Haramaya university school of graduate studies

HARAMAYA UNIVERSITY

SCHOOL OF GRADUATE STUDIES

PERFORMANCE AND CHALLENGES OF VEGETABLE MARKET: THE CASE OF KOMBOLCHA DISTRICT, EAST HARARGHE ZONE, OROMIA NATIONAL REGIONAL STATE, ETHIOPIA
M.Sc. Thesis

By

Meron Yohanes
College: Agriculture and Environmental Sciences

School: Agricultural Economics and Agribusiness

Program: Agricultural Economics

Major Advisor: Jema Haji(PhD)

Co-Advisor: Belaineh Legesse(PhD)

June, 2015

Haramaya, Ethiopia

ABBREVIATIONS AND ACRONYMS

BoARD Bureau of Agriculture and Rural Development

CASCAPE Capacity Building for Scaling up Evidence Based Best

Practices in Production in Ethiopia

CIAT International Center for Tropical Agriculture

CSA Central Statistical Agency

EHDA Ethiopian Horticulture Development Agency

GDP Gross Domestic Product

IHC International Horticultural Congress

LDCs Least Developed Countries

MSDF Ministry of State Farms Development

SCP Structure-Conduct-Performance

WB World Bank

TABLE OF CONTENTS

TABLE OF CONTENTS 3

1. INTRODUCTION 4

1.1. Background of the Study 4

1.2. Statement of the Problem 5

1.3. Objective of the Study 7

1.4. Scope and Limitations of the Study 7

1.5. Significance of the Study 8

1.6. Organization of the Study 9

2. LITERATURE REVIEW 10

2.1. Concepts and Definitions 10

2.2. Approaches to the Study of Agricultural Marketing 11

2.2.2. Institutional approach 12

2.2.3. Commodity approach 12

2.3. Characteristics of Vegetables and its Marketing 13

2.4. Vegetable Production and Marketing in Ethiopia 14

2.5. Marketing Constraints Facing Smallholder Farmers 15

2.6.1. Constraints on production 15

2.5.2. High transaction costs 16

2.5.3. Lack of on-farm infrastructure 16

2.5.4. Asymmetry or lack of information on markets 17

2.5.5. Low quantity and poor quality 17

2.5.6. Transportation problems 17

2.5.7. Lack of markets in rural areas 17

2.5.8. Lack of barraging power 18

2.6.Conceptual and Methodological Framework 18

2.6.1. Conceptual framework 18

2.6.1.1. Structure-Conduct-Performance(S-C-P) 18

2.6.1.2. Market integration 22

2.6.1.3. Market supply 23

2.6.2. Methodological Framework 26

2.6.2.1. Measures of market concentration ratio 26

2.6.2.2. Measures of market integration 30

2.6.2.3. Analysis of factors affecting market supply 39

2.7. Empirical Literature Reviews 40

2.7.1. Empirical literature on S-C-P 40

2.7.2. Empirical review on marketed supply 42

2.7.3. Empirical review on market integration 43

2.7.4. Empirical review on challenges and opportunity 44

3. METHODOLOGY 46

3.1. Description of the Study Area 46

3.2. Types, Sources and Methods of Data Collection 47

3.3. Sampling Procedure and Sample Size 47

3.4. Methods of Data Analysis 48

3.4.1. Descriptive and inferential statistics 48

3.4.2. Econometric Model 50

3.4.2.1. Factors affecting market supply 50

3.4.2.2. Market integration 52

3.5. Definition of Variables and Hypothesis 54

3.5.1. Dependent variables 54

3.5.2. Independent variables 55

4. RESULTS AND DISCUSSION 59

4.1. Descriptive Results 59

4.1.1. Demographic Characteristics of the Sample Households 59

4.1.2. Socioeconomic Factors 61

4.1.2.1. Land holding 61

4.1.2.2. Livestock ownership 61

4.1.2.3. Source off/non-farm income 62

4.1.2.4. Vegetables production 63

4.1.3. Institutional Factors 63

4.1.3.1. Extension contact 63

4.1.3.2. Access to credit 64

4.1.3.3. Access to market information 65

4.1.3.4. Market Distance 65

4.1.4. Demographic characters of traders 67

Stationarity and Co-integration test 77

Stationarity test 77

Long-run relationships and the short-run dynamics 78

4.2.5. Short run price transmission and speed of adjustment 82

4.4. Marketing constraints 91

4.4.1. Marketing constraints facing framers in the Kombolcha Districts 91

4.4.1.1. Access to resource and support services 91

Access to land 91

Extension support services 92

4.4.2. Marketing constraints facing farmers 92

4.4.2.1. Lack of transport 92

4.4.2.2. Distance to market 93

4.4.2.3. Market information 94

5. SUMMARY , CONCLUSION AND RECOMMENDATIONS 95

5.1. Summary 95

5.2. Conclusion 96

5.3. Recommendations 98

6. REFERENCES 100