SCHOOL OF GRADUATE STUDIES

WOLLEGA UNIVERSITY

VALUE CHAIN ANALYSIS OF HONEY PRODUCTION IN HORO DISTRICT

M.Sc. Thesis Research Proposal

By AMENTE NEGUSSA

Faculty: College of Agriculture and Natural Resource

School: AGRICULTURAL ECONOMICS AND VALUE CHAIN

Program: Agricultural Economics

Major Advisor: ADAM BEKELE (PhD)

Co-Advisor: AntenehTemesgen (MSc)

MARCH, 2015

SHAMBU, ETHIOPIA
Table of Contents
1. INTRODUCTION...............................................................................................................................4

1.1. Statement of the Problem..................................................................................................................5

1.2. Objectives of the study................................................................................................................5

1.3. Scope of the study.............................................................................................................................6

1.4. Significance of the Study..................................................................................................................6

1.5. Organization of the study..................................................................................................................6

2. LITERATURE REVIEW........................................................................................................................7

2.1. Basic Concepts and Definitions........................................................................................................7

2.1.1. Market and marketing...............................................................................................................7

2.1.2. Marketing Channels...................................................................................................................8

2.1.3. Marketing Agents......................................................................................................................8

2.1.4. Marketing efficiency..................................................................................................................9

2.1.5. Measuring value chain...............................................................................................................9

2.2. Benefit of Value Chain in Agricultural Sector..................................................................................10

2.3. Marketable and Marketed Surplus..................................................................................................11

2.4. Market Structure, Conduct and Performance Analysis (S-C-P)......................................................11

2.4.1. Market structure.......................................................................................................................12

2.4.2. Market conduct........................................................................................................................13

2.4.3. Market performance.................................................................................................................14

2.5. Market Concentration.....................................................................................................................15

2.6. Supply and Supply Chains..............................................................................................................15

2.6.1. Supply determinants................................................................................................................16

2.7. Honey production and Marketing...................................................................................................17

3. METHODOLOGYS.............................................................................................................................18

3.1. Study Area......................................................................................................................................18

3.2 Method of Data collection...............................................................................................................19

3.2.1. Questionnaire and group discussion.........................................................................................19

3.3. Sample Size and Method of Sampling............................................................................................20

3.3.1 Site selection and sampling techniques.....................................................................................20

3.4. Method of Data Analysis................................................................................................................20

3.4.1 Descriptive statistics.................................................................................................................20

3.4.2. Econometrics Model................................................................................................................21

3.4.2. Multivariate analysis................................................................................................................21

 1. INTRODUCTION

Ethiopia has a long tradition of honey production reaching back many centuries; in fact the
longest tradition of honey and beeswax marketing in Africa. Despite this long tradition,
honey production in Ethiopia is still treated as a supplemental on-farm activity that is usually
combined with crop cultivation and animal husbandry. A vast majority of the honey
produced in Ethiopia comes from traditional beehives, which currently are the most common
form of technology used for honey production in Ethiopia. As of 2011, Ethiopia possessed
about 4.9 million traditional beehives, which constitutes about 95.57 percent of the total
number of beehives in Ethiopia. Currently, only about 81,500 transitional beehives
(commonly called Kenya top bar hives) and 140,000 modern beehives exist. The total
quantity of honey produced in Ethiopia in 2010–11 was about 39.9 million kilograms (kg).
Almost all honey that is currently produced in Ethiopia (about 98 percent of the total yearly
production) is consumed in the domestic market, with only about 2 percent of the total yearly
production being exported (CSA Agricultural Survey Report, 2012). Despite its long history,
beekeeping in Ethiopia is still an undeveloped sector of agriculture. The knowledge and skill
of honey production and honey and beeswax extraction of Ethiopian farmers is still very
traditional (MoARD 2006).

According to information compiled in the National Apiculture Research and Development

Strategy Program (ARSD 2000), Ethiopia ranks 10th and 4thin the world in honey and wax
production, respectively. The current annual honey production is estimated at approximately
24 thousand tons, accounting for about 24 and 2% of the total Africa and world honey
production, respectively. With this level of production, the beekeeping farmers of the country
gain approximately ETB 450 million annually.

However, these resources are underutilized due to the traditional beekeeping methods that
currently prevail in the country (ARSD 2000). In Ethiopia, honey is almost exclusively used
for local consumption, and to a very large extent (80%) for brewing of mead, locally called
‘Tej’. Almost no wedding or other cultural, religious and social events can be imagined
without the honey wine ‘Tej’. Even though honey satisfies the local demand; it is so crude
that it cannot compete in the international market (Ministry of Trade and Industry 1995).

1.1. Statement of the Problem

Honey production in the study area is mainly with seasonality where surplus at harvest
products is the main characteristics. The nature of the product on the one hand and the lack of
organized market system on the other often resulted in low producers’ price. This, therefore,
demanded a holistic study of the system in the form of market chain analysis.

Market chain analysis is supposed to be the current approach working in studies of such type
of production and marketing problems. Analysis of the system in terms of honey market
structure, conduct and performance taking in to consideration the product and location
specificity will, therefore, be used to identify the bottlenecks and come up with precise
possible solution. Even though both honey and honey by-products are economical and
socially important, no adequate study has been made in the study area to improve the sector.
This study therefore, has attempted to contribute to filling the information gap by
investigating the honey marketing chains and factors affecting honey supply in Horo District.

1.2. Objectives of the study

The overall objective of the study is to investigate honey market chains in HoroDistrict. The
study will have the following specific objectives:
 1. To assess the marketing activities performed by Honey producer farmers’ in the
study area.
2. To analyze the structures of production costs of production adopted by Honey
producer farmers’ in the study area.
3. To explore factors influencing honey supply in the study area

1.3. Scope of the study

The area coverage of the study will be Horo District. It will focus on the functioning of the
market and relationship among the actors within the marketing chains, transportation, marketing
information, finance, institutions involved in honey marketing and factors affecting supply of
honey production in the study area. Different market levels, role of actors in the channel, and
bargaining characteristics of producers, buying and selling strategies, and trades' behaviors in the
whole marketing process were seen.

1.4. Significance of the Study

The study will generate useful information in order to formulate honey marketing development
projects and guidelines for interventions which improve the efficiency of honey marketing
system. The potential users of this finding will be farmers (producers), traders, government and
non-government organizations, that have an interest to intervene in honey marketing system. I
expect that researchers who want further investigation on honey marketing will use the result
from this study.

1.5. Organization of the study

The first chapter deals with the background, statement of the problem, objectives and
significance of the study. The second chapter consists of the review of the literature.
Methodology is outlined and described in the third chapter. The fourth chapter consists of the
work plan, the fifth chapter consist logistics and the sixth chapter ends with references.

2. LITERATURE REVIEW

2.1. Basic Concepts and Definitions

2.1.1. Market and marketing

Market can be defined as an area in which one or more sellers of given products/services and
their close substitutes exchange with and compete for the patronage of a group of buyers.
Originally, the term market stood for the place where buyers and sellers are gathered to exchange
their goods, such as village square. A market is a point, or a place or sphere within which price
making force operates and in which exchanges of title tend to be accompanied by the actual
movement of the goods affected (Backman and Davidson, 1962). The concept of exchange and
relationships lead to the concept of market. It is the set of the actual and potential buyers of a
product (Kotler and Armstong, 2003). Conceptually, a market can be visualized as a process in
which ownership of goods is transferred from sellers to buyers who may be final consumers or
intermediaries.

Marketing involves all activities involved in the production, flow of goods and services from
point of production to consumers. Marketing includes all activities of exchange conducted by
producers and middlemen in exchange for the purpose of satisfying consumer demand. It is
defined as the set of human activities directed at facilitating and consummating exchange. All
business activities facilitating the exchange are included in marketing (Kotler, 2003).

Market chain is the term used to describe the various links that connect all the actors and
transactions involved in the movement of agricultural goods from the producer to the consumer
(CIAT, 2004). Commodity chain is the chain that connects smallholder farmers to technologies
that they need on one side of the chain and to the product markets of the commodity on the other
side (Mazula, 2006).

2.1.2. Marketing Channels

Formally, marketing channel is a business structure of interdependent organizations that reach

from the point of product origin to the consumer with the purpose of moving products to their
final consumer destination. The analysis of marketing channels is intended to provide a
systematic knowledge of the flow of goods and services from their origin (producer) to their final
destination (consumer) (koler et al., 2003).

2.1.3. Marketing Agents

Producer: It is first link in the marketing chain analysis of agricultural products. The producer
harvests the products and supply to the second agent. From the movement he/she decides what to
produce, how to produce, how much to produce, when to produce, and where to sale.

Rural assembler: Sometimes also called transporter or the trader; he/she is the first link between
producer and other middlemen.

Marketing boards: It is a legalized single government agency charged with the responsibility of
a nation’s total output of a particular commodity.

Wholesaler: He provides the optimum combination of functions and services for different kinds
of retailers, and performs desired distribution functions for different kinds of processors. Carry a
wide range of products that meet almost all the retailers’ requirements and his emphasis is on a
complete line of products and several major brands.

Agents and brokers: They handle individual brands and sell to food chains, general
wholesalers, and institutional markets on a commission or fee basis. Agents and brokers do not
take title to or warehouse the products they sell. They operate under a franchise or contract
agreement. Their duty is to provide a major sales effort for the brands they represent.

Retailers: Middlemen, which includes super markets and other large scale retailer who divides
up large scale shipments of produce and sell it to consumers in small units. The basic function
they provide is bulk breaking.

Consumer: The last link in the marketing chain. The participants and their respective functions
often overlap. The widest spread combinations are: traders- wholesalers that collect the
commodity and supply it to retailers, wholesalers-retailers (wholesalers that also sell directly to
consumers and wholesalers- exporters).

2.1.4. Marketing efficiency

Efficiency in marketing is the most used measure of market performance. Improved marketing
efficiency is a common goal of farmers, marketing organizations, consumers and society. It is a
commonplace notation that higher efficiency means better performance whereas declining
efficiency denotes poor performance. Most of the changes proposed in marketing are justified on
the grounds of improved efficiency (Kohls and Uhl, 1985).

2.1.5. Measuring value chain

A fundamental aspect of global value chain research is how ‘value’ itself, is conceptualized and
measured. According to Gereffi (1999) profit, value addition and price markups are indications
of income shares across value chain actors. Value–added shares can be calculated for different
links in the chain. A second way to calculate value added is to look its distribution by each value
chain actors of vegetable market and decomposing for each actor to get approximations of each
value-added share. Marketing margin is the difference between the value of a product or a group
of products at one stage in the marketing process and the value of an equivalent product or group
of products at another stage. Measuring this margin indicates how much has been paid for the
processing and marketing services applied to the product(s) at that particular stage in the
marketing process (Smith, 1992).

2.2. Benefit of Value Chain in Agricultural Sector

It is an innovation that enhances or improves an existing product, or introduces new products or

new product uses. This allows the farmer to create new markets, or differentiate a product from
others and thus gain an advantage over competitors. In so doing, the farmer can ask a higher
premium (price) or gain increased market share or access. Adding value does not necessarily
involve altering a product; it can be the adoption of new production or handling methods that
increase a farmer’s capacity and reliability in meeting market demand. Value-added can be
almost anything that enhances the dimensions of a business. The key is that the value-adding
activity must increase or stabilize profit margins, and the output must appeal to the consumer
(AAFC, 2004).

Value chain is useful as a poverty-reduction tool if it leads to increase on and off farm rural
employment and income. Increased agricultural productivity alone is not a sufficient route out of
poverty within a context of globalization and increasing natural resource degradation. A focus on
post-harvest activities, differentiated value added products and increasing links with access to
markets for goods produced by low-income producers would appear to be the strategy open to
smallholders (Lundy et al., 2002).

Traditionally, little attention has been paid to the value chains by which agricultural products
reach final consumers and to the intrinsic potential of such chains to generate value added and
employment opportunities. While high-income countries add nearly US$185 of value by
processing one tone of agricultural products, developing countries add approximately US$40.
Furthermore, while 98 percent of agricultural production in high-income countries undergoes
industrial processing, barely 38 percent is processed in developing countries. These indicate that
well developed agro-value chains can utilize the full potential of the agricultural sector (UNIDO,
2009).
2.3. Marketable and Marketed Surplus

Marketable surplus is the quantity of the produce left out after meeting the farmer’s consumption
and utilization requirements for kind payment and other obligations such as gifts, donations,
charity, etc. Thus, marketable surplus shows the quantity left out for sale in the market. 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 etal., 1997). Thus,
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 transit. The importance of marketed and marketable surplus has greatly increased owning
to the recent changes in agricultural technology as well as social patterns. In order to maintain
the balance between demand for and supply of food grains with the rapid increases in demand
due to higher growth population, urbanization, industrialization and overall economic
development accurate knowledge on marketed and marketable surplus is essential in the process
of proper planning for the procurement, distribution, export and import of agricultural product
(Malik et al., 1993).

2.4. Market Structure, Conduct and Performance Analysis (S-C-P)

Since the 1960s, the systematic nature of markets has increasingly been emphasized in defining
means of analyzing their efficiency. The S-C-P approach or industrial organization school is then
developed. The approach has been used in the study of markets in many countries such as in
India by Level and Harris and in West Africa by Jones among others (Magrath, 1992). The S-C-
P approach focuses on the behavior of groups rather than individual firms, and looks into the
influence of the horizontal relationships among these firms on market performance. Thus, it is
suggested that the S-C-P model is preferable to that model which analyze the productive
efficiency of individual marketing enterprises (Magrath, 1992).
The most commonly used theoretical frame work (model) is the structure-conduct-performance
model. Social, political, economic and physical environment in different societies influence the
operation of the marketing system (Kohls and Uhl, 1985). The interrelationship between the
factors and their influence on firms’ behavior within the society will change through time. The
implicit goal of public policy has been to protect and promote setting that approaches the
conditions of pure competition. Consistent performance model (C-P), which appears to provide
significant part of the theoretical support for the policy formulation (Kohls and Uhl, 1985;
Abbot; 1958).

2.4.1. Market structure

Market structure shows trends in the number and size of firms relative each other and to the
number of consumers and producers in particular time and place (Malhotra, 1996). It explains
about Presence /absence, the levels and nature of entry barriers distribution of market
information and its adequacy in sharpness of prices and quantity compositions and individual
risk (Kohls and Uhl, 1985; abbot; 1958). Conduct explains price policy, advertising policy,
output policy, legal tactics, etc (Abbot, 1958). Performances depend on conduct of sellers and
buyers which intern is strongly influenced by structure of the relevant market. It also shows a
locative efficiency, technical efficiency, equality, innovation etc. (Purcel, 1979).

A commonly used measure of the performance of a marketing system is the marketing margin or
price spread (Abbot et al., 1990). Margin or spread can be useful descriptive statistics it used to
show how the consumer’s expenditure is divided among participants at different levels of the
marketing system. Abbot et al., (1990) defined marketing margin as the differencebetween price
consumers pay and product and then resell it together with specific charges for marketing
services rendered. The relative share of the different market participants will be estimated using
the marketing margin analysis. The total marketing margin in marketing system constitutes the
marketing costs plus the profit earned. The price that is obtained by producers, or as the price of
collection of marketing services, which the outcome of the demand for and supply of such
services. Marketing services include such items as assembling, grading, storing, processing,
packing, distribution, and transportation (Branso and Norvell, 1983). It is made of individual
margins obtained by intermediaries who actually assume ownership of product and then resell it
together with specific changes for marketing services rendered. The relative share of the different
market participants will be estimated using the marketing margin analysis. The total marketing
margin in marketing system constitutes the marketing costs plus the profit earned.

2.4.2. Market conduct

Marketing conduct refers to the patterns of behavior that enterprises follow in adopting or
adjusting to the markets in which they sell or buy (Bain, 1968). Such a definition shows the
analysis of human behavioral patterns that are not readily identifiable, obtainable, or
quantifiable. Thus, in the absence of theoretical frame work for market analysis, there is a
tendency to treat conduct variables in descriptive manner. The specified structure features of
homogeneous product, and free entry and exit require a form of conduct such that each firm must
operate as if in isolation. Market conduct is exceedingly complex, encompassing as it does
virtually all human decision masking within business organizations and, by extension,
household, on top of the market structure, the legal environment and the internal organization of
the business enterprise influence the market conduct (Wolday, 1994).

Bain (1968) names two closely interrelated aspects of market conduct: the manner in which, the
devices and mechanisms by which, the different sellers coordinate their decision and action, to
each other, or succeed in marketing them mutually consistent as they react to demand for their
products in a common market, and the character of pricing policies and related market policies
that the sellers in the industry adopt; assessed in terms of individual or collective aims or goals
that they pursue as they determine their selling prices, their sales promotion outlays, the designs
and qualities of their products and so forth. By examining the relationship between the factors of
the market structure and their setting practice; it may be possible to make some predictions about
the consequences of these behavioral patterns for performance.
2.4.3. Market performance

Market performance according to Bain refers to the composite of results that firms in the market
arrive at by pursuing whatever line of conduct they espouse-end results in the dimensions of
price, output, production and selling cost, product design, and so forth (Wolday, 1994). For firms
acting as sellers, these results measure the character of the firm’s adjustment to the effective
demands for their outputs; for firms buying goods, they measure the quantity of adjustments
made by firms to the supply conditions of the goods, they purchase. There are two main
indicators of market performance: Net return and marketing Margin.

Estimation of net returns and market margins provide indications of an exploitative nature when
returns of buyers are much higher than the fair amount, that is including all marketing costs and
return to management and risk, and when market margins increase not because of higher real
marketing costs but because prices paid to producers are lower. The analysis of market
performance using the industrial organization framework is as follows: Collusive pricing (market
conduct) becomes possible if (i) market concentration is high (market structure); (ii) entry
barriers are high (market structure); and (iii) market information is not available to all
participants (market conduct).

This results in net returns and marketing margins that are much higher than the “fair” amount
(Pomery, 1989). Market performance refers to the impact of structure and conduct as measured
in terms of variables such prices, costs, and volume of output (Bressler and King, 1970). By
analyzing the level of marketing margins and their cost components, it is possible to evaluate the
impact of the structure and conduct characteristics on market performance (Bain, 1968). For
most countries, it is generally acknowledged that a distribution system displaying acceptable
performance is one that allows technological progress, has the ability to adopt, innovate, and
utilize resources efficiently and to transmit prices that reflect costs (OECD, 1982). Prices are
thus viewed as a stimulus for an efficient allocation of resources.
Hence, desirable market performance is directly related to the competitiveness of an industry
because distortions thereof tend to impede price efficiently.
2.5. Market Concentration

Market concentration refers to the number and size of distribution of buyers and sellers in a
market. It is believed that higher market concentration indicates non-competitive behavior and
thus inefficiency. “Buyer concentration is analogous to seller concentration, and in principle a
range of absolute and relative measure of buyer concentration corresponding to those seller
concentrations could be constructed. However, such measures have not been constructed, to the
absence of product by purchasing firms” Devine et.al. (1984)

The relationship between concentration and market behavior, and performance must not, be
interpreted in isolation. Other factors such as the firms’ objectives, barriers to entry and exit,
economics of scale, and assumptions about rival firms behavior, will all relevant in determining
the degree of concentration and the relationship between concentration and behavior and
performance (Scherer, 1980).

There are a number of measures of market concentration and the most commonly used is the
market index, which measures the percent of traded volume accounted for by a given number of
participants. Empirical studies in the field of industrial organization suggested certain level of at
which non- competitive behavior of market participant begins in different industries. For
example, Kohls and Uhl (1985) suggests that a four firms concentration ratio (CR4 ), that is, the
market share of the larger four firms, of less than or equal to 33% is generally indicator of a
competitive market structure, while a concentration ratio of 33% to 50% and above 50% may
indicate a weak and strongly oligopolistic market structure, respectively. However, the
concentration ratio of four firms is best regarded as a “rule of thumb,” and there are reasons why
high concentration levels may be reasonable in light of small potential volumes of trade
(Gebremeskelet al., 1998).

2.6. Supply and Supply Chains

“A supply chain is a network of organizations that are involved through upstream and
downstream linkages in different process and activities that produce value in the form of
products and services in the hands of the ultimate user” (Christoher, 1998 in: Omtaet al.,2001:
78) An important aspect of supply chain is that they consist of some associated, but distinct
flows. The physical flow of the commodity and the flow of money realized from final sale back
to the producer and all the firms that have been involved in processing and marketing. The
efficiency and effectiveness of a practices and procedures that govern this latter flow are as
important as technical efficiency with which the commodity is produced, processed and
marketed (Westlake, 2005).

Supply is predominantly determined by price of the commodity in question especially when

there are floor and cutting prices imposed by the government or any other responsible body. If
the government imposes a maximum, or ceiling prices on a good, the effect is to cause a shortage
that good and frequently creates a black market (underground market) that rations that quantity
available.

2.6.1. Supply determinants

The most important factors which determine market supply could be divided into economic
factors which include product price, provision of consumer goods, production cost and market
supply costs and political factors which include the level of government intervention (Maro,
1996; cited in Wolday, 1994). One of the expected important variables which influence the
behavior of the market supply of producers is price. If price increases, producers will gain high
revenue and would be motivated to increase the market supply (Wolday, 1994).

As Branson and Norvell (1983) stated the model as general statement of a supply functional
relationship that includes the major factors that affecting the supply offer farmers is a function of
(a) price of the commodity to be supplied (b) cost of all the inputs necessary to produce the
commodity (c)net income or profit that could be had from alternative crops (d)state of
technology that affects potential yields (e)total acreage available ( f) expectations about future
price changes (g) risks to production (weather, insects)Three of the factors warrant special
comment: technology, expectation, and risks. All three have to do with shifts in the supply curve.
Technology is perhaps the major factors influencing supply, which includes the development of
new varieties of plants that give higher yields. It breaks through cause a shift of the supply curve
to the right. Expectations about future price changes also have a strong influence on agricultural
production. Most econometric tests of supply response behavior find that farmers’ expectations
about prices are influenced greatly by the present price and to a lesser degree by that of the
previous year. Risk is also significant in shifting the supply curve. For high- risk crops, prices are
necessary to call forth a given level of production. Prices also show increased variability because
production plans are not always achieved.

2.7. Honey production and Marketing

World production of honey during the 1990s was in excess of 1.2 million metric tons (MT) per
year. Beeswax production was more than 50,000 MT per year. World demand for these products
is substantially in excess of these amounts and is likely to increase even further.

FAO, 2005 data indicated that world trade in honey during the 1990s amounted to more than
300,000 MT per annum with Western Europe and the United States in particular being major
importers at an average price of about US $1500 per MT. World trade in beeswax amounted to
about 10,000 MT per annum with Western Europe accounted for about one half of total imports
with the world price average about US $ 4000 per MT.

Much of African honey production is gathered rather than framed, private sector modern
production with many movable frame hives and inputs such as winter or out of season feeding
and use of disease prevention measures is largely unknown in sub Saharan Africa. The use of
hives with removable top bars has been promoted intermit and often in a not very coordinated
way in some countries by government extension services (Fadare, 2003). Almost all African
honey and beeswax is traditionally which is almost synonymous with inefficiently. The problem
with all these traditional hives is that they engender low output; in Ethiopia, for example, there
were an estimated 4.55 million hives in 2005 (CSA, 2006) which, based on FAO, 2005 data for
National production, is equivalent to 8.85kg honey and 0.95 kg wax per hive per year, although
better beekeepers using long hives can achieve 15 kg per hive per year in more favorable areas.
In addition to low yield traditional hives often have to be destroyed in the process of extraction.

3. METHODOLOGYS

3.1. Study Area

This study will be conducted in Ethiopia; Oromia Region; Horo Guduru Wollega zone; Horo
District. It is located about 334 km west of Addis Ababa and around Shambu area.

3.2 Method of Data collection

In order to get use full information about the honey marketing chain in the study area, the study
will use both primary (for producers and traders) and secondary (for offices) data. The primary
data will be collected through questionnaires, individual interview, observations and organizing
group discussion. This data will focus on factors affecting honey market supply, market
information, access to market, number of beehives owned, honey production cost, annual return
from honey, and annual income from honey. Moreover; the questionnaire for traders includes
type of business (wholesaler, retailer, assembler, etc.), buying and selling strategies, initial
capital, current working capital, source of working capital, source of market information, and
other related data will be used.

3.2.1. Questionnaire and group discussion

A modified questionnaire will be prepared to collect information on value chain analysis of

honey production and market constraints. The questionnaire will be pre-tested before
administration and some re-arrangement, reframing and correcting in accordance with
respondent perception will be done. The questionnaire will be administered to the randomly
selected household heads or representatives by a team of enumerators recruited and trained for
the purpose with close supervision by the researcher. Sets of open-ended questions will be used
to guide focus group discussions with key informants, local agricultural extension staffs and
knowledgeable elders. .

Focused group discussions will be held with honey producer farmers, village leaders and socially
respected farmers who are known to have better knowledge on the present and past economic
status of honey value chain in the study area. Information from special farmers will be collected
through interview. Besides, secondary data on market chain analysis of honey production will be
gathered from district Agriculture and Rural Development offices.

3.3. Sample Size and Method of Sampling

The sample frame of the study will be honey producer farmers and traders who are found in the
study area. A two stage sampling procedure will be employed to select a specific honey producer
household. First, three potential honey producer Parent Associations (PAs) from the District will
be selected through purposive sampling method. In the second stage, using the population list of
honey producer farmers from sample PAs, the intended sample size will determine
proportionally to population size of honey producer farmers.

3.3.1 Site selection and sampling techniques

Before deciding on the survey areas, discussions will held with the district experts of the rural
and agricultural development office and honey producer farmers’ about the market analysis of
honey production and also about the current marketing systems of honey production in the study
area.

3.4. Method of Data Analysis

Both statistical and econometric methods of data analysis will be analyzed. Descriptive statistics,
multivariate and multiple correlation analysis will be carried out.
3.4.1 Descriptive statistics

Quantitative and qualitative variables measured on market chain analysis will be analyzed using
statistical analysis system. Descriptive statistics like mean, standard deviation and percentiles
will be used to explain basic characteristics of the channel members besides econometric models.
The data which is collected from the sample producers and traders will be analyzed using
descriptive statistics followed by determinants analysis of honey supply using econometric
model.

3.4.2. Econometrics Model

The multiple linear regression model will used as Y=f (price, honey output, access to market
information, access to extension services, education level, experience in beekeeping, sex, access
to credit, age, etc…). The econometric model specification of supply function in matrix notation
can be:

Yi =βX +Ui

Where Yi = honey supplied to the market

β = a vector of estimated coefficient of the explanatory variables
X= a vector of explanatory variables
Ui = disturbance term

3.4.2. Multivariate analysis

The quantitative variables for farmers (producers) and traders (buyers and sellers) will be
separately subjected to identify market values among sellers and buyers in the study area. This
will be done by taking individuals from both producers and buyers as a sample. The step wise
discriminant analysis procedure will be run to rank the variables by their discriminating power.

i. Multiple linear regression models for both producers and traders

yij = β0 + β1X1 + β2X2 + β3X3 + β4X4 + β5X5 + β6X6 + β7X7 + Uij

Where:

Yij = the dependent variable market value of honey;

β0 = the intercept;
X1, X2 , X3 , X4 , X5, X6 and X7 = the independent variables (price, honey output, access
to market information, access to extension services, education level, experience in
beekeeping, and access to credit respectively.

β1, β2, β3, β4, β5, β6 and β7 are the regression coefficients of the variables X 1, X2, X3, X4, X5, X6
and X7
Uij = the residual error