DAIRY MARKETING PATTERNS AND EFFICIENCY: A CASE STUDY OF AMIBARA DISTRICT OF AFAR NATIONAL REGIONAL STATE

Abstract

The study was initiated with the objectives of examining the dairy marketing patterns and efficiency. Data were collected from ANRS Amibara district two Kebeles from 61 selected HHs by using separate survey of dairy producing households and marketing middlemen. Maximum Likelihood Estimation procedure such as logit model was employed in identifying factors affecting decision to sell dairy products, Tobit model was used in investigating factors affecting decision on volume of dairy sales. Concentration ratios and marketing margin analysis were conducted in examining efficiency. Market participation decision is affected by household demographic and socioeconomic characteristics and transaction costs represented by distance to market and urban centers. Volume sale of dairy is affected by intellectual capital, transaction cost represented by distance to district capital and financial resources. unconcentrated suppliers characterize dairy market; market at the next level is also un concentrated for butter and cheese but concentrated for liquid milk. The results suggest that production and marketable surplus should be improved and adequate marketing infrastructure like roads and transport facilities should be established between rural and urban areas in the district to support enhanced market participation. With the aim of reducing transactions cost adequate marketing link should be established between the rural producer and urban consumer through institutional arrangements, such as dairy cooperatives. Relaxing the criteria required in obtaining bank and micro credit and forming a well-functioning urban and rural financial system would enable resource poor pastoral households to participate in dairy market and improve its supply.