GROSS MARGIN ANALYSIS OF CATTLE MARKETING IN WEST SHOA ZONE: A CASE STUDY OF GINCHI LIVESTOCK MARKET

Abstract

Despite the cattle potentiality and the resultant enormous economic contribution, information on the performance of marketing and competitive behavior of actors in cattle marketing chain of Ginchi Livestock Market was highly scanty. This study was initiated to identify the main channels and participants; to estimate and specify the determinants of gross marketing margin of various categories of cattle. Secondary and primary data were analyzed using SPSS of version 20 descriptively and the determinants of gross marketing margin employing Multilinear Regression. Existences of very short to elongated and complex routes of marketing channels were, thus, identified. Market participants were producers, farmer traders, traders and butchery men (traders were those who directly supplied to Ginchi Livestock Market and those who received from the aforementioned market center to others terminal market). Total gross marketing margin moved up as the supply was away from the terminal market. It was higher in the case of cattle for slaughter due to the longer marketing route coverage where extra cost of marketing was incurred to the animal. The producers were fetching favorable share of consumer’s price probably because of their improved bargaining power. Analysis of econometric model indicated that number of actors in the channels, marketing costs, distance to the terminal market, and selling price were significantly and positively influencing the gross marketing margin; purchasing price also affected significantly but inversely. Under the situation of producer’s access to marketing information, gross marketing margin was demonstrated to be apparently reduced. Prices and gross marketing margin of cattle can be balanced by minimizing the number of actors in the marketing channel and creating competition with dealers that are irrationally the main escalator. Selling prices and Gross Marketing Margin of various categories of cattle were suggested to be balanced by creating competition with dealers. Design of systematic strategies which may not be the cause for further aggravation should be policy implication so that the final seller hardly the foremost actor of Gross Marketing Margin.