MARKET CHAIN OF HARICOT BEAN: THE CASE OF SAYINT

DISTRICT, SOUTH WOLLO ZONE, AMHARA NATIONAL

REGIONAL STATE, ETHIOPIA

MSc THESIS

TAREKEGN KASSIE

JANUARY 2018
HARAMAYA UNIVERSITY, HARAMAYA
Market Chain of Haricot Bean: The Case of Sayint District, South Wollo
Zone, Amhara National Regional State, Ethiopia

A Thesis Submitted to the School of Agricultural Economics and

Agribusiness, Directorate of Graduate Studies

HARAMAYA UNIVERSITY

In Partial Fulfillment of the Requirements for the Degree of MASTER OF

SCIENCE IN AGRICULTURAL ECONOMICS

TAREKEGN KASSIE

January 2018
Haramaya University, Haramaya
 HARAMAYA UNIVERSITY
POST GRADUATE PROGRAM DIRECTORATE

I hereby certify that I have read and evaluated this Thesis entitled „ Market Chain of Haricot
Bean: The Case of Sayint District, South Wollo Zone, Amhara National Regional State,
Ethiopia‟ prepared, under my guidance, by Tarekegn Kassie I recommend that it be submitted
as fulfilling the Thesis requirement.

BosenaTegegne (PhD) __________________ ______________

Major Advisor Signature Date

As members of examining Board of the Final MSc Open Defense, I certify that I have read
and evaluated the Thesis prepared by Tarekegn Kassie and examined the candidate. I
recommended that the Thesis be accepted as fulfilling the Thesis requirement for the degree of
Master of Science in Agricultural Economics.
__________________ __________________ ________________
Chairperson Signature Date
__________________ __________________ __________________
Internal Examiner Signature Date
________________ __________________ __________________
External Examiner Signature Date

Final approval and acceptance of the Thesis is contingent up on the submission of its final
copy to the Council of Graduate Studies (CGS) through the candidate‟s department or school
graduate committee (DGC or PGPD).

ii
 DEDICATION

This piece of work is dedicated to in memory of my late mother Serkalem Mekonnen who had
played great role in nursing and educating me.

iii
 STATEMENT OF THE AUTHOR

By my signature below, I declare and affirm that this Thesis is my own work. I have followed
all ethical and technical principle of scholarship in the preparation, data collection, data
analysis and compilation of this Thesis. Any scholarly matter that is included in the Thesis has
been given recognition through citations and acknowledgments.
This Thesis is submitted in partial fulfillment of the requirements for “Masters of Science in
Agricultural Economics” at Haramaya University. The Thesis is deposited in the Haramaya
University Library and is made available to borrowers under the rules of the Library. I
solemnly declare that this Thesis has not been submitted to any other institution anywhere for
the award of any academic degree, diploma or certificate.

A brief quotation from this Thesis may be made without special permission, provided that
accurate and complete acknowledgement of the source is made. Requests for permission for
extended quotations from or reproduction of this Thesis in whole or in part may be granted by
the Head of the School or Department when in his or her judgment the proposed use of the
material is in the interest of scholarship. In all other instances, however, permission must be
obtained from the author of the Thesis.

Name: Tarekegn Kassie Zewude Signature _____________

Date: January 2018
School: Agricultural Economics and Agribusiness

iv
 BIOGRAPHICAL SKETCH

The author was born in South Wollo Zone, Amhara National Regional State, Sayint district on
December 02, 1992. He completed his primary and junior school (1-8) at Guameda Primary
and General secondary School. He attended his Secondary and Preparatory School (9-12) at
Sayint Adjibar from 2009 to 2012. He joined Wollo University in October 2013 and graduated
in Bachelor degree in Agricultural Economics in July 2015. Soon after graduation, he joined
Haramaya University in October 2015 to pursue his MSc. study in Agricultural Economics.

v
 ACKNOWLEDGEMENTS

I would like to thank many people and organizations who have supported me in accomplishing
this Thesis work. My greatest thanks and heartfelt appreciation goes to my advisor Dr. Bosena
Tegegne, for her constructive comments, guidance, encouragement, and for her polite
behavior.

I gratefully acknowledge Ministry of Education and Haramaya University for providing me

education opportunity. I am highly indebted to my father Kassie Zewude and sisters for their
love, support and consistent encouragement to complete my MSc study.

I also gratefully acknowledge Sayint district agricultural office, office of trade and industry of
the district and kebele extension workers for their support in giving important data for the
thesis work. In addition, I would like to thank Mr. Jemberu Tarekegn and my friends for their
invaluable comments in enhancing the quality of this thesis. Last but not the least, my
gratitude goes to the enumerators, farmers and traders in the study area who fully co-operated
in providing the necessary data and generously sharing their experience.

Above all, I extend my special thanks to the Almighty God.

vi
 ACRONYMS AND ABBREVIATIONS

CIAT Centro International de Agricultural Tropical

COMESA Common Market for Eastern and Southern Africa
CSA Central Statistical Agency
EATA Ethiopian Agricultural Transformation Agency
EIAR Ethiopian Institute of Agricultural Research
FAO Food and Agriculture Organization
FGDs Focus Group Discussions
GMM Gross Marketing Margin
IGAD Intergovernmental Authority on Development
MARD Ministry of Agriculture and Rural Development
MOFED Ministry of Finance and Economic Development
NBE National Bank of Ethiopia
SCP Structure Conduct Performance
SDRDAO Sayint District Rural Development and Agricultural Office
SSA Sub-Saharan Africa
TGMM Total Gross Marketing Margin
TLU Tropical Livestock Unit
VIF Variance Inflation Factor

vii
 TABLE OF CONTENTS

DEDICATION iii
STATEMENT OF THE AUTHOR iv
BIOGRAPHICAL SKETCH v
ACKNOWLEDGEMENTS vi
ACRONYMS AND ABBREVIATIONS vii
TABLE OF CONTENTS viii
LIST OF TABLES xii
LIST OF TABLES IN THE APPENDIX xiii
LIST OF FIGURES xiv
1. INTRODUCTION 1
1.1. Background of the Study 1
1.2. Statement of the Problem 3
1.3. Research Questions 4
1.4. Objective of the Study 5
1.5. Significance of the Study 5
1.6. Scope and Limitations of the Study 5
1.7. Organization of the Thesis 6
2. LITERATURE REVIEW 7
2.1. Concepts and Definitions 7
2.2. Haricot Beans Production and Marketing in Ethiopia 8
2.3. Economic Importance of Haricot Bean 9
2.4. Major Constraints in Haricot Bean Production and Marketing 10
2.5. Approaches to the Study of Agricultural Marketing 11
2.5.1. Functional approach 11
2.5.2. Institutional approach 12
Continues…

viii
 2.5.3. Commodity approach 12
2.6. Structure, Conduct and Performance (SCP) Model 12
2.6.1. Structure of the market 13
2.6.2. Conduct of the market 14
2.6.3. Performance of the market 14
2.6.3.1. Marketing costs 15
2.6.3.2. Marketing margin 15
2.7. Theoretical Review 15
2.8. Empirical Studies 16
2.9. Conceptual Framework 19
3. RESEARCH METHODOLOGY 20
3.1. Description of the Study Area 20
3.1.1. Geographical location of the study area 20
3.1.2. Demographic characteristics of the study area 21
3.1.3. Relief and climate 21
3.1.4. Economic activities 21
3.2. Data Type, Sources and Methods of Data Collection 22
3.3. Sampling Techniques and Sample Size Determination 23
3.3.1. Sampling techniques 23
3.3.2. Sample size determination for producers 23
3.3.3. Number of traders 24
3.4. Method of Data Analysis 24
3.4.1. Descriptive statistics 24
3.4.1.1. Market Structure 24
3.4.1.2. Market Conduct 25
3.4.1.3 Market Performance 25
3.4.2. Econometric Model 26
3.4.2.1. Factors affecting market supply 26
3.4.2.2. Hypothesis and definition of variables 27
Continues…

ix
4. RESULTS AND DISCUSSION 32
4.1. Descriptive Statistics 32
4.1.1. Demographic characteristics of producers 32
4.1.2. Socio-economic and production factors 32
4.1.3. Institutional factors 34
4.1.4. Characteristics of traders 34
4.1.4.1. Rural Assemblers 34
4.1.4.2. Urban assemblers 35
4.1.4.3. Wholesalers 36
4.1.5. Haricot bean market chain actors, their role and market channels in the district 36
4.1.5.1. Haricot bean market chain actors and their role 36
4.1.5.2. Haricot bean market channels 38
4.2. Structure, Conduct and Performance of Haricot Bean Market 39
4.2.1. Structure of haricot bean market 39
4.2.1.1. Capital 39
4.2.1.2. Degree of market concentration 40
4.2.2. Conduct of haricot bean marketing 41
4.2.2.1. Producer price setting strategy 42
4.2.2.2. Buying and selling strategy of traders 42
4.2.3. Analysis of market performance of haricot bean 43
4.2.3.1. Marketing margins 43
4.3. Constraints and Opportunities in Haricot Bean production and
Marketing 45
4.3.1. Constraints of producers in haricot bean production and marketing 45
4.3.2. Constraints of traders in haricot bean marketing 46
4.3.3. Opportunities in haricot bean production and marketing 47
4.4. Factors affecting Market Supply of Haricot Bean 47
5. SUMMARY, CONCLUSION AND RECOMMENDATIONS 51
5.1. Summary and Conclusion 51
Continues…

x
 5.2. Recommendations 52
6. REFERENCES 54
7. APPENDICES 61

xi
 LIST OF TABLES
Table Page

1. Production and marketing calendar of haricot bean 9

2. Sample size of producers 23
3. Number of traders 24
4. Description and hypothesis of variables 31
5. Demographic characteristics of producers 32
6. Socio-economic and production factors 33
7. Institutional factors 34
8. Demographic and socio-economic characteristics of rural assemblers 35
9. Demographic and socio-economic characteristics of urban assemblers 35
10. Demographic and socio-economic characteristics of wholesalers 36
11.Traders market concentration in Adjibar market 41
12. Haricot bean marketing margin in Sayint district (birr/quintal) 44
13. Major constraints of haricot bean producers 46
14. Major constraints of haricot bean traders 46
15. Factors affecting quantity of haricot bean supplied to the market in Sayint district 50

xii
 LIST OF TABLES IN THE APPENDIX

Appendix Table Page

1. Rgression results 62
2. Test for omitted variable 62
3. Test for hetroscedasticity 63
4. Test for multicolinearity 63
5. Endogeneity test 64
6. Conversion factor for man equivalent 64
7. Conversion factor for tropical livestock unit 65

xiii
 LIST OF FIGURES
Figure Page

1. Conceptual framework of factors affecting market supply of haricot bean 19

2. Geographical location of the study area 20
3. Haricot bean market channels in Sayint district 39

xiv
 MARKET CHAIN OF HARICOT BEAN: THE CASE OF SAYINT
DISTRICT, SOUTH WOLLO ZONE, AMHRA NATIONAL REGIONAL
STATE, ETHIOPIA

ABSTRACT
In this study market chain of haricot bean in the case of Sayint district was analyzed. The area
is known for its potential production of haricot bean; however, market chain of haricot bean
was not well understood. The objectives of this study were to identify major haricot bean
market chain actors and their roles, to analyze structure, conduct and performance of haricot
bean market; to identify factors affecting market supply of haricot bean of smallholder farmers
and to identify the major constraints and opportunities in haricot bean production and
marketing in Sayint district. The study used cross-sectional data collected in 2015/16
production year from a sample of 121 farm households selected through three stage sampling
techniques and all 28 haricot bean traders who were available during the survey period.
Household data collected using pre-tested semi-structured schedule was used for the study.
Moreover, focus group discussions were used to generate qualitative data and secondary data
were also used to supplement the primary data. Since all sampled haricot bean producers
supplied haricot bean to market, multiple linear regression model was used to analyze factors
affecting haricot bean market supply. The main market participants of haricot bean marketing
in the district during the production year were producers, rural assemblers, urban assemblers,
wholesalers, and consumers. Market concentration ratio result showed that Adjibar market
was characterized by strongly oligopolistic market structure with the traders’ concentration
ratio of 50.86%. The results of econometric analysis showed that education level, land
allocated for haricot bean production, lagged market price, yield of haricot bean and access
to credit significantly affected haricot bean market supply of smallholder farmers positively;
whereas, distance to the nearest market affected negatively. Based on the finding of the study,
policy interventions need to be made to increase the capacity building (access to education),
intensive use of the existing land, provide credit services for farmers, encourage farmers’
group marketing and linking them with exporters, enhance yield of haricot bean, and road
infrastructure development.

Key words: Market chain, SCP, OLS, Haricot bean, Sayint

xv
 1. INTRODUCTION

1.1. Background of the Study

Agriculture is the core component and driver for Ethiopia‟s growth and long-term food
security. It directly employs 85% of the total population, over 77% of export value and it also
accounted for 40% of GDP (EATA, 2017). The agricultural sector determines the growth of
all other sectors in the country and consequently, the whole national economy. On average,
livestock accounts for 47% and crop production and others contribute 53% to the total
agricultural value added (IGAD, 2013).

Pulse crops are important components of crop production in Ethiopia's smallholders‟

agriculture, providing an economic advantage to small farm holders as an alternative source of
protein and other nutrients, cash income, that seeks to address food security (Alemneh et al.,
2017). In addition, pulses offer natural soil maintenance benefits through nitrogen fixation,
which improves the cereals yield, consequently resulting in savings for smallholder farmers
because of less fertilizer use and increasing soil fertility. Pulses account for 13 percent of
cultivated land and approximately 10 percent of value addition. Pulses play crucial economic
role in food and nutrition security, in Ethiopia. Recently, the production and supply of pulses,
has increased due to increased demand in both local and international markets, thus enhancing
smallholders‟ income (Shahidur et al., 2010).

Haricot beans (Phaseolus vulgaris L.) are among the most important pulse crops produced by
small-scale farmers for both subsistence and cash, mainly in the lowlands and in the rift valley
areas of Ethiopia. They are high in starch, protein, and dietary fiber, and are an excellent
source of minerals and vitamins (Ephrem, 2016). Haricot beans are increasingly becoming an
important food security commodity particularly among the smallholders (Bindera, 2009).

There are two main types of haricot beans, red and white. Smallholder farmers typically grow
the red bean types for household consumption while white haricot beans are produced almost
exclusively for the export market (Ferris and Kaganzi, 2008). White haricot beans are edible
when boiled, fried, or in the form of soups. It is also milled or grounded to make stews
(Firehiwot, 2010).
 2

Haricot bean has been an export pulse crop for Ethiopia for more than 50 years and probably
been grown as food crop for a much longer period in the low and mid land altitude areas of the
country (Ferris and Kaganzi, 2008). The crop is widely grown in areas between 1400-2000
m.a.s.l. The main production areas include the East Hararghe, West Wellega, East shewa,
West Arsi, Sidama, Wolayita, Wollo and East Gojam (Ephrem, 2016). Haricot bean is the
most marketable and exportable pulse crop. It accounts for about 41 percent of pulse exports
(FAO, 2015).

According to CSA (2017) annual agricultural survey, Ethiopia produced 1,259,801.75 quintals
of white haricot beans and 3,579,424.75 quintals of red haricot bean out of this Amhara region
produced 533,909.47 and 524,292.99 quintals of white and red haricot beans, respectively.
South Wollo shared 119,867.15 and 13,714.88 quintals of white and red haricot beans
respectively. Sayint and Makdella are highly potential districts in producing haricot bean in
relative to other haricot bean producing districts in South Wollo zone.

Major changes are happening in agricultural and food markets worldwide and especially so in
developing countries; supermarkets revolution, share of high-value crops have increased,
quality demands rise, food safety requirements for export countries, vertical integration, up
scaling, disintermediation, and branding (Reardon et al., 2012). Despite major changes are
happening in agricultural markets, majority of smallholder farmers in rural areas are trapped in
a vicious circle of poverty characterized, interlaid, by low economic returns due to low market
supply (ibid).

Poverty reduction and improving the livelihood of the rural smallholders has strong
relationships with their market supply (Mathenge et al., 2010). Increased market supply by the
poor has been found to be vital as a means of breaking from the traditional semi-subsistence
farming and a key factor to lifting rural households from poverty. However, smallholders do
not often supply much in food crops markets due to subsistence production and also higher
costs associated with searching for markets (World Bank, 2008). Hence, this study was aimed
to analyze the market chain of Haricot bean in the study area so as to generate information
which can help stakeholders to make an intervention in order to more strengthen the strong
sides and solve the problems existing in the chain and improve the livelihood of the actors and
also to contribute its part in the national economy.
 3

1.2. Statement of the Problem

Agriculture has a substantial contribution to Africa‟s economy in terms of employment,

aggregate output, foreign exchange earnings, and tax revenue. Integrated value chains and
markets offer better opportunities for transforming African agriculture, because they have the
potential of expanding market opportunities and enhancing incentives for private investors to
undertake long-term investments in agribusiness and agro processing. Without a strong
regional integration, Africa cannot compete in the global economy, because African
agriculture is dominated by small-scale producers and markets are small and fragmented
(Mulat et al., 2006).

Markets and improved market access for poor rural households are a precondition for
increasing agriculture-based economic development and increasing rural household incomes
(World Bank, 2008). Despite the policy interests to increase the volume of production of
haricot bean, the crop has not fully exploited, there are lots of constraints in haricot bean
marketing in Ethiopia (Ephrem, 2016). The national average yield is low, estimated at 9
quintal per hectare (Rahmito, 2007) compared to the production potential of 25 quintal per
hectare. This yield gap is caused by numerous production constraints (Katungi et al., 2010).

Improving marketing facilities for agricultural crops in general and haricot bean in particular
enables farmers to plan their production more in line with market demand, to schedule their
harvest at the most profitable times, to decide which markets to sell their produce and
negotiate for better prices from traders. A proper marketing system enables increased
production and market efficiency (Astewl, 2010).

According to CSA (2016) annual agricultural sample survey, out of the total annual production
of haricot beans in Ethiopia, only 21.83% is available for market as surplus product of the
smallholder farmers. The rest is used for household consumption (65.72%), seed (10.41%), for
wage in kind (0.5%), for animal feed (0.22%) and for other purposes (1.3%). This shows the
production of the crop by smallholder farmers is mainly for subsistence, thus marketable
surplus is very small. This implies the quantity of the output supplied to the market is less as
compared to the potential of the area. As a result there is a need to study the factors that
determines haricot bean market supply of smallholder farmers. There is a study conducted on
 4

market linkages, channels and structure of haricot bean by Amare (2015) in Enebse Sar Midir
District in Northern Ethiopia. But the study did not consider market supply issues.

Katungi et al. (2011) conducted a study on market access, intensification and productivity of
common bean in Ethiopia. The study investigated the contribution of market access and other
micro level factors in crop intensification and productivity. The study mainly concentrated on
production issue but not on market supply issues.

Hassen et al. (2015) conducted a study on technical efficiency of haricot bean production in
Misrak Badawacho Wereda, Hadiya Zone, Ethiopia. The study was conducted to assess the
technical efficiency of smallholder farmers‟ haricot bean production and its determinants;
however, thus the study mainly focused on production efficiency; however, it did not address
issues related to market supply since haricot bean is one of the important marketable crop to
generate foreign earning.

Ytayal and Adam (2015) conducted a study on adoption spell of improved common bean
varieties in the central rift valley of Ethiopia, the study assessed the spread and farm
household level determinants of adoption lag of improved haricot bean varieties; however the
study did not addressed determinants of market supply after adoption of improved varieties
and production of haricot bean.

Generally, other studies were also conducted on market chain in different areas on different
enterprises; however, there was no empirical research conducted in the study area on haricot
bean market chain which is one of the important crops for farm households to generate cash as
well as the nation to obtain foreign earning since it is an exportable crop. Therefore, this
research was intended to fill this research gap in the case of Sayint district.

1.3. Research Questions

This study tried to answer the following questions:
1. Who are the haricot bean market chain actors and what roles they have in the study area?
2. How is haricot bean marketing system organized and functioning?
3. What are factors influencing market supply of haricot bean at farm household level in the
study area?
 5

4. What are key constraints and opportunities in haricot bean production and marketing?

1.4. Objective of the Study

The general objective of the study was to evaluate haricot bean market chain in Sayint district.
Specific objectives of the study were:

1. To identify haricot bean market chain actors and their roles and market channels
2. To analyze structure conduct performance of haricot bean market
3. To analyze factors influencing quantity of haricot bean supplied to market at farm
household level in the study area
4. To identify major opportunities and constraints in haricot bean production and marketing

1.5. Significance of the Study

The study may give detailed information on how haricot bean marketing chain is currently
functioning. It will point out factors that constrain haricot bean production and marketing
system. The study may also generate information which will help how to formulate marketing
development programs and guidelines for interventions that would improve efficiency of the
haricot bean marketing system. The findings of the study may benefit haricot bean farmers and
traders, policy makers, governmental and non-governmental organizations that have a stake in
haricot bean marketing system and want to intervene in it in the future. Finally, researchers
who want to make further investigation in haricot bean may equally benefit from the results.
The document will also serve as reference for researchers to embark upon similar or related
work in other parts of the country.

1.6. Scope and Limitations of the Study

The main focus of the study was to analayze market chain of haricot bean in Sayint district.
The study was delimited to smallholder haricot bean producer farmers (from four kebeles) and
haricot bean traders in the study area. In the market chain, the final end user was limited to
domestic consumers i.e foreign consumers were not captured in the market chain. Empirical
work is based on cross-sectional data (data collected at appoint in time). However, households
may change their marketing decisions from one year to the next depending on production and
 6

market conditions since minor time difference is negligible in cross sectional survey, and the
findings of the study may not show changes that may occur over time. In addition, the
dependent variable was continuous and as surveyed in the area also all producers sale most of
their haricot bean. Thus, multiple linear regression model (OLS) was employed to analyze the
factors that affect the volume of haricot bean supplied to the market. This model is susceptible
to a number of assumption problems and the estimators in this research had passed some
important assumptions within the tolerable intervals.

1.7. Organization of the Thesis

This research paper is organized in five chapters. The first chapter has already dealt with the
introduction part, comprising the background, statement of the problem, objectives,
significance, scope and limitation of the study. The second chapter contains the literature
review part, which has been intensely reviewed the available literature by entailing general
concepts of market chain and empirical research results. The third chapter deals on the
methodology employed for the study, including description of the study area, sources and
methods of data collection, sampling procedure and the analytical technique employed in the
analysis. The fourth chapters deal with the results and discussion of the. Finally, the fifth
chapter presents summary, conclusions and recommendations for improving the marketing
system in the study area (Sayint district).
 7

2. LITERATURE REVIEW

2.1. Concepts and Definitions

Many agricultural support programs focus only on increasing production with little regard to
markets and business relationships. The market can be viewed from many different
perspectives and, consequently, is impossible to define precisely.

Market: It is a particular group of people, an institution, and a mechanism for facilitating

exchange (Johan et al, 1988). It is defined as a place- "the marketplace"- is a common practice
of the general public, a people since exchange involves two or more people and an economic
entity since it involves economic forces of supply, demand, competition, and government
intervention (Burnett, 2008). Markets are important because they act as a mechanism for
exchange. They are particularly important to the poor because their involvement in the markets
results in coordination and allocation of resources including goods and services (Jari and
Fraser, 2009).

Marketing: It is defined as a societal process by which individuals and groups obtain what
they need and want through creating, offering, and freely exchanging products and services of
value with others (Kotler and Armstrong, 2003). Marketing is the activity, set of institutions,
and processes for creating, communicating, delivering, and exchanging offerings that have
value for customers, clients, partners, and society at large (Jones and Weitz, 2007).

Market Chain: according to CIAT (2004) the term that is used to describe the various links
that connect all the actors and transactions involved in the movement of commodities from
producer to final consumer. 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.

Marketable surplus: It is the residual with the producer after meeting the requirement of
seed, payment in kind and consumption by the peasant at source (Wolday, 1994). It is the
quantity of produce left out after meeting the farmer‟s consumption and utilization
 8

requirements for kind payments and other obligations such as gifts, donation, charity, etc. It
shows the quantity available for sale in the market (ibid).

Marketed surplus: The marketed surplus shows the quantity actually sold after accounting
for losses and retention by the farmers, if any and adding the previous stock left out for sale
(Thakur et al., 1997). Marketed surplus may be equal to marketable surplus, it may be less if
the entire marketable surplus is not sold out and the farmers retain some stock and if losses are
incurred at the farm or during the transit (ibid). In the case of crops that are wholly or almost
wholly marketed, the output and marketed surplus will be the same (Reddy et al., 1995).

Marketing channel: It 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 (Kotler and Armstrong, 2003).

Market performance: It is defined as how well the marketing system performs what society
and the market participants expect of it (Abbot and Makeham, 1981). It is an assessment of
how well the process of marketing is carried out and how successful its aims are accomplished
(Giroh et al., 2010). It is concerned with technological progressiveness, growth orientation of
agricultural firms, efficiency of resource use and product improvement and maximum market
services at the least possible cost (ibid).

Marketing margin: It is an equilibrium entity that is a function of the difference between

equilibrium retail and farm prices (Wohlgenant, 2001). Marketing margins provide neither a
measure of farmers‟ well-being nor of marketing firms‟ performance; however, they give an
indication of the performance of a particular industry, or an indication of the market‟s
structure and efficiency (Tomek and Robinson, 1990). The marketing margin, or the farm-to-
retail price spread is, the difference between the farm value and retail price. It represents
payments for all assembling, processing, transporting and retailing charges added to the farm
products (Elitzak, 1996).

2.2. Haricot Beans Production and Marketing in Ethiopia

Globally, in 2010 Ethiopia ranked the eleventh producer of haricot beans and eighth in amount
exported in the world. Haricot beans are concentrated in the relatively dry and warmer parts of
 9

the country mainly along the rift valley part of the country. It is mainly produced in Amhara,
Oromia, Southern Nation Nationalities and peoples regions its production is also expanding in
Gambella and Benshangul-Gumuz regional states (Shahidur et al., 2010). Haricot bean is one
of the crops whose production and marketing could be a potential pathway for improving rural
livelihoods. Ethiopia produced 0.7 million MT of common bean in 2004 and in 2010 the
country‟s average production increased to 0.36 million MT annually. Haricot bean is used as a
source of foreign currency, food crop, means of employment, source of cash, balance of
payments and plays great role in the country‟s farming system. An increasing trend of haricot
bean production has been observed since 2006. This could probably be attributed to a number
of reasons including increased use of haricot bean as a substitute for long maturing crops and
poor distribution and unreliability of rainfall. Moreover, haricot beans are important crops in
various intercropping systems in Ethiopia (Birachi et al., 2011; Bindera, 2009; Rahmeto,
2007). Furthermore, the Ethiopian government removed export restrictions with the aim of
stimulating domestic production to meet increasing international demand for common beans
(MARD, 2011).

There are two seasons for bean production in Ethiopia; the short rains season (Belg) which run
from March–May (Table 1). Several farmers that were interviewed felt that rain fall in this
season have become too unreliable to invest in commercial bean production. Consequently,
most farmers focus their efforts on the longer rains (Meher) season from July to August. The
main marketing season for beans is from September to January, with residual trading into
February (Ferris and Kaganzi, 2008).

Table 1. Production and marketing calendar of haricot bean

Activities Seasons
Short rains production March-June
Lean season market May-August
Long rains production July-October
Main marketing season September-February
Source: Ferris and Kaganzi (2008)

2.3. Economic Importance of Haricot Bean

In Ethiopia, haricot bean is one of the most important cash crops and source of protein for
farmers in many lowlands and mid-altitude zones. The country‟s export earnings is estimated
 10

to be over 85 % of export earnings from pulses, exceeding that of other pulses such as lentils,
horse (faba) bean and chickpea (Rahmito, 2007). Haricot bean is also highly preferred by
Ethiopian farmers because of its fast maturing characteristics that enables households to get
cash income required to purchase food and other household needs when other crops have not
yet matured (Legesse et al., 2006). Two types of common bean are grown: the canning type
primarily grown for export market dominates the Oromiya region (Northeast rift valley), and
the cooking type primarily grown for food in the Southern National Nationality Peoples‟
region, south of lake Ziway (Dawit and Adam, 2005). Significant amounts of the cooking type
are exported to the neighboring countries particularly Kenya (Ferris and Kaganzi, 2008).

Common bean has been grown for export in Ethiopia for over 40 years, but its sub-sector
growth was interrupted between 1975 and 1989 during the socialist regime. The regime put
restrictions on all private trade, giving the state-controlled marketing board full monopoly over
the marketing of all grains in the country (Gabre-Madhin, 2001). With the liberalization of
grain marketing in early 1990s, common bean production was able to recover and even exceed
its production and export volumes of later 1970s and early 1980s (Dawit and Adam, 2005).

2.4. Major Constraints in Haricot Bean Production and Marketing

There are a number of constraints that affects haricot bean production and marketing.
Agete (2014) identified the major production and marketing constraints of haricot bean
producers and traders. Incessant price fluctuations, access to improved seed, access to credit,
access to fertilizer and inconsistent demand are the major constraints in haricot bean
production and marketing of haricot bean producers. Low quality of haricot bean supplied by
producers, price fluctuation, and high number of informal traders, inconsistent supply and
shortage of finance were the major constraints of haricot bean traders.

The principal constraints that face haricot bean production and commercialization include
diseases, pests and market constraints. The diseases, including angular leaf spot (P. griseola),
common bacterial blight (X. axonopodis), anthracnose (C. lindemuthianum), and some
diseases of the roots such as bean root rot (R. solani, Pythium sp. and F. solani), vary widely
in terms of their geography. Pest are the second haricot bean production commercialization
constraints, tend to be much more geographically specific. For example, the whitefly is a
 11

priority in LAC and the management of the bean stem maggot (Ophiomyia sp.) is a key
priority in Africa. Market constraints such as: access to and the high cost of inputs; the low
prices received by farmers, the appropriation of a large percentage of profits by dealers, lack
of credit, lack of market access, price instability are the third constraints that affect haricot
bean production and commercialization. Issues related to extension and production
technologies (EPT) such as low rates of technology adoption, limited technical assistance to
farmers, and poor agronomic practices, are also seen as important constraints (Rodríguez and
Creamer, 2014).

There are numerous production constraints including drought (low amounts of rains,
midseason gaps, rains ending early and rains coming late); pests and diseases; shortage of land
and seed related problems (like lack of high yielding seed varieties, low availability of good
quality seed and high price of seed), poor soil fertility, lack of good storage facilities, lack of
markets, shortage of labor, high cost of labor and lack of information (Katungi et al., 2010).
Haricot bean traders also facing constraints related to market infrastructure (example,
transportation, storage, access to information, quality standards, etc.)

2.5. Approaches to the Study of Agricultural Marketing

Different circumstances involved in the demand and supply of agricultural products, and the
unique product characteristics, require a different approach for analyzing agricultural
marketing problems (Johan, 1988). The major and most commonly used approaches are
functional, institutional and commodity approaches.

2.5.1. Functional approach

Functional approach to study marketing is to break up the whole marketing process into
specialized activities performed in accomplishing the marketing process (Kohls and Uhl,
1985). The approach helps to evaluate marketing costs for similar marketing middlemen
and/or different commodities and costs and benefits of marketing functions (Kohls Uhl, 1985;
and Andargachew, 1990). The widely accepted functions are: exchange (buying and selling),
physical (processing, storage, packing, labeling and transportation), and facilitating
(standardizing, financing, risk bearing, promoting and market information). The exchange
 12

function involves pricing, buying and selling which is a transfer of title between exchanging
parties.

2.5.2. Institutional approach

This approach focuses on the description and analysis of different organizations engaged in
marketing (producers, wholesalers, agents, retailers, etc) and pays special attention to the
operations and problems of each type of marketing institution. The institutional analysis is
based on the identification of the major marketing channels and it considers the analysis of
marketing costs and margins (Mendoza, 1995). An institutional approach for the marketing of
agricultural product should be instrumental in solving the three basic marketing problems,
namely consumers' demand for agricultural products, the price system that reflects these
demands back to producers and the methods or practices used in exchanging title and getting
the physical product from producers to consumers in the form they require, at the time and
place desired (Johan, 1988).

2.5.3. 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
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).
Among the three approaches, this study used commodity approach since it was important to
identify marketing problems and improvement measures.

2.6. Structure, Conduct and Performance (SCP) Model

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
 13

(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 (ibid).

2.6.1. 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; Branson and Norvell, 1983).
Examples of such dimensions include:
a) Degree of buyers and sellers concentration: Number and size distribution of buyers and
sellers in the market.
b) 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
c) 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
 14

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).

2.6.2. 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).

2.6.3. 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.

As a method for analysis the SCP paradigm postulates, there exists a relationship between the
three levels distinguished. One can imagine a causal relations starting from the structure,
which determine the conduct, which together determine the performance (technological
progressiveness, growth orientation of marketing firms, efficiency of resource use, and
product improvement and maximum market services at the least possible cost) of agricultural
marketing system in developing countries (Meijer, 1994). The performance of a certain market
or industry depends on the conduct of its sellers and buyers which, in turn, is strongly
influenced by the structure of the relevant markets (Scarborough and Kydd, 1992).
 15

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).

2.6.3.1. 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).

2.6.3.2. 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 of the demand for and supply of such services (Cramers and Jensen, 1982;
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).

2.7. Theoretical Review

The law of supply states that other things being equal, quantity supplied of a commodity is
directly related the price of the commodity. It follows that quantity supplied varies directly
with the price. Supply can be influenced by a number of factors that are termed as
 16

determinants of supply. Generally, the supply of a commodity depends on its price, costs of
production, natural conditions, technology, and transport conditions (Mas-Colell et al., 1995).

The supply of a commodity is decreased with increase in cost of production and vice versa. In
such a case the seller would wait for the rise in price in future. The cost of production
increases due to several factors, such as loss of fertility of land, high wage rates of labor,
increase in the price of raw material, transport cost and tax rate. Climatic conditions affect
supply of a product either positively or negatively. For example, the supply of agricultural
products increase when monsoons come on time and decreases at the time of drought (ibid).

Technology is another important determinant of supply of a commodity. A better and

advanced technology increases the production of a commodity, which results increase in the
supply of a commodity (ibid).

Transport facilities increase in the supply of products. Transport is always constraint to the
supply of products, as the products are not available on time due to poor transport facilities.
Therefore, even if the price of a product rises, the supply would not necessarily increases
(ibid).

Price is the main factor that influences the supply of a product to a greater extent. There is a
direct relationship between the price of a product and its supply. Speculation about future
prices can also affect the supply of a product. If the price of a product rises in future, the
supply of a product would decrease in the present market because of the profit expected by the
seller in the future (Friedman, 1990).

2.8. Empirical Studies

There are few studies conducted on market supply of haricot bean in Ethiopia. The following
studies show the factors that affect haricot bean market supply of smallholder farmers.

Jemberu (2017) conducted a study on chick pea market chain analysis in Gondar Zuria district
of North Gondar Zone, Amhara National Regional State, Ethiopia. The study found that yield
of chick pea, land allocated for chick pea production, lagged market price, education level and
years of experience in chick pea production significant variables which affected market supply
of chick pea at farm household level.
 17

Shewaye et al. (2016) identified the determinants of participation decision of haricot bean
producers in the output market; and the factors that influence the marketed surplus in Misrak
Badawacho District, Hadiya zone, Southern Nations Nationalities and Peoples Regional State.
The study found that household size, number of oxen owned, use of credit, access to
communication facilities, membership in cooperative, and distance to all weather roads are
variables that determine haricot bean market participation decision. The study also found that
cultivated land size, number of equine owned, distance to the nearest market, perception on
lagged market price, livestock owned, rented and/or shared in farmland, and use of credit
determine level of market participation. The study addressed only the determinants of market
participation decision and level of participation of haricot bean producers; however, the study
does not identify the margins that market participants get from haricot bean marketing.

Amare (2015) conducted on market linkages, chain and structure of haricot bean (Phaseolus
Vulgaris L.), Enebse Sar Midir district, Eeast Gojjam, Ethiopia. The objective of the study was
identifying the different marketing channels, evaluating the marketing margins and examining
the market structure and analyzing the functions of the various marketing actors in the
marketing chain. The study found that the performance of the haricot bean market is
inefficient and strongly oligopoly. The study also found that the net marketing margin was
maximum for processors (11.52%) and minimum for rural assemblers (7.365%) and most of
the output is transacted and handled by few traders (that is there are challenges that
constrained traders in haricot bean market). Despite identifying the performance and structure
of the market, the study was not identifying the factors that affect haricot bean market
participation and volume of haricot bean supplied to the market. The study was not
concentrated on the challenges and opportunities exist in haricot bean production and market.

Wogayehu and Tewodros (2015) studied factors affecting production and market supply of
haricot bean in Southern Ethiopia. The study used a modified Cobb Douglas production
function and supply function to analyze factors affecting production and market supply of
haricot bean in the study area. The result of the supply function indicated that volume of
production of haricot bean, education level of the household head, land allocated to haricot
bean and selling price affected the quantity of haricot bean supplied to the market significantly
and positively.
 18

Agete (2014) analyzed factors influencing participation of smallholder farmers in red bean
marketing in Halaba special district, Ethiopia. The objective of the study was to examine the
factors that influence market participation decision and the extent of participation of red bean
farmers, to characterize the red bean market channels, and to identify the constraints faced by
farmers, traders and cooperatives in red bean marketing. The study used a Heckman two-stage
model to assess the factors that affect red bean producers‟ output market participation decision
and extent of participation. The study found that family size, ownership to transportation
means and price of the red bean affects the volume of red bean supplied to the market
positively. However, the results obtained for red bean in special Halaba district cannot be
generalized to haricot bean in Sayint district. That is, the production drivers may not be the
same in the two areas.

Yaynabeba and Tewodros (2013) studied factors influencing market participation decision and
extent of participation of haricot bean farmers in Meskan district, Ethiopia. The study used
Heck man two step model to analyze market participation decision and extent of participation.
At the second stage of OLS regression the study found that farm size, access to credit, access
to input supply and value of haricot bean produced affected extent of market participation of
haricot bean significantly and positively.

Birachi et al. (2011) analyzed factors Influencing Smallholder Farmers‟ Bean Production and
Supply to Market in Burundi. The study used a modified Cobb Douglas production function to
determine the influence of different factors on the quantities of beans produced by farm
households, while a supply function was used to determine factors influencing the volume of
bean supplied to the market. The study found that transportation losses, price of bean, quantity
of bean produced and quantity stored for food are factors influencing quantity of beans
supplied to the market.

Muhammed (2011) analyzed teff and wheat market chain in Halaba Special Woreda, Southern
Ethiopia. The objective of the study was to analyze the institutional support services of
extension, input supply and credit in Halaba, to assess the determinants of marketed supply of
teff and wheat in the woreda and to study the market structure-conduct- performance of teff
and wheat in Halaba. The study used multiple linear regression model to analyze determinants
of marketed supply of teff and wheat. The study found that sex of the household head, quantity
 19

of teff produced, access to market information and access to extension services were
significant variables that determined marketable supply of teff. Quantity of wheat produced
price of other crops and access to credit services also determined market supply of wheat.

2.9. Conceptual Framework

Market supply of smallholder farmers is affected by numerous factors, including,

socioeconomic factors, demographic factors, institutional factors, and production factors.
These factors could have positive or negative effects, which could either improve or cause a
decline in the market supply of the smallholder farmers as illustrated in (Figure 1). Greater
market supply of smallholder farmers results in more commodities being traded and this may
lead to more return being obtained by these smallholder farmers. This becomes an incentive to
increase production and hence a positive supply response is achieved (Omiti et al., 2009)

Figure 1. Conceptual framework of factors affecting market supply of haricot bean

 20

3. RESEARCH METHODOLOGY

3.1. Description of the Study Area

3.1.1. Geographical location of the study area

Sayint is one of the districts in south Wollo zone. The district is bordered on the south by
Borena and Mehal Sayint, on the west by Blue Nile that separates the district from east Gojjam
zone of Enebse Sar Midr district, on the north west by Bashilo river that separates from the
south Gondar zone of Simada district, on the north by Makdella district, on the east by Tenta
district and on the southeast by Legambo. The district is also located 189 km from Dessie, the
capital of South Wollo zone to the west, 659 km from Bahir Dar, capital of the region, and 590
km from Addis Ababa to the north (Tesfaye, 2016).

Figure 2. Geographical location of the study area

 21

3.1.2. Demographic characteristics of the study area

According to SDRDAO (2016), Sayint district has a population of 168,139; of whom 84,171
are men and 83,968 women. From the total population of the district 9,695 or 5.77% are urban
inhabitants. According to 2011 sample survey data the district had a total of 34,999
households, resulting in an average of 4.40 persons to a household, with an area of 1,437.30
square kilometers. Sayint has a population density of 100.86 persons per square kilometer,
which is less than South Wollo Zone average population density of 147.58 persons per square
kilometer.

3.1.3. Relief and climate

According to Tesfahun (2009) the district has a very diverse topography constituted of
mountains, river valleys and scattered plains separated by deep-cut gorges and steep slopes.
Valley relief features characterize a large percentage of the district (70%). Plains and mountain
relief features constitute 17% and 13%, respectively. The altitude of the district ranges from
<1500 m.a.s.l. at Yemeka administrative area to 4247 m.a.s.l. at the top of the Tabor
Mountain. In the lowest parts of the area, the climate is tropical (Kolla) while in the higher
parts, a temperate (Dega) climate prevails. At the intermediate altitude, the climate is
subtropical (Woyna Dega). Thus, the climatic zones of the district are classified into Dega
(above 2500m.a.s.sl) which refers to highlands, WoynaDega (1500-2500m.a.s.l.) that refers to
the intermediate and Kolla (below 1500m.a.s.l.) which refers to the lowlands. The Kolla agro
climatic zone constitutes 34.6% of the total area of the district while Woyna Dega and Dega
agro climatic zones constitute 22.6% and 42.8% respectively. Sayint Rural District has mean
annual temperature of 22°C. Areas in the middle altitude range have favorable weather, while
the high and lowland climates are characterized by extreme weather conditions.

3.1.4. Economic activities

Most farmers in the Ethiopian highlands depend on rain-fed agriculture. Some areas have the
favorable situation of having two rainy seasons, Belg (February-May) and the long rainy
season Kiremt (June-October), which is the case in some parts of Sayint Rural District.
Agriculture is the single most dominant means of livelihood in the district, and 65% of the
population depends on it. Despite the prevalence of agriculture, both crop cultivation and
 22

livestock rearing are the overall dominant economic activities, and about 26% of the
populations are engaged in business activities and in handicrafts. Furthermore, the main
sources of cash for the middle and better-off are from the sale of crops, livestock and
eucalyptus trees. Migrant labor, the sale of eucalyptus trees and local and urban labor are the
major economic activities for the poor and very poor (Tesfahun, 2009).

According to SDRDAO (2016), the main crops grown in the district are wheat, barley, teff,
maize, beans, chickpeas, sorghum, and haricot bean. The type and pattern of crop cultivation is
affected by altitude. Barley, wheat, beans and peas are the major crops in the highlands while
sorghum, maize and haricot beans are widely cultivated in the lowlands. The main cash crop
for low land settlers is haricot bean, particularly the white haricot bean. At every altitude,
households try to plant all of the crops considered suitable for the area. Both men and women
carry out all farming activities except for plowing and sowing, which is done by the men.
Women typically process and prepare the crops into food. Rearing livestock is the other
important economic activity performed in combination with crop production.

3.2. Data Type, Sources and Methods of Data Collection

Primary and secondary data were used for this study. The data were collected from a sample of
haricot bean farmers and traders using a semi-structured pre-tested questionnaire and two
focus group discussions (FGDs) with producers, haricot bean traders, and chairpersons of
kebeles and development agents, to generate more information on the market chain. Two types
of schedules were developed, one for farmers and the other for traders.

A checklist was used to guide the FGDs. The schedule for farmers captured information on
farmer and farm characteristics and the factors affecting quantity of haricot bean supplied to
market. The schedule for traders covered trader characteristics; trading activities, constraints
of marketing, source of market information and other relevant information. The interview
schedule for traders included: types of traders (wholesalers, rural assemblers, urban
assemblers, exporters, etc.), buying and selling strategies, source of market information,
demographic characteristics.
 23

Secondary data was collected from different sources, such as: government institutions, the
District Agricultural Office, reports, bulletins and websites. Published and unpublished
documents were extensively reviewed to secure relevant secondary information.

3.3. Sampling Techniques and Sample Size Determination

3.3.1. Sampling techniques

A three stage sampling procedure was employed in order to draw a sample from haricot bean
producers. First, 16 haricot bean producing Kebeles were identified, in consultation with
district agricultural office purposively. At the second stage, from haricot bean producing
kebeles four kebeles were drawn randomly using simple random sampling. At the third stage,
sample respondents from each kebele were drawn using systematic random sampling based on
population proportion to sample size of the kebeles.

3.3.2. Sample size determination for producers

The sample size of haricot bean producers was done using Yamane (1967) sampling formula
with 90% confidence level.

N 6382
n   121 (1)
1  N ( e) 2
1  6382(0.09) 2
where n is the sample size, N is the total number of households of haricot bean producers,
while e2 is the margin of error expressed as a fraction of 0.09 and represents allowable errors
assumed.

Table 2. Sample size of producers

Sampled Kebeles Total number of households Sample taken
Guameda 2560 49
Ambasenber 1200 23
Mese 1806 34
Yemeka 816 15
Total 6382 121
Source: Survey result (2017)
 24

3.3.3. Number of traders

The size of haricot bean traders was determined based on the number of permanent haricot
bean traders in the main haricot bean market in the study area. During the production year of
2015/16, volume of production was too low due to rains coming late and ending early. As a
result, weak traders exit from the market and the number of permanent traders was few, and
hence all of them were interviewed.

Table 3. Number of traders

Traders Total number
Rural Assemblers 6
Urban Assemblers 5
Wholesalers 17
Source: Own computation, 2017

3.4. Method of Data Analysis

3.4.1. Descriptive statistics

Descriptive statistics was used to characterize marketing channels, and describe the role of
market chain actors, to evaluate structure conduct and performance of the haricot bean market
and to identify and describe the challenges and opportunities associated with haricot bean
production and marketing. The tool included means, frequencies and percentages.

3.4.1.1. Market Structure

Structure conduct performance model investigated the relationship between market structure,
conduct and performance of haricot bean market. The model had been used by different
market researchers to address their objectives. As indicators of the market structure, market
concentration ratio had been used along with the description of the conduct of the haricot bean
market.

Market concentration measure

According to Tomek and Robinson (1990), concentration ratio refers to the number, and
relative size of buyers in the market. The concentration of firms in the market is estimated
using the common measure of market concentration ratio. Concentration ratio is one of the
commonly used methods to measure market structure. It is given as:
 25

r
C S i i  1,2,3,4 (2)
i 1
Where Si = the percentage market share of the ίth firm and
r = the number of relatively larger firms for which the ratio is going to be calculated.
As noted by Kohl and Uhl (1985), concentration ratio of 50% or more is an indication of a
strongly oligopolistic industry, 33- 50 % a weak oligopoly and less than that a competitive
industry. As a result, concentration ratio was used to measure market structure in the study
area to indicate whether the market is deviated from competitive market structure or not.

3.4.1.2. Market Conduct

Market conduct refers to the market behavior of all firms. The way they compete, their looking
for new techniques and practicability, looking for new investment opportunities, whether 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). Market conduct was
analyzed based on selling strategies of producers and purchasing and selling strategies of
haricot bean traders.

3.4.1.3 Market Performance

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.

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
 26

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 margins

Marketing margin is the difference between the value of a product or group of products at one
stage in the marketing process and the value of an equivalent product or group of products at
another stage (Smith, 1992). It measures the share of the final selling price that is captured by
a particular agent in the marketing chain (Mendoza, 1995). The total gross marketing margin
(TGMM) is the difference between price per unit of that product at the farm gate and the price
per unit when sold to the final consumer (Smith, 1992).

End buyer price  First seller price

TGMM   100 (3)
End buyer price
In order to gauge the level of equity in the distribution of benefits accrued along the market
chain, producer's gross margin (GMMP) which is the portion of the price paid by the end
buyer that goes to the producer was calculated as:

End buyer price  Marketing gross m arg in

GMMP   100 ( 4)
End buyer price
Because precise marketing costs are frequently difficult to determine in many agricultural
marketing chains in developing countries due to price data limitations, the gross rather than the
net marketing margin is calculated. Thus, the marketing margin was understood as gross
marketing margin (Scott, 1995). The gross marketing margins was used to compare the
benefits farmers get from each haricot bean marketing channel and the higher value indicated
the higher gross returns to the farmers.

3.4.2. Econometric Model

3.4.2.1. Factors affecting market supply

In this study, multiple linear regression model was fitted to survey data to generate
information about determinants of market supply of haricot bean. The rationale for choice of
the analytical model was the nature of the dependent variable. Since all haricot bean producing
farmers supplied their produce to the market and quantity of haricot bean supplied to the
 27

market is continuous as a result, multiple linear regression model was found to be appropriate
to analyze factors affecting quantity of haricot bean supplied to the market. Therefore, the
haricot bean supply model to be estimated in this study would take the following form

Yi  Xii  Ui (5)
Where Yi = market supply of haricot bean
Xi = a vector of explanatory variable, and „i‟ is 1, 2, 3… n
β= coefficient of ith independent variable
Ui = unobserved disturbance term

3.4.2.2. Hypothesis and definition of variables

The main hypothesized variables expected to influence marketable supply of haricot bean in
the study area are explained as follows:

Quantity Supplied (QTHSUP): It is a continuous variable which represents dependent

variable; the amount of haricot bean actually supplied to the market by household per year,
which is measured in quintals.

Sex (SX): This is a dummy variable representing 1 for female headed and 0 for male headed
households. Male-headed households in Ethiopia have been observed to have a higher
tendency than female-headed households to enter into agricultural marketing. For instance,
Rehima and Dawit (2012) found that male-headed households participated more in red pepper
market in Selti and Aalaba Special districts in Ethiopia than their female-headed counterparts.
This implies male headed households supply more as compared to female headed households.
In this study, male headed households were expected to have a positive relationship with
market supply of haricot bean.

Family size (FAMSZ): This is measured by man-equivalent as a continuous variable. This

variable was used as a proxy for availability of active labor force in the household. Wolday
(1994) found that household size had a positive and significant effect on quantity of teff
marketed. Haricot bean production is labor intensive; those households with large family sizes
need less investment to hire labor for haricot bean production because their family members
can be used as a major source of labor. In this study therefore, family size was expected to
have a positive relationship with market supply of haricot bean.
 28

Education level (GRADE): This is measured as a continuous variable denoting the number of
years of formal schooling of the household head at the time of the survey. Household heads
with more years of formal education are expected to have a higher ability to accept new ideas
and innovations; therefore, they are more willing to produce and supply haricot bean for sale.
Thus, education was hypothesized to positively influence market supply of haricot bean
positively. Wogayehu and Tewodros (2015) found that education level affected quantity of
haricot bean supplied to the market significantly and positively. In this study, therefore, the
household heads‟ years of formal education was hypothesized to have a positive effect on
volume of haricot bean supplied to the market.

Non/off-farm income (INCOM): This is a dummy variable indicating farmer‟s involvement

in non/off-farm activities. If farmers have involved in alternative works to farm income
sources they will supply less since the volume of production is low as a result of engagement
in non/off-farm activities. Income from non/off-farm sources affects market supply of the
commodity negatively. Households with higher income from these sources are tending to be
supply less of the product to the market (Moti and Berhanu, 2012). This may be explained by
the fact that farmers who have better off-farm income will not tend to generate cash from sell
of agricultural commodities. Thus, involvement in off-farm income was expected to influence
market supply of haricot bean negatively.

Number of livestock owned (TLU): This is a continuous variable that refers to the number of
livestock a household owned. Shewaye et al. (2016) found number of livestock owned
negatively and significantly affected market supply of haricot bean. This is because of that
livestock serve as a means of generating income through sale of livestock and livestock
products i.e farmers with large TLU are not encouraged in producing haricot bean as a means
of income generation. Thus, in this study number of livestock owned was expected to affect
market supply of haricot bean negatively.

Land allocated to haricot bean (FARMSZ): This is measured in hectares as a continuous

variable indicating the total size of land allocated to haricot bean. Total farm size allocated to
haricot bean was expected to influence the quantity of haricot bean marketed positively.
Yaynabeba and Tewodros (2013) found that size of farm allocated to haricot bean affected
extent of market participation/volume of sale of haricot bean significantly and positively.
 29

Wogayehu and Tewodros (2015) also found that size of farm affected quantity of haricot bean
supplied to the market significantly and positively. Land allocated to chick pea production
affects market supply of chick pea positively (Jemberu, 2017). This was because increase in
farm size provides opportunity to increase surplus production, which is critical in improving
market supply.

Distance to the nearest markets (DISTA): This variable is measured in kilometers as a

continuous variable. The closer the household is to the haricot bean market the lower the
transportation cost and the better would be farmers‟ market access. Hence, distance to the
nearest markets was hypothesized to be negatively related to the volume of sale. Rehima and
Dawit (2012) found that market participation among smallholder pepper producers in Silte and
Aalaba in Ethiopia negatively associated with distance to the market. Martey et al. (2012) in
Ghana found distance to nearest market significantly associated with a lower level of cassava
sales and every additional kilometer reduced the volume of sale.

Lagged market price (PRICE): This is a continuous variable and it is a one year lag price.
Jemberu (2017) found that lagged market price affects chick pea market supply positively.
Agete (2014) also found that lagged market price affected the quantity of haricot bean supplied
to the market positively and significantly. The lagged price was expected to positively affect
the quantity of haricot bean supplied to the market because when producers are well paid, this
will motivate them to increase volume of sell.

Number of extension contact (EXTE): This variable is a continuous variable referring to

number of contact of farmers with public extension workers per year that is during the year
2015/16. Farmers who have contact with extension agents are more likely to have knowledge
about production, quality, and price of inputs and information on markets and output prices of
poultry (Awol, 2010). According to Nuri et al. (2016), an increase in the number of extension
visits significantly and positively affected bulla farmers‟ extent of bulla marketed surplus. This
could be attributed to the fact that an increase in the number of extension visits would avail up
to date information regarding agricultural technologies that might improve productivity and
therefore increase the marketed surplus. In this study, therefore, number of extension visit was
expected to have positive relationship with market participation decision and the extent of
participation.
 30

Ownerships of communication facilities (OCF): This variable is a proxy for access to

market information and was expected to influence market supply positively. It is a dummy
variable with value of one if the household owned communication facilities and zero if not
owned. Households who have owned mobile and radio were assumed to access to market
information. Producers and traders with access to market information can make better decision
on how much to produce and supply to the market. According to Shewaye et al. (2016), access
to communication facilities significantly and positively influences market supply. The result
shows that access to communication facilities increases market supply of haricot bean. This
implies that households who have high access to communication facilities have increased
information flow which enables farmers to link to buyers at a lower cost. In doing so it lowers
the fixed transaction costs of market participation. Hence in this study access to
communication facility was expected to affect market supply of haricot bean positively.

Access to credit (CREDT): This is a dummy variable taking a value of one if the household
had access to credit and zero otherwise. This variable was expected to influence the market
supply of haricot bean producers positively on the assumption that access to credit improves
the financial capacity of haricot bean producers to buy more improved production inputs,
thereby increasing haricot bean production, which will also increase market supply. Alene et
al. (2008) found that limited access to credit constrains farmers‟ ability to buy agricultural
inputs, which in turn reduces farmers‟ market participation. Yaynabeba and Tewodros (2013)
found that access to credit affects extent of market participation/volume of sale of haricot bean
significantly and positively.

Experience in haricot bean production (EXPR): This is continuous variable measured in

years. It is expected to affect haricot bean market supply of smallholder framers positively.
This is due to the fact that households who have more experience had a good know-how about
the right time of plowing season and farming system that increases the volume of production
which in turn increases quantity of haricot bean supplied to the market. Jemberu (2017) found
that farm experience has a positive and significant effect on chickpea market supply.

Yield of haricot bean (YILD): it is a proxy variable for quantity produced. Yield of haricot
bean defined as output per unit hectare depends on levels of seed, fertilizer and labor and the
technological progress embodied in seed, rainfall variability and how well inputs are combined
 31

and applied in production (Katungi et al., 2010). Jemberu (2017) found that household with a
high level of yield supply more chick pea in the market. That is yield of chick pea affects
market supply of chick pea positively. Therefore, in this study yield of haricot bean was
hypothesized to affect market supply of haricot bean positively.

Table 4. Description and hypothesis of variables

Variables Unit of Measurement Ex. Sign
Quantity of haricot bean supplied to the Quintal
market in 2015/16
Sex Dummy (1= female, 0= otherwise) Positive
Family Size Man Equivalent Positive
Education Level Number of years of formal schooling Positive
Non/off-farm income Dummy (1= involved, 0= otherwise) Negative
Number of livestock owned Tropical Livestock Unit Negative
Land allocated to haricot bean production Hectares (Ha) Positive
Distance to the nearest market Kilometers Negative
Lagged market price ETB per quintal Positive
Number of extension contact Number of days Positive
Ownership of communication facilities Dummy(1=owned, 0= otherwise) Positive
Access to credit Dummy(1 =access, 0 = otherwise) Positive
Experience in haricot bean production Year Positive
Yield of haricot bean Quintal per hectare Positive
Source: (Author, 2017).
 32

4. RESULTS AND DISCUSSION

This chapter presents the results and discussion of the study. Descriptive statistics were used to
analyze the data to have a clear understanding of the socio- demographic, institutional,
economic and other characteristics of the households in addition to the econometric model.

4.1. Descriptive Statistics

4.1.1. Demographic characteristics of producers

As Table 5 shows, 14 % of the respondents were female headed and the rest 86% were male
headed households. The mean year of formal schooling of the respondents was 2.07 years and
with minimum and maximum years of formal schooling of 0 and 8 respectively. Chi square
value indicated that mean supply of haricot bean was significantly different with respect to
education level of household. The mean age of the respondents was 45.81 years with
minimum and maximum age of 34 and 65 years respectively. The survey data indicated that
the average family active labor force was 3.64 in man equivalent term with minimum and
maximum of 0.7 and 5.7 man equivalent, respectively. The average farm experience of the
household in haricot bean production was 16.61 years with minimum and maximum of 8 and
31 respectively.

Table 5. Demographic characteristics of producers

Variable N Percent χ2
Sex of the respondent Female 17 14 14.67
Male 104 86
Variables N Mean Std. Dev. Minimum Maximum χ2
Age of the respondent 121 45.81 7.54 34 65 371.8
Family size 121 3.64 1.26 0.7 5.7 400.86
Education level 121 1.91 2.07 0 8 197.92***
Farm experience 121 16.61 6.45 8 31 292.96
***
indicates significance level at 1%
Source: Survey result, 2017

4.1.2. Socio-economic and production factors

As indicated in Table 6, from the total sample households 50.6% were involved in non/off-
farm activities in addition to on farm activities to generate income and the remaining 49.6%
generated income from their farm. The result of the chi square also reveals that mean supply of
 33

haricot bean was significantly different between those households who were involved in
non/off-farm income and those who were not involved. With respect to ownership of
communication facilities 39.7% of the respondents had owned communication facilities and
the remaining were not. On average, producers sold their produce at price of 1048.97
birr/quintal. The minimum and maximum price that producers receive during the time of sale
was 875 and 1250 birr/quintal. The result of the chi square reveals that mean supply of haricot
bean is significantly different in terms of one lagged price of haricot bean. On average,
sampled households have 6.18 TLU. The minimum and maximum number of livestock owned
for the household was 3.61 and 9.53 TLU, respectively. Average size of land allocated for
haricot bean production during 2015/16 production year was 0.75 hectares. The chi square
value indicates mean supply of haricot bean is significantly different in terms of land allocated
for haricot bean production. On average, yield of haricot bean during production year of
2015/16 was 7.85 quintal per hectare. The chi square value indicates mean supply of haricot
bean is significantly different in terms of yield of haricot bean.

Table 6. Socio-economic and production factors

Variables N Percent χ2
Non/off-farm Involved 60 49.6 69.9***
income Not involved 61 50.4
Ownership of No owned 73 60.3 13.43
communication Have owned 48 39.7
facilities
Variables N Mean Std. Dev. Minimum Maximum χ 2
Number of 121 6.18 1.32 3.61 9.53 ---
livestock owned
Lagged market 121 1048.97 65.30 875 1250 327.55***
price
Land allocated for 121 0.75 0.34 0.25 1.5 259.99***
haricot bean
production
Yield of haricot 121 7.85 2.41 3.25 16 509.41***
bean
***
indicates significance level at 1%
Source: Survey result, 2017
 34

4.1.3. Institutional factors

As indicated in Table 7, out of total sample households 47.1% of the households‟ accessed
credit and the rest were not. The result of chi square indicates that mean supply of haricot bean
is significantly different between with those households who accessed credit and do not
accessed. The average distance that the household went to the nearest market was 7.26 km.
The minimum and the maximum distance that the household covered were 3 and 17.5 km,
respectively. The value of chi square indicated that mean supply of haricot bean was
significantly different with respect to distance to the nearest market. On average, extension
workers make contact with haricot bean producers 3 days per year. The result of the chi square
reveals that mean supply of haricot bean was significantly different in terms of number of
extension contact.

Table 7. Institutional factors

Variable N Percent χ2
Access to credit No access 64 52.9 71.27***
Access 57 47.1
Variables N Mean Std. Dev. Minimum Maximum χ 2
Distance to the nearest 121 7.26 3.2 3 17.5 442.86***
market
Number of extension 121 3.28 1.26 1 6 179.39***
contact
***
indicates significance level at 1%
Source: Survey result, 2017

4.1.4. Characteristics of traders

Characteristics for the traders considered for this study were; summarized by demographic
institutional and economic characteristics.

4.1.4.1. Rural Assemblers

As indicated in Table 8, the average age and years of formal schooling of rural assemblers
were 39.2 and 6 years. The mean market experience of these traders was 5 years. Out of
sampled rural assemblers, 62.5% of the rural assemblers were male traders, and all of the rural
assemblers are married. Half of the traders had their own storage facilities to store the
purchased haricot bean. From the total sampled rural assemblers only 16.7% had access to
credit service. The average distance traveled to purchase haricot bean was 21.5km.
 35

Table 8. Demographic and socio-economic characteristics of rural assemblers

Variables Number Percent
Female 2 33.3
Sex
Male 4 66.7
Marital status Married 6 100
No access 3 50
Access to storage facilities
Access 3 50
No access 5 83.3
Access to credit
Access 1 16.7
Variables Mean Std. Dev.
Age 39.2 5.6
Education level 6 1.79
Market experience 5 2.28
Distance traveled 21.5 3.73
Source: Survey result, 2017

4.1.4.2. Urban assemblers

As indicated in Table 9, the average age and years of formal schooling of urban assemblers
were 34.4 and 7.4 years. The mean market experience of these traders was 5.6 years. From
total urban assemblers, 20% of them were female and 80% of the urban assemblers were male
traders, and all of the urban assemblers are married. Only 40% of the traders had their own
storage facilities to store the purchased haricot bean. About 60% of sampled urban assemblers
had access to credit service. The average distance traveled to purchase haricot bean was 27km.

Table 9. Demographic and socio-economic characteristics of urban assemblers

Variables Number Percent
Sex Female 1 20
Male 4 80
Marital status Married 5 100
Access to storage facilities No access 3 60
Access 2 40
Credit No access 2 40
Access 3 60
Variables Mean Std. Dev.
Age 33.4 5.13
Education level 7.4 1.52
Market experience 5.6 2.3
Distance traveled 27 4.47
Source: Survey result, 2017
 36

4.1.4.3. Wholesalers

As indicated in Table 10, the average age and years of formal schooling of wholesalers were
39.3 and 8.9 years, respectively. The mean market experience of these traders was 10.2 years.
From the total wholesalers only 5.9% were female which means that majority of haricot bean
wholesalers in Sayint district were male wholesaler traders. About 88.2% of wholesalers were
married and the rest were single. From the total wholesalers 17.7% had not access to credit,
and all wholesalers had their own storage facilities. The average distance traveled to sell
haricot bean was 213km and standard deviation of zero since there was no variation in
distance traveled to sell haricot bean. All wholesalers sold the commodity to Ethiopia
Commodity Exchange (ECX) at Kombolcha

Table 10. Demographic and socio-economic characteristics of wholesalers

Variables Number Percent
Male 16 94.1
Sex
Female 1 5.9
Married 15 88.2
Marital status 2 11.8
Single
Access to storage facilities Access 17 100
No access 3 17.7
Access to credit
Access 14 82.3
Variables Mean Std. Dev.
Age 39.3 6.8
Education level 8.9 2
Market experience 10.2 2.7
Distance traveled 213 0
Source: Survey result, 2017

4.1.5. Haricot bean market chain actors, their role and market channels in the district

4.1.5.1. Haricot bean market chain actors and their role

Along the marketing channel, there are a number of marketing actors who handle the
commodity/haricot bean at different stages in the process of transaction. These actors together
form a link and create the channel beginning from producers until the commodity reaches to
the ultimate consumers.
Producers: Producers are pioneer actors as well as the first stage actors in the chain who
perform most of the market chain functions right from farm inputs preparation on their farms
 37

or procurement of the inputs from other sources to post harvest handling and marketing. The
major market chain functions that haricot bean producers perform include ploughing, weeding,
pest controlling, harvesting and post-harvest handling. They transport haricot bean to the
nearest markets (village market) either carrying by themselves or using donkeys. They
produce haricot bean and sell their produce to different market chain actors like, rural
assemblers, urban assemblers, wholesalers and consumers. Producers/farmers sold 7.53% of
their produce to rural assemblers, 8.62% to urban assemblers, 79.93% to wholesalers and 3.9%
to domestic consumers. Generally, they are involved in both production and marketing of
surplus of commodities they produce.
Brokers: These are agent middlemen who facilitate the trading activity (buying and selling)
between farmers and traders (rural assemblers, urban assemblers wholesalers), but does not
physically handle haricot bean. These agents are not permanent and licensed brokers rather
their main economic activity is farming during production season of the year. These
intermediaries play important role in bringing farmers of their home residence to sell their
marketable surplus to the trader whom they undertook their brokerage activity. Brokers obtain
payment from traders for their facilitating activity.

Rural assemblers: Rural assemblers are farmers or part-time traders in the chain who buy
small quantity of haricot bean from farmers in village markets during slack period for the
purpose of reselling it to urban assemblers or wholesalers in the district market. They use their
financial resources and their local knowledge to buy haricot bean from the surrounding area.
Generally, they perform physical function (especially, they play an important role in the
system of assembly) of haricot bean for their loyal customers. Those are market chai actors
who purchase haricot bean from producers during the time of surplus and sell when price
increases. They sell haricot bean to urban assemblers and wholesalers. Rural assemblers sold
41.7% of haricot bean to urban assemblers and 58.3% to wholesalers.

Urban assemblers: Those are market agents who purchase haricot bean from farmers and
rural assemblers and sale to wholesalers. They are located in the district market. They have
accessed market information more relative to rural assemblers. They perform a physical
function that is they play an important role in assembly of haricot bean to wholesalers.
 38

Wholesalers: Those are market chain actors who purchase large volume of haricot bean from
different haricot bean market agents/market chain actors like producers, rural assemblers, and
urban assemblers. Wholesalers are traders who resell haricot bean to exporters than selling
directly to the ultimate consumers. They are the major actors in the market channel of haricot
bean in the study area. These have somewhat strong financial as well as management-know
how in all aspects of the business activity in comparison with other actors. Wholesalers
generally participate in marketing of haricot bean and perform physical (place utility) and
facilitating functions (financing).They directly supply to the Ethiopian Commodity Exchange
(exporter) at Kombolcha. Wholesalers traveled long distance to sale haricot bean; on average,
they travel 213km relative to other traders.

4.1.5.2. Haricot bean market channels

Based on the direction of flow and volume of haricot bean transacted, five marketing channels
were identified. The channel starts from the producers and ends in consumers passing through
a number of marketing actors along the chain. A total of 11,150 quintals of haricot bean was
sold by sample farm households to haricot bean traders in 2015/16 production year. Following
the channels depicted in Figure 1, the following marketing channels were identified:

Producer Domestic Consumer (437 Quintal)

Producer Rural Assembler Urban Assembler Wholesaler Exporter (350
Quintal)
Producer Rural Assembler Wholesaler Exporter (490 Quintal)
Producer Urban Assembler Wholesaler Exporter (961 Quintal)
Producer Wholesaler Exporter (9,349 Quintal)

The flow of haricot bean from producers to different channels is presented in Figure 2. The
figure representing the channels was considered only the haricot bean that was sold /actually
marketed. There were five haricot bean-marketing channels in the study area. In terms of
quantity of haricot bean sold by producers, 3.9% of the total quantity sold was sold to
domestic consumer, 7.53% to rural assemblers, 8.92% to urban assemblers and large
proportion that is about 79.93% of the total quantity sold was sold directly to wholesalers.
 39

Figure 3. Haricot bean market channels in Sayint district

Source: Own market survey result, 2017

4.2. Structure, Conduct and Performance of Haricot Bean Market

4.2.1. Structure of haricot bean market

Structure of haricot bean market is evaluated in terms of entry barriers to the haricot bean
market and degree of market concentration.

4.2.1.1. Capital

Capital was the primary barrier to enter to haricot bean marketing. The survey result indicates
that urban assemblers, rural assemblers and wholesalers confirmed that capital is the primary
barrier that blocks many traders from entering haricot bean marketing. Lack of collateral to
take credit from banks and unavailability of credit services has also contributed to financial
scarcity. The only available credit service in the district is the Amhara Credit and Saving
 40

Institution. But due to its high interest rate, rural assemblers and urban assemblers confirmed
that they refuse to take credit from this credit service institution.

4.2.1.2. Degree of market concentration

The concentration ratio is expressed in terms of CR4 which stands for the percentage of the
market sector controlled by the biggest four firms. As noted by Kohl and Uhl (1985),
concentration ratio of 50% or more is an indication of a strongly oligopolistic industry, 33- 50
% a weak oligopoly and less than that a competitive industry. Since the number of traders at
each sample market level was few, therefore, the analysis of the degree of market
concentration ratio was carried out for all traders at district level. It was measured by the
percentage share of volume of haricot bean handled by the largest four traders. Here,
concentration ratio for four traders was meant for all haricot bean traders across the study area.

Haricot bean is supplied to the market by a large number of farmers, where no producer affects
the functioning of other producers. Even though different types of haricot bean traders were
available in the study area, due to their limited number in their respective locality, district level
market concentration ratio was calculated to evaluate the structure of markets prevailed. The
analysis of the degree of market concentration was carried in Adjibar market, which is the
district market (main market in the district). Concentration was calculated by taking annual
volume of purchased haricot bean in 2015/16 production year from traders‟ survey.

As indicated on Table 11 haricot bean markets at Sayint district was strong oligopoly. The
CR4 measures of market concentration ratio showed that the top four or 14.29% of the traders
controlled 50.86% of the haricot bean market in the district during 2015/16 production year.
This indicates haricot bean market being highly oligopolistic market and deviation from
competitive market norms.
 41

Table 11.Traders market concentration in Adjibar market

Number Cumulative %of Cumulative Quantity Total % share Cumulative
of Traders frequency traders %of traders purchased quantity of total %of total
of traders (quintal) purchased quantity quantity
(quintal) purchase purchased
1 1 3.57 3.57 1980 1980 17.76 17.76
1 2 3.57 7.14 1455 1455 13.05 30.81
1 3 3.57 10.71 1190 1190 10.67 41.48
1 4 3.57 14.29 1046 1046 9.38 50.86
1 5 3.57 17.86 630 630 5.65 56.51
1 6 3.57 21.43 510 510 4.57 61.09
1 7 3.57 25.00 430 430 3.86 64.94
1 8 3.57 28.57 348 348 3.12 68.06
1 9 3.57 32.14 326 326 2.92 70.99
1 10 3.57 35.71 315 315 2.83 73.81
2 12 7.14 42.86 275 550 4.93 78.74
1 13 3.57 46.43 230 230 2.06 80.81
1 14 3.57 50.00 200 200 1.79 82.60
1 15 3.57 53.57 190 190 1.70 84.30
1 16 3.57 57.14 170 170 1.52 85.83
3 19 10.71 67.86 160 480 4.30 90.13
5 24 17.86 85.71 135 675 6.05 96.19
1 25 3.57 89.29 122 122 1.09 97.28
2 27 7.14 96.43 105 210 1.88 99.17
1 28 3.57 100.00 93 93 0.83 100.00
Source: Own survey result, 2017

4.2.2. Conduct of haricot bean marketing

Market conduct refers to the practices or strategies of traders in maximizing their profits.
Among these practices are the use of regular partners, long-term relations with clients, and
suppliers, the use of intermediaries, and trade within personalized networks as stated in
Wolday (1994).

Market conduct deals with the behavior of firms that are price-searchers, which are expected
to act differently than those in a price-taker type of industry as stated in Cramers and Jensen
(1982). Price searchers can determine their selling prices or quantity of output they sell. In
addition, they could use their market power to weaken or eliminate competitors example
 42

reducing price. In this section, the conduct of haricot bean traders is analyzed in terms of the
producer and trader‟s price setting, purchasing and selling strategies.

4.2.2.1. Producer price setting strategy

According to the survey result, about 59.5% of sample farmer respondents reported that
market price was set by traders. And 23.97% respondents reported that price was set by the
market. The remaining 13.22% and 3.31% of farmer respondents reported that the selling price
of their produce was set through bargaining with traders and themselves respectively. The
survey further confirmed that, about 82.1% of sample respondents face problem of low price
received after they took the product in to the market. And 21.5% of sample respondent farmers
reported that they took their product back to home and waited till next market day. The other
56.2% of sample respondents sold their product with the existing price. The remaining 22.3%
put their produce in homes of their relatives on market place to be sold some other day other
than the market day. The majority of farmers identified that price was the major determining
factor that affect their decision as to whom and which market to sell their produce. Hence,
there existed absence of competitive pricing system, indicating the deviation of market from
the competitive market norms.

4.2.2.2. Buying and selling strategy of traders

Trading was carried out based on eye appraisal of the commodities and exchange takes place
on bargaining. The strategies of traders in maximizing profit and develop bargaining power
include the use of regular partner, long term relation with clients or suppliers, the use of
intermediaries, trading with personalized network, availability of market information and its
impact on price, feasibility of alternative market outlets and price setting practices etc.

Based on the data from sample trader‟s survey, 53.8% and 17.35% of the traders reported that
buying price was set by discussion of the traders themselves and the market respectively.
28.85% of traders also reported that market price was also set by negotiation with suppliers
and by traders.
 43

4.2.3. Analysis of market performance of haricot bean

Marketing performance of haricot bean was analyzed by estimating the marketing margin, by
taking into consideration associated marketing costs for key marketing channels identified.
Based on production costs and purchasing prices of the major market participants along the
chain, margins at farmer, rural assembler, urban collector, wholesalers and exporter levels
were estimated and analyzed.

4.2.3.1. Marketing margins

Marketing margins are the difference between prices at two market levels. The term market
margin is most commonly used to refer to the difference between producer 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, or wholesale and retail, prices (Spencer, 1971). Marketing margin is the percentage
of the final weighted average selling price taken by each stage of the marketing chain. The
margin covers costs involved in transferring produce from one stage to the next and provides a
reasonable return to those doing the marketing. It can be interpreted as a cost of providing a
mix of marketing services. Therefore, haricot bean marketing margins were analyzed based on
the average sale price of different market chain actors in each market channel.
 44

Table 12. Haricot bean marketing margin in Sayint district (birr/quintal)

Costs and Market channels
Actors
benefits I II III IV V
Production cost
379 379 379 379 379
(birr/ha)
Marketing cost
23 25.5 25.5 27 40
(birr/quintal)
Producer Total cost 402 404.5 404.5 406 419
Selling price 1050 930 930 960 1000
Gross profit 648 525.5 525.5 554 581
GMMp(%) 100 59.2357 62 60.3774 65.7895
Marketing cost
61.5 61.5
(birr/quintal)
Purchase price 930 930
Rural Total cost 991.5 991.5
Assembler
Selling price 1075 1090
Gross profit 83.5 98.5
GMMru (%) 9.23567 10.6667
Marketing cost
44 63.75
(birr/quintal)
Purchase price 1075 960
Urban Total cost 1119 1023.75
Assembler
Selling price 1200 1200
Gross profit 81 176.25
GMMua (%) 7.96178 15.0943
Marketing cost
102.5 65.25 107.75 65
(birr/quintal)
Purchase price 1200 1090 1200 1000
Wholesaler Total cost 1302.5 1155.25 1307.75 1065
Selling price 1355.5 1240 1380 1320
Gross profit 53 84.75 72.25 255
GMMw (%) 9.90446 10 11.3208 21.0526
Marketing cost
174.75 174.75 174.75 174.75
(birr/quintal)
Purchase price 1355.5 1240 1380 1320
Exporter Total cost 1530.25 1414.75 1554.75 1494.75
Selling price 1570 1500 1590 1520
Gross profit 39.75 85.25 35.25 25.25
GMMe (%) 13.6624 17.3333 13.2075 13.1579
TGMM (%) 0 40.7643 38 39.6226 34.2105
Note: TGMM=Total Gross Marketing Margin, GMMP=Gross Marketing Margin for
Producers, GMMru=Gross Marketing Margin for Rural Assemblers, GMMua=Gross Marketing
 45

Margin for Urban Assemblers, GMMw=Gross Marketing Margin for Wholesalers and
GMMe=Gross Marketing Margin for Exporters.
Source: Own computation, 2017

Table 12 clearly showed the differences between the benefit from haricot bean trading and the
costs incurred in the process of haricot bean production and marketing which gives the gross
profit of each actor namely producers, rural assemblers, urban assembles, wholesalers, and
exporters. The results showed that haricot bean producers gross profit was highest when they
directly sell to domestic consumers in channel I which is 648 birr/quintal and lowest gross
market profit gained when they directly sell to rural and urban assemblers in channel II and III
which accounts, 525.5 birr/quintal at both channels. This implies producers are more profitable
if they sold to wholesalers and consumers. From traders‟ market agents, the highest profit
belongs to wholesaler that is 255 birr/quintal when they directly purchase from producers and
sold to exporters in channel V. Urban assembler gained the second highest profit that was
176.25 birr/quintal on channel IV when they purchased directly from producers and sold to
wholesalers. Rural assemblers made a profit of 98.5 birr/quintal at channel III and V and
exporters 85.5 birr/quintal at channel III. This implies that wholesalers and urban assemblers
received the highest gross profit from haricot bean marketed in Sayint district while rural
assemblers and exporters took the smallest profits shares from haricot bean market in the study
area (see Table 12). As observed from Table 12 above, the total gross marketing margin
(TGMM) was highest in Channel II which was 40.76% of the consumers‟ price followed by
channel IV which was 39.62. From all haricot bean traders, wholesalers have got the highest
gross marketing margin which accounted 21.05%. In channel I there were no intermediaries
between producers and consumers and hence no marketing margin. Both producers and
consumers possessed faire price both for in relative terms. This is because producers directly
sold haricot bean for consumers without any other market actor‟s involvement in this channel.

4.3. Constraints and Opportunities in Haricot Bean production and

Marketing

4.3.1. Constraints of producers in haricot bean production and marketing

The smallholder farmers reported various constraints hindering increased haricot bean
production and marketing. From the total sampled haricot bean producers 93.5%, 82.1%,
 46

69.9%, 48%, 45.5%, 40.7%, 26.8%, 14.6%, 11.4% of producers reported lack of rain, low
price receive, poor road and infrastructure, pests and diseases, small size of farm, inadequate
improved seed, lack of markets, and inconsistent demand as the major constraints in haricot
bean production and marketing, respectively (see Table 13). Result from FGDs also
confirmed that farmers faced those production and market constraints during haricot bean
production and marketing.

Table 13. Major constraints of haricot bean producers

Constraints Number Percent Rank
Poor road and infrastructure 86 69.9 3
Lack of markets 18 14.6 7
Low price receive 101 82.1 2
Pests and diseases 59 48 4
Inadequate improved seed 50 40.7 6
Inconsistent demand 14 11.4 8
Shortage of farm 56 45.5 5
Lack of rain 115 93.5 1
Source: Survey result, 2017

4.3.2. Constraints of traders in haricot bean marketing

Traders‟ faced a number of constraints along the market chain of haricot bean marketing in
Sayint district. Among these constraints traders reported the major constraints they face, these
includes low quality produce, lack of financial capital, poor road and infrastructure,
inconsistence supply, price fluctuation, high sale tax, weak coordination among traders, lack
of transport services, and lack of price information (see Table 14).

Table 14. Major constraints of haricot bean traders

Constraints Number Percentage Rank
Low quality 21 75 1
Lack of financial capital 20 71.4 2
Poor road infrastructure 19 67.86 3
Inconsistent supply 15 53.57 4
Price fluctuation 14 50 5
High sale tax 10 35.71 6
Weak coordination among traders 9 32.14 7
Lack of transport services 8 28.57 8
Lack of storage facilities 6 21.4 9
Lack of price information 5 17.86 10
Source: Survey result, 2017
 47

4.3.3. Opportunities in haricot bean production and marketing

Despite the existence of haricot bean production and marketing constraints, results from FGDs
indicated that there are also opportunities for both haricot bean producers and traders.

Haricot bean production potential of the area: The district has high potential to produce
haricot bean in South Wollo zone. Therefore, producers can be motivated to produce more and
supply more to the market.

Simada-Sayint road construction: It is a project held by Amhara road authority which is

120km far away from Adjibar that is from the district market to Simada district of South
Gondar. This decreases transportation cost of both haricot bean producers and traders, as a
result producers can supply regularly and transaction can be conducted easily.

Use of mobile: mobile use can help to access information for haricot bean production and
marketing and motivate both producers and traders in production and marketing.

Emphasis given to agricultural sector by the governments: There is a possibility that

farmers supply haricot bean to the Ethiopian Commodity Exchange directly, which initiates
producers to produce more and supply more.

4.4. Factors affecting Market Supply of Haricot Bean

After running the OLS regression, post estimation tests had been done to check the basic
assumptions of OLS. All the hypothesized explanatory variables were checked whether
multicollinearity, omitted variable and endogeinity problems exist or not. Heteroscedasticity
problem was also checked. Ramsey RESET test was used to check whether there is omitted
variable problem or not. The result of Ramsey RESET test indicated that the null hypothesis
(the model has no omitted variable) was accepted. There was no problem of omitted variable
since the p-value for this test was exactly equal to 0.3107 (see Appendix Table 2). Breusch-
Pagan test was used to check heteroscedasticity problem. The result of hettset indicated that
the null hypothesis (constant variance) was accepted. The variance of the residual was
constant; as a result there was no heteroscedasticity problem since the probability of chi2 is
equal to 0.4538 (see Appendix Table 3). Variance inflation factor (VIF) was used to test the
existence of multicollinearity problem among explanatory variables. Result from VIF test
indicated that value of VIF for each explanatory variable is <5 (see Appendix Table 4). This
 48

indicated that there was no serious correlation among explanatory variables. As a result there
was no multicollinearity problem. After running the OLS model, endogeneity problem also
checked whether it exists or not. Covariance of the residuals and explanatory variables was
equal to zero (see Appendix Table 5).

In this study, a total of 13 explanatory variables were hypothesized to determine market supply
of haricot bean. According to multiple linear regression model outputs, out of thirteen
explanatory variables, six variables (education level, land allocated to haricot bean, lagged
market price, distance to the nearest market, access to credit, and yield of haricot bean) are
statistically significant variables determining quantity of haricot bean supplied to the market.
Education level, land allocated to haricot bean, lagged market price, access to credit, and yield
of haricot bean affects the volume of haricot bean supplied to the market positively; whereas,
distance to the nearest market affects negatively (see Table 15). About 81.5% of the variation
in volume of haricot bean supplied was explained by those significant variables.

Education level: As hypothesized, the regression coefficient of education level was found to
have a positive and significant influence on volume of haricot bean supplied to the market at
5% significance level. Keeping other variables constant, a one year increase in years of formal
schooling increases the volume of haricot bean supplied to the market by 0.069 quintal. This is
due to the fact that educate producers easily access market information and they easily adopt
production technologies that enhance the volume of production and minimizes production
constraints. This is going in line with previous studies like Wogayehu and Tewodros (2015).

Land allocated to haricot bean: As expected land allocated to haricot bean determined the
quantity of haricot bean supplied to the market significantly and positively at 1% significance
level. A one hectare increase in land for haricot bean production increases the volume of
haricot bean supplied to the market by 1.501 quintal being other variables held constant. This
is to mean that the larger land size allocated to haricot bean production the larger the quantity
produce and thereby increasing the quantity of produce available for sale. The study confirmed
results of previous studies of Wogayehu and Tewodros (2015) and Shewaye et al. (2016) that
land has significant and positive effect on volume of haricot bean supplied to the market.
 49

Lagged market price: As expected lagged market price determined the quantity of haricot
bean supplied to the market positively at 5% level of significance. Keeping other variables
held constant, a one birr increase in the price of haricot bean in last year increases the quantity
of haricot bean supplied to the market by 0.003 quintal in the coming year. This implies that
an increase in price of haricot bean in last year motivates producers to produce more and
thereby increases the quantity of haricot bean supplied to the market in the coming year. This
confirms the law of supply, being other things constant, quantity supply increases with an
increase in price of the commodity (Mas-Collel et al., 1995). The result also confirms previous
studies (Shewaye et al., 2016). That is the study found that producers who perceived the
market price was good supplied more than that of who perceived bad. The study also goes in
line with Agete (2014), an increase in price of haricot bean increases the volume of haricot
bean supplied to the market.

Distance to the nearest market: as hypothesized it determined the volume of haricot bean
supplied to market negatively at 5% level of significance. As distance from the nearest market
increased by 1km, the quantity of haricot bean supplied to the market decreased by 0.089
quintal, other things being equal. The possible explanation was that when distance increases
from the nearest market producers supply less quantity. This goes in line with Berhanu and
Moti (2012) who found that smallholder farmers who are away from market centers supply
small quantity.

Access to credit: Access to credit affected quantity of haricot bean supplied to the market
significantly and positively at 1% level of significance. As compared to households who had
not access to credit, those households who had access to credit increases the quantity of
haricot bean supplied to market by 0.404 quintal, other variables remaining constant. The
possible explanation is that households who had access to credit services have ability to
purchase production inputs (which increases volume of production, this in turn increases
quantity supplied in the market) as compared to those households who had not access to credit
services. This is in conformity the study of Yaynabeba and Tewodros (2013) which found that
volume of sale was higher for those producers who accessed credit services as compared to
those who had no access to credit services.
 50

Yield of haricot bean: As hypothesized productivity of haricot bean affected market supply
of haricot bean positively at 1% level of significance. Other factors remained constant; a one
unit increase in productivity of haricot bean increases the market supply of haricot bean by
0.103 quintal. This study is in conformity with the study of Jemberu (2017) who found that
yield of chick pea affected the market supply of chick pea positively.

Table 15. Factors affecting quantity of haricot bean supplied to the market in Sayint district
Variables Coefficient Std. Err. t-value
Sex of the respondent -0.184 0.151 -1.22
Family size 0.001 0.041 0.02
Education level 0.069** 0.034 2.04
Non/off-farm income -0.254 0.154 -1.64
Number of livestock owned -0.061 0.040 -1.53
Distance to the nearest market -0.089*** 0.030 -3.00
Lagged market price 0.003** 0.001 2.52
Number of extension contact -0.012 0.073 -0.16
Ownership of communication facilities -0.111 0.109 -1.02
Access to credit 0.404*** 0.143 2.82
Experience in haricot bean production 0.011 0.009 1.19
Land allocated to haricot bean production 1.501*** 0.293 5.13
Yield of haricot bean 0.103*** 0.028 3.71
_cons 0.499 1.383 0.36

Number of obs = 121 Prob > F = 0.0000 R-squared = 0.8352 Adj R-squared = 0.8151
Note: *** and ** significant at 1% and 5% respectively.
Source: Survey data, 2017
 51

5. SUMMARY, CONCLUSION AND RECOMMENDATIONS

5.1. Summary and Conclusion

The study was conducted with the general objective of analyzing of haricot bean market chain
in Sayint district of south Wollo zone in Amhara national regional state, Ethiopia. The specific
objectives of the study were to identify haricot bean market chain actors and their role and
market channels, to analyze the structure conduct performance of haricot bean market, to
analyze factors influencing quantity of haricot bean supplied to the market at farm household
level and finally to identify challenges and opportunities in haricot bean production and
marketing in the study area.

The data used for the study were collected from 121 randomly selected sample households
who produced haricot bean in the year 2015/16 production year and 28 haricot bean traders
through formal sample survey. More specifically, a pre-tested structured questionnaire was
administered to collect the primary data from selected sample households. Moreover,
secondary data were extracted from relevant sources to supplement the primary data.

The descriptive statistical result on the selected variables used in the empirical analysis
showed that from the total of 121 sample households considered in this study 86 % were male
headed households and the mean years of formal schooling of households was grade two. The
average age, experience in haricot bean production and family size of the sample households
were 45.81, 16.61 years and 3.64 man equivalent, respectively. Households allocated about
0.75 hectares of land for haricot bean production. On average, the sample households located
7.27 kilometer away from the nearest market. Only 39.7% of the sample households had
ownership of communication facilities, 47.1% of them accessed credit services and 49.6% of
households were involved in non/off-farm activities. On average, producers sold their produce
at 1047.36 ETB/quintal. On average, sample households have 6.18 TLU and average yield of
haricot bean during the production year of 2015/16 was 7.85 quintal per hectare.

Haricot bean market chain in Sayint district has five marketing channels, and there are a
number of marketing actors who handle the commodity/haricot bean at different stages in the
process of transaction. These actors together form a link and create the channel beginning
from producers until the commodity reaches to the ultimate consumers. Market concentration
 52

ratio was computed to identify the market structure existed in the district. According to the
result of CR4, haricot bean market at Adjibar market was strong oligopoly market. The market
was controlled by few traders. The conduct of the market indicated that price of haricot bean
was set by traders at large and through negotiation of traders and producers in some extent.
Price of haricot bean also set by market and by the producers themselves. Market performance
in the district indicated that producers‟ gross profit was highest when they directly sell to
domestic consumers and from traders market agents gained the highest profit belongs to
wholesalers.

Ordinary least square (OLS) result reveals out of thirteen explanatory variables which were
hypothesized to affect quantity of haricot bean supplied to market, six of them significantly
affected market supply. Education level, land allocated to haricot bean production, lagged
market price, access to credit, and yield of haricot bean affected quantity of haricot bean
supplied to market positively whereas distance to the nearest market affected negatively. From
the result of the model, 81.5% of the variation in the model was explained by those significant
predictor variables.

5.2. Recommendations

Based on the findings of the empirical result the following recommendations are drawn that
can help to design appropriate policy intervention mechanisms to increase volume of sale of
haricot bean in the study area

Education level affected the volume of haricot bean supplied to the market. Therefore,
government and other stakeholders need to strengthen adult education to develop capacity of
haricot bean producers in order to increase quantity supplied to the market.

Distance to the nearest market affected quantity of haricot bean supplied to market. Therefore,
government and other organizations need to give strong emphasis to improve roads and road
networks to production areas to facilitate trading of the produce and purchase of farm inputs
for use during production hence better road infrastructure can decrease transportation cost of
farmers and increase market supply.
 53

Land allocated to haricot bean had a positive effect on market supply of haricot bean. However
increasing the size of land cannot be an alternative to increase market supply of haricot bean
due to the fact that land is a limited resource. Therefore, looking for productivity improving
measures through proper management of land increases the production per unit area. Thus,
interventions by governmental and nongovernmental organizations through promoting and
provision of improved technology packages and better practices would increase the
productivity and market supply of haricot bean and thereby improve the level of participation
of households who own small size of land.

Lagged market price has positive effect on quantity of haricot bean supplied to market. The
output price is an incentive for farm households to supply more produce for sale. Therefore, in
order to increase the quantity produce interventions by regional, zonal or district level,
marketing office should focus on bringing down transaction costs and encourage farmers to
form group marketing arrangements and linking farmers with exporters through which they
can take the advantage of bargaining power in output market. Moreover, strengthening the
marketing extension services to enable the farmers to make good marketing decision by
enabling them to produce in accordance to the market requirement, by giving advice for the
farmer in harvesting and postharvest handling and by carrying out market related information
for farmers on price trends, and future demands.

Access to credit had significant effect on quantity of haricot bean supplied to the market; as a
result, financial institutions and other concerned bodies need to provide credit either in kind or
cash for farmers since credit help farmers to purchase production inputs which in turn increase
volume of production and market supply.

The study suggested that increased yield of haricot bean resulted in increase in market supply
of haricot bean. Therefore, there is a need for the concerned bodies to focus on increasing the
yield of haricot bean through promoting and providing; improved seeds, training on
production skill, technical support to farmers in agronomy practices.
 54

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 61

7. APPENDICES
 62

Appendix1. Appendix of Tables

Appendix Table 1. Rgression results

Source SS df MS Number of obs = 121
F( 13, 107) = 41.70
Model 164.505991 13 12.654307 Prob > F = 0.0000
Residual 32.4692157 107 .303450614 R-squared = 0.8352
Adj R-squared = 0.8151
Total 196.975207 120 1.64146006 Root MSE = .55086

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

SX -.1843534 .1511451 -1.22 0.225 -.4839808 .1152741

FAMSZ .0006385 .0409213 0.02 0.988 -.0804833 .0817602
GRADE .0694136 .0340695 2.04 0.044 .0018747 .1369524
INCOM -.2536556 .1544325 -1.64 0.103 -.5597999 .0524887
TLU -.0605944 .0395838 -1.53 0.129 -.1390647 .0178758
DISTA -.088954 .0296456 -3.00 0.003 -.1477229 -.0301851
PRICE .0032828 .0013035 2.52 0.013 .0006988 .0058668
EXTE -.0117808 .0731547 -0.16 0.872 -.1568014 .1332398
OCF -.1105169 .1087102 -1.02 0.312 -.3260222 .1049883
CREDT .4038981 .1432079 2.82 0.006 .1200051 .6877912
EXPR .0110009 .0092532 1.19 0.237 -.0073426 .0293443
FARMSZ 1.500951 .2925548 5.13 0.000 .9209952 2.080907
YILD .1025592 .0276206 3.71 0.000 .0478047 .1573138
_cons .4993583 1.382839 0.36 0.719 -2.241958 3.240675

Source own computation, 2017

Appendix Table 2. Test for omitted variable

. ovtest

Ramsey RESET test using powers of the fitted values of QTHSUP

Ho: model has no omitted variables
F(3, 104) = 1.21
Prob > F = 0.3107
Source own computation, 2017
 63

Appendix Table 3. Test for hetroscedasticity

. hettest

Breusch-Pagan / Cook-Weisberg test for heteroskedasticity

Ho: Constant variance
Variables: fitted values of QTHSUP

chi2(1) = 0.56
Prob > chi2 = 0.4538

Source: own computation, 2017

Appendix Table 4. Test for multicolinearity

. vif

Variable VIF 1/VIF

FARMSZ 4.03 0.248157

DISTA 3.55 0.281621
EXTE 3.36 0.297736
PRICE 2.87 0.348994
INCOM 2.38 0.420644
CREDT 2.04 0.490777
GRADE 1.96 0.510606
YILD 1.77 0.566147
EXPR 1.41 0.709560
OCF 1.13 0.886684
SX 1.10 0.909082
TLU 1.08 0.925938
FAMSZ 1.04 0.957716

Mean VIF 2.13

Source: own computation, 2017

 64

Appendix Table 5. Endogeneity test

. corr (QTHSUP SX FAMSZ GRADE INCOM TLU DISTA PRICE EXTE OCF CREDT EXPR FARMSZ YILD e), cov
(obs=121)

QTHSUP SX FAMSZ GRADE INCOM TLU DISTA PRICE EXTE OCF CREDT EXPR FARMSZ

QTHSUP 1.64146
SX -.043388 .121763
FAMSZ -.016798 .030854 1.57678
GRADE 1.78504 -.087879 .065455 4.26667
INCOM -.421987 -.013085 -.007328 -.446212 .252066
TLU -.131841 -.006037 .143983 -.113772 -.028733 1.74297
DISTA -3.15742 .070799 -.086019 -3.47992 1.08444 -.272234 10.217
PRICE 63.5137 .270317 1.25138 70.322 -19.9001 -6.59476 -139.933 4264.55
EXTE 1.12636 .014807 .020792 1.25909 -.432163 .142257 -3.0916 57.7927 1.58705
OCF .044077 .006198 .022638 -.013636 -.048347 -.02408 -.209952 5.62156 .112603 .241322
CREDT .446092 -.016598 -.048795 .559848 -.143871 -.009324 -.96312 19.449 .349862 .03657 .25124
EXPR 3.05823 .328306 .752851 2.77273 -1.33912 .226021 -9.09642 132.72 3.70172 .697039 .901171 41.6229
FARMSZ .354817 -.004132 -.009189 .421591 -.105269 -.027231 -.80656 16.4433 .302014 .014118 .096453 .661002 .11906
YILD -.913115 -.02907 .062516 -.623447 .497059 .114831 3.55 -57.5977 -1.25053 -.198269 -.296169 -3.29943 -.478709
e .270577 7.1e-10 3.1e-10 -6.8e-10 -6.2e-10 -1.7e-10 9.5e-10 -9.1e-09 1.4e-10 5.2e-10 1.9e-10 4.9e-09 -8.9e-11

YILD e

YILD 5.85481
e -5.9e-09 .270577

Survey Data, 2017

Appendix Table 6. Conversion factor for man equivalent

Age Group Male Female

<10 0 0
10-13 0.2 0.2
14-16 0.5 0.4
17-50 1 0.8
>50 0.7 0.5

Source: Strock et al. (1991)

 65

Appendix Table 7. Conversion factor for tropical livestock unit

Animal Category Tropical Livestock Unit

Ox/Cow 1
Bull/Heifer 0.75
Calf 0.25
Mule/Horse 1.1
Donkey 0.7
Camel 1.25
Sheep/Goat 0.13
Chicken 0.013

Source: Strock et al. (1991)

 66

HARAMAYA UNIVERISTY
POSTGRADUATE PROGRAM DIRECTORATE
SCHOOL OF AGRICULTURAL ECONOMICS AND AGRIBUSINESS

Market Chain of Haricot Bean: The Case of Sayint District, South Wollo Zone, Amhara
National Regional State, Ethiopia
Appendix 2 Interview Schedule for Haricot Bean Producers and Traders

Instructions to Enumerators:

1. Make a short and brief introduction to each respondent before starting the interview, get
introduced to them, greet them in the local way, get their name; tell them yours and make clear
the purpose and objectives of the study.
2. Please ask each question clearly and patiently until the farmer understands it.
3. Please fill up the interview Schedule according to the respondent‟s reply (do not put your
own opinion).
4. Please do not try to use technical terms and words from other languages because they may
not understand while discussing with farmer.
5. Do not argue with respondent; appreciate all and listen, take note and finally thank the
respondent for the cooperation.
6. Check that all the questions provided in the interview schedule are fully completed and there
is no missing.

I. Interview schedule for haricot bean producers

1. General Information
1. Questionnaire number: _____________
2. Name of the enumerator: _____________________Signature: _____________
3. Date: _______/ _______/________
4. Name of Kebele administration ____________________________
2. Household Characteristics
1. Age of the respondent ____________________________
2. Sex of the respondent 1.Male [ ] 2. Female [ ]
3. Marital status of the respondent 1.Single [ ] 2. Married [ ] 3. Divorced [ ] 4. Widowed [ ]
 67

4. Education level of the respondent 1. Number of years in school____________

5. Farming experience of the respondent in haricot bean production: _______ years
6. Number of family including the respondent:
Age group Male Female
<10
10-13
14-16
17-50
>50

3. Land Use
1. Total land holding owned _____________ (ha)
2. Total land hired in ___________________ (ha)
3. Cultivated area ______________________ (ha)
4. Land allocated to haricot bean production _______________ (ha)
5. Land allocated for other crops __________ (ha)
4. Marketing aspects
1. Experience in the marketing of haricot bean (Years) __________
2. Total quantity of haricot bean sold and average selling price (birr/quintal) in 2015/16
production year: __________ and __________ respectively
3. Average selling price (birr/quintal) during production year of 2014/15?
4. To whom are you supplying your haricot bean?
1. Rural assemblers [ ] 2.Wholesalers [ ] 3.Retailers [ ] 4.Urban assemblers [ ] 5.Consumers [ ]
6.Informal traders [ ] 7. Other/specify ________
5. Where could (did) you get them/buyers?
1. At the farm level [ ] 2.At the local market [ ] 3.on the main road [ ]
4. At the district market [ ] 5. Others/specify________
6. Who set price of haricot bean?
1. By the farmers [ ] 2. By the traders [ ] 3. By the market [ ] 4. By negotiation (both farmers
and traders) [ ] 5. Other (Specify) ________
7. What did you do if price of haricot bean is low?
 68

1. Go back to home [ ] 2. Sell with the existing price [ ] 3. Put home of your relative [ ] 4.
Others (Specify) ________
8. What are marketing costs you incur when you take your produce to the market?
Cost item Cost (birr) Remark
Sales tax
Transport cost
Loading and unloading
Sack cost
Others
5. Credit
1) Do you have access to credit? 1. Yes [ ] 2. No [ ]
2) If yes, what is your source of the credit?
1. Bank [ ] 2.NGO [ ] 3.Microfinance [ ] 4.Relatives or friends [ ] 5. Other_______________
3) What problem do you perceive in taking formal credit?
1. Inadequacy of supply [ ] 2.High interest rates [ ] 3. Restrictive procedures [ ]
4. Others (specify) ___________________________________
6. Extension Service and market information
1. Do you have access to extension service? 1. Yes [ ] 2. No [ ]
2. Did you get extension service in relation to haricot bean production? 1. Yes [ ]
2. No [ ]
3. If yes, what type of extension service did you get?
1. Technical advice i. Yes [ ] ii. No [ ]
2. Price information 1. Yes [ ] ii. No [ ]
3. Input use i. Yes [ ] ii. No [ ]
4. Other _________________________________________________________
4. How often the extension agent contacted you?
1. Weekly [ ] 2.Once in two week [ ] 3. Monthly [ ]
4. Twice in the year [ ] 5.Once in a year [ ] 6. Any time when I ask them [ ]
5. Do you have access to market information? 1. Yes [ ] 2. No [ ]
6. If yes, how do you access market information? 1. Mobile [ ] 2. Radio [ ] 3. TV [ ] 4. Others
(Specify)
7. Non/off-farm income
1. Have you involved in non/off-farm activities
 69

2. If yes, what is the type of non/off-farm activity in which you involved in?
i. Paid daily labor [ ] ii.Petty trade [ ] iii. Handcraft [ ]
iv. Other, specify ___________________________________________
2. What was the estimated amount of off-farm income for last year? ______ Birr.
8. Number of livestock owned
1. How many livestock do you have?
1. Ox _________________ 2.Cow __________ 3. Bull _________________
4. Heifer___________ 5 calf __________ 6.Mule ___________ 7.Horse
___________8.Donkey__________9.Goat__________ 10. Sheep __________
11.Chicken__________ 12.Others_________
9. Production and market constraints
Please jot down the major constraints that you are facing while or to supply haricot bean to the
market and during its production?
1. Access to improved seed i. Yes [ ] ii. No [ ] 2.Access to fertilizer i. Yes [ ] ii. No [ ]
3. Inconsistent demand i. Yes [ ] ii. No [ ] 4.Ownership of oxen for plough i. Yes [ ] ii. No [ ]
5. Price fluctuation i. Yes [ ] ii. No [ ] 6. Distance to the market i. Yes [ ] ii. No [ ]
7. Access to credit? i. Yes [ ] ii. No [ ] 8.Access to price information i. Yes [ ] ii. No [ ]
9. Transport service i. Yes [ ] ii. No [ ] 10.Absence of demand i. Yes [ ] ii. No [ ]
11. Storage facilities i. Yes [ ] ii. No [ ] 12. Weak coordination among marketing actors
i. Yes [ ] ii. No [ ] 13. Sale tax i. Yes [ ] ii. No [ ]
14. Poor road facility i. Yes [ ] ii. No [ ] 15 .Brokers i. Yes [ ] ii. No [ ]
16. Lack of awareness on the type of variety that is standard for marketing i. Yes [ ] ii. No [ ]
17. Shortage of labor force i. Yes [ ] ii. No [ ]
18. Shortage of farmland i. Yes [ ] ii. No [ ]
19. Less return from selling i. Yes [ ] ii. No [ ]
20. Other ______________________________________________________________.
Thank you!

II. Questionnaires for haricot bean traders

1. General information
1. Name of enumerator: …………………………….Signature: …………………………
Date: … /…/… Checked by …………………..
 70

2. Demographic Characteristics
1. Name of the trader/urban collector/rural assembler/wholesaler _______________________
2. Age of the trader/urban collector/rural assembler/wholesaler _________________________
3. Sex of the trader 1.Male [ ] 2. Female [ ]
4. Marital status of the trader 1.Single [ ] 2. Married [ ] 3. Divorced [ ] 4. Widowed [ ]
5. Polygamous [ ]
5. Education status of the trader 1.Number of years in school?
6. Market experience in haricot bean trading in years?
7. Distance traveled to purchase and sell haricot bean?
1. What type of business were you involved in?
1. Wholesaler [ ] 2.Broker & commission agent [ ] 3. Retailer [ ]
4. Local collector [ ] 5. Assembler [ ] 6. Others (Specify) _________
2. How long have you been engaged in haricot beans trading? _________Years
3. Would you please list the major actors in the market chain of haricot bean in your area? __
4. What barrier you face to enter in to haricot bean marketing?
5. What are marketing costs you incur?
Cost item Cost (birr) Remark
Sales tax
Transport cost
Loading and unloading
Sack cost
Cost incurred for brokers
Others

3. Purchasing strategy
1. Do you have any arrangement with suppliers of haricot bean? 1. Yes [ ] 2. No [ ]
2. If yes, what kind of arrangement you practiced? 1. Contract with producers [ ]
2. Contact with [ ] local traders [ ] 3) other/specify _______________________________
3. Do you have your own intermediaries who collect haricot bean from farmers?
1. Yes [ ] 2. No [ ]
4. If no, how do you access the produce from farmers? _____________________________
5. From which market you bought haricot bean in 2015/16?
1. Village market [ ] 2.District market [ ] 3.other district market [ ]
4. Zonal market [ ] 5. Other (specify) _________________________________
 71

6. Who set the price of haricot bean during the time of purchasing?
7. What strategies have been used for maximizing profit?
8. To who did, you supplied your haricot bean in 2015/16?
1. Farmers/producers [ ] 2.Retailers [ ] 3.Wholesalers [ ] 4. Assemblers [ ]
5. Cooperative union [ ] 6.Cooperatives [ ] 7.ECX [ ] 8. Other (specify) [ ]
9. Average quantity purchased in a year ____________________
10. Average purchase price per quintal of haricot bean ____________
11. Did you use brokers to purchase haricot bean? 1. Yes [ ] 2. No [ ]
4. Distance of the market
1. How far is the purchasing market place from your residence?
1. Longest _______kms 2. Nearest ______Kms
2. Average cost of transportation you incur to transport 100 kg of haricot bean:
1. From purchase, center /collection point to the store? _______Birr/quintal
2. From store to ECX market? ______________ Birr/quintal
3. How much was the loading and unloading expenses per quintal? _________________
5. Selling practice
1. Where did you sale haricot bean in 2015/16 production season?
2. To whom did you sell? ________________________________________________
3. How many quintal/100 kg/ you sold in the year? ________________________
4. Average selling price (birr/quintal) of haricot bean____________
6. Constraints in haricot bean trading
1. Please, could you tick the major constraints that hinder you from haricot bean trading?
1. Low quality 1. Yes [ ] 2. No [ ] 2.Inconsistent supply 1. Yes [ ] 2. No [ ]
3. Price fluctuation 1. Yes [ ] 2. No [ ] 4. Distance to market 1. Yes [ ] 2. No [ ]
5. Access to credit? 1. Yes [ ] 2. No [ ] 6.Access to price information 1. Yes [ ] 2. No [ ]
7. Transport service 1. Yes [ ] 2. No [ ] 8.Demand 1. Yes [ ] 2. No [ ]
9. Storage facilities 1. Yes [ ] 2. No [ ]
10. Week coordination among marketing traders
1. Yes [ ] 2. No [ ]
11. Sale tax 1. Yes [ ] 2. No [ ]
12. Poor road facility 1. Yes [ ] 2. No [ ]
 72

13. Brokers 1. Yes [ ] 2. No [ ]

15. Linkage among cooperatives 1. Yes [ ] 2. No [ ]
16. Financial capacity of the cooperative 1. Yes [ ] 2. No [ ]
17. Illegal/informal market 1. Yes [ ] 2. No [ ]
18. Linkage between cooperatives and union 1. Yes [ ] 2. No [ ]
17. If yes, can you mention the marketing agents who are causing problem in the haricot bean
market ___________________________________________________________________?
18. Other ______________________________________________________________.

Thank you!

III. Checklist for Focus Group Discussion

Focus group discussion questions with actors along the market chain of haricot bean on
analysis of haricot bean market chains in Sayint district, South Wollo, Amhara regional state
Ethiopia.
1. Who are the major marketing actors that are involved in the movement of the product from
producer to consumer?
3. What are the major factors that affect producers to supply haricot bean to the market?
4. What are the major constraints in haricot bean production and marketing for farmers?
5. What are the major constraints that affect producers, urban assemblers, rural assemblers,
and wholesalers to operate in the haricot bean marketing?
6. What are opportunities exist in haricot bean production and marketing in Sayint district?

Thank you for you cooperation!