MARKET CHAIN ANALYSIS OF TOMATO: THE CASE OF DUGDA DISTRICT, EASTERN SHEWA ZONE, OROMIA NATIONAL REGIONAL STATE OF ETHIOPIA

Abstract

This study analyzes the marketing chain of tomato in Dugda district of east Shewa zone, Oromia regional state of Ethiopia. The specific objectives of the study were to analyze the tomato market structure, conduct and performance; and to identify factors affecting farmers’ decision for participation in tomato market and the extent of their participation in the district. Factors affecting farmers’ decisions for participation in tomato market on how much quantity of sale were estimated using Heckman two stage econometrics models. Tomato market channels, and role and linkage of marketing actors were evaluated using structure, conduct and performance (SCP) approach. Traders survey result show that shortage of capital was the main barrier to entry into tomato marketing in the study area. Though the formation of price mainly depends on the buyer and brokers in the market and it is mainly influence by decision of brokers among markets actors. The result of marketing cost and margin shows marketing cost for urban wholesaler was found to be the highest while the marketing cost incurred by brokers was found to be the least. About six different market channels were identified with each channel having different marketing margin; for producer channel were found to be the more efficient. Factor affecting farmers’ decision to participate in tomato market and supply of tomato to the market has been analyzed using Heckman two stage models. The model results show price of tomato, farming experience, and distance to nearest market center and number of oxen owned were found to have a significant contribution to producers’ participation to tomato marketing. Variables like use of improved seed, size of land holding, number of oxen owned, access to credit and household head got formal education were found to have a significant effect on supply of tomato market. Enhancing bargaining power of farmers in front of traders through capacitate cooperatives, necessary to provide better seed which can resist diseases in order to increase marketable surplus, and creating awareness on where to sell and at what price to sell by local extension workers are the major recommendations drawn from this study.