls [______ ], Cows/heifers [_____ ], Calves [ ________], Goats [
_______], Sheep[____ ], Donkeys [_______ ], Horses [____ ], Camels [_____ ], Mules
[ ______], Chickens [______ ], Bee hives [____ ] , Others______

45
13. Did you sell sorghum in 2018? ______0=No, 1=Yes,
14. If yes, what were the amounts produced and sold in 2018. To whom did you sell your
production?

Typ Area(ha Amount amount Amount Price(Birr/qt To whom

e ) produce consum sold(qt)201 ) you
d e 8 commonl
2018(qt) y sell?
1

Code for whom you sell: 0). Farmers 1).Wholesalers 2) Rural consumers 3).Urban consumers
4).Retailers 5) self consumption
15. Have you ever participated in cereal production system training in the last three years? (√) 1.
[ ] Yes 2. [ ] No
16. Do you have marketing information in last year? (√) 1. [ ] Yes 0.[ ] No
17. Did you get extension service on sorghum production practices before? (√) 1. [ ] Yes 0. [ ]
No; if yes how much per year……………………………
18. Did you obtain credit in 2018? ________0=No, 1= Yes; If yes, how much did you obtain?
______________Birr

19. Do you have off/non-farm income source 1. Yes 2. No

46
20. What are the main bottlenecks in production and marketing of Sorghum?

Problems in production and marketing of Sorghum

No Main Problems 1. Yes 0. no

1 Low fertility of the soil
2 Poor soil conservation activities
3 Shortage of rain
4 Seed shortage
5 Shortage of land
6 Shortage of labor High weed infestation
7 Price fluctuation
8 Lack of transport
9 Lack of market information
10 Lack of infrastructure (road, communication
device)
11 Low demand

47