Exploring Wheat Value Chain Focusing on Market Performance, Post-Harvest loss, and Supply Chain Management in Ethiopia: The Case of Arsi to Finfinnee Market Chain

Tadesse Kenea Amentae, Tura Kaso Hamo, Girma Gebresenbet, David Ljungberg

Abstract


In this study the wheat value chain from one of the highest wheat producing areas in Ethiopia (Arsi zone of Oromia region) to central markets in Finfinnee/Addis Ababa was assessed focusing on market performance, post-harvest losses, and the potential of supply chain management to improve the chain.

Value chain analysis, questionnaire-based loss estimations, Tobit model for loss factor determination, structure-conduct-performance (S-C-P), four firm concentration ratio (CR4), market and profit margins, and theory of supply chain management were used to evaluate the wheat value chain. Primary data were collected using a semi-structured survey questionnaire and interview of key informants. The data was analyzed using descriptive statistics and Tobit model in SPSS and Excel software.

The study identified producers and their cooperatives, collectors, wholesalers, retailers, and processors as primary actors. At these stages of the wheat chain, post-harvest losses reported were 21%, 3%, 4%, 6%, and 5%, respectively. With the highest loss happening at producers’ stage, this stage was identified as loss-hot-spot point. The Ethiopian Grain Trade Enterprise was also identified as main actor connecting the flow of wheat between producers and consumers occasionally. An increase in a quintal of wheat production, bad storage facilities, and weather conditions caused in an increase in post-harvest losses of 5.18, 4.06 and 1.36 Kgs per quintal, respectively, at 1% statistical significance.

The assessed wheat value chain was characterized by unfair share of benefit among the chain actors. The producers who were in a position of adding the highest portion of value to the wheat received only 16% of the profit margin. The traders jointly and processors shared 33% and 51% of the profit margin, respectively. The CR4 assessments in the major wheat markets along the chain noted that with CR4 in Etaya (26.8), Asala (37.7), Adama (41.4), and Finfinnee (42.8), the wheat markets near the producers were more competitive than the central ones. Assessment on the degree of clearness noted that for 54% of the chain actors, it was very difficult to get reliable information about the whole wheat market along the chain. Licensing procedure, capital, and competitions were reported as barriers to wheat market entry.

For all producers, retailers, and collectors on agreement with their suppliers, the only means of agreement in doing business with their transaction partners were spot-market. However, 63% and 16% of collectors had oral and written contractual agreements, respectively, with their buyers. 36% and 31% of wholesalers reported they had oral contracts with their suppliers and buyers, respectively; 18% and 12% of them had written contracts with suppliers and buyers, respectively. Similarly, 42% and 9% of the processors had oral agreement with their suppliers and buyers while 23% and 27% of them had written contract agreement with their suppliers and buyers, respectively.

The study noted that the wheat chain assessed was characterized by disintegrated chain where businesses were self-oriented and mutualism has not well-developed. Working towards supply chain management and relational view of business has been recommended based on the problems identified in the study.


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DOI: https://doi.org/10.5539/jas.v9n8p22

Copyright (c) 2017 Tadesse Kenea Amentae, Tura Kaso Hamo, Girma Gebresenbet, David Ljungberg

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Journal of Agricultural Science   ISSN 1916-9752 (Print)   ISSN 1916-9760 (Online)  E-mail: jas@ccsenet.org

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