MARKET CHAIN ANALYSIS OF POTATO IN ALLICHO WURIRO

WOREDA, SILTIE ZONE,

SOUTHERN ETHIOPIA

M.SC THESIS IN DEVELOPMENT ECONOMICS

BY ABDULKERIM NURI KETERA

MAJOR ADVISOR: - ABEBE A. (PHD)

CO-ADVISOR:- GETACHEW ERMUTO (MSC)

WACHEMO UNIVERSITY HOSSANA, ETHIOPIA

JUNE, 2023

HOSSANA,ETHIOPIA

I
 Table of Contents
APPROVALE SHEET...................................................................................................................V
EXAMINERS’ APPROVALE SHEET........................................................................................VI
DEDICATION.............................................................................................................................VII
STATEMENT OF THE AUTHOR............................................................................................VIII
BIOGRAPHICAL SKETCH.........................................................................................................IX
ACKNOWLEDGEMENTS............................................................................................................X
ACRONYMS AND ABBREVIATIONS.....................................................................................XI
ABSTRACT...................................................................................................................................XII
CHAPTER ONE..............................................................................................................................1
INTRODUCTION...........................................................................................................................1
1.1 Background of the Study........................................................................................................1
1.2 Statement of the problem.......................................................................................................4
1.3 Objectives of the Study..........................................................................................................5
1.3.1 General Objective............................................................................................................5
1.3. 2 Specific Objectives.........................................................................................................5
1.4. Research Questions...............................................................................................................5
1.5 Scope and Limitation of the study.........................................................................................6
1.6 Significance of the study........................................................................................................6
CHAPTER TWO.............................................................................................................................7
LITERATURE REVIEW................................................................................................................7
2.1. Theories and Basic Concepts................................................................................................7
2.1.1. Marketing system...........................................................................................................8
2.1.2. Marketing efficiency......................................................................................................8
2.1.3. Marketing channel..........................................................................................................9
2.1.4. Market chain analysis.....................................................................................................9
2.2. Approaches to the Study of Agricultural Marketing...........................................................10
2.2.1. Functional Approach....................................................................................................10
2.2.2. Institutional Approach..................................................................................................10
2.2.3. Commodity approach...................................................................................................11

I
 2.3. Methods of Evaluating Efficiency of Agricultural Marketing System...............................11
2.3.1. Structure of the market.................................................................................................12
2.3.2. Conduct of the market..................................................................................................13
2.3.3. Performance of the market...........................................................................................13
2.4 Empirical Literature Review................................................................................................14
CHAPTER THREE METHODOLOGY.......................................................................................18
3.1. Description of the Study Area.............................................................................................18
3.1.1. Overview of Siltie zone................................................................................................18
3.1.2. Location, area, population and administrative division of allicho wurriro district.....18
3.2. Methods of Data Collection and Data Sources...................................................................19
3.3 Sampling Techniques and Sample Size...............................................................................19
3.4 Methods of data analysis......................................................................................................21
3.4.1 Descriptive analysis.......................................................................................................21
3.4.2 Econometric analysis....................................................................................................27
3.4.3 Definition of Variables and Hypothesis........................................................................28
CHAPTER FOUR.........................................................................................................................32
DATA ANALYSIS AND INTERPRETATION...........................................................................32
4.1 INTRODUCTION...............................................................................................................32
4.2 General Information (Demographic Data) of the Respondents...........................................32
4.1.2. Access to institutional service of farm households head..............................................36
Input utilization......................................................................................................................38
4.2. Demographic characteristics of traders...............................................................................39
4. 2.1 potato market actors, their linkages and their function/ Roles.....................................40
4.2.2 Potato marketing channels:-..........................................................................................41
4.3 Potato Market Structure, Conduct, and Performance..........................................................43
4.3.1 Structure of potato market.............................................................................................43
4.3.2 Conduct of potato market..............................................................................................45
4.3.3 Market performance......................................................................................................49
4.4 Econometric Results............................................................................................................50
4.4.1 Pearson Correlation Analysis........................................................................................50
4.4.2 Result of Regression Assumptions Tests of the study..................................................53

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 4.5 Multiple Linear Regression Analysis...................................................................................58
CHAPTER FIVE...........................................................................................................................65
5.1SUMMARY, CONCLUSIONS AND RECOMMENDATIONS.........................................65
5.2. Recommendations:..............................................................................................................68
Referanceses..................................................................................Error! Bookmark not defined.
Appendix 1(Farmers' questioners).................................................................................................75
Appendix 2(Questionnaire for traders)..........................................................................................78

III
 MARKET CHAIN ANALYSIS OF POTATO፡ THE CASE OF ALLICHO
WURRIRO WEREDA OF SILTIE ZONE, SOUTHERN ETHIOPIA.

BY ABDULKERIM NURI KETERA

A THESIS SUBMITTED TO THE DEPARTMENT OF ECONOMICS

COLLEGE OF BUSINESS AND ECONOMICS, SCHOOL

OF GRADUATE STUDIES WACHEMO UNIVERSITY HOSSANA,

ETHIOPIA

IN PARTIAL FULFILLMENT OF THE REQUIREMENTS FOR THE

DEGREE OF MASTER OF SCIENCE IN ECONOMICS (DEVELOPMENT
ECONOMICS)

June, 2023

IV
 APPROVALE SHEET
SCHOOL OF GRADUATE STUDIES

WACHEMO UNIVERSITY
This is to certify that the thesis entitled; Market chain analysis of potato; the case of allicho
wurriro wereda Siltie zone, SNNPR, Ethiopia was submitted in partial fulfillment of the
requirements for the degree of Master’s with Development Economics. A thesis submitted to the
department of Economics College of Business and Economics school of graduate studies
Wachemo University Hossana, Ethiopia. Abdulkerim nuri authorized out prerequisites and that
the thesis is submitted to the department under our supervision. Therefore, we recommend that
the student has fulfilled the requirements and hence hereby can submit the thesis to the
department.

ABDULKERIMNURi  ---------------------- ------------------

Name of Student Signature Date

ABEBE A. (PHD)                  _______________ _______________

Name of Major Advisor Signature Date

GETACHEW E. (MSC) _______________ _______________

Name of Co-Advisor Signature Date

V
 EXAMINERS’ APPROVALE SHEET
SCHOOL OF GRADUATE STUDIES

WACHEMO UNIVERSITY
As member of the examining board of the final M.Sc. open defense, we certify that we have read
and evaluated the thesis prepared by; Abdulkerim nuri. Entitled; Market chain analysis of potato;
The Case of allicho wurriro wereda, Silie Zone, SNNPR, Ethiopia and recommended that it is
accepted as partial fulfilling the thesis requirement for the degree of M.Sc with development
economics.

------------------------------------ _______________ _______________

Name of Chairman Signature Date

Abebe A.(PHD)                                         _______________ _______________
Name of Major Advisor Signature Date

Getachew E. (Msc.)         _______________ _______________

Name of Co-Advisor Signature Date

________________________ _______________ _______________

Name of Internal Examiner Signature Date

________________________ _______________ _______________

Name of External Examiner Signature Date

________________________ _______________ _______________

SGS Approval Signature Date

VI
 DEDICATION
I dedicate this Thesis to my twin brothers Nesre Nuri and Shemsedin Nuri their endless love,
support and encouragement throughout my pursuit for education. My wife Sekina sultan and
daughters have never left my side and very special.

I dedicate this work and give special thanks to my best friend Abdi sheycho for being there for
me throughout the entire msc program.

VII
 STATEMENT OF THE AUTHOR
I declare that this thesis is my original work and that all sources of material used for this thesis
have been dually acknowledged. The thesis has been submitted in partial fulfillment of the
requirement for a M.Sc. degree at the Wachemo University and is deposited at the university
library to be made available to borrowers under the rules of library. I solemnly declare that this
thesis is not submitted to any other institution anywhere for the awards of any academic degree,
diploma or certificate.

Brief quotations from this thesis are allowable without special permission provided that accurate
acknowledgement of source is made. Requests for permission for extended quotation from or
reproduction of this manuscript in whole or in part may be granted by the head of the major
department or the Dean of the School of Graduate Studies when in his or her judgment the
proposed use of the material is in the interests of scholarship. In all other instances, however,
permission must be obtained from the author of thesis.

Name:- Abdulkerim nuri Signature:

-----------------

Place: Wachemo University,

Date of Submission: , 2023

VIII
 BIOGRAPHICAL SKETCH
The author was born in May 1992 in Siltie Zone. He attended his primary education (1-8 grade)
in Gindo Elementary School, ,completed his junior secondary education (9-10 grade) in Kutere
Secondary School and the author attended preparatory education (11-12 grades) in Werabe
Preparatory School.

After he successfully passed the Ethiopian School Leaving Certificate Examination (E.S.L.C.E.),
the author joined Jimma University, College of Natural and Computational Science with
department of statistics in 2001 and graduated in June 2004 with a BSc degree in Statistics.
Soon after his graduation, he was employed by Revenue authority Office of Allicho Wurriro
woreda.

The researcher works woreda Revenue authority head office until he rejoined Wachemo
University in October 2013 E.C for his MSc in Development Economics program.

IX
 ACKNOWLEDGEMENTS
First my praises to Allah who created this world of knowledge for us: Alhamdulillah (Thank
you) for your giving me health, strength, patience and support for completion of the study.
Primarily, I would like to extend my heartfelt thanks to my major advisor Dr. Abebe A. for his
valuable advice, insight and guidance to the completion of the research work. I am again
thankful to my co-advisor, Getachew E. (Msc.) for his valuable guidance and support throughout
my research work. Both have worked hard starting from proposal development to keep me on the
right track and accomplishment of the study.

I owe thanks to Allicho Wurriro Administration, Woreda Finance and development office for
financing the education and for providing me other required facilities that is useful for my
success.It is agreat pleasure to extend my appreciation to staff members of woreda revenue
authority for their facilitation of the study process and encouragement. My thanks also go to
Allicho Wurriro woreda Agricultural office staff members for their encouragement and gracious
support. I am grateful to the Werabe Agricultural Research Center staff and Silite Zone
Agricultural office staff members for helping me during my research work. My acknowledgment
was not do justice if I fail to mention the farmers, Development agents (DAs) and trader
households who took part in the survey work. I would like to thank them all for sharing their
precious time with me. I would like to extend my heartfelt gratitude to Mr. Abdi Sheycho for
facilitating every arrangement required for my study. Truly speaking without his cooperation I
could not complete my research work.

Finally, my special thanks also go to my dearest wife Sekina Sultan, my daughters for their
patience during my study work mainly done at the expense of the time they deserved to have
with me. And I would like to express my heart-felt gratitude to my classmate students specially
my class met and our representative Melese for his endless support in all time.

X
 ACRONYMS AND ABBREVIATIONS
ATA Agricultural Transformation Agency

BLUE Best Linear Unbiased Estimators

CSA Central Statistical Agency

DA Development Agent

EGTE Ethiopian Grain Trade Enterprise

ETB Ethiopian Birr

FAO Food and Agriculture Organization

GDP Gross Domestic Product

KM Kilo Meter

M.a.s.l Meter above Sea Level

MT Metric Ton

NGOs Non-Governmental organizations

SLMP Sustainable Land Management Program

SNNPR Southern Nations Nationalities and Peoples Region

SZAO Siltie Zone Agricultural Office

TLU Tropical Land Unit

UNIDO United Nations Industrial Development Organization

USAID United States Agency for International Development

VIF Variance Inflation Factors

XI
 ABSTRACT
Hundreds of millions of people in developing countries like Ethiopia depend on potatoes for their
survival and use as food and source of cash income for majority of the smallholder farmers.
Potato’s short cropping cycle allows it to serve as a hunger-breaking crop, and makes it suitable
for intercropping and double cropping. However, the supply of potato in
the study area still can’t satisfy the existing market demand and the farmers are not benefited
from the market price. This study was aimed at a market chain analysis potato crops to the
market with specific identify potato market chain actors and their respective roles, to analyze the
market structure, conduct and performance of potato market, to analyze the determinants of
potato supply to the market in the study area. The data were obtained from both primary and
secondary sources. Using simple random probability sampling technique, the sample size of 147
smallholder potato producers were selected to collect primary data through semi-structures
questionnaires and both descriptive statistics and econometric analysis were used to analyze the
data collected from potato producers and traders involved in the market. The market revealed
that the major marketing actors are Market supporters, producers, wholesalers, retailers,
brokers and consumers. Market supporters are woreda office of agriculture and rural
development, woreda office of trade and industry and woreda administration. The result of the
multiple regression model indicated that volume of market supply of potato is positively and
significantly affected by size of land allocated for potato, amount of potato produced, use of
agricultural impute and distance to nearest market and also negatively and significantly affected
by lack of market information and lack of road access. Therefore, policies aiming at increasing
households’ awareness of potato marketing, improving farmers’ knowledge and experience on
potato production, improving productivity and volume sales of potato, expanding accessibility of
government infrastructure, improving land management practices and create additional land for
potato production, a well-organized market intelligence information system are recommended to
accelerate the chain’s development.

Keywords: S-C-P, Multiple linear regression models.

XII
 CHAPTER ONE
INTRODUCTION
1.1 Background of the Study
The potato (Solanum tuberosum L.) first used as food in the highlands of the Andes in South
America (Hawkes, 1978). Potato belongs to the Solanaceae family, genus Solanum. It`s life
cycle is a perennial and spreads itself by vegetative propagation. Potato is grown as an annual
species for meet insufficient food problem and commercial purposes (Graham et al., 2011).

Globally productivity of potatoes was 388 million tons, led by China with 64% of the world
total. Now the biggest potato producer, and almost a third of all potatoes are harvested in China
and India is secondary producer (FAOSTAT, 2019). Potato (Solanum tuberosumL.) is the
world’s most important root and tuber crop worldwide. Hundreds of millions of people in
developing countries depend on potatoes for their survival and use as food and source of income;
its cultivation is expanding strongly in the developing world, where cultivation and nutritive
content has made it a valuable food security and cash crop for millions of farmers (FAO, 2009).
Potato’s short cropping cycle allows it to serve as a hunger-breaking crop, and makes it suitable
for intercropping and double cropping, especially in cereal-based production systems in Africa
and Asia (Cromme et al. 2010).

In Africa the top potato producers were Algeria and Egypt. Ethiopia was 9th potato producer
country in Africa (FAOSTAT, 2019). The current average potato yield in Africa has been
reported to be about 13.22 t ha-1 which is under potential of productivity that is 20.11 t ha-
1 .And also in Sub- Saharan Africa, Kenya, Uganda and Ethiopia are among the ten African
countries with the largest area allotted to potato production (FAOSTAT,2016) as cited by
(Gildemacher et al.,2009) . According to the report of (FAOSTAT, 2019) and ( CSA, 2018) the
productivities’ of potato in Ethiopia was 13.8 t ha-1 and 17.58 t ha-1 respectively.

According to the survey results of CSA (Central Statistical Agency) for the year 2009/2010, root
crops covered more than 1.65% of the total area under all crops cultivated in the country. From
this total area allocated to root crops, 32.88% of it is covered by potato while Sweet potatoes and
taro (‘Godere’) cover 25.19% and 24.6% respectively.

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Root crops like potatoes, sweet potatoes and taro/’Godere’ are among the major food crops
consumed across the country. Potatoes are source of both food and income in many of the
densely populated highlands of Sub- Saharan Africa. Due to its high significance as a source of
both food and income, potato remains to be an important crop for the livelihood of the rural
population in these countries. Taking into consideration the prospect for growth of market for
fresh potatoes and the current international market conditions characterized by high prices for
cereals, potato can be taken as a good benchmark for rural development in sub-Saharan Africa
(Gildemacher et al., 2009).

Ethiopia is potentially suitable for potato production because of Ethiopia has favorable weather
conditions and good strategic location (CoQA, 2009). However, although the country is endowed
with huge favorable land that can be allocated to potato cultivation, the current area cropped with
potato is very small and yield is quite low (Hirpa et al., 2010). There has been efforts made by
the government to improve productivity and market performance of potato but the results are not
that much promising. This can be attributed to many factors like inadequate technical and
managerial production skills, poor contract enforcement (weak institutional framework),
imperfections in the marketing chain and very few potato market related institutions and weak
infrastructure like road transport access, insufficient government attention to potato productivity
and market chain (CoQA, 2019).

Potato is also the fastest growing rooted food crop and source of cash income for smallholder
farmers in Ethiopia (Berhanu and Getachew, 2014). It is a critical crop in terms of food security
(Birch et al. 2012). In developing countries and under marginal growing conditions, potato is a
cheap source of nutrients, thus playing an important role in guaranteeing food security, income
generation, and employment opportunity (Lutaladio and Castaidi, 2009).

Potato is one of economically most important crop in Ethiopia that plays a key role as source of
food and cash income for small- holder producers. There is a huge potential for potato to
contribute economic growth (Agajieet al, 2008). Potato is an important crop for food security and
source of income in parts of Ethiopia by virtue of its ability to mature earlier than most other
crops at time of critical food need (Asresie et al., 2015; Biruk, 2013).

2
In southern Ethiopia Potato is produced twice a year i.e. during Belg a i.e. Short rain season,
(March–June), and during the Meher season a i.e. long rain season, (July–October). Rural
households in the potato-growing areas of this region have less than 1 ha per households [Abite
S.2014].

The major potato producing zones in SNNPs regional state are Gurage, Gamo Goffa, Hadiya,
Wolyta, Kambata, and Siltie (Eshetu Mulatu, O.2015) .

According to Siltie Zone Finance and Economic Development Zonal Statistical document
(2017/2018) Department Agriculture is still the single most important Sector of siltie zone
economy. Particularly peasant agriculture performance is critical not only to false effective
demand but also to meet food security objectives, foreign exchange requirements and basic
needs, and to increase employment opportunities. Farmer in the zone mainly uses systems of
multiple cropping to maximize production per unit area. The most common system in double
cropping, inter-cropping relay cropping and rotation Maize, Teff & Enset (false banana),
potatoes, wheat, barely, pulses, fruits and vegetables are major crops, grown in the zone. But
lacks of proper market information, road access, transport access …..etc are still the problem of
farmers in the zone.

3
1.2 Statement of the problem
The marketing system of agricultural products in Ethiopia is failed to address price fluctuations
due to improper functioning market system and information asymmetry. Makhura (2017) found
that marketing by smallholder farmers was constrained by poor infrastructure, distance from the
market, lack of assets (for example lack of own vehicles) and inadequate market information.
Lack of bargaining power along with various credit bound relationships with the buyers has led
to farmers being exploited during the transaction where most of the farmers become price takers.
The majority of the farmers are smallholders and hence, unable to obtain a fair price for their
product. This results to farmers not being able to sustain their livelihood. In the structure of the
traditional vegetable supply chains between the producer and the consumer there are a large
number of intermediaries like vegetable collectors, transporting agents, commission agents and
etc. Addition of the marketing margins of all these intermediaries coupled with almost 30 to 40
percent of the vegetables being wasted as post-harvest losses have eventually resulted in
producers receiving a very low price for their product while at the other end the consumers are
compelled to pay a highly inflated price for their purchases (Hettige and Senanayake, 1992;
Kodithuwakku, 2000). Jaleta (2007) showed that inadequate market channels and poor
information regarding price were among factors affecting commercialization of agriculture.
Furthermore, Emana and Gebremedhin (2018) in their study on market chain analysis argued that
the marketing of rooted crops is affected by inadequate local markets, poor pricing system, lack
of local markets to absorb supply, low produce prices, excess of intermediaries, and poor
marketing institutions and poor coordination of farmers. Emana and Gebremedhin (2017) further
argued that poor handling and poor coordination of farmers packaging of products, poor pricing
systems, and information asymmetry affect marketing of vegetables. Despite of potato
production potential of the study area, different socio-demographic aspects were limited amount
of quantity supplied to the market. Yet, no study was conducted to identify these factors. This
was a reason for why this study sought to identify market supply determinants. In order to
improve the marketing system linked with the markets in the study area, the role of market-actors
and market channels need to be analyzed. Therefore, this study was initiated to investigate the
different marketing channels, analyze the marketing margins and identify determinants of market
supply in the study area.

4
Potato production in study area is mainly with seasonality where surplus at harvest products is
the main characteristics. The lack of organized market system resulted in low producers price.
No studies have been carried out to identify what the marketing systems look like and no
remedial measures were taken to solve this problem. Therefore, demanded a holistic study of the
system in the form of market chain analysis. Market chain analysis is supposed to be the current
approach working in studies of such type of production and marketing problems. Analysis of the
system in terms of potato market structure, conduct and performance taking in to consideration
the product and location specificity will, therefore, be used to identify the bottlenecks and come
up with precise and possible solution. Even though potato is economical and socially important,
no adequate study has been made in the study area to improve the sector. This study therefore,
has attempted to contribute to filling the information gap by investigating the potato marketing
chains and factors affecting potato supply in study are.

1.3 Objectives of the Study

1.3.1 General Objective
The general objective of this study was to analyze the potato market chain in Allicho wuriro
Woreda of Siltie zone

1.3. 2 Specific Objectives

 To identify the major potato marketing channels in study area
 To quantify margins for potato marketing channels in Study area
 To identify factors affecting marketable supply of potato in Study area

1.4. Research Questions

This study was attempted to answer the following research questions:

1. Who are the major actors and what are their respective roles along potato market Chain in the study area?

2. Which channel gets the major share of the marketing margins in potato marketing at the study area?

3. What are the factors affecting marketable supply of potato in Study area?

5
1.5 Scope and Limitation of the study
This study focused on market chain analysis of potato production in allicho wuriro dworeda.
Specifically, it focused on the potato market and factors affecting market supply of potato in the
study area coverage.

Being only one district was selected in terms of locations and lack of access to data, faulty
instruments, sampling restrictions, lack of recent literature in the area potato crops out of other
many vegetable crops like carrot, cabbage and sweet potato etc. produced in the study area.

1.6 Significance of the study

This study was provide information on the determinants of potato supply to the market, the
marketing channels and performance, the main challenges and opportunities of potato market
chain, actors and their role of potato market chain in the study area. The result of the study
was helpful for the potato producers and traders in the study area in planning and for
development planners and policy makers in drafting policies for vegetable production
and marketing. Additionally, the study was generate important information for research
and development organizations, extension service providers, government and non-
governmental organizations to formulate potato marketing development programs and
guidelines for interventions that was improved efficiency of the potato marketing system. The
other benefit that waw be anticipated is its significance as a source for further similar studies.

6
 CHAPTER TWO
LITERATURE REVIEW
2.1. Theories and Basic Concepts
Market A market is a point or a place or sphere within which price-making force operates and
exchanges of title tend to be accompanied by the actual movement of the goods
affected(Backman and Davidson, 1962; Andargachew, 1990). The concept of exchange and
relationships lead to the concept of market. It is the set of the actual and potential buyers of a
product (Kotlerand Armstong, 2003). A market can be described as simple arrangements to
facilitate exchange of one thing for another (Bain and Howells, 1988). The most observable
features of a market are its pricing and exchange processes and it is more than a physical place.
No need to meet physically for a market to operate especially in today‟s information and
communication technologies.

Modern definition considers market as an area for organizing and facilitating business activities
and for answering the basic economic questions (Kohls and Uhl, 1985) described market as how
much to produce? What to produce? How to distribute production? A location, a product, a time,
a group of consumers, or a level of the marketing system may define it. The choice as to which
market definition to use depends on the problem to be analyzed. (Bain and Howells 1988, cited
in Andargachew, 1990) described market as simple arrangements to facilitate exchange of one
thing for another.

Agricultural marketing: The term marketing has been a very debatable concept and defined in so
many different ways by different scholars. This is because marketing, or more specifically
agricultural marketing, projects different impression to different groups of people in a society,
like farmers, traders and consumers (Kohls and Uhl, 1985).

Marketing can be described as the performance of all business activities involved in the flow of
food products and services from the point of initial agricultural production until they are in the
hands of consumers (Kohls and Uhl, 1985; Bain and Howells, 1988). According to Kotler and
Armstrong (2003), 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 and

7
value with others. Marketing is essentially a process like farming, manufacturing, mining or
construction (Backman and Davidson, 1962).

2.1.1. Marketing system

The concept of marketing system includes both physical distribution of economic input
andproducts and the mechanism of process or coordinating production and distribution (cited
inAndargachew 1990). Branson and Norvel (1983) defined the marketing system in terms of
whatis otherwise known as marketing channel. In broad terms, marketing system may be defined
asthe totality of product channels, market participants and business activities involved in the
physical and economic transfer of goods and services from producers to consumers.

Marketing system operates through a set of intermediaries performing useful commercial

functions in chain formations all the way from the producer to the final consumers (Islam et al.,
2001).

2.1.2. Marketing efficiency

It refers to the efficient allocation of resources to achieve the greatest possible consumer
satisfaction (Raymon, 2003). Efficiency of agricultural marketing according to Scarborough and
Kydd (1992) refers to the efficiency with which resources are used in marketing, in terms of
physical input and output ratios. An efficient firm or market produces the maximum possible
output from the input used, given location and environmental constraints, and it minimize s
resource inputs for any given output. There are numerous ways of estimating the performance of
agricultural marketing. However, two aspects of market efficiency are mostly mentioned in
agricultural marketing these are: operational efficiency and pricing efficiency (Jesse, 1987).

Operational efficiency: It is defined as the provision of goods and services at least cost and at a
level of output, or combination of inputs, which ensures that, the value of marginal product
equals marginal factor costs. Sometimes it is also referred to as firm level allocative efficiency.
The fundamental question is assessing the static operational efficiency of market and of
marketing firms, are whether, the level of output per combinations of inputs are such that
marginal revenues equate with marginal costs (Scarborough and Kydd, 1992).

Pricing efficiency: It is concerned with accuracy, precision, and speed with which prices reflect
consumers‟ demands and are passed back through the market channels to producers. Pricing

8
efficiency is, thus, affected by rigidity of marketing costs and the nature and degree
of9competition in the industry. Activities that may improve pricing efficiency are improvement
of market news and information, and competition (Cramer and Jensen, 1982). If markets are
perfectly competitive, and prices reflect real costs of production, it can be shown that markets
will lead to an optimal allocation of resources reflecting the scarcity of resources relative to
consumer demand (Scarborough and Kydd, 1992).

2.1.3. Marketing channel

It is a business structure of interdependent organizations from the point of product origin to the
consumer with the purpose of moving products to their final consumption destination (Kotler and
Armstong, 2003). The analysis of marketing channels is intended to provide a systematic
knowledge of the flow of goods and services from their origin (producer) to their final
destination (consumer). This knowledge is acquired by studying the participants in the process,
i.e. those who perform physical marketing functions in order to obtain economic benefits
(Getachew, 2002). This channel may be short or long depending on the kind and quality of the
product marketed, available marketing services, and prevailing social and physical environment
(Islam et al., 2001).

2.1.4. Market chain analysis

A marketing chain is used to describe the numerous links that connect all actors and transactions
involved in the movement of agricultural products from the farm to the consumer (Lunndy et al.,
2004). It is the path one good follow from their source of original production to ultimate
destination for final use. Functions conducted in a marketing chain have three things in common;
they use up scarce resources, they can be performed better through specialization, and they can
be shifted among channel members (FAO, 2005). According to Hobbs et al. (2000), the term
supply chain refers to the entire vertical chain of activities: from production on the farm, through
processing, distribution, and retailing to the consumer. In other words, it is the entire spectrum,
from gate to plate, regardless of how it is organized or how it functions.

Market chain is the term used to describe the various links that connect all the actors and
transactions involved in the movement of agricultural goods from the producer to the consumer
(CIAT, 2004). Commodity chain is the chain that connects smallholder farmers to technologies
that they need on one side of the chain and to the product markets of the commodity on the other

9
side (Mazula, 2006). Market chain analysis, therefore, identifies and describes all points in
the10chain (producers, traders, transporters, processors, consumers), prices in and out at each
point, functions performed at each point/ who does what?, market demand/ rising, constant,
declining, approximate total demand in the channel, market constraints and opportunities for the
products.

2.2. Approaches to the Study of Agricultural Marketing

Marketing studies adopt different viewpoints and approaches in order to study agricultural
marketing problems (Mendoza, 1995). The functional, institutional (organizational) and the
commodity approaches which combine the previous two approaches, and the mixed systems
approach are a few examples of the different ways of analyzing (understanding) marketing
(Mendoza, 1995).

2.2.1. Functional Approach

One approach to study marketing is to break up the whole marketing process into functions -
specialized activities performed in accomplishing the marketing process (Kohls and Uhl,
1985).Regardless of how the marketing system is organized, the economic functions necessary
for the production of form, time, and place utilities must be performed. The efficiency with
which the various economic functions are performed is important (Andargachew, 1990). The
approach helps to evaluate marketing costs for similar marketing middlemen and/or different
commodities and costs and benefits of marketing functions (Kohls and Uhl, 1985; cited in
Andargachew, 1990). The approach promotes careful identification of corrective measures as it
pays special attention to particular functions. At the same time it has drawbacks as the
improvement measures formulated in isolation may not necessarily fit very well into the rest of
the marketing system (Kohls and Uhl, 1985; Purcell, 1979). Since the focus on the functions
performed usually leads to consideration of institutions and a particular commodity, the
functional approach provides the skeletal framework for a more encompassing approach to the
study of marketing problems. Most contemporary marketing texts follow to varying degrees
functional approach.

2.2.2. Institutional Approach

The institutional approach to the studies on agricultural marketing problems pays attention to the
nature and characteristics of the various middlemen and related agencies and organization of

10
marketing machinery (Kohls and Uhl, 1985). The institutional analysis is based on the
identification of the major marketing channels and it considers the analysis of marketing costs11
and margins (Mendoza, 1995). The human element receives primary emphasis in this approach.
There can be no change and no adjustment without action by the institutions. But emphasis on
mere institutions is not sufficient. In the final analysis, it will be the interactions along the
marketing continuum from producer to consumer that determines the degree of co-ordination and
total system efficiency achieved. Neither detailed descriptions of the institutions involved, nor
in-depth analysis of the actions of the institutions will contribute in any significant way toward
increased efficiency in marketing unless the focus of attention is extended to include the
interstage actions and interactions.

2.2.3. Commodity approach

In a commodity approach, a specific commodity or groups of commodities are taken and the
functions and institutions involved in the marketing process are analyzed (Kohls and Uhl,
1985).This approach is said to be the most practical as it helps to locate specific marketing
problems of each commodity and improvement measures. The approach follows the 14
commodity along the path between producer and consumer and is concerned with describing
what is done and how the commodity could be handled more efficiently (Purcell, 1979).

2.3. Methods of Evaluating Efficiency of Agricultural Marketing System

The basic view of this approach is that, given certain basic conditions, the structure of an
industry or market determines conduct of buyers and sellers which influence its performance.

The basic conditions refer to characteristics which are exogenous to the market, for example
infrastructure, legal and policy environment and available technology. Efficiency factors can be
evaluated by examining marketing enterprises for structure, conduct and performance (Abbott
and Makeham, 1981). SCP model is one of the most common and pragmatic methods for
analyzing marketing system. It analyzes the relationship between functionally similar firms and
their market behavior as a group and, it is mainly based on the nature of various sets of market
attributes and relations between them and their performance (Scarborough and Kydd, 1992). This
analytical method is based on the theory that market structure and market conduct determine the
performance of a marketing system.

11
2.3.1. Structure of the market
The term market structure refers to the number of buyers and sellers, their size distribution, the
degree of product differentiation, and the ease of entry of new firms into an industry (Abbott and
Makeham, 1981 Cramer and Jensen, 1982; and Branson and Norvell, 1983). Examples of such
dimensions include:

 Degree of buyers and sellers concentration: Number and size distribution of buyers and
sellers in the market.
 Barriers to potential entrants: Refers to the relative ease or difficulty with which new
dealers may enter into market. Technological, economic, regulatory, institutional, and
other factors that inhibit firms from engaging in new businesses or entering new markets,
and
 Degree of product differentiation: Refers to the extent to which competing products in a
market are differentiated and it is expected to influence the competitive interrelationships
of sellers in the market.

Market concentration can be defined as the number and size of sellers and buyers in the market.
Concentration is believed to play a large part in the determination of market behavior within an
industry because it affects the interdependence of action among firms. The relationships between
concentration and market behavior and performance must not be interpreted in isolation. Other
factors, such as firms‟ objectives, barrier to entry, economies of scale, and assumptions about
rival firms‟ behavior, will be relevant in determining the degree of concentration and
relationship between concentration and behavior and performance (Schere, 1980). Market
structure can also be defined as characteristics of the organization of a market, which seem to
strategically influence the nature of competition and pricing behavior within the market (Bain,
1968). Structural characteristics may be used as a basis for classifying markets. Markets may be
perfectly competitive; monopolistic; or oligopolistic (Scott, 1995; Meijer, 1994). The
organizational features of a market should be evaluated in terms of the degree of seller
concentration, entry barriers (licensing procedure, lack of capital, know-how, and policy
barriers), degree of transparency and degree of product differentiation that condition or influence
the conduct and strategies of competitors(Wolday, 1994).13

12
2.3.2. Conduct of the market
Market conduct refers to the market behavior of all firms. In what way do they compete? Are
they looking for new techniques and do they apply them as practicable? Are they looking for
new investment opportunities, or are they disinvesting and transferring funds elsewhere? Market
conduct also deals with the behavior of firms that are price searchers and are expected to act
differently than those in a price-taker type of industry (Abbott and Makeham, 1981; Cramers and
Jensen, 1982).

2.3.3. Performance of the market

It is reflection of the impact of structure and conduct on product price, costs and the volume and
quality of output (Cramers and Jensen, 1982). If the market structure in an industry resembles
monopoly rather than pure competition, then one expects poor market performance. According to
Abbott and Makeham (1981), market performance is how successfully the firm’s aims are
accomplished, which shows the assessment of how well the process of marketing is carried out.
Market performance can be evaluated by analyzing the 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 a useful descriptive statistics if it used to show how the
consumer’s food price is divided among participants at different levels of marketing system
(Getachew, 2002).

2.3.3.1. Marketing costs

It refers to those costs which are incurred to perform various marketing activities in the
transportation of goods from producer to consumers. Marketing costs includes handling
cost(packing and unpacking), costs of searching for a partner with whom to exchange, screening
potential trading partners to ascertain their trustworthiness, bargaining with potential trading
partners (officials) to reach an agreement, transferring the product, monitoring the agreement to
see that its conditions are fulfilled, and enforcing the exchange agreement(Holloway and Ehui,
2002).

2.3.3.2. Marketing margin

It is a commonly used measure of the performance of a marketing system (Abbott and Makeham,
1981). It is defined as the difference between the price the consumer pays and the price that is
obtained by producers, or as the price of a collection of marketing services, which is the outcome

13
of the demand for and supply of such services (Cramers and Jensen,1982 and William and
Robinson, 1990; Holt, 1993). The size of market margins is largely dependent upon a
combination of the quality and quantity of marketing services provided the cost of providing
such services, and the efficiency with which they are undertaken and priced. For instance, a big
margin may result in little or no profit or even a loss for the seller involved depending upon the
marketing costs as well as on the selling and buying prices(Mendoza, 1995).Under competitive
market conditions, the size of market margins would be the outcome of the supply and demand
for marketing services, and they would be equal to the minimum costs of service provision plus
“normal” profit. Therefore, analyzing market margins is an important means of assessing the
efficiency of price formation in and transmission through the system. There are three methods
generally used in estimating marketing margin.

 Detailed analyses of the accounts of trading firms at each stage of the marketing channel.
 Computations of share of the consumer’s price obtained by producers and traders at each
stage of the marketing chain; and
 Concurrent method: comparison of prices at different levels of marketing over the same
period of time (Mendoza, 1985 and Scarborough and Kydd, 1992).

2.4 Empirical Literature Review

Wondim Awoke and DesselgnMolla(2019) Market chain analysis of potato and factors affecting
market supply in West Gojam Zone, JabiTehinan district ,according to the paper there was
variation in amount of potato supply in study districts, all sample households were good
suppliers of potato to the market. The analysis of factors affecting producer of potato supply to
the market by using multiple linear regressions used among the hypothesized eight variables,
only owned ox number, experience in potato production, distance to nearest market, access to
credit, total amount of potato produced and market information were found to be significantly
affecting the household potato supply to the market. The rest of variables (education of
household head and access to extension service) have no significant effect on market supply of
potato.

Ayelech (2011) investigate the market chain analysis of fruit, Structure, Conduct and
Performance (SCP) approach was used to evaluate avocado and mango market and Multiple
Linear Regression Model used in Gomma woreda, Jimma Zone. Output suggests that all of the

14
independent variables are significant and positively correlated with market supply of
fruit .Rehima (2006) also identified that the key factors that affecting marketable supply of red
pepper at Alaba and Siltie districts of SNNPRS using cross-sectional data with both dummy and
continuous independent variables. In her study, she employed Tobit model and came up with the
finding that distance to the market, frequency of contacts with extension agents, quantity of
pepper produced and access to market information influenced marketable supply of pepper
positively at the district. Similar study undertaken by Kinde (2007) indicated that, the major
factors that affect marketable supply of sesame in Metema district by using cross-sectional data
with dummy and continuous explanatory variables. In his study he implemented multiple linear
regression model to identify the relationship between the marketable supply of sesame and the
hypothesized explanatory variables, hence his study acknowledged that amount of sesame
productivity, use of modern inputs, number of language spoken by the household head, number
of oxen owned, sesame are a and time of selling of sesame influenced marketable supply of
sesame positively. Muhammad (2011) Also analyze the market chain of teff and wheat in Halaba
with specific objective of assessing the structure-conduct-performance of teff and wheat
marketing.

Accordingly, quantity of teff produced, access to market information, access to extension and sex
of the household head were found to have positive and significant influence on marketable
supply of teff. Likewise, quantity of wheat produced, and access to credit were found to
influence marketable supply of wheat positively and significantly. Contrary to this, price of other
crop (pepper) had shown negative and significant relationship with volume of wheat marketed.
Ashenafi Amare(2010) identified analysis of grain marketing in southern zone of Tigray Region.
The market participation decision and quantity of grain supply were estimated by Tobit and
Heckman two stage econometric models. Among the variables included in the analysis,
5variables such as nonfarm income, total livestock unit, oxen number, market information and
yield influence the quantity of grain supply positively significantly and family size affected
negatively the supply of grain at 5% significant. The main grain marketing constraints for traders
are shortage of capital, shortage of supply, lack of timely and accurate market information, poor
access to credit and competition with unlicensed traders were few of the inherent problems.
Hailu Negash(2010) also identify Cereal Market Performance of Mekelle Market, Ethiopia. The
identified cereal market problems are: infrastructure problem followed by price related problems,

15
supply problems, lack of proper contract agreement and enforcements and lack of real and timely
information, Financial constraint also problem of farmers, and demand shortage.16Sultan Usman
(2016) Analysis of wheat value chain the case of sinana district, Bale zone, Oromia Region,
Ethiopia, wheat supplied to market stated by using the model 2SLS and theresult show that size
of landholding, livestock ownership, family size and quantity of wheat produced influences
amount of wheat supplied to market significantly. Fikru Temesgen et al. (2017) Analysis of
sesame marketing chain in case of gimbi districts, Ethiopia, The researchers select a
representative two-stage random technique was used to select sample. In the first stage, with the
consultation of woreda agricultural experts and development agents, out of 12 kebeles potential
sesame producer of Gimbi Woreda 3 sesame producer kebeles were purposively selected based
on the level of production. In the second stage, using the list of households in the sampled
kebeles, 127 sample farmers were selected randomly at 95%confidence. According to the
researchers marketing channels and factors affecting outlet choice decisions of farm to evaluate
these multinomial logit model was applied to explain inter household variation in the choice of a
specific marketing outlet. The model results indicated that the probability to choose the collector
outlet was significantly affected by Land, Market price of sesame, Membership to any
Cooperatives, Credit Access, and Owning Transport Facility compared to wholesale outlet.

Tigabu and Asmamaw (2019) identify Analysis of red pepper marketing in northern parts of
Ethiopia. Researchers select representative used multistage sampling technique was used to
select sample producers. In the first stage, selected purposively due to high potentials of red
pepper production. In the second stage, eight largest red pepper-producing kebele’s were
purposively selected in consultation with district agriculture office experts due to the high
potentials of production and best smallholder farming experience in red pepper production and
marketing. In the third stage, 385 red pepper producers were selected using systematic random
sampling technique. Multiple linear regression model was used to analyze factors affecting red
pepper market supply. According to research result from the econometric analysis also revealed
that various socioeconomic, demographic and institutional variables such as experience in red
pepper production, access to extension, yield and market price of red pepper were found to havea
positive and significant effect on the volume of red pepper supplied to the market, while amount
of off-farm income negatively and significantly influenced the volume of red pepper marketed.
Kutoya Kusse et al.(2019) Debub Ari woreda in South Omo Zone of SNNPR to analyze market

16
chain of maize. Researchers multi-stage sampling technique was employed. In the first stage, the
study area was selected purposively based on the maize production potential of the zone. In the
second stage, four participant kebeles were also purposively selected based on the secondary data
of the woreda and consulting experts of the respective woreda office. Researchers analyze the
data both descriptive statistics and appropriate econometric model (Logit model) were used.
According to the result age of household head, quantity produced in quintals, access to market
information, and access to extension service variables were significantly the remaining four
variables are not significantly Beza Erko Erge et al.(2016) Value Chain Analysis of Maize the
case of bakotibe and gobusayo districts in central west Ethiopia, Researchers identified the two
districts were selected purposively. Based on the objectives of the project, it was implemented on
ten kebeles in BakoTibe and three kebeles in GobuSeyo districts. Sample size of each kebele was
selected based on probability proportional to the size (PPS) sampling technique. Researcher’s
analysis factors determining volume of maize supply to market were identified using
econometrics analysis of Tobit model. Explanatory variables such as fertilizer quantity used,
current maize price, marketing costs and land allocated determined volume of maize supplied
positively. In other hand, district dummy BakoTibe, non-farm income and distance from main
market determined negatively. The most important determinant factors were location differences,
current price and quantity of fertilizer used.

17
 CHAPTER THREE
METHODOLOGY
3.1. Description of the Study Area

3.1.1. Overview of Siltie zone

Siltie zone administration is among one of the 13 administrative zones found in SNNPRS
covering an area of 2786.09 Square Kilometer. Astronomically, it is roughly lies between 7.43 -
8.10" north, latitude and 37.86-38.53 longitude. It is bordered with Hadiya Zone in South, in
north and North West-Gurage Zone, in East Oromia Region, in south-east Halaba Zone. The
zone contains 13 woredas and five town administration namely, Allicho wuriro, Dalocha, Siltie,
Lanfuro, Sankura, West azrnet berbera, East Azernet berbera, Mitto, Hulbareg, Misraq siltie,
Worabe town administration, Tora town administration, Kibet town administration, Alemgeby
atown administration and Dalocha town administration. Worabe is the zone’s capital town is
located on the main road from Addis Ababa to Hosanna just 172KM apart from Addis Ababa.

According to the 2018 Population and Housing Census of Ethiopia the Population of the zone in
2010 E.C were about 1,048,686 where 49% Male and 51% female concerning the settlement
87% and 13%of the population lives in rural and urban areas respectively. Siltie zone is one of
the central zones of the region with large plain land, mountainous area, plateaus. Regarding to
the climate of the zone it has two different agro-climatic conditions, high land (DEGA) and
(WEYNA-DEGA) and consisting 20.5% and 79.5% respectively. The average temperature
ranges from 12-26CO and the average annual rainfall ranges from 780-1818mm. About 95.5% of
the population engaged in agriculture. According to Zonal sector and worades reports of
2013E.C there are 29 urban and 183 rural kebeles in the zone.

3.1.2. Location, area, population and administrative division of allicho wurriro district
allicho wurriro woreda is one of the 12 Siltie zone wored as covering an area of 26,465
square kilometer. allicho wurriro woreda is found at a distance of 28km in the north east
direction of Worabe town, 158km to Northwest direction of Hawassa city and 202km far
from the city of Addis Ababa. The Woreda is relatively bordered by hulbareg woreda to
w e s t , Silti woreda to the east, Worabe town administration to the southeast, gurage zone to
the south, and Mesrak Azernet berbere woreda. The woreda is also bounded by a natural
boundary such as ensilas Mountain to the west. The absolute location of the woreda is 7o 45’

18
42” up to 80 05’ 11’’N and 380 46’ 41” to 390 07’ 12’’ E latitude and longitude
respectively and 2800-3370 above sea level. It has 23 kebeles, qawaqotto is the woreda’s capital
town located on the main road from worabe to bojjebar just 202 KM apart from Addis Ababa.

According to the 2018 Population and Housing Census of Ethiopia the population of the
woreda was about 106,598 where 48,739 were male and females were 57,859 concerning the
settlement 95.76% and 4.24% of the population lives in rural and urban areas respectively.
99.7% of the population is Muslim.

Climate

The woreda has different agro-ecological namely, Dega 82.4% and W.Dega, 17.6% which
are found between 1500 up to 2300masl. Concerning the climate of the woreda agro-
climatic conditions, characterized by dega. The average temperature range from 24˚C and
the average annual rainfall ranges 1200mm. 95.76% of the population engaged in
agriculture.

3.2. Methods of Data Collection and Data Sources.

The result of this study was based on the information obtained from primary and secondary
source of data.

The study used both primary and secondary data. Primary data is collects using two types of
interviews plan (one for farmers and the other for traders). The primary data collects from farmer
focus on factors affecting potato market supply, size of output, market information, credit access,
access to market, potato cultivated land size, extension service, and demographic characteristics
of the household. The interview plans for traders includes: types of traders wholesalers, retailers,
local collectors, buying and selling strategies, source of market information, demographic
characteristics. This study was also collected secondary data from different sources, such as:
government institutions, woreda’s and zone agricultural and trade Office .

3.3 Sampling Techniques and Sample Size

The study was apply multi-stage sampling technique. In the first stage, the study woreda was
selected purposively based on the potato production potential and consulting experts of zone
agricultural office. In the second stage, five participant kebeles (Weshano, Fucharee, Tanche

19
Edo-1 and Qetucha) were purposively selected based on the secondary data of the woreda
agricultural office and consulting experts of woreda agricultural office. Using the population list
of potato producer households from the sampled kebele administrations, 150 representative
households were randomly selected from 3900 potato producers in sample kebeles using
probability proportionality size and by using a simplified formula provided by (Yamane, 1967).
Accordingly, the required sample size at 95% confidence level with degree of variability of 5%
and level of precision equal to 8% is used to obtain appropriate observation or sample size
required that fulfill rule of thumb which represent a true population. The formula used to
calculate and determine the sample size was:-

N
n= ------------------------------------------(3.1)
1+ N ( e ) 2

Where, n = sample size, N= population size (sampling frame) and e = level of precision assumed.
The minimum level of precision is acceptable at 10%. However, for this study 8% of precision
level was used.

3900/1+3900 (0.08)2 = 3900/25.96 = 150

Then, to select sample from each kebele we calculated by the following formula of Israel G.
(1951) was done.
n h = (𝑁h/𝑁𝑠)*𝑛 --------------------------------------------- (2)
Where,n h = required sample size from each kebele,
Nh = total potato producer farmers in each kebele,
Ns = total target population and
n = sample size from total target population. So
Nw
n1 = * n, n1 = 821/3900 * 150 n1 =32 where Nw is number of farmers participate in potato
N
production in weshano kebele
n2 = Nf/N*n, n2 =897/3900*150 n2 =34 where Nf is number of farmers participate in potato
production in fuchare kebele
n3 = Nt/N*n, n3 =715/3900*150 n3 =27 where Nt is number of farmers participate in potato
production in tanze kebele

20
n 4= Nq/N*n, n 4= 881/3900*150 n 4 = 34 where Nq is number of farmers participate in
potato production in qetucha kebele
n5 = Ne/N*n, n5 =586/3900*150 n5 = 23 where Ne is number of farmers participate in
potato production in Edo-1 kebele
Number of potato
Name of sample Number of Sample
producing households Percentage
kebeles households
(farmers)
Weshano 821 32 21.33
Fucharee 897 34 22.7
Tanze 715 27 18
Qetucha 881 34 22.66
Edo-1 586 23 15.33
Total 3900 150 100

Source: -Allicho wurirro woreda Agriculture Office, 2023 and own computation result

The survey for the traders is based on their availability. The major market actors that are
interviews include traders and farmers

3.4 Methods of data analysis

This study used two types of analysis, namely descriptive and econometric analysis for analyzing
the data collects from farmers and traders in the study area.

3.4.1 Descriptive analysis

Descriptive statistics such as frequencies, percentages, maximum, minimum, mean and standard
deviation was describe demographic, socio-economic and institutional characteristics of potato
producers and traders.

3.4.1.1 Structure conduct and performance (SCP) model

This model is an analytical approach used to study how the structure of the market and the
behavior of sellers of different commodities and services affect the performance of market, and
consequently the welfare of the country as a whole (Kizito, 2008).

21
The model examines the causal relationships between market structure, conduct
and performance, and is usually referred to as the structure - conduct - performance (S-C-P)
model. It is based on the theory that the structure of a market (S) determines market conduct (C),
which then determines market performance (P), and that higher concentration ratios generate
welfare losses by competition restricting activities (Abbott and Makeham, 1981). Many
researchers they conducted their research on market area were using this model like Wolday
(1994) used this model to evaluate food grain, Rehima (2016) evaluate red pepper market and
Mohammed (2011) also used this model to evaluate teff and wheat market. Therefore, this study
was used this model to evaluate the efficiency of potato market in the study area.

Market margin: - is the difference between the price paid by consumers and received by
producers/farmer’s. Margins can be calculated all along the market chain.

Market structure
Market structure consists of the relatively stable features of the environment that influence the
behavior and rivalry among the buyers and sellers operating in a market (Branson and Norvell,
1983). For example, if the market structure is characterized by high barriers to entry, it may
result in only a few traders profitably maintaining the business activities.

These few traders may engage in noncompetitive behavior such as collusion and exclusionary or
predatory price setting behavior. These non-competitive behaviors can result in excessive profits
and widened marketing margins for traders. The major structural elements which are most
critical to performance analysis are the following:

Market concentration:- this refers to the number and size, distribution of sellers and buyers in
the market. The greater the degree of concentration the greater will be the possibility of
noncompetitive behavior, such as collusion existing in the market (Pomeroy and Trinidad,
1995). Which means that when there are few buyers and sellers, they may engage in
noncompetitive behaviors such as collusion and price discrimination. When there are few buyers
of a commodity, traders offer sellers low prices which reduce the income of sellers. If there are
few sellers of a commodity in the market, then sellers gain market power and increase prices,
which reduce the amount of commodity that buyers can purchase with a given amount of

22
income, therefore, making them relatively poorer than if prices were lower. The most commonly
used measure of concentration indices are:

Concentration ratio (CRr):- This measure shows the proportion of the industry‘s output
accounted for by r largest firms:

C=Σri=1 Si…………………………………………………... (3)

Where;- i=1, 2, 3, 4……………..r,

C- is concentration ratio, Si- is market share firm ith and r- Number of

largest firms for which the ratio is going to be calculated.

Vi
Si=
∑ Vi ………………………………….……………. (4)
Where, Si = market share of firm I; Vi = amount of product handled by firm i; and
ΣVi =Total amount of the product supplied to the market.

Kohls and Uhl (1985) bring into play as a rule of thumb, four largest enterprises ‘concentration
ratio of 50 percent or more (an indication of a strongly oligopolistic industry), 33-50 percent (a
weak oligopoly) and less than that (competitive or non-concentrated industry).

Herfindall-Hirschman Index (HHI):- The HH index is the sum of squares of the market shares
of each of the firms in the industry:

HHI= Si2 -------------------------------------------------------- (5)

In an ideal situation where all n firms are of equal size, then HHI =1/ n

The strength of the HHI lies in its ability to combine information on both the number and the
size distribution of firms. For this reason it is the preferred measure of concentration. However,
its data requirements are immense as its calculation would demand firm level data for all
individual firms in the industry. It is also noted that the squaring of market shares gives greater
weight to larger firms. In practice, many different distributions could give the same value of the
HHI.

23
Gini-coefficient (GC): It measures the size of firms ranked from the smallest to the largest as a
percentage of the number of firms in the market, plotted against the cumulative output of these
firms. The greater the deviation from the diagonal line, the greater the inequality in firm size is.
The GC is a measure of statistical dispersion most prominently used as a measure of inequality
of wealth or product distribution. The GC can range from 0 to 1; it can also be multiplied by 100
to range between 0 and 100.

GC can be computed using different formulas having their own levels of bias. In this case, the
GC of the suppliers is calculated as:

D
G= --------------------- (6)
2Q

G = Gini coefficient,
D =Coefficient of mean difference,
Q =Mean of the total quantity supplied
Even if Herfindall-Hirschman Index (HHI) shows the distribution purchased product among each
firm it is difficult to get the actual data of each firm and this measure of concentration highly
applicable in industry cases. Therefore, concentration ratio and gini coefficient measure market
concentration were used in this study.

Barriers to entry: Barriers to market entry include a number of different factors that restrict the
ability of new competitors to enter and begin operating in a given industry. The major source of
barriers to enter in to the market are; Economies of scale, Natural factor endowments, exclusive
knowledge on factor of production, Product differentiation, Capital requirements, Switching
costs, Access to channels of distribution, Government policy, etc.

Market conduct

It is the patterns of behavior that traders follow and how they adjust to changing market
conditions. Meijer (1994) said that, ―conduct is pattern of behavior which enterprises follow in
adopting or adjusting to the market in which they sell or buy‖, in other words the strategies of the
actors operating in the market. For example, in an environment where there are many buyers and
sellers, the market tends to determine the price. If one trader tries to increase his or her price, he
or she sells nothing. This means that households buy food commodities and agricultural inputs at
24
prices that equal to the costs of producing the last unit of the commodities (marginal cost). In
contrast, if there are only a few sellers of food commodities in a market, these few traders can
collude and charge consumers higher prices, up to the level where consumers can afford to buy
from nearby market at a lower cost.

Market Performance

Market performance refers to the impact of structure and conduct on prices, costs, and volume of
output (Pomeroy and Trinidad, 1995). Marketing efficiency is essentially the degree of market
performance. It is defined as having the following two major components: (i) the effectiveness
with which a marketing service would be performed and (ii) the effect on the costs and the
method of performing the service on production and consumption. These are the most important
because the satisfaction of the consumer at the lowest possible cost must go hand in hand with
maintenance of a high volume of farm output (Ramakumar, 2001). The two approaches to
measure marketing performance are: marketing margin and the analysis of market channel
efficiency.

Marketing cost: - It refers to those costs which are incurred to perform various marketing
activities in the transportation of goods from producer to consumers. Marketing costs includes
handling cost (packing and unpacking), costs of searching for a partner with whom to exchange,
screening potential trading partners to ascertain their trustworthiness, bargaining with potential
trading partners (officials) to reach an agreement, transferring the product, monitoring the
agreement to see that its conditions are fulfilled, and enforcing the exchange agreement
(Holloway and Ehui, 2002). Marketing costs refers to those costs, which are incurred to perform
various marketing activities in the shipment of goods from producers to consumers.

Marketing cost includes: Handling cost (packing and unpacking, loading and unloading putting
inshore and taken out again), transport cost, product loss (particularly for perishable fruits and
vegetable), storage costs, processing cost and capital cost (interest on loan), market fees,
commission and unofficial payments (Heltberg and Tarp, 2001).

25
Marketing Margin: In a commodity subsystem approach, the institutional analysis is based on
the identification of the marketing channels. This approach includes the analysis of marketing
costs and margins (Mendoza, 1995). A marketing margin can be defined as a difference between
the price paid by consumers and that obtained by producers; or as the price of a collection of
marketing services that is the outcome of the demand for and supply of such services (Tomek
and Robinson, 1990). It measures the share of the final selling price that is captured by a
particular agent in the marketing chain (Mendoza, 1995).

Marketing margin is most commonly used to refer to the difference between producer and
consumer prices of an equivalent quantity and quality of a commodity. However, it may also
describe price differences between other points in the marketing chain, for example between
producer and wholesale, wholesale and retail, prices (Scarborough and kydd, 1992). The size of
marketing margins is largely dependent upon a combination of; the quality and quantity of
marketing services, and the efficiency with which they are undertaken and priced. The quality
and quantity of marketing services depends on supply and demand of marketing services and/or
the degree of competition in the market place. The costs of service provision depend on both
exogenous and endogenous factors and the efficiency are determined by the extent of
competition between marketing enterprises at each stage.

Total Gross Marketing Margin (TGMM) is the final price of the produce paid by the end
consumers minus farmers‟ price divided by consumers‟ price and expressed as the percentage
(Mendoza, 1995).

TGMM = (Pc-Pp)/Pc*100% ---------------------------------------------(7)

Where, TGMM is total gross marketing margin

Pc is the consumer (or final) price

Pp is producer price.

It is useful to introduce the idea of „farmer’s portion‟, or ‘Producer’s Gross Margin‟ (GMMp)
which is the share of the price paid by the consumer that goes to the producer.

The producer’s/farmer’s margin is calculated as: GMp = (pc-TGMM)/PC* 100% ------------- (8)

26
Where, GMp is the producer's share in consumer price

The Net Marketing Margin (NMM) is the percentage of the final price earned by the
intermediaries as their net income after their marketing costs are deducted. The percentage of net
income that can be classified as pure profit(i.e. return on capital), depends on the extension to
such factors as the middlemen‘s own (working capital) costs. An efficient marketing system is
where the marketing cost is expected to be closer to transfer costs and the net margin is near to
normal or reasonable profit.

NMM= (Gross margin-Marketing cost/Price paid by the consumer)x 100…………………… (9)

NMM = (TGMM-MC)/Pc*100%

Where, NMM is net marketing margin higher NMM or profit of the marketing intermediaries
reflects reduced downward and unfair income distribution, which depresses market participation
of smallholders.

MC is marketing cost

TGMM =(Reteling price-Farm gate price)/(retaling or consuming price)

GMMi =(seling price of i-purchasing price of i)/(retailing or consumer price)

NMMi=GMMi-TMC

3.4.2 Econometric analysis.

For studying factors affecting potato market supply in the study area, multiple linear regression
models was used since all sample farmers interviewed participate in supplying potato to the
market during the survey year and the variable is continuous.

Since, potato was a cash crop that most of farmers decided to produce for selling and daily
consumption purpose. Therefore, all the sampled potato farmers of the study area supply their
product to the market and the dependent variable which is amount of potato supplied to the
market which was a continuous variable. Hence, multiple linear regression models were fitted to
survey data to identify the determinants of potato supply to the market. Following (Greene,
2000).

27
Econometric model specification of supply function in matrix notation is given as below.

Y = β 0+ β 1 X 1 + β 2 X 2 + β 3 X 3 + β 4 X 4+ β 5 X 5+ β 6 X 6+ β 7 X 7+ β 8 X 8 + β 9 X 9+ β 10 X 1 O + β 11 X 11 + u

β 0= Model intercept β 7= Access to market information

β 1= age of the household head β 8= availability of road access

β 2= Family size (Number of household members) β 9= use of agricultural impute

β 3= Education level of household head β 10= use of credit access

β 4 = Size of land allocated to potato production (in hectare) β 11= distance from market (in km)

β 5= Frequency of extension service (Frequency)

β 6= Amount of potato produced in 2013/14E.C

Y= dependent variable (potato supply to the market) u = error term

β0= is the intercept term: - it gives the average value of Y when the stated independent variables
are set equal zero.

X 1 = age of house hold X 5 =frequency of extension contact X 9= agri impute

X 2 =number of family member X 6 =amount of potato produced X 10 =credit acccess

X 3 =educational level of house hold X 7 =market information X 11 =distance of markt

X 4=land allocated for potato production X 8=availability of road access

The parameter estimates of the above model might have been violated due to the presence of
multi collinearity, normality and linearity problem. Hence, before analyzing significant variables,
the researcher check these problems among the variables and have seen the association between
the variables, which seriously affect the parameter estimates.

3.4.3 Definition of Variables and Hypothesis

To identify factors affecting potato supply to the market and the sales income from market
supplies of potato that actors involved in the marketing of the product, the following variables
were assumed to affect dependent variables and used for this study.

28
3.4.3.1 Dependent variables
Quantity of potato supplied to the market: It is dependent variable which represents the amount
of potato actually supplied to the market by household in the year 2022/2023 which is measured
in quintals.

Market participation: It is dummy dependent variable which represents the participation of

households in potato marketing in the analysis year. 1=if the household was participated and 0=if
not participated

3.4.3.2 Independent variables

Sex of the household head (SEX HH): It is a dummy variable taking 1 for male and 0 for
female potato producing farmers. Male-headed households have access to productive assets such
as land, labor and capital which increases their production capabilities and hence, expected to
have a positive relationship with market participation and level of participation. Mohammed
(2011) found sex of household head positively affected Teff market participation. The result
showed that being male household head increases the probability of market participation of the
sample participant due to the reason that men contribute more labor input in the production of
crops.

Level of education (EDUC): is a categorical variable, which represents education level of

households, expected to have a positive relationship with market participation and level of
participation. The finding of Assefa (2009) showed that education level of household head
affected marketed surplus of honey positively. This is because producers who have higher
education level have better attitudes towards the new production technologies, input utilization,
to actively being beneficiaries of services provided to them. Additionally, it is due to the fact that
as the educational level of farmers increased, farmers‟ ability to get, process and use information
for their market supply also increases.

Family size (FAMSZ): It is a continuous variable, measured in adult equivalent of the

household members. The result of Sultan (2016) showed that family size affected the supply of
wheat to market negatively. When the number of household members increased more part of
wheat produce will be allocated for household consumption. There is also another argument
which is man equivalent; households with higher family labor supply are more likely to grow
output.

29
Age of household head (AGEHH): It is a continuous variable and measured in years. This may
be the fact that age is alternative measure of farming experience of household. Aged
households are believed to be wise in resource use, and it is expected to have a positive effect on
marketable surplus.

Log of amount of credit used (LOCRD): It is a continuous variable which represents the
amount of money in which the households were borrow from credit institutions for potato
production. For small-scale farmers, access to credit is believed to play important role in
increasing the market participation and level of participation. Consistent with this, Muhammed
(2011) found the amount of credit to have positive and significant influence on volume of wheat
marketed.

Frequency of extension contact (FRQEXTC):It is a continuous variable measured in number.

It is expected that extension service extends the household’s knowledge with regard to the use of
improved potato production technologies and has positive impact on potato market participation
decision. Ayelech(2011) fond frequency of extension contact positively influenced participation
decision of framers in marketed supply of mango. Muhammed(2011) extension contact
positively influenced participation decision of framers in marketed supply of Teff. This suggests
that access to extension service avails information regarding technology which improves
production that affects market participation decision of households. Therefore, an extension
service was expected to be associated with higher market participation and level of participation.
Kutoya et al. (2019) indicated that access to extension service was positively and significantly
related to the quantity of potato supplied to the market at 8% significance level.

Distance to nearest market (DSNMKT): It is a continuous variable and is measured in walking

time (hour). Beza Erko et al (2016). The distances from the main market influence households in
buying inputs and selling outputs. The closer the market place to farm gate, the lesser would be
the transportation costs, transaction costs, time, and more access to market information.
Therefore, the time taken to market negatively affected quantity supplied to the market.

Amount Yield of potato (productivity) (q/ha): It is a continuous variable measured in quintal

per hectare and expects to affect potato market participation and intensity of participation
positively. Farmers who produce higher output per hectare expected to supply more to the

30
market than those with the lower output per hectare of land. According to Kutoya et al. (2019),
productivity of maize affected intensity of maize marketed positively and significantly and
Muhammed (2011) productivity of teff affected intensity of teff marketed positively and
significantly. It indicates that households who produce more quantity of teff had also supplied
more to the market.

Land allocated for potato (lnalfrptt): It is a continuous variable measured in hectares. It is

expects to affect intensity of potato market participation positively. BezaErko et al (2016) the
more the allocation of land for maize, the more increase in production. This in turn increased the
volume of marketable supply. The result showed that the more the land is allocated for maize,
the higher the production that in turn increased marketed supply of maize.

Agricultural impute used for potato (imputpott): It is a continuous variable measured in

kilograms per hectares. It is expects to affect intensity of potato market participation positively.
According to Beza Erko et al (2016) the rate of fertilizers used for maize production has
significant and positive effect on the yield. The result showed that use of fertilizers had
significant and positive effect on marketed supply of maize.

Access to market information: This is dummy variable assigned 0 if the farmer has access to
market information and 1 otherwise. A study by Muhammed (2011) discovered that if wheat
producer gets market information, the amount of wheat supplied to the market increases.
Therefore it was hypothesize that access to market information positively affects amount of
wheat supplied to market.

Access to road: This is dummy variable assigned 0 if the farmer has road access and 1
otherwise.

31
 CHAPTER FOUR
DATA ANALYSIS AND INTERPRETATION
4.1 INTRODUCTION
This chapter explains and discusses the results of findings based on the analysis done on the data
collected. The discussion attempts to accomplish the objectives of the study and answer the
research questions.

The results of the study are discussed by triangulating the results of sources, like questionnaire
results.

Therefore, the data from the questionnaire was properly coded and entered into the computer and
analyzed by using statistical tools with the help of SPSS V 20 and STATA.
A total of 150 questionnaires were distributed to the selected sample size, from those selected
samples for the study 147 questionnaires were valid and used for analysis which makes a
response rate of 98%, as shown in the table No. (4. 1) below:

Table No 4.1 Distribution of samples of survey

Data N-Sample Percent(%)

Distributed sample size 150 100%

Invalid Response 3 2%

Valid Response 147 98%

4.2 General Information (Demographic Data) of the Respondents

The first part of the questionnaire consists of items about the demographic information of the
respondents. such as gender, age, educational level, year of service, employment group and field
of study in allicho wuriro wereda Administration. The following table shows the demographic
characteristics of the respondents.

32
Table 4.2 demographic characteristics of the respondents

Frequency Percent (%)

20-25 years 29 19.7%

26-30 years 45 30.6%

31-35 years 20 13.6%

Age
36-40 years 27 18.4%

above 40 years 26 17.7%

Total 147 100%

Source: Field Survey (2022/2023)

1. It was observed from the table 4.2 that, the majority of the respondents which their age
group between 26-30 years old were 45 with a ratio of (30.6%), 29(19.7%) of the
respondents were between 20-25 years old, 27(18.4%) were 36-40 years old, 26(17.7%)
were above 40 years old and 20(13.6%) were between 31-35 years old respectively. From
the point of view of the researcher, this was support the results of the study, because
about 50% respondents were in the actively working age group i.e in 20-30 years old.
This is a positive indicator that most of the respondents were more mature to deal
objectively and effectively with the questions of the questionnaire. In addition to that,
when respondents are younger and mature, they may be more active and creative and also
they are simply adopt and understand the new technological improvement in agriculture.
2. The demographic data of pie figure 4.1 below shows that out of the 147 respondents, 103
with the ratio of 70.07%, were male and 44 with the ratio of (29.93%,) were females. The
result of the study in the table above indicated that the male group has the majority of the
respondents of the study. The researcher attributed this small ratio of females to the
nature of the work as well as the less number of females are participate in farming than
males.

33
 figure 4.1 sex of respondent

Source: Field Survey (2022/2023)

3 The bulk of the respondents had educational level of primary school and less, as shown in
chart 4.2 with a total of 104 with the ratio of 70.7% of the sample. Following that were
secondary school completes who accounted for 30 with the ratio of 20.4% response rate
and 13 of respondent with the ratio of 8.8% have collage diploma and above . The
preceding data reveals that the respondents were simply communicate with agricultural
agent because of they can read and write
figure 4.3 Educational level of respondent

So
urce: Field Survey (2022/2023)

34
Table 4.3 Demographic characteristics of the respondents

Frequency Percent

1 6 4.1

2 30 20.4

3 35 23.8

4 21 14.3

5 19 12.9
total number of family members
6 12 8.2

7 10 6.8

8 12 8.2

9 2 1.4

Total 147 100.0

4 8 5.4

5 30 20.4

6 28 19.0

7 19 12.9
farming experience
8 21 14.3

9 22 15.0

10 19 12.9

Total 147 100.0

4.
Based on result of table 4.3 Family size: The availability of number of individuals in the
household is considered as active working labor force in the household to perform production
activities. In this study the minimum and maximum family size measured in adult equivalent was
1 and 9 with (4. 1%) and (1.4%) respectively.

35
5. Based on result of table 4.3 Farming experience:-The farming experience in potato production
is the number of years that an individual was continuously engaged in potato production activity.
the minimum and maximum farming experience of sample respondents was 4 and 10 years with
5.9% and 12.9% respectively and average years farming experience of respondent were 7 years.

4.1.2. Access to institutional service of farm households head

Access to market information:

Access to agricultural markets and marketing information are essential factors in promoting
competitive markets and improving agricultural sector development. A well-organized market
intelligence information system helps all the producers and traders freely interact with one
another in arriving at prices. Access to reliable market information help farmers sell their
surpluses of wheat and choose modes of transaction, each of which yields a different benefit. It
has been postulated that farmers will choose a profitable mode of transaction if they can receive
reliable market information on the prevailing market conditions.

According to result of table 4.4 in the study area farmer that get market information from
different source were 68(46.3%) and farmer that not get market information from different
source were 79 (53.7%). This indicates that more of farmers have not market information and
they do not effectively use with their product.

Table 4.4 Access to credit and market information:

Frequency Percent
No 79 53.7%
market information Yes 68 46.3%
Total 147 100.0%
No 89 60.5%
Credit access Yes 58 39.5%
Total 147 100.0%

Source: own survey computation (2022/23)

According to result of table 4.4 in the study area farmer that used credit access from different
source were 58(39.5%) and farmer that not used credit access from different source were

36
89(60.5%). The credit access with and without interest in the study area was available but
farmers have not used this access because of lack of understanding and Islamic religion doesn’t
allow it.

The Agriculture and Trade Offices: Trade and agriculture wereda office are supporting the
market linkage facilitation, market information provision and production potato. The following
services are rendered by the office.

a) Provision of inputs like fertilizer, improved seed,…etc

b) Strengthening of market linkages;
c) Disseminating market information, (market price information collection on a weekly
basis (Monday & Thursday) and reported to the respective Zone Office every Friday.

Table 4.5 Access to agricultural extension services in production

(in a year)
Frequency Percent

1 8 5.4%

2 4 2.7%

3 24 16.3%

4 26 17.7%

5 25 17.0%
extension contact
6 24 16.3%

7 20 13.6%

8 12 8.2%

9 4 2.7%

Total 147 100.0%

Source: own survey computation (2022/23)

The kebele level development agents are the most important sources of extension services to
transfer agricultural technologies and innovations to farmers. The effort to disseminate new
agricultural technologies is influenced by the efficiency of communication between the
development (change) agent and the farmers at grassroots level. They play a critical role by
providing the necessary information in terms of crop management, marketing and related
activities like use of input And access to agricultural extension services helps to facilitate

37
dissemination and adoption of improved technologies and ensure the local availability of these
technologies for the majority of potato producer household headers.

Based on table.4.5 in the study area out of the total respondents of potato producing sample
household heads, 5.4% (8) of sampled household contact 1 times within a year, 2.7% (4) of
sampled household contact 2 times within a year, 16.3% (24) of sampled household contact 3
times within a year, 17.7% (26) of sampled household contact 4 times within a year, 17% (25) of
sampled household contact 5 times within a year, 16.3% (24) of sampled household contact 6
times within a year, 13.60% (20) of sampled household contact 7 times within a year, 8.2% (12)
of sampled household contact 8 times within a year, and 2.7% (4) of sampled household contact
9 times within a year.

Table.4.6 type of input used for potato production

Frequency Percent
improved seed 15 10.2
DAP and UREA 56 38.1
improved seed and chemicals 5 3.4
type of input producers used
improved seed and DAP and UREA 70 47.6
chemicals and DAP and UREA 1 .7
Total 147 100.0

Source: own survey computation (2022/23 GC)

Input utilization

Inputs used by farmers in the study area cooperative/unions supplied inputs (fertilizer, improved
seed,) to farmers. Cooperatives/unions are major suppliers of fertilizer for producers in the study
area. Government (National Input Supply Enterprise) supplies to the unions with DAP and Urea
fertilizers and the unions can either sell to the cooperative which is found in each kebele and then
the cooperatives sell to farmers directly by loan or cash payment.

Fertilizer application is one of the most important agricultural practices that are used by wheat
growers in the study area. Moreover, proper application of the recommended impute rate is

38
important to obtain the required production and marketable supply. However, farmers in the
study area apply varying impute rate.

The survey result in table 4.6 indicated that 70 (47.6%) of sample respondents used improved
seed, DAP (Di Ammonium Phosphate) and UREA jointly and 56(38.1%) of respondent use only
DAP (Di Ammonium Phosphate) and UREA jointly but not used improved seed and 15 (10.2%)
of sample respondent used only improved seed but not DAP (Di Ammonium Phosphate) and
UREA on their potato field. This result indicates that more of farmers not used recommended
impute to get proper amount of product from their firms.

4.2. Demographic characteristics of traders

Figure depicted that the demographic characteristics of trader’s show 75% were male trader
and 25 were females. This implies that womens participation in potato trading was lower.
70% of the traders were married , 20% were single and the rest of 10% are divorce. Based on
the table more of the respondent was married.

Figure traders 4.3 genders and marital status

Source:-Data result of the study (2023)

In terms of education, 25% of traders were illiterate, 55% could read and write, and 20% had
completed Grades 5-10th/12th

39
 Figure 4.4 Educational
levels of traders Source: Data result of the study (2023)

Age is one of the demographic factors that is useful to describe traders experience and
networking. The age of sample traders ranged from 20 to 40 years. Based on above bar graph
result maximum (7) traders age lie between 26-30 years and minimum (1) traders age is lie
between 20-25 years . this imply that more of traders are in active age boundary to adopt new
technology and information that they need to their trading process.

Figure 4.5 age group of traders

Source: Data result of the study (2023)

4. 2.1 potato market actors, their linkages and their function/ Roles

In this study, different stakeholders were involved in bringing potato from the point of
production (farm gate) till it reached the final destination (consumers). According to the data
obtained market participant identified in the transaction process of potato in the study area
direct/main actors include farmers/producers, wholesalers, retailers, and indirect actors are those

40
that provide financial or non-financial support services for the actors in the chain such as
microfinance, governments, NGOs. SLMPs, Productive safety net program (PSNP)...etc. The
market participants involved in different activities (wholesale, retail, processors….etc.) in the
study area were categorized into different categories.

Producers

Farmers are the primary and most valued actor in the potato market chain. Two categories of
farmers were noticed in production areas: They perform most of the market chain functions right
from farm inputs preparation on their farms to post harvest handling and marketing. The major of
market chain functions that potato producers perform include land preparation,
growing/planting/, fertilization, protecting from weed, pest/disease, harvesting and post-harvest
handling and marketing. They transport potato to the nearest markets (village market) by
themselves, either carrying by themselves or using donkeys either using pack animals, or animal
driven carts, Motor bike or else Bajaj. Whereas woreda markets are big markets that are found in
the woreda town ( qawaqoto, tanze, kutere and terega) where, most of surplus potato products
are transacted.

Wholesalers: - Wholesalers are the major buyers/retails of potato as they at a time from farmers.
Wholesalers are traders that buy potato directly from farmers. They mostly purchase from
farmers and small traders. Usually those in surplus areas for resale in deficit, to larger market
centers and retailers with better financial and information capacity. Almost all wholesalers have
the license to do wholesale in the study woreda. In this the study area markets, the wholesalers
sell the potato either directly or through commission agents to the different buyers in most cases
retailers and processors. This means that the wholesalers generally participate in marketing of
potato and perform physical (place utility) and facilitating functions (financing).

Ultimate consumers:

Consumers are the end actors in the potato market chain and those purchasing the products for
consumption. Consumers of potato such as: - Households, wholesaler and retailer. The private
consumers are employees, traders, and other urban dwellers that purchase and consume potato
product. Private consumers purchase potato from producers(farmers), collectors, wholesalers,

41
retailers and most of the urban consumers purchase from retailers. Farmers also make important
segment of the rural consumers because they consume part of their products especially
households who have large family members consume more of their product. The market chain
map indicated below the involvement of different actors who participated directly or indirectly
between farmer and final consumer in the market chain.

4.2.2 Potato marketing channels:-

According to Kotler and Armstrong (2003), marketing channel is a business structure of
interdependent organizations that reach from the point of product origin to the consumer with the
purpose of moving products to their final consumption destination. A product channel refers to
route followed by products as it moves from producers to a consumer. Thus market chain
analysis is intended to provide a systematic knowledge of the flow of goods and services from
their origin (producer) to their final destination (consumer).This knowledge is acquired by
studying the participants/key actors in the market chain that is, those who perform physical
marketing functions in order to obtain economic benefit. There are successive functions which
have to be performed by market intermediaries through which they achieve both personal and
social goals by earnings a personal financial award. In so doing they add value to products and
satisfy the consumer’s needs. The channels thus, vary in their efficiency example in terms of
profitability to actor, quantity moved or transformed as stated in (Mmasa and Msuya, 2012). The
transactions of potato from producers to final consumers were conducted through different
marketing channels. These include direct sell to consumers and the involvement of various
intermediaries between producer and consumers. Accordingly, in the study area six alternative
channels were identified for potato market. Major marketing channels were identified from
production up to final consumption with the involvement of different actors as shown below.

1. Producers Consumer

2. Producers Retailers Consumer

3. Producers Wholesalers Consumers

4. Producers Wholesalers Retailer Consumers

5. Producers Brokers Wholesalers Consumer

6. Producers Brokers Wholesalers Retailer Consumer

42
 POTATO PRODUCERS/FARMERS (3110 quintal)

4.7%(146ku)
48.4% (1505ku)
Brokers
16.27%(506ku) 30.64%(953ku)
Whole sealers (1651ku)

57.05% (942)
RETAILERS
21.25%(351ku) Outside the study
21.68%(358)
area market

CONSUMERS

Figure 4.6 Potato market channels of the study area

Source: Data result of the study (2023)

4.3 Potato Market Structure, Conduct, and Performance

4.3.1 Structure of potato market

The structure of the potato market is described in this paper utilizing variables such as market
concentration, exit and entry conditions, and market concentration

43
4.3.1.1 Ratio of market concentration

There were small numbers of traders in the selected woreda which are participating in potato
trading. So that, woreda level market concentration ratio was calculated to analyze the type of
markets existed in the selected area. The most popular market concentration indicator is the
market concentration index, which measures the percentage of traded volume accounted for by a
specific number of participants. The letters CRx stand for the concentration ratio, which
represents the proportion of the market sector that the top x enterprises dominate. The most
popular concentration ratio for evaluating market structure is the concentration ratio of four
enterprises (CR4). Strong oligopolies are defined as having a CR4 of more than 50%, moderate
oligopolies as having a CR4 of between 30% and 50%, and non-concentrated markets as having
a CR4 of less than 30% (Kohls & Uhl, 2002).

To determine the total amount of potatoes sold on the Kutara market, the data collected from the
dealers' monthly quantity purchases were multiplied by 12 months to create an annual total. The
Kutara market was anticipated to have a 6876 quintal total volume.

Table 4.7 Market concentration ratio of Kutara potato market

s.no Top four and total Market share (%) Cumulative market share (%)
volume of potato handled
annually (in quintal)

1st 500 7.27% 7.27%

2nd 496 7.21% 14.49%

3rd 495 7.20% 21.68%

4th 430 6.25% 27.94%

5th 420 6.11% 34.05%

6th 400 5.82% 39.86%

7th 400 5.82% 45.68%

8th 400 5.82% 51.50%

44
9th 330 4.80% 56.30%

10th 330 4.80% 61.10%

total 6876 quintal

Concentration ratio of top 4 traders 27.94%

Source: Data result of the study (2023)

The four biggest traders’ from the survey were used in the concentration ratio calculation
together with Kohl's and Uhl's (2002) market structure criteria. According to table 4.7, the level
of market concentrations (CR4) for total potatoes was found to be lower than what would be
considered a competitive market. The four biggest potato traders only handled 27.94% of the
total volume of potato purchased at the Kutara market, showing a competitive market structure.

4.3.1.2 Barriers to entry and exit

One of the markers of market structure measures were entrance and exit barriers.

Figure 1.7 The enter & exit problem of potato market

Source: Data result of the study (2023)

According to the research findings, 35% of potato traders reported entry challenges, while 65%
of traders claimed there were none. On the other hand, 15% of potato traders claim there are exit
problems while 85% of them claim there are none.

45
4.3.2 Conduct of potato market
All firms' market behavior is referred to as market conduct. They are seeking for new approaches
and putting them into practice as soon as possible, looking for new investment opportunities, or
disinvesting and shifting cash elsewhere. Firms that are price searchers are expected to act
differently than those in a price-taker industry, and this is referred to as market conduct (Abbott
& Makeham, 1981; Cramers & Jensen, 1982).

Figure 4.8 Way of attract your suppliers

Source: Survey data result (2023)

Computation between potato traders: The study's findings indicate that retailers are more likely

to draw suppliers by using fair scaling (measurement) and by giving a higher price, whereas

wholesalers are more likely to do so. Brokers can save money by utilizing fair scale

(measurement), and rural collectors can save money by giving a better price.

Additionally, wholesalers draw in your customers by 50% by providing a better price, 30% by
applying fair scaling (measurement), and 20% by delivering high-quality goods, as shown in
figure 4.9. Retailers increase their sales by 25% when they provide high-quality potatoes, 30%
when they use fair scaling (measurement) and 45% when they give a lower price. Rural

46
collectors, meantime, draw in your customers by offering a better pricing, fair scale (measuring),
and high-quality potatoes, resulting in a 55 percent increase in sales.

Chart Title
ways of atracting buyeres by saling less price
ways of atracting buyeres by fare masurmente
ways of atracting buyeres by supplying better producte
11
10
9 9
8
6 6 6
5
4
3 3

wholseleres retaletes rural colacteres brokeres

Figure 4.9 Ways of attracting your buyers

Source: Data result of the study (2023)

4.3.2.1 Pricing mechanisms of traders and potato producers

According to the study's findings from all sample traders and potato growers, 25% of
wholesalers said that the selling price of potatoes was decided upon by the traders themselves,
20% by customers, 30% by brokers, and 25% through negotiation. The selling price of potatoes
was determined by traders themselves in 25% of cases for retailers, consumers in 30%, brokers
in 25%, and negotiators in 20% of cases. The selling price of potatoes was determined by traders
themselves 30% of the time, 15% by customers, 30% by brokers, and 25% by negotiation,
according to rural collectors. Brokers claimed that 25% of brokers, 20% of customers, 35% of
brokers, and 20% of brokers reported that the selling price of the potato was determined through
negotiation. Producers indicated that 60.5% of traders set the selling price of potatoes, followed
by customers 26.5% of the time, brokers 9.5% of the time, and negotiators 3.4% of the time.

47
Table 4.8 Selling and purchasing price seating mechanisms of traders

pricing
mechanism Wholesaler Retaliate Rural Producers
sailing price s % s % collectors % Brokers % ’ %

By trader 8 40% 10 50% 10 50% 12 60% 89 61%

By consumers 3 15% 3 15% 6 30% 4 20% 39 27%

By broker 3 15% 3 15% 2 10% 3 15% 14 10%

By negotiation 6 30% 4 20% 2 10% 1 5% 5 3%

Total 20 100% 20 100% 20 100% 20 100% 147 100%

pricing
mechanisms Wholesaler Retaliate Rural
purchasing price s % s % collectors % Brokers %

By trader 8 40% 10 50% 10 50% 12 60%

By consumers 3 15% 3 15% 6 30% 4 20%

By broker 3 15% 3 15% 2 10% 3 15%

By negotiation 6 30% 4 20% 2 10% 1 5%

Total 20 100% 20 100% 20 100% 20 100%

Source: Data result of the study (2023)

The study's results from all sample traders above table 4.8 show that 40% of wholesalers claimed
that the decision about the purchase price of potatoes was made by the traders themselves, 15%
by clients, 15% by brokers, and 30% through negotiation. In accordance with retailers, 50% of
traders set the price for buying potatoes, 15% of consumers do, 15% of brokers do, and 20% of
traders negotiate the price. According to rural collectors, 50% of traders choose the price they
would pay for potatoes, 30% of clients do so, 10% of brokers establish the price, and 10% of
traders negotiate. According to 60% of rural collectors, clients decide 20% of potato traders'

48
prices, brokers decide 15%, brokers decide 20%, and traders themselves decide 5% of traders'
prices.

4.3.3 Market performance

Market performance can be evaluated by analyzing the 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 a useful descriptive statistic if it is used to show how the
consumer’s food price is divided among participants at different levels of the marketing system.
(G. T. Abate et al., 2015).

Table 4.10 below shows potato marketing margins and gross profits for all channels recognized
in the study area. The total gross profit was highest in channel VI, which was 250 birr per quintal
of potato, followed by channel V, which had a total profit of birr 210. When comparing traders
with respect to gross profit, Rural collectors got the highest profit, which accounted for birr 300.

Regarding marketing margin, as indicated in table below, total marketing margin was highest in
channel VI, which accounted for 7.2%, and it was lowest in channel II. Out of this total gross
marketing margin, Rural collectors have taken the highest margin, which is 8%. Retailers had the
lowest percentage of gross margin compared to others, which is 3.94%. The above result of
margin analysis implies that all actors are advantaged and there is positive profit for all potato
market participants.

Table 4.20 Potato marketing margin and profitability analysis (ETB/q)

Actors of market chain Channels

I II III IV V VI TGMM
Producers GMMp% 100 98.7 98.84 97.36 94.4 92.8
GPp
Rural collectors GMMrc - - - - 4 4 8%
GPrc - - - - 150 150

Wholesalers GMMw - - 1.6 1.6 1.6 1.6 6%

GPw - - 60 60 60 60
Retailers GMMr - 1.3 - 1.04 - 1.6 3.94%
GPr - 50 - 40 - 40

49
 TGMM % 1.3 1.6 2.64 5.6 7.2
TGP Birr 50 60 100 210 250
Source: Data result of the study (2023)

Generally, based on the results of the structure-conduct and performance analysis of the potato
market in the study area, it is impossible to say that the potato market is efficient. According to
the study, the imperfect behavior of the potato market, the existence of barriers to entering the
potato market, and incomparable cost and profit sharing among potato market chain actors are
indicators of market inefficiencies. Therefore, the performance of the potato market in the study
area was characterized as inefficient.

4.4 Econometric Results

Before going to apply multiple linear regration analysis different tests are taken

4.4.1 Pearson Correlation Analysis

Correlation analysis is done to examine the relationship between dependent variable and
independent variable. The Pearson Product-Moment Correlation Coefficient is a statistic that
indicates the degree to which two variables are related to one another. The sign of a correlation
coefficient (+ or -) indicates the direction of the relationship between -1.00 and +1.00. Variables
may be positively or negatively correlated. A positive correlation indicates a direct positive
relationship between two variables. A negative correlation, on the other hand, indicates an
inverse, negative relationship between two variables (Ruud et. al. 2012).Table below clearly
shows that the relationship between two variables will be negligible, low, moderate, substantial,
or very strong.

Table 4.9 Correlation Coefficient

Correlation coefficient(r) Strength of correlation

From 0.01 up to 0.09 Negligible association
From 0.10 up to 0.29 Low association
From 0.30 up to 0.49 Moderate association
From0.50 upto0.69 Substantial association
From 0.70 and above Very strong association
Source: Joe W. Kotrlik, J. C. Atherton, A. Williams, M. KhataJabor and Zegeye (2011,2021)

50
Table 4.10 Result of Correlations analysis

Dist mrk mrkt info amnt pot cult land agri input crdt accs

Pearson Correlation 1

Distance from market Sig. (2-tailed)

N 147

Pearson Correlation .170* 1

market information/ Sig. (2-tailed) .039

N 147 147

Pearson Correlation -.059 -.076 1

potato produced in Sig. (2-tailed) .475 .358

N 147 147 147

Pearson Correlation -.002 -.096 .564** 1

cultivated land Sig. (2-tailed) .978 .246 .000

N 147 147 147 147

Pearson Correlation -.113 -.002 .268** .102 1

agricultural inputs Sig. (2-tailed) .174 .985 .001 .221

N 147 147 147 147 147

Pearson Correlation -.054 .005 .288** .168* .247** 1

Credit access Sig. (2-tailed) .512 .954 .000 .042 .003

N 147 147 147 147 147 147

Source:-own survey result (2022/23)

*. Correlation is significant at the 0.05 level (2-tailed).

**. Correlation is significant at the 0.01 level (2-tailed).

51
Accordingly, as it is clearly indicated in the above table 4.10 all the independent variables have
a tolerable amount of correlation with the each other.

1) Distance of farmer far from market has a low level correlation amount with farmers who
have/haven’t market information with (r=0.170*, p =0.039 ), no correlation with amount
of potato produced in 2013/14 E.C with (r= -0.059, p =0.475 ), no correlation with
cultivated land with (r= -0.002, p =0..978), low correlation with agricultural impute with
(r= -0.113, p =0.174) and no correlation with use of credit with (r= -0 .054, p =0.512
respectively.
2) market information have negligible level of association/correlation with amount of potato
produced in 2013/14 E.C, amount of cultivated land, agricultural impute and credit access.
3) Amount of potato produced in 2022/202 have substantial level association/correlation with
amount of cultivated land and moderate level association with agricultural impute and
credit access.
4) Cultivated land have low level association/correlation with cultivated land and
5) Agricultural impute have moderate level of association with credit access.

In addition to above description table 4.11 show that all VIF values are less than 10. This
indicates that absence of serious multi collinearity problem among independent variables. If
there is presence of multi collinearity between independent variables, it is impossible to separate
the effect of each parameter estimate in the dependent variables. It is thus, important to test multi
collinearity between explanatory variables.

Table 4.11 multi-collinearly test table (Coefficientsa )

Model Unstandardized Standardized T Sig. Collinearity
Coefficients Coefficients Statistics
B Std. Error Beta Toleranc VIF
e
1 (Constant) -21.685 2.185 -9.923 .000
total cultivated land 3.108 1.037 .090 2.996 .003 .674 1.483
amount of potato .858 .031 .882 28.002 .000 .607 1.647
market information/ -2.829 1.173 -.062 -2.412 .017 .925 1.081
road access -2.378 1.175 -.052 -2.023 .045 .917 1.091
agricultural input 3.804 1.264 .079 3.011 .003 .867 1.153

52
 Receive credit -.216 1.238 -.005 -.174 .862 .865 1.156
Distance from market .524 .230 .057 2.275 .024 .955 1.047
a. Dependent Variable: supply potato to the market
4.4.2 Result of Regression Assumptions Tests of the study
. Regression analysis is a statistical method to deal with the formulation of a mathematical model
showing relationship amongst variables which can be used for the purpose of prediction of the
values of the dependent variable, given the values of the independent variables. Multiple
regression analysis was conducted to establish the relationship between two or more independent
variables.

Assumptions of multiple regressions such as linearity, independence of errors, homoscedasticity,

normality, and collinearity have been cited as being of main concern in the study. Each
assumption will be thoroughly explained in this section, along with the effects of assumption
loss, how to measure each assumption, and how to interpret the results. Some academics contend
that this assumption is the most important because it blatantly distorts the results of the entire
study (Keith, 2006).

According to Darlington (1968), the dependent variable is defined as a linear function of the
predictor (independent) variables. When this relationship is linear, multiple regressions will
accurately approximate the dependent variable (Osborne & Waters, 2002). It's crucial to verify
for linearity in studies since the likelihood of non-linear interactions is high in the social sciences
(Osborne & Waters, 2002).

According to the homoscedasticity assumption, errors vary uniformly across all levels of the
independent variables (Osborne & Waters, 2002). This suggests that researchers think that errors
are distributed equally across the variables (Keith, 2006). This is clear when the departure from
the regression line is the same for all predictor variable values. Collinearity, also referred to as
multi-collinearity, is the idea that the independent variables are not correlated (Darlington, 1968;
Keith, 2006).

Regression coefficients should be interpreted as impacts of the independent factors on the

dependent variables when collinearity is at a minimum (Keith, 2006; Poole & O'Farrell, 1971).
This is predicated on our ability to discern components' causes and effects with accuracy. Multi-
53
collinearity occurs when several independent variables exhibit a strong connection with one
another or when one independent variable is a nearly linear combination of other independent
variables (Keith, 2006).

Therefore, regression analysis is conducted to test the effect of independent variables (total
cultivated land, amount of potato produced in 2013/14 E.C in quntal, market information, road
access, agricultural input, Receive credit, Distance from market, extension contact, family
member of farmers, and educational level of farmers) on the dependent variable (amount of
potato supply to the market). Firstly, the assumptions of the variables were checked before the
regression analysis. Therefore, the study has gone through the most critical regression diagnostic
tests consisting of multi-collinearity, normality, and linearity diagnostic tests. Accordingly, the
results for the tests are presented below.

4.4.2.1 Multi-co linearity Test

Multiple linear regressions made the assumption that the independent variables shouldn't have a
lot of linkage or correlation. Multi-collinearity is the term for the difficulty that arises when the
independent variables have a high degree of correlation. According to Gujarat and Porter (2010),
multi-collinearity can be detected by examining the tolerance and variance inflation factor values
(VIF). A tolerance of less than 0.10 and/or a VIF more than 10 point to a multi-collinearity issue,
as most authors have argued. As a result, the results from the Multi-collinearity Statistics table
above( Table 4.11) indicate that the VIF values are fewer than 10 and the tolerance values are
more than 0.1.

This demonstrates that the independent variables have no multi-collinearity issues. When there
are strong correlations between some or all of the sets of predictor variables, multi-collinearity
occurs. There were no obvious multi-collinearity issues because none of the predictor variables
had variance inflation factors higher than 10; in other words, no variable in the model measured
the same connection as quantified by another variable or set of variables. Table 4.9 above shows
information regarding the multi-collinearity analysis.

Table 4.12 multi-collinearly test table

Model Collinearity Statistics

54
 Tolerance VIF

(Constant)

total cultivated land .674 1.483

amount of potato produced in
.607 1.647
2013/14 E.C in quntal
market information/ .925 1.081
1
road access .917 1.091

agricultural input .867 1.153

Receive credit .865 1.156

Distance from market .955 1.047

a. Dependent Variable: supply potato to market
Source : survey result 2013/14 E.C

In addition to table 4.11 also the results of table 4.12 show that VIF value varies between 1.483
and 1.047. The tolerance value is in the range of 0.674-0.955. The values of both (VIF and
tolerance level) tests reflect that the variables used in the study are free from multi co-linearity.

4.4.2.2 Normality tests

Multiple regressions (Darlington, 1968; Osborne & Waters, 2002) imply that the distributions of
the variables are normal. This shows that errors are evenly distributed and that a map of the
residual values would look like a regular curve (Keith, 2006). The inference informs the
researcher of the anticipated values and is based on the normal distribution's shape (Keith, 2006).
Until the sampling distribution of the mean is understood, predictions can be made for a new
sample (Keith, 2006).

Gujarati (2004) states that the histogram of residuals, normal probability, and PP-plot test can all
be used to test the normality of an assumption. As a result, a histogram of residuals is a
straightforward graphic tool that can be used to understand the characteristics of a random
variable's probability density function. With the largest frequency of scores in the center, close to
the mean of zero, and decreased frequencies toward the extremes, the distribution of scores on

55
the dependent variable should be normal, describing an asymmetrical, bell-shaped curve. The
study used the scatter plot of the standardized residual, normal probability plot (P-P) of
regression standardized residual, and histogram normal distribution to test these presumptions.

Figure No.4.11 Histogram with Normal Distribution

Source: Survey result (2013/14) E.C

The histogram in the figure 4.11 above the normality test of the data, observation on the shape of
the histogram was checked and the result indicates that data used in the study was normally

56
distributed. In depth test of the residual plot and scatter plot reachable or to be in most statistical
software program packages may even suggests the linear relationship (Keith, 2006; Osborne &
Waters, 2002). A residual plot is a graph that suggests the residual on the vertical axis and the
independent variables on the horizontal axis. If the thing in a residual are randomly dispersed or
spread across the horizontal axis, a linear regression model is suitable for the data in any other
case a non-linear version is better appropriate.

Furthermore, the study used the normal probability plot (P-P) of regression standardized residual
and the scatter plot of the standardized residual. The (P-P) plot suggested no major deviations
from normality when the points lie on straight diagonal line. Therefore, the result of this study
had shown from results of SPSS software on figure No 4.12 Normal P-Plot shows linearity with
standardized residuals by predicted values and the P-P points lie on straight diagonal line, which
shows no major deviations from normality. Then, the researcher can say that the assumptions for
linearity have been met.

Figure No.4.11 p-p plot of regression standardized residual

Source: Survey result (2022/2023)

57
4.5 Multiple Linear Regression Analysis
Linear regression estimates the coefficients of the linear equation, involving one or more
independent variables that best predict the value of the dependent variable (Field, 2005).

Multiple linear regressions was conducted in order to determine the explanatory power of the
independent variables (number of family member, educational level of house hold head, area of
cultivated land, total amount of potato produced in 2022/2023, use of agricultural impute, use of
credit access, market information access, road access and distance from market) to identify the
relationship and to determine the most dominant variables that influenced the dependent variable
(supply of potato product to market). The significance level of 0.05 with 95% confidence interval
was used.

Table 4.13: Regression Model Summary

Model Summaryb

Model R R Square Adjusted R Std. Error of the Durbin-Watson

Square Estimate

1 .958a .918 .911 6.84547 1.673

a. Predictors: (Constant), distance from market, age of house hold, area of total cultivated
land, road access, total number of family members, extension contact, use credit access,
educational level of house hold head, market information, use of agricultural, total amount
of potato produced in 2013/14 E.C in quintal
b. Dependent Variable: potato supply to market
Source: Survey result (2013/14)
As it is revealed in table No (4.13) above, R: ranges from 0 to 1, with a bigger value indicating a
stronger correlation and 1 signifying an equation that exactly predicts the observed result.
indicates the value of the various correlation coefficients between the predictors and the outcome
(Pedhazur, 1982).

58
From the model summary (R=.958a) indicated that, the linear combination of the eleven
independent variables (distance from market, age of house hold, area of total cultivated land,
road access, total number of family members, extension contact, use credit access, educational
level of house hold head, market information, use of agricultural, total amount of potato
produced in 2022/2023 in quintal) strongly predicted the dependent variable (potato supply to
market).

R Square ( R2): shows how much of the variance in the dependent variable can be accounted for
by the linear combination of the independent variables. R2 Measures how much of the outcome's
variability can be attributed to the predictors, to put it another way R2's values fall between 0 and
1. (Pedhazur,1982). The linear combination of independent variables or predictors‟ i.e. distance
from market, age of house hold, area of total cultivated land, road access, total number of family
members, extension contact, use credit access, educational level of house hold head, market
information, use of agricultural, total amount of potato produced in 2013/14 E.C in quintal
explains 91.8% of the variance in dependent variable ‟ i.e. amount of potato supply to market
and the remaining 8.2% is explained by extraneous(other) variables, which have not been
included in this regression model. On another word, 91.8% of the variation in the amount of
potato supply to market is explained by the changes in the aforementioned independent variables
while the rest 8.2% of other factors not included in this research contributed for variance in the
dependent variable. .

Adjusted R Square ( R2): The adjusted R2 gives some idea of how well the model generalizes
and its value to be the same, or very close to the value of R2. That means it adjusts the value of
2
R to more accurately represent the population under study (Pedhazur, 1982). The difference for
the final model is small (in fact the difference between R2 and Adjusted R2 is (0.918 − 0.911 =
0.007) which is about 0.7%. This shrinkage means that if the model were derived from the
population rather than a sample it would account for approximately 0.7% less variance in the
outcome.

Durbin-Watson: The Durbin–Watson statistic expresses that whether the assumption of

independent errors is acceptable or not. As the conservative rule suggested that, values less than
1 or greater than 3 should definitely raise alarm bells (Field, 2005). In other word a value near 2

59
indicates non-autocorrelation; a value toward 0 indicates positive autocorrelation; a value toward 4
indicates negative autocorrelation. So that the desired result is when the value is closer to 2, and for
this data, the value is 1.673, which is so close to 2 that the assumption has almost certainly been
met.

Table No.4.14 Analysis of variance (ANOVA)

ANOVAa

Model Sum of Squares Df Mean Square F Sig.

Regression 70873.240 11 6443.022 137.494 .000b

1 Residual 6326.161 135 46.860

Total 77199.401 146

a. Dependent Variable: supply potato to the market

b. Predictors: (Constant), distance from market, age of house hold, total cultivated land, road
access, number of family members, extension contact, use of r credit access, educational level
of house hold head, getting market information, use of agricultural input, total amount of potato
produced in 2013/14 E.C in quintal
Source: Survey result (2022)
To set up the significance of regression table, the researcher used ANOVA. The ANOVA test
tells whether the overall model is acceptable from a statistical perspective i.e. whether the
independent variables are in a significantly good degree of prediction of the dependent variable.
In testing its significance level, the study considered significant if the p value is less than or
equal to 0.05. Therefore, as it is depicted in table No (4.14) above, the significance of the
regression of p value 0.000 which is < 0.05. Consequently, it shows that the regression model is
statistically significant as a result showed and it is right for prediction.

As it can be seen from the table (4.14) above, the independent variables which affect the
significantly predicted with F = 137.494 and sig = .000. (I.e. the regression model is the good fit
of the data). F tests used to find out overall probability of the relation between the dependent
variable and all the independent values occurring by chance. The F-test result of the study was
137.494 with a significance value of 0.000, which means that the probability of this result
occurring by chance was less than 0.05, which means the variation explained in the model not

60
simply brought by chance. The overall ANOVA result suggest that the model become significant
or substantial at F= 137.494, P=.000. Hence, accept the alternative showing that all independent
variables affect potato suuply to the market at P< 0.05. According to the table (4.14) above, we
can see that the Mean Square of Regressions is more than Mean Square of Residual and the sig =
0.000 <0.05. Thus for this research Regressions is significant at a confidence level of 95%.

Table 4.15 multiple regression analysis test result of factor affecting of potato supply to market

Model Unstandardized Standardized T Sig. Collinearity

Coefficients Coefficients Statistics
B Std. Beta Toleran VIF
Error ce
(Constant) -21.374 3.481 -6.140 .000
age of house hold
-.368 .413 -.022 -.892 .374 .956 1.046
head
number of family
-.197 .286 -.017 -.689 .492 .943 1.060
members
educational level of
1.063 .919 .030 1.156 .250 .914 1.094
house hold head
cultivated land of
3.094 1.049 .089 2.949 .004 .664 1.506
house
Use extension contact .083 .300 .007 .276 .783 .925 1.081
1
total amount of potato
produced in 2013/14 .856 .031 .880 27.501 .000 .593 1.686
E.C
getting market
-2.564 1.191 -.056 -2.153 .033 .905 1.105
information
road access -2.374 1.184 -.052 -2.005 .047 .910 1.099
use of agricultural
3.509 1.300 .073 2.699 .008 .825 1.212
input
use credit access -.327 1.248 -.007 -.262 .794 .856 1.168
distance from market .549 .233 .060 2.357 .020 .940 1.064
a. Dependent Variable: supply potato to the market

The beta coefficients those present the contribution positive or negative effect of each variable to
the model. The beta coefficients with its significance level P values showed the influence of the
61
independent variables on the dependent variable. According to survey in the study area potato is
a perennial and cash crop, potato farmers’ primary decision to produce it for sales purpose in
order to earn cash as well as for household consumption purposes. All sample households are
suppliers of the potato to the market. Therefore, multiple linear regression models were
employed to identify the factors affecting market supply of potato. Out of 11 variables, 6
variables were significant. The multiple linear regression model showed that potato producers
decision to participate in the potato market positively and significantly affected by total amount
of potato produced in 2022/2023, land allocated to potato production, distance of farmers from
market and use of agricultural impute. On the other hand lack of market information and lack of
road access are negatively and significantly affected the supply of potato producers’ decision to
participate in the potato market. According to the survey result showing on above table 4.15 the
rest variables (Family size, Use of available credit service, Frequency of extension service and
educational level of house hold) have no effect in the participation of farmers on the potato
market. Under this part variables that affect potato market participation in the proposed study
area are discussed.

The determinants of participation in market-chains was

(a) Dependent variable: potato supply to the market

Independent variables for (a)

β 0= Model intercept β 7= coefficient of access to market information

β 1= coefficient of age of the household head β 8= coefficient of availability of road access

β 2= coefficient of family size β 9=coefficient of use of agricultural impute

β 3= coefficient of education level of household head β 10= coefficient of use of credit access

β 4 = coefficient of size of land allocated to potato β 11= coefficient of distance from market

β 5= coefficient of frequency of extension service (Frequency)

β 6= coefficient of amount of potato produced in 2022/2023

Y= coefficient of dependent variable (potato supply to the market) u = error term

β0= is the intercept term: - it gives the average value of Y when the stated independent variables
are set equal zero.

Y = β 0+ β 1 X 1 + β 2 X 2 + β 3 X 3 + β 4 X 4+ β 5 X 5+ β 6 X 6+ β 7 X 7+ β 8 X 8 + β 9 X 9+ β 10 X 1 O + β 11
X 11 + u

62
X 1 = age of house hold X 5 =frequency of extension contact X 9= agri impute

X 2 =number of family member X 6 =amount of potato produced X 10 =credit acccess

X 3 =educational level of house hold X 7 =market information X 11 =distance of markt

X 4=land allocated for potato production X 8=availability of road access

Size of land under potato production:- Land allocated by farmers for potato production,
affected farmer’s decision to market participation positively and significantly at 1%
significant level. As land size increases by a hectare, the probability of market supply
increases by 3.094 quintal keeping others factors constant. This implies that, farmers who
allocate more area land for potato production had supplied more potato to the market. And,
having larger cultivated land for potato, were found to participated more than smaller land
allocated potato producers because of their capability to produce larger volumes which
resulted in marketed surplus. In line to this finding done by Getachew (2015) found that land
allocated for potato seed tuber were found to be associated positively in favour of
participation in primary producers̕ cooperative of potato seed tuber with expected sign. Efa et
al. (2016) indicated that land allocated for teff production positively and significantly
affected the probability of market participation.

Lack of market information:- Contrary to prior prediction, the variable has inverse relation with
market supply of potato. lack of access to market information affected the decision of farmers
to market participation negatively and significantly at 5% significance level. a negative
coefficient implying that an lacking in access to market information would decrease market
supply of potato. This means that the farmer who havnt a good access to market information
(selling price, place where and time when they sell) would likely not produce more quantity of
potato and supplied less potato to the market. This result indicates that an unit decreased in
access to market information leads to decreases in the potato supply by 2.564 quintalt. Contradict
to this finding Astewul (2010) and Nuri (2016) found that access to market information
significantly and positively affects rice and bulla market participation respectively.

Distance from nearest market: - It is a continuous variable and it is measured in kilometers

which farmers travel short distance to sell their product to the market. As hypothesized it affects

63
the decision of farmers to participate potato marketed positively and significantly at 5% level
of significance. The implication is that as the distance to the nearest market decreases by one
kilometre, the probability of farmers’ participation in potato market increases by 0.549
quintal. Beza (2014) conducted a study on value chain analysis of maize estimated that,
distance from the main market influence the household’s market supply negatively. Riziki et al.
(2015) confirmed that distance to the market is significant determinant of choice of marketing
outlet.

Total amount of potato produced: As hypothesized, the result confirms that the total amount
of potato produced and market supply of potato has positive effect and statistically significant at
1%. Therefore, farmers who produce more amount of potato per hectare may supply more potato
to the market than those who produce low amount of potato. The result of the study also shows
that a unit increase in the quantity of potato produced has caused an increase of 0.856 quintal of
potato supply to the market. Wondimu Awoke1* and Desselgn Molla2 (2019) conducted a their
study on Market chain analysis of potato and factors affecting market supply in West Gojam
Zone, Ethiopia they estimated that total amount of potato product influence the household’s
market supply performance positively . and also this is in line with Abay (2007), Adugna (2009),
Assefa (2009), Ayelech (2011) and Abraham (2013).

Lack of road access: Contrary to prior prediction, the variable has inverse relation with market
supply of potato, which was significant at 5% probability level. The result show that lack of road
access to market increase by one unit the household supply of potato to the market decrease by
2.374 quintal.

Use of agricultural impute:- As hypothesized, the result confirms that the use of agricultural
impute and market supply of potato has positive effect and statistically significant at 1%.
Therefore, farmers who use appropriate amount of agricultural impute to potato production per
hectare may supply more potato to the market than those who not use appropriate amount of
agricultural impute to potato production per hectare. The result of the study also shows that a
unit increase in appropriate amount of agricultural impute caused an increase of 3.509 quintal of
potato supply to the market.

64
 CHAPTER FIVE

5.1SUMMARY, CONCLUSIONS AND RECOMMENDATIONS

Potato is mainly produced as cash and home consumption purpose in the study area. The role of
potato for food security is important and is consumed and marketed throughout the year. Despite
the significance of potato in the livelihood of large number of farmers and is being cash crop in
the study area, it has not been given as such due attention.

The main focus of this thesis was analyzing potato market chain in the study area. The specific
objectives of the study include analyzing the market structure-conduct-performance of potato
markets in the study area; identifying the potato market chain actors and their respective roles in
the study area; analyzing the determinants of potato supply to the market in the study area.

Primary data were collected from 147 sample potato household headers drawn from allicho
wurriro woreda, 20 traders including (wholesalers, retailers and consumers) from three towns
(Kutere, tanje and qawaqoto were interviewed using structured questionnaire. Additionally, input
suppliers cooperatives at each kebele were interviewed.

Secondary data which assisted this study were collected from Woreda Agriculture Office, Office
of Trade and Industry, Woreda Finance and Development Office, selected kebele officers and
from published and unpublished materials (like reports of Central Statistical Agency). The data
were analyzed using econometrics and descriptive statistics tools by employing SPSS V 20 and
STATA software packages.

A two-stage random sampling technique was used to select sample potato farmers and traders.
Respondents were selected randomly from the respective list of farmers and traders of Woreda
and woreda town respectively. Descriptive statistics and econometric model were used to
analyze data. Descriptive statistics data analysis methods such as, means, frequency, percentages,
standard deviations and t-test for significant mean difference were used to examine variables.

65
Structure, conduct and performance approach was used to analyze potato market performance.
Econometric model, multiple linear regression models was used to analyze determinant variables
for market supply for potato market.

Out of the respondents, 70.03% and 29.93% were male and female household heads respectively.
The minimum and maximum number of respondent was with in age group of 31-35 and 26-30
which account 20(13.6%) and 45(30.6%) respectively. The average family members of
respondent in the study area were 4 and the minimum and maximum family size of the
respondents was 1 and 9 respectively. The minimum and maximum sizes of landholding of the
respondent for potato farming were 0.25 and 2.5 hectare respectively with mean landholding of
1.039 hectares.

The result also showed that 60.5% of the respondents weren’t use available credit service. Even
if now a day omo microfinance provides interest free credit, but due to lack of adequate
information most of farmers doesn’t use credit in the study area. Provision of adequate services
for the communities enhances the communities’ socioeconomic development in general and the
well-being of individuals in particular. The most important services that are expected to promote
production and marketing of potato in the study area include potato farm experience, education
level of farmers, and access to market information. Inputs used by farmers of the study area are
fertilizer, improved seed and chemicals. These inputs are supplied to farmers either by
government cooperative/unions and private traders. The survey result indicated that only 15
(10%) respondent use improved seed they do not used neither DAP and UREA nor any
chemicals. 56 (38.10%) of respondent used DAP and UREA but not used improve seed and any
chemicals.70 with 47.6% respondents use both improved seed and DAP and UREA for potato
field. Seed distribution remains largely formal and union-to-farmer exchanges account for as
much as 95% of the seed trade and the remaining is supplied by the farmer himself.

The main potato market chain actors in the area are producers, wholesalers retailers and
consumer. There are about six channels in the study area and the total gross profit was highest
in channel VI, which was 250 birr per quintal of potato, followed by channel V, which had a
total profit of birr 210. When comparing traders with respect to gross profit, Rural collectors got
the highest profit, which accounted for birr 300.

66
Regarding marketing margin, total marketing margin was highest in channel VI, which
accounted for 7.2%, and it was lowest in channel II. Out of this total gross marketing margin,
rural collectors have taken the highest margin, which is 8%. Retailers had the lowest percentage
of gross margin compared to others, which is 3.94%. The above result of margin analysis implies
that all actors are advantaged and there is positive profit for all potato market participants.

Wholesalers play an important role in collecting produce from smallholder producers at farm
gate and delivering to retailers and consumers at different levels. Retailers are market actors
operating at the last stage of the marketing channels selling to consumers. They buy from
wholesalers and farmers in their surroundings and directly sell potato to consumers.

The production and marketing constraints that encounter farmers were very high cost of
improved agricultural products, extension support problems, erratic rainfall patterns, poor road

and transport, labor-intensive nature of potato production, high marketing costs, marketing price
and lack of market research and information. The channel was found to be the third list important
in terms of volume. Traders of potato in the woreda have the problem of capital shortage,
information flow, and absence of storage. Accordingly, the opportunities of the study area were
availability of good weather condition, availability of fertile land, fast-growing demand for
potato by low and middle income consumers, availability of motivated and hardworking farmers,
and the presence of suitable soil for potato production.

The result of multiple regressions indicated that land allocated to potato production, amount of
potato produced, agricultural impute used, and distance from market influences amount of potato
supplied to market positively and significantly. Lack of access of market price information and
lack of road access were negatively and significantly affected potato supplied to the market. This
indicated that the six variables should get attention if we are going to increase marketable supply
of potato in the study area.

67
5.2. Recommendations:

 The result of econometric analysis indicates that land allocated for potato production
positively and significantly affected market participation. It is the single most important
variable in the production of agricultural products. Since this variable has a positive
effect, there is a need potato producer in the study area to shifting land to potato
production than other crops, rent and search land lease if possible to increase their
likelihood of potato participation and intensity of potato market participation to the
market via increased production.
 Lack of market information and road access negatively and significantly affected the
number of potato supplied to the market. Therefore, producers need training from
government related to production and market price information of impute and product
for understanding of the business, developing market infrastructure such as building
market places, repairing roads and improving road networks to production areas reduce
trekking time, minimize transportation and other marketing costs which in turn improve
potato production and increase potato supply to the market.
 Well-established marketing institutions are needed to promote and enhance potato
market competitiveness that helps in reducing monopoly power of existing traders.
 The survey indicates that volume of potato supplied to market is influenced positively
and significantly by use of agricultural impute. Therefore, in order to enhance volume of
product supplied to market, these variables should get attention and promoted.
Government and any concerned body solve the problem of impute and development
agent exostively teach the producer about use of impute and this lead to surplus produce
by farmers in the study area. Increasing surplus production through promotion of
appropriate input technologies such as seed of improved varieties, recommended
fertilizer rates, pesticides and other appropriate agronomic recommendations can
improve production and productivity of potato in the study area.

68
  Availability of interest free credit and reconsidering the existing bureaucratic input
administration procedure are also crucial to increase supply of potato to market.
 Government and religious institution solve problems of misunderstanding of producer in
use of available interest free credit that government sustain to producers.

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74
 Appendix 1(Farmers' questioners)
Wachemo University College of business and economics department of economics MSc.
Research in development economics on Market chain analysis of potato production in siltie zone,
SNNP Regional state of Ethiopia
A. Demographics
1 Sex of household head 1 male 2 female
2 Dear respondent, how old are you.? 1, 20-25 years 2, 26-30 years
3, 31-35 years 4, 36-40 years 5, above 40 year
3 Marital status of household head 1. Single 2. Married 3. Divorced
4 other specify ___________________________
4 Total number of family members’ 1, < 5 members’ 2, 5-9 members’ 3, > 10
5 Education level of household head 1,primery and below 2, Secondary school (9-12)
3, collage and above
B. Land holding and Farming
1 What is the area of total cultivated land do you have in hectare-------------------
2 Are you participating in potato production in 2013/2014 E.C 1. Yes 0. No
3 If your answer for question no/ 2 is yes what is the area of your cultivated land for potato
production in 2013/14 E.C in hectare -------------------------
4 Total amount of potato produced in 2013/2014 E.C __________________kuntal(kun)
5 When did you started farming (farming experience) ? 1, < 5 years 2, 5-10 years
3, above 10 years
C. Input Supply
1 . Have you used agricultural inputs for the production of potato? 1.Yes 2.No
2 If your answer for question no/ 1 is yes which type of input for potato you used (more than one
answer is possible) 1, Improved seed 2, chemicals 3, DAP and UREA
4, 1 & 2 5, 1 & 3 6, 2&3 7, Others (specify)---------
3 If your answer for question no/ 1 is no why? 1 because the cost of input is high
2, I have not awareness about use of impute
3, No need of impute for my land 4 other specify-------------------------------

75
4 If you use impute for your production of potato from where you get input? 1, from government
2, from Cooperatives/union 3, from Private traders 4 other specify----------
D. Credit services
1 Do you receive credit in cash to improve potato production process at last year? 1 Yes
0 No
2 If your answer for question no/ 1 is yes from where did you get the credit Service?
1, Cooperative 2, Micro finance 3, NGOs 4, Local money Lender
5, Saving and credit Association 6, (Others specify)__________________________
3 If you use credit at last year for what purpose do you apply the credit? 1 for buying improved
seed 2 for buying fertilizer and chemicals 3 for buying own ox 4 for daily
labor cost 5 other specify--------------------------
E. Extension and Information Services
1. Did you have an extension contact? 1, Yes 0, No
2. If your answer for question no/ 1 is yes which sector provides extension service 1, Research
Centre’s 2, Bureau of agriculture 3, University 4, NGOs
5, Others (specify)____________________
3. Which type of training you get from extension service providers? (more than one answer is
possible) 1, Pre and post-harvest crop management 2, use of input 3, Use of credit
4, cultivating strategy and season 5, Marketing time of agricultural products
6, all above training we get 7, Others specify___________
4. Which means of ploughing you use ? 1, Own Oxen 2, Rented oxen 3, Family labor
4, Daily labor 5, other specify-----------------------
5. If your answer for question no/ 4 is rented oxen or daily labor what is its coast?-------------------
6. Which means of cultivation do you use to cultivate your potato? 1, Own Oxen 2, Rented
oxen 3, Family labor 4, Daily labor 5, Other specify-----------------------
7. If your answer for question no/ 6 is rented oxen or daily labor what is its coast?-------------------
F. Marketing data
1 how many kuntal do you supply to the market last year 2013/14 E.C?------------
2 who buy your potato ?(More than one answer is possible) 1, consumer 2, Retailer 3,
Wholesaler 4, Cooperatives/Unions 5, brokers 6, commission agents 7,
other specify___________________
3 To whom you sold your potato product to get better price? 1, To consumers 2,To Retailers
3, To Wholesalers 4, To Cooperative/union 5, To brokers 6, To
commission agents 7, To other specify-----------------------
4 What was the price of potato immediate after harvest in 2013/14 E.C? _________birr/100kg

76
5 Where do you sale your product/market place? 1. Within local market 2. Within woreda capital city
market qawaqoto 3. Within zonal capital city market worabe 4. Other specify--------------------------
6 Is there a difference in price due to differences in place of sales? 1 Yes 0 No
7 If your answer for question no/ 7 is yes, from which market do you get better price? 1. Within
local market 2. Within woreda capital city market qawaqoto 3. Within zonal capital city
market worabe 4. Other specify--------------------------
8 Do you have own transportation you used to supply potato product to market place?
1 . Yes 0. No
9 If your answer for question no/ 7 is no, which means of transportation used to take potato to the
market? 1. Rented Cart 2. Rented Pack animal 3. Rented vehicle 4.
Others(specify)_________
10 If your answer for Q 10 is no, how much it costs you spent to reach market place per 100kg?
_______birr
G. Price data
1 What is the trend of potato price for the past five years? 1. Increasing 2. Decreasing
3. Stable
2 Who decides on price during selling potato? 1. Traders 2. Producers/farmers
3. Brokers 4. Negotiation of farmers with trader’s 5 commission agents
6. Others (specify)_____________________
3 If your answer for Q 3 is broker/middlemen negotiates on price, who will pay for him?
1. Farmer 2. Traders
4 If your answer for Q 3 is farmer, how many percent of your sels do you pay for him per quintal
___________birr/qt
H. Supply data
1 When do you sold last year’s potato produce? 1. Immediate after harvest
2.One month later 3. More than two months
2 If you sell immediate after harvest, why you did that? 1. Better price 2.Storage
problem 3. Fear of price fall 4. Fear of Loose of productivity
5. Others (specify)___________
3 What do you consider to supply your potato to the market?
1. Assess price information and supply if better 2. When we need money, we supply
3. Others (specify) _____________________________

77
Appendix 2(Questionnaire for traders)
Wachemo University College of business and economics department of economics MSc.
Research in development economics on Market chain analysis of potato production in
siltie zone, SNNP Regional state of Ethiopia
Name of the market -------------------------
A. Demographics
1. Sex of trader 1. male 2. female
2. Dear respondent how old are you? 1, 20-25 years 2, 26-30 years
3 31 -35 years 4, 36-40 years 5, above 40 year
3. Marital status of trader 1. Single 2. Married 3. Divorced
4 other specify ___________________________
B. Market structure related questions
1 Is your license a wholesaler or a retailer? 1, wholesaler 2, retailer
2 What is your business type?
3 Are there entry problems? 1, yes 0, No
4 Q
If your answer for 1 is yes what is the problem? 1. The market is monopolized by few
traders 2. there is not government police that govern entry problem 3, there exist
misunderstanding between traders 4 other specify________________________
5 Chooses your answer at the space is provided 1 for yes and 0 for no
s.no question Yes(1) No(0)
1 Do you have supply problem?
2 Is there competition among traders?
3 Is there perfect information flow?
4 Are you willing to pay for information?
5 Is there homogeneity of a product?
6 Do you have roads access in all-weather condition?
7 Do you have demand/ market problem?

6 How many potato traders are there? 1,Too many 2, Many 3,average
4,Few 5,Very few

78
C. Market conduct related questions
1) Who decides the price in the market? 1, consumers 2,Retailers
3,Wholesalers 4, Cooperative/union 5, brokers 6, commission agents
7, the market 8, other specify------------------------------------------------------
2) How much is your average transaction cost per quintal in the marketing process in
birr for different activities? Loading/ Unloading -----------Packaging------------
transportation-------------Sorting --------------assembling ------------ storage--------------
others cost specify ---------------------------------------------
3) Chooses your answer at the space is provided 1 for yes and 0 for no
s.no question yes no
1 Is there price variation based on demand & supply?
Is there evaluation and standard base
2
marketing/pricing?
3 Is there truthful product right in the market?
4 Is there collusion among traders?
5 Are there unfair trade practices?
6 Is there transparency in the marketing process?
7 Is there investment & reinvestments to the market?
D. Performance related questions
1) Is there profit margin difference between market actors? 1. Yes, 0. No
2) If your answer for Q 1 is yes who gets better? 1, consumers 2,Retailers
3,Wholesalers 4, Cooperative/union 5, brokers 6, commission
agents 7, farmers 8, other specify--------------------------------------------
3) What is the degree of benefit from the trade? 1. Very good 2.good
3.fair 4.low 5. Very low
4) . List the opportunities of potato marketing?--------------------------------------------------
5) . Any suggestion & comment about market developments----------------------------------

Thank you!!

79
Analysis of the Demographic Characteristics

Frequency Percent (%)

20-25 years 29 19.7%

26-30 years 45 30.6%

31-35 years 20 13.6%

Age
36-40 years 27 18.4%

bove 40 years 26 17.7%

Total 147 100%

Male 103 70.1%

Sex Female 44 29.9%

Total 147 100%

primery and below 104 70.7%

Educational level secondary school (9-12) 30 20.4%

collage and above 13 8.8%

Total 147 100%

1 6 4.1%

2 30 20.4%

3 35 23.8%

4 21 14.3%
number of family
5 19 12.9%
members
6 12 8.2%

7 Frequency Percent10 6.8%

8 12 8.2%

94 8 5.4 2 1.4%

Total 147 100%

5 30 20.4

6 28 19.0

7 19 12.9
farming experiance
8 21 14.3

9 22 15.0
80
10 19 12.9

Total 147 100.0

 Frequency Percent

no 79 53.7

market
yes 68 46.3
information

Total 147 100.0

total number of family members

Frequency Percent

farming experience of house hold 1 2 1.4

2 13 8.8

3 26 17.7

4 15 10.2

5 11 7.5

6 18 12.2

7 15 10.2

8 12 8.2

9 14 9.5

10 5 3.4

12 4 2.7

81
 13 8 5.4

14 4 2.7

Total 147 100.0

Market chain of the potato supply

Frequency Percent Valid Percent Cumulative

Percent

consumers 47 32.0 32.0 32.0

retailers 51 34.7 34.7 66.7

wholesalers 43 29.3 29.3 95.9

Valid
brokers 5 3.4 3.4 99.3

other specify 1 .7 .7 100.0

Total 147 100.0 100.0

___ ____ ____ ____ ____ (R)

/__ / ____/ / ____/

___/ / /___/ / /___/ 13.0 Copyright 1985-2013 StataCorp LP

Statistics/Data Analysis StataCorp

4905 Lakeway Drive

Special Edition College Station, Texas 77845 USA

800-STATA-PC http://www.stata.com

979-696-4600 stata@stata.com

979-696-4601 (fax)

3-user Stata network perpetual license:

Serial number: 501306208483

Licensed to: IDRE-UCLA

IDRE-UCLA

82
Notes:

1. (/v# option or -set maxvar-) 5000 maximum variables

Checking for updates...

(contacting http://www.stata.com)

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unable to check for update; verify Internet settings are correct.

. use "C:\Users\HAMDU\Desktop\the last research\data edited with mhmd.dta", clear

. correlate

(obs=48)

| sexhh agehh ttlnumfm frmexp edulvh~d cltland hvyuet~t wchmns~d whobyp~t togtbe~c

-------------+------------------------------------------------------------------------------------------

sexhh | 1.0000

agehh | -0.3332 1.0000

ttlnumfm | -0.0179 -0.0344 1.0000

frmexp | 0.0624 0.2950 0.1473 1.0000

edulvhhed | -0.0714 -0.2386 -0.2438 0.0707 1.0000

cltland | -0.1944 -0.0044 0.0964 0.1127 0.2738 1.0000

hvyuetntnc~t | -0.1833 0.1351 -0.2220 -0.0609 0.1688 0.0026 1.0000

wchmnsplph~d | 0.1554 -0.0410 -0.0965 -0.1631 -0.1984 -0.2640 -0.0158 1.0000

83
 whobypott | -0.1023 -0.2050 -0.0019 0.1619 0.1750 0.2538 0.1116 -0.4249 1.0000

togtbetrprc | 0.0492 -0.0731 -0.1758 -0.0258 0.0957 0.1397 0.1526 0.0421 -0.0262 1.0000

prcpottimd~t | -0.0129 -0.2802 0.1342 -0.2048 -0.0259 -0.1513 0.0951 0.4029 -0.0314 0.1917

plcmarkpot~d | -0.3224 0.1041 0.0803 0.4443 0.3709 0.6277 0.1647 -0.4327 0.4079 0.1384

prcdfwthdf~t | . . . . . . . . . .

whchmarkty~c | -0.0228 0.2195 -0.1731 0.4946 0.4226 0.2706 0.0713 -0.5639 0.3433 0.0585

decpottprce | 0.1726 -0.1710 0.0446 -0.3297 -0.1716 -0.1331 0.1346 0.1146 0.1609 0.2461

whpaycmsssn | 0.1467 -0.3498 0.1977 -0.4290 -0.2315 -0.1422 -0.0114 0.3273 -0.0652 -0.0209

ttamp~201314 | -0.2051 0.0533 -0.0001 0.4519 0.3201 0.3822 0.0466 -0.3298 0.3886 0.0556

timsellngp~t | -0.1392 0.1853 0.0080 0.2737 -0.1026 0.0983 -0.0039 0.0471 0.0070 0.0331

minfo | -0.1098 0.0884 0.1197 0.0311 -0.1271 -0.1054 -0.2275 0.1741 -0.0933 -0.1015

road | 0.0930 -0.1396 0.2716 -0.0215 0.0348 -0.0155 0.0619 -0.0146 0.1614 -0.0058

agrctlimpt | -0.1600 -0.1435 -0.1027 0.0825 0.1896 -0.0986 0.2382 -0.1193 0.1437 0.0477

credtacc | -0.0247 -0.1220 -0.1721 0.3960 -0.0465 0.2972 0.0629 0.0287 0.2308 0.1928

dim | -0.1951 -0.1374 0.2748 0.1521 0.0904 0.1951 -0.0591 -0.3045 0.2689 -0.3094

supply | -0.1889 0.0254 0.0117 0.4484 0.3949 0.4048 0.0428 -0.3481 0.3978 0.0534

| prcpot~t plcmar~d prcdfw~t whchma~c decpot~e whpayc~n t~201314 timsel~t minfo road

-------------+------------------------------------------------------------------------------------------

prcpottimd~t | 1.0000

plcmarkpot~d | -0.1643 1.0000

prcdfwthdf~t | . . .

whchmarkty~c | -0.4274 0.5309 . 1.0000

decpottprce | 0.4215 -0.2525 . -0.2077 1.0000

whpaycmsssn | 0.5666 -0.4136 . -0.6639 0.4865 1.0000

84
ttamp~201314 | -0.0763 0.7580 . 0.4383 -0.1688 -0.2813 1.0000

timsellngp~t | -0.1905 0.2455 . 0.1859 -0.2176 -0.2750 0.0567 1.0000

minfo | 0.3660 -0.1065 . -0.1962 -0.0068 0.1506 -0.1507 0.0915 1.0000

road | 0.1117 0.0895 . -0.1813 0.1417 0.2057 0.1686 -0.2204 -0.4393 1.0000

agrctlimpt | 0.0545 0.1927 . 0.0355 -0.2523 0.0723 0.2690 -0.1128 -0.2185 0.2647

credtacc | -0.0343 0.4216 . 0.2524 -0.1441 -0.1843 0.3681 0.3167 0.0707 -0.2814

dim | -0.2267 0.1777 . 0.0070 -0.1491 -0.0724 0.0886 0.2106 0.1143 -0.1262

supply | -0.0610 0.7665 . 0.4565 -0.1837 -0.3017 0.9845 0.0210 -0.1573 0.1713

| agrctl~t credtacc dim supply

-------------+------------------------------------

agrctlimpt | 1.0000

credtacc | 0.0384 1.0000

dim | -0.0105 0.1298 1.0000

supply | 0.2684 0.3459 0.1032 1.0000

85
 Correlations

how many kilo do you get ma

metere far from information
market

Correlation Coefficient 1.000 .1

how many kilo metere far from
Sig. (2-tailed) . .
market
N 147

Correlation Coefficient .166* 1.

do you get market information/ Sig. (2-tailed) .045

N 147

Correlation Coefficient -.015 -.

total amount of potato produced
Sig. (2-tailed) .860 .
in 2013/14 E.C in quntal
N 147
Spearman's rho
Correlation Coefficient .068 -.
area of total cultivated land of
Sig. (2-tailed) .416 .
house hold in hectr
N 147

Correlation Coefficient -.123 -.

use of agricultural inpute for
Sig. (2-tailed) .138 .
production of potato
N 147

Correlation Coefficient -.046 .

do you reciev credity to improve
Sig. (2-tailed) .578 .
potato production
N 147

*. Correlation is significant at the 0.05 level (2-tailed).

**. Correlation is significant at the 0.01 level (2-tailed).

86
 Correlations
Dist mrk mrkt info amnt pot cult land agri input crdt accs

Pearson
how many kilo 1
Correlation
metere far from
Sig. (2-tailed)
market
N 147
Pearson
.170* 1
market Correlation
information/ Sig. (2-tailed) .039
N 147 147
Pearson
amount of potato -.059 -.076 1
Correlation
in 2013/14 E.C in
Sig. (2-tailed) .475 .358
quntal
N 147 147 147
Pearson
-.002 -.096 .564** 1
total cultivated Correlation
land Sig. (2-tailed) .978 .246 .000
N 147 147 147 147
Pearson
-.113 -.002 .268** .102 1
Correlation
agricultural inputs
Sig. (2-tailed) .174 .985 .001 .221
N 147 147 147 147 147
Pearson
-.054 .005 .288** .168* .247** 1
Correlation
reciev access p
Sig. (2-tailed) .512 .954 .000 .042 .003
N 147 147 147 147 147 147
*. Correlation is significant at the 0.05 level (2-tailed).
**. Correlation is significant at the 0.01 level (2-tailed).

___ ____ ____ ____ ____ (R)

/__ / ____/ / ____/

87
___/ / /___/ / /___/ 13.0 Copyright 1985-2013 StataCorp LP

Statistics/Data Analysis StataCorp

4905 Lakeway Drive

Special Edition College Station, Texas 77845 USA

800-STATA-PC http://www.stata.com

979-696-4600 stata@stata.com

979-696-4601 (fax)

3-user Stata network perpetual license:

Serial number: 501306208483

Licensed to: IDRE-UCLA

IDRE-UCLA

Notes:

1. (/v# option or -set maxvar-) 5000 maximum variables

Checking for updates...

(contacting http://www.stata.com)

host not found

http://www.stata.com did not respond or is not a valid update site

unable to check for update; verify Internet settings are correct.

. use "C:\Users\HAMDU\Desktop\the last research\data edited with mhmd.dta", clear

. regress supply ttlnumfm edulvhhed cltland ttampttpr201314 agrctlimpt credtacc minfo road dim
hvyuetntn

88
> cntct

Source | SS df MS Number of obs = 147

-------------+------------------------------ F( 10, 136) = 151.23

Model | 70829.713 10 7082.9713 Prob > F = 0.0000

Residual | 6369.68837 136 46.8359439 R-squared = 0.9175

-------------+------------------------------ Adj R-squared = 0.9114

Total | 77199.4014 146 528.763023 Root MSE = 6.8437

---------------------------------------------------------------------------------

supply | Coef. Std. Err. t P>|t| [95% Conf. Interval]

----------------+----------------------------------------------------------------

ttlnumfm | -.1936267 .2856601 -0.68 0.499 -.758537 .3712836

edulvhhed | 1.166322 .9100802 1.28 0.202 -.6334166 2.966061

cltland | 3.19911 1.046896 3.06 0.003 1.128811 5.26941

ttampttpr201314 | .8510778 .0309014 27.54 0.000 .7899684 .9121872

agrctlimpt | 3.46979 1.295164 2.68 0.008 .9085245 6.031056

credtacc | -.2110375 1.242025 -0.17 0.865 -2.667218 2.245143

minfo | -2.650504 1.197804 -2.21 0.029 -5.019233 -.2817741

road | -2.32254 1.183183 -1.96 0.052 -4.662357 .0172772

dim | .5741999 .2331627 2.46 0.015 .1131066 1.035293

hvyuetntncntct | .050677 .2993699 0.17 0.866 -.5413452 .6426992

_cons | -22.32806 3.223111 -6.93 0.000 -28.70196 -15.95416

---------------------------------------------------------------------------------

Coefficientsa

89
Model Collinearity Statistics

Tolerance VIF

(Constant)

total cultivated land .674 1.483

amount of potato produced in 2013/14 E.C

.607 1.647
in quntal

market information/ .925 1.081

1
road access .917 1.091

agricultural input .867 1.153

Receive credit .865 1.156

Distance from market .955 1.047

a. Dependent Variable: supply potato to market

ANOVAa

Model Sum of Squares Df Mean Square F Sig.

Regression 70873.240 11 6443.022 137.494 .000b

1 Residual 6326.161 135 46.860

Total 77199.401 146

a. Dependent Variable: supply potato to the market

b. Predictors: (Constant), distance from market, age of house hold, total cultivated land, road
access, number of family members, extension contact, use of r credit access, educational level
of house hold head, getting market information, use of agricultural input, total amount of potato
produced in 2013/14 E.C in quintal

Coefficientsa

90
Model Unstandardized Standardized t Sig. Collinearity Statistics
Coefficients Coefficients

B Std. Error Beta Tolerance VIF

(Constant) -21.374 3.481 -6.140 .000

age of house hold head -.368 .413 -.022 -.892 .374 .956 1.046

number of family members -.197 .286 -.017 -.689 .492 .943 1.060

educational level of house

1.063 .919 .030 1.156 .250 .914 1.094
hold head

cultivated land of house 3.094 1.049 .089 2.949 .004 .664 1.506

Use extension contact .083 .300 .007 .276 .783 .925 1.081
1
total amount of potato
.856 .031 .880 27.501 .000 .593 1.686
produced in 2013/14 E.C

getting market information -2.564 1.191 -.056 -2.153 .033 .905 1.105

road access -2.374 1.184 -.052 -2.005 .047 .910 1.099

use of agricultural input 3.509 1.300 .073 2.699 .008 .825 1.212

use credit access -.327 1.248 -.007 -.262 .794 .856 1.168

distance from market .549 .233 .060 2.357 .020 .940 1.064

a. Dependent Variable: supply potato to the market

farming experiance of house hold

91
 Frequency Percent

4 8 5.4

5 30 20.4

6 28 19.0

7 19 12.9
farming experience in a
year
8 21 14.3

9 22 15.0

10 19 12.9

1 6 4.1

2 30 20.4

3 35 23.8

4 21 14.3

5 19 12.9
Family size of house hold
6 12 8.2

7 10 6.8

8 12 8.2

9 2 1.4

Total 147 100.0

92
total number of family members

Frequency Percent

1 6 4.1

2 30 20.4

3 35 23.8

4 21 14.3

5 19 12.9
total number of family members
6 12 8.2

7 10 6.8

8 12 8.2

9 2 1.4

Total 147 100.0

4 8 5.4

5 30 20.4

6 28 19.0

7 19 12.9
farming experience
8 21 14.3

9 22 15.0

10 19 12.9

Total 147 100.0

93