ValueChain Analysis of onion Market: Case Study of South Bench

Woreda, Bench Maji Zone.

Thesis Submitted to the School of Graduate Studies of Jimma University in Partial
Fulfillment of the Requirements for the award of Degree of Master ofScience in
Development Economics.
BY: TESFAYE ZELEKE GALAME

JIMMA UNIVERSITY
COLLEGE OF BUSINESS AND ECONOMICS
DEPARTMENT OF ECONOMICS

MAY, 2019

JIMMA, ETHIOPIA

i
 Value Chain Analysis of onion Market: Case Study of South Bench
Woreda, Bench Maji Zone

BY: TESFAYE ZELEKE GALAME

UNDER THE GUIDANCE OF

MAIN ADVISOR: DR JEMAL ABAFITA (PhD)
AND
CO ADVISOR: MR. NEGESE TAMIRAT(MSC)

Thesis Submitted to the School of Graduate Studies of Jimma University in Partial

Fulfillment of the Requirements for the award of Degree of Master of Science in
Development Economics.
JIMMA UNIVERSITY
MSC PROGRAM IN DEVELOPMENT ECONOMICS

MAY, 2019

JIMMA, ETHIOPIA

ii
 DECLARATION

I, Tesfaye zeleke Galame, hereby declare that this thesis entitled “value chain analysis of onion
market, case study of south Bench woreda, Bench maji zone, has been Carried out by me under
the guidance and supervision of dr. Jemal Abafita and Mr. Negese Tamirat.
The thesis is original and has not been submitted for the award of degree of diploma any
university or instructions.
Researcher’s Name Date Signature
--------------------------------- ---------------- --------------

JIMMA UNIVERSITY
SCHOOL OF POST GRADUATE STUDIES
COLLEGE OF BUSINESS AND ECONOMICS

iii
 CERTIFICATION

This is to certify that the thesis entitled, Value chain analysis of onion market, case study of
south Bench woreda, Bench maji zone, submitted to Jimma University school of post graduate’s
studies for the award of the Degree of Master of science in development economics and research
work carried out by Tesfaye zeleke Galame, under our guidance and supervision. Therefore, we
hereby declare that no part of this thesis has been submitted to any other university or institutions
for the award of any degree of diploma.

Main- Advisor Name Co- Advisor Name

Name: Dr. Jemal Abafita Name: Mr. Negese Tamirat

Signature ----------------------- Signature ---------------------------------

Date -------------------------------Date ---------------------------------------

Approval Board of Examiners

External Examiner: Internal Examiner:

Name: -------------------------------- Name: ---------------------------------------

Date: ------------------------ Date: -------------------------

Signature: ----------------- Signature: ------------------

Chair person

Name: --------------------------------------- Date: -----------------------Signature: -----------------

As a member of board of the examiner of the MSC Thesis open defense examination, we certify
that we read, evaluated thesis prepared by Tesfaye zeleke Galame.
We recommend that the Thesis be accepted as fulfilling the requirement of Master of Science in
development Economics.

iv
 ACKNOWLEDGEMENT

First; it is the forgiveness, help and kindness of the almighty God that made me still alive for
today, achieve this work and go through all the difficulty time.
Next, I would like to express my heartfelt gratitude to my main advisors Dr Jemal Abafita and
co-Advisor Mr. Negase Tamirat for their priceless comments and constructive suggestions to
empowering my capacity, assistance and guidance starting from the origin of the research idea
up to the completion of this thesis.
Next to that, I extend my deepest thanks to Business and Economic college of jimma university
research and school of post graduating office for granting part of research fund for thesis work
and to continue my capacity building activities in empirical economics research methods and
different software applications.
Finally, I would like to thank staff members of south Bench Woreda agricultural office and
kebele agricultural offices for their cooperation during the data collection.
The last thanks go to my family for their incalculable assistance from the start of my education
and for sharing all difficulties with me until to do this thesis.

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Table of Contents
DECLARATION ........................................................................................................................... iii

CERTIFICATION ......................................................................................................................... iv

ACKNOWLEDGEMENT .............................................................................................................. v

ACRONYMS AND ABBREVIATIONS .................................................................................. xiv

ABSTRACT .............................................................................................................................. xv

CHAPTER ONE ............................................................................................................................. 1

1. INTRODUCTION ................................................................................................................... 1

1.1. Back Ground of the Study ................................................................................................ 1

1.2. Statement of the Problem ................................................................................................. 2

1.3. Research Questions .......................................................................................................... 4

1.4. Objective of the Study ...................................................................................................... 5

1.4.1. General objective of the study .................................................................................. 5

1.4.2. Specific objective of the study .................................................................................. 5

1.5. Significance of the Study ................................................................................................. 5

1.6. Scope of the Study............................................................................................................ 5

1.7. Limitation of the Study .................................................................................................... 6

1.8. Organization of the thesis ................................................................................................. 6

CHAPTER TWO ............................................................................................................................ 7

2.1. Review of Related Theoretical Literature ........................................................................ 7

2.1.1. Basic Concept and Definition ................................................................................... 7

2.1.2. Agricultural value chain analysis. ................................................................................ 8

2.1.3. Purpose of value chain analysis ................................................................................ 9

2.1.4. Measuring of Value Chain Analysis ......................................................................... 9

2.1.5. Marketing Channel and actors in onion Value chain. ............................................. 11

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 2.2. Status of onion Value chain analysis and Production in Ethiopia ................................. 12

2.3. Review of Empirical studies on Agricultural Marketable Supply ................................. 13

2.4. Conceptual Framework of onion value chain ............................................................. 16

CHAPTER THREE ...................................................................................................................... 16

3. METHODOLOGY OF THE STUDY .................................................................................... 17

3.1. Description of the Study Area ....................................................................................... 17

3.2. Sources and Method of data Collection. ....................................................................... 18

3. 3. Sampling Technique and Sample size determination ................................................... 19

3.4. Methods of data analysis .............................................................................................. 21

3.5. Definition of Variables and Working Hypothesis. ..................................................... 23

CHAPTER FOUR ......................................................................................................................... 27

RESULT AND DISCUSSION ..................................................................................................... 27

4.1. Descriptive Analysis ......................................................................................................... 27

4.1.1. Demographic characteristic of onion producer (Categorical variable) ....................... 27

4.1.2. Demographic characteristic onion producer (continuous variable) ............................. 29

4.1.3. Demographic characteristics of sampled traders ....................................................... 29

4.1.4. Socio-Economic characteristic of sample of trader ..................................................... 31

4.2. Actor participated in onion value chain and marketing channel ..................................... 32

4.3. Constraints and Opportunity in onion value chain analysis .............................................. 42

4.3.1. Major Onion Production Constraint at Producer Level .............................................. 42

4.3.2. Major Onion Marketing Constraint at Producer Level ................................................ 43

4.3.3. Major Onion Marketing Constraint at Trader level .................................................... 44

4.3.4. Opportunity along the onion value chain ................................................................... 44

4.4. Econometric Analysis ....................................................................................................... 45

CHAPTER FIVE .......................................................................................................................... 52

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Conclusion and policy Recommendation ...................................................................................... 52

5.1. Conclusion........................................................................................................................ 52

5.2. Policy Recommendation .................................................................................................... 54

6. REFERANCE ......................................................................................................................... 57

7. APPENDIX .......................................................................................................................... 65

APPENDIX A........................................................................................................................ 65

APPENDIX B ........................................................................................................................... 67

APPENDIX C ........................................................................................................................... 67

7.1. Producer Questionnaire ......................................................................................................... 68

7.2. Questionnaire for trader ......................................................................................................... 73

APPENDIX D.......................................................................................................................... 76

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LIST OF TABLE

TABLE PAGE

Table 3. 1. Sample of onion producer in five selected Keble ..................................20

Table 3. 2. Sample of onion trader in three selected market ...................................20

Table. 4. 1. house hold Characteristic of onion producer (categorical variable).....................28

Table. 4. 2. Source of loan for the sample of Credit service user .........................................33

Table 4. 3. frequency of extension service.........................................................................34

Table 4. 4. Age group category of the respondent .............................................................35

Table 4. 5. Farming experience Categories of the respondent .............................................34

Table 4. 6. House hold Characteristic of onion producer (continous) ..................................29

Table 4. 7. Demographic characteristics of sample of traders ............................................30

Table 4.8. source of working capital for trader ................................................................31

Table 4. 9. Source of loan for trader ..............................................................................31

Table 4. 10. Utilization of fertilizer for onion production ....................................................32

Table 4.11. Source of family labor for onion production ...................................................32

Table 4. 12 Average land holding and onion production pattern33

Table 4. 13. Onion land coverage and output obtained .......................................................34

Table 4. 14. Quantity of onion produced during the survey year during 2018? .......................35

Table 4. 15. Average distance of the respondent from market center to production center .......36

Table 4. 16. Means of transportation used by House Hold Head ..........................................36

Table 4. 17. Wholesalers response from whom they buy and to whom they sell ......................37

Table 4. 18. Quantity of onion purchased by sampled wholesaler, 2018 ...............................37

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Table 4. 19. Quantity of onion purchased by sampled retailers, 2018 ..................................38

Table 4. 20 . Retailers response from whom they buy and to whom they sell ..........................38

Table 4. 21. Marketing margin in onion value chain ..........................................................40

Table 4. 22. constraints of onion production at farm level ..................................................42

Table 4. 23. constraints onion marketing at farm level ......................................................43

Table 4. 24. Constraints of onion marketing at trader level ................................................44

Table 4. 25. Econometric result. ..................................................................................50

x
LIST OF FIGURE
2. 1. Conceptual framework of onion value chain-----------------------------------------16
3.1. geographical map for south bench woreda----------------------------------------------20
4.21. onion marketingchannel for south bench woreda------------------------------------37

xi
 LIST OF TABLE IN APPENDIX

Appendix table 7. 1 . Test for multicollineartity......................................................65

Appendix table 7. 2. Constraints of onion production at farm level ......................65

Appendix table 7. 3. Constraints onion marketing at farm level ............................66

Appendix table 7. 4. Constraints of onion marketing at trader level .....................67

xii
LIST OF FIGURE IN APPENDIX

7. 5. Appendix figure Test for normality ..............................................................67

7. 6.Appendix figure Test for heteroscedasticity ... Error! Bookmark not defined.

xiii
ACRONYMS AND ABBREVIATIONS
AAFC Agriculture and Agri-Food Canada
ATA Agricultural Transformation Agency
CSA Central Statistical Agency
CIAT International Center for Tropical Agriculture
CLRM classical linear regression model
EHDA Ethiopian Horticulture Development Agency
FAO Food and Agriculture Organization
GMMW Gross Marketing Margin of Wholesalers
GMMP Gross Market Margin of Producers
GMMi marketing margin at given stage.
OLS Ordinary list square
PF producer price
PR price of retailer
PPi purchase price at ith link.
SBWNDOA South Bench Woreda natural resource development Office
of agriculture
SNNPRS Southern Nations Nationalities and Peoples Regional State
SSpi selling price at ith link and
USAID United States Agency for International Development
UNIDO United Nations Industrial Development Organization
UNCTAD United Nations Conference on Trade and Development
USAID United States of America Agency for International
Development
VIF variance of inflation factor

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 ABSTRACT
This study was aimed to examine the value chain analysis of onion market in south Bench
woreda in Bench maji, focused on specific objective of factor affecting quantity of onion
production supplied to the market by farm, identifying major actor in onion value chain,
constraint and opportunity along the onion value chain in both production and marketing.
In order to address the objective of the study both primary and secondary source of data were
used. The primary data was collected from onion producers and trader (wholesaler and Retailer)
using questionnaire and focus group discussion (FGD) with key informant and Secondary data
were collect from published article and unpublished reports of different level of agricultural
bureau. To analyze the collected data both descriptive and inferential analysis were used.
Cobb-Douglas production function model (CDM) were used to identify factor affecting quantity
of onion production supplied to the market by farm 118 sample of onion producer were selected
from five selected kebele through multi stage probability sampling technique and 65 sample of
onion trader were selected through simple random method of sampling technique.
Out of 118 sample of producer selected from five kebele 52.54% were male headed and 47.46%
were female headed and out of 65 sample of trader selected from three market place. The
average age of sampled trader was 35.82 with the minimum age of 18 and the maximum of 75
and standard deviation of 12.32. The major constraints that impede onion production at farm
level were low supply of input, low irrigation facility, Poor disease control, lack of technical
training, high cost of inputs and low demand. Econometric result indicates that quantity of
fertilizer utilized, distance from the nearest market, family size of house hold head, educational
level of house hold head, farming experience and Credit access were significantly and positively
determined the quantity of onion supplied to the market.
For over all, the study recommended that those significant variable need to be promoted to boost
the amount of the onion market supply. In order to increase the productivity of onion there is
need of public, private, research center and farmer themselves working together so as to
increase access to improved and disease resistance seed verity
Key word: onion value chain analysis, marketing channel, cobb Douglas production
function model, actor, constraint

xv
 CHAPTER ONE

INTRODUCTION
1.1. Back ground of the Study
Vegetable production is an important economic activity in agricultural sector ranged from home
gardening small holder farming to commercial farm owned both by public and private
enterprise(ATA, 2014)
Ethiopia has variety of vegetable crops, grown in different agro ecological zone produced
through commercial as well as small holder farmer as both source of income as well as a food.
In spit the production of vegetable varies from cultivating a few plant in the backyard for home
consumption up to large scale production for domestic and export market (Dawit et al, ..2004)
Smallholder vegetable farms were based on low input- output production systems, use of
improved seeds, planting material of high yielding varieties and other inputs such as fertilizer
,technical training and extension services on improved crop husbandry techniques are not
available a result average productivity levels are low in the small scale farming sector (EHDA,
2011).
Among those vegetable crop, onion was recognized as one of the most important vegetable crops
that cultivated throughout the world since its introduction to the worlds, grown mainly as source
consumption and income generation (Goldman, 2011).
In global perspective, the production of onion crop is worldwide because of its wide benefits in
our daily foods requirement, largely produced in the developed nations, and dominated
international markets due to its higher quality production and longer storage life (Opara LU,
2003).
According to (FAO, 2012) the world total onion production was 742.51 million tons per annum.
China was the leading world producer accounts 205.08 million ton followed by India and USA
(Manna D, 2014).
In Africa perspective, Egypt was the leading onion producer country by producing 22.08 million
tons of onion per year for domestic and international markets that rank as the fourth of world
producer of onion and first exporter of onion in African country (Kulkarni.et al.., 2012).East

1
African country such as Kenya (18.55%), Ugand (1.41% ) and Rwand (33.33%) were also
importer of fresh onion from other to meet demand(FAOSTAT, 2007).
Onion is considered as one of the most important vegetable crops produced on large scale in
Ethiopia, and occupied an economically important domicile among vegetables. The area under
onion is increasing from time to time mainly due to its high profitability per unit area and ease of
production, and increases in small scale irrigation areas. The crop is produced both under rain
fed in the meher season and under irrigation in the off season.
In many areas of the country, the off season crop (under irrigation) constitutes much of the area
under onion production (FAO-CDMDP, 2008). The total areal coverage of onion crop in the
country was 21,865.4 hectares, with total production of 219, 188.6 tons with average
productivity of 10.02 tons per hectare (Weldemariam S. et al, ..2015)
South Bench woreda was the study area endowed with naturally in terms of capacity to grow
different vegetable crop and major vegetable crops currently growing in the woreda were potato,
onion, tomato, cabbage, beet root and green pepper. Onion was one of the most commonly
produced vegetable crop in the area both for consumption and income generation
(SBWNRDOA, 2018). The production of onion crop in the woreda was mainly for market and
was fragmented resulting from lack of coordination among the actor. Analysis of marketing
chain was anticipated to offer as systematic knowledge of the flow of the product from their
origin to their final destination. This study was proposed to investigate the value chain analysis
of onion market that were produced in the study area.

1.2. Statement of the Problem

Agricultural marketing is the most significant energetic force for economic development and
contains a guiding and simulating impact on production and distribution of agricultural
products(Wolday A, 2004). The sector still remains largely dominated brain-fed subsistence
farming by smallholders who cultivate an average land holding of less than a hectare.
Although agriculture has a long history in the country’s economy and the development of the
sector has been hampered by a range of constrains which include land degradation, low
technological inputs, weak institutions, and lack of appropriate and effective agricultural policies
and strategies (Aklilu, 2015)

2
Vegetable production is one of agricultural sector that is produced in the country following the
development of irrigation and increased emphases given by the government to small scale
commercial farmers (CSA, 2014).
According to (Colman Y, 1999),because of different marketing constraints smallholder farmers
were not getting the right share of consumer price, producing and selling their product in
organized manner so that some of their benefit may transfer to the intermediaries.
Onion is one of the top most important vegetable crop produced almost in all parts of the country
by smallholder farmers due to its requirements in the daily diet of peoples and as a source of
livelihood of most people’s and for the export market purposes (Berhanu, 2014).
Even if, the country has greater potential to produce onion ever year for both domestic and
export market, there were problem that affect the marketing activity of onion produced in
Ethiopia, some of them are price fluctuation or low pricing at peak supply period ,lack of
standard for produce, lack of coordination and marketing research and marketing information
,weak linkage in the chain ,lack of storage facility and poor road access(Adugna G, 2009) .
In spite of the policy options provided by the Ethiopian government, was very little empirical
evidence on value chain analysis of onion, to design appropriate policies for the improvement of
onion production and productivity in Ethiopia(Vermeulen. et al.., 2008).
According to the productivity of onion seed in Ethiopia was much lower than other African
countries, this low productivity could be attributed to the limited availability of quality of the
seed that associated with production technologies. For the supply of such seed, informal sector
plays significant role in reaching out of large number of farmer and most of the demand for
onion were either meet by private or unorganized program.
South Bench woreda, was the study area with great potential for onion farming, due to
accessibility of irrigable farm land and favorable climatic condition.
However, in the study area, most of smallholder onion producer in the rural areas were poorly
linked to the market and poor access to the market information regarding to their product price,
and intermediaries generate good business in the chain than producers.
Besides, the production in the area was below the potential due to lack of extension service, high
price of fertilizer, lack of improved seed varieties, lack of coordination among the actor, high
cost of production and delay in input arrival for purchase result in sharp seasonal fluctuation of

3
onion price, particular in remote area and isolated from the end-consumers (SBWNRDOA,
2018)
Even if some related studies on vegetable crop like onion were carried out in different region of
the country, empirical evidence on the constraint of onion production and marketing supply of
onion crop, besides their determinant has not been under taken in the study area.
According to the study conducted by (Almaz G. et.. al.., 2014)indicate that onion value chain
was complicated by substantial problems including; low yield, marketing skill, lack of capital,
adulteration (poor quality of seed), brokers hindering fairness in price, unable to have good
vegetable marketing policy, storage problem and improper shading.
The market performance studies conducted on vegetables by (Debela, 2013)out that
concentration ratio for onion was oligopolistic and wholesalers get the highest profit, which is
56.29% of the market cost followed by urban assemblers (50.26%) and the producers’ gross
profit was the lowest which was 4.89%, while Retailers and wholesalers have got the highest
gross marketing margin whereas rural assemblers have got the lowest marketing margin.
Furthermore, the previous studies related with onion crop focused on onion production rather
than giving more attention on marketing cost, performance, conduct and, structure and draw up
value chain map with linkage among actor which include input supplier, producer, trader and
consumer
Therefore, there is strong need to conduct on value chain analysis to identify onion value chain
actor and their marketing channel, determinants of onion production and constraint and
opportunity especially at the production and marketing level in the study area.
In doing so, this study attempted to contribute the knowledge gap by taking in to consideration
all of the above mentioned problem in the study area for the purpose of providing vital
information for effective research, and policy formulation. With regarding to this knowledge gap
the study bidden to respond the following research question

1.3. Research Questions

 Who are the major actors participated in onion value chain and what look like their
marketing channel in the study area?
 What are the factors affecting quantity of onion production supplied to the market in the
study area?

4
  What was the constraint and opportunities in onion value chain in the study area?

1.4. Objective of the Study

1.4.1. General objective of the study

The general objective of the study was to investigate the value chain analysis of onion market in
south bench woreda.

1.4.2. Specific objective of the study

 To identify onion value chain actor and their market channels in the study area?
 To analyze factor affecting quantity of onion production supplied to the market by farm
level in the study area.
 To identify the constraint and opportunities in the onion value chain in the study area.

1.5. Significance of the Study

The study enables to provide information on constraint onion production, marketing channel and
opportunities in onion value chain in the study area.
This study result would be used for farmer, trader, policy maker, governmental and none
governmental organization, who want to introduce intervention in onion marketing.
In addition to this, the study generated important information for research and development
organizations, extension service providers, to formulate onion marketing development programs
and guidelines for interventions that would improve efficiency of the onion marketing system.
This study could be used as source of material for further studies.

1.6. Scope of the Study

The area coverage of this study was in south Bench woreda, Bench maji zone focusing on onion
crop which account major proportion of the production and passed through a number of
marketing stages. The study emphasized on different marketing channel and actor in the chain.
The collected data entered in to a software called Stata (14) to find the frequency of distribution
mean, max, min, standard deviation and Econometric result.

5
 1.7. Limitation of the Study

Being the first study in the woreda lack details, investigations which could have reinforced in
understanding of the whole system particularly in relation to production studies. The time limit
and budget constraint exclude consideration of other neighboring woreda as well could give
more weight to the limitation. The other limitation was geographical location of the kebele that
most of them were far from the main road and researcher was take a long time to found the
respondent and some of farmer were busy in their farm. Moreover, few producer and trader were
reluctant to provide information without a benefit or payment and have no willingness to participate
in this study.

1.8. Organization of the thesis.

The thesis had five chapters. The first chapter of the thesis were discussed back ground of the
study, Statement of the Problem, Objective, Significance, Scope and limitation and Organization
of the thesis. The Second chapter were discussed about review of related literature.
The third chapter deals methodology of the study. The fourth chapter deals result and discussion
and the last chapter deals about conclusion and policy recommendation.

6
 CHAPTER TWO

LITERTURE REVIWE
In this chapter an attempt has been made to explain certain concept used in this study.
In addition, this part is intended to critically review the literature of the past research work in
relevance to present study so that theoretical review, empirical evidence of the reviews and
conceptual frame work enable better understanding of the subject
2.1. Review of Related Theoretical Literature

2.1.1. Basic Concept and Definition

Value chain: a chain of activities that is associated with adding value to a product through
production and distribution processes (Schmitz, 2005)The goal of company is to deliver
maximum value to the end user at least possible cost to the company to maximizing profit.
Approach of value chain was developed by Michael Porter in the 1980s, and described in his
book Competitive Advantage, Creating and Sustaining Superior Performance. His idea was to
divide a business into its strategic activities to make them better than the rivals, or to a lower
cost. Their suppliers affect a firm value chain and customers value chains(Porter, 1985). It is the
full range of activities that is required to bring a product from conception, through the different
phases of production and transformation and made up of a series of actors from input suppliers to
exporters(Kaplinsky R. and Morris M K, 2000).
According to (Barnes, 2004)Value chain is coalition of enterprises collaborating vertically to
achieve a more rewarding position in the market. The basic characteristic of a value chain is
focused on collaboration of market, different business enterprises work together to produce
market products and services in an effective and efficient way and it allow businesses to respond
to the market place by linking production, processing and marketing activities to market
demands.
According to (UNIDO, 2009)value chain is set of businesses activities and relationships involved
in creating a final product or service and builds on the idea that a product are infrequently
consumed in its original form but becomes transformed, transported, packaged, marketed and
combined with other products, until it reaches to its final consumer. In this sense, a value chain

7
describes how producers, processors, wholesaler, retailer, sellers, and consumers separated by
time and space gradually add value to products as they pass from one linkage to the next in the
chain.
Market chain: It is the term that is used to describe the various links between all the actors and
transactions involved in the movement of agricultural goods from producer to the consumer
(CIAT, 2004)
Supply chain: it is the sequence of (decision making and excusion) process and (material,
information and product) flow that aim to meet final customer requirement that take place within
and between different stage along continuum, from production o final consumption. The
supply chain not only including the producer but also depending on the logistic flows,
transporter, ware house, retailer and consumer themselves.
In the border sense supply chain include also new product development, marketing, operation
distribution and finance and customer service (FAO, 2007)
Supply chain management: is about making the chain as efficient as possible through better
flow scheduling and resource use, improving quality control throughout the chain, reducing the
risk associated with food safety and contamination, and decreasing the agricultural industry’s
response to changes in consumer demand for food attributes (Dunne A, 2001)
Marketable surplus: quantity of product that is left out after meeting farmer consumption and
utilization requirements for kind of payments and other obligations or quantity actually sold after
accounting for losses and retention by farmers (Trienekens H.J, 1997)
Marketed surplus: the quantity actually sold after accounting for losses and retention by the
farmers, if any adding the previous stock left out for sale. Thus, marketed surplus may be equal
to marketable surplus, it may be less if the entire marketable surplus is not sold out and the
farmers retain some stock and if losses are incurred at the farm or during transit (Trienekens H.J,
1997).

2.1.2. Agricultural value chain analysis.

Agricultural value chain involves all companies and their activities engaged in input supply,
production, transporting, processing, marketing and distributing of the product.
It is a dynamic approach that examines how markets and industries are respond to changes in the
domestic and international demand and supply for a commodity, technological change in

8
production and marketing, developments in organizational models and institutional arrangements
or management techniques.
Value chain analysis focuses on changes over time in the structure, conduct and performance of
value chains, particularly in response to changes in market conditions, technologies and policies
(Anandajayasekeram P. and Berhanu Gebremedhin, 2009).
agricultural value chain can be considered as an economic unit of analysis of a particular group
of commodities that encompasses a meaningful grouping of economic activities that are linked
vertically by market relationships.
The emphasis is on the relationships between networks of input suppliers, producers, traders,
processors and distributors (UNCTAD, 2000.). Agricultural value chains link urban consumption
with rural production. Changing demand, because of urbanization, emergence of modern
consumption patterns or new trends in international trade, affects rural areas along value chains
and spills over to marketing and production systems
. These rural urban linkages bear challenges but also mutual benefits for producers and
consumers and can be promising entry points for development interventions (Höffler H. and
Maingi G, 2006)

2.1.3. Purpose of value chain analysis

According to (Kaplinsky R. and Morris M, 2002)the value chain analysis offers division of labor
and comprehensive dispersion of the production component. The primary purpose of value chain
analysis is to understand the reasons for inefficiency in the chain, and identifying potential
leverage points for improving the performance of the chain. Value chain analysis; enable to
identify the relationship and coordination mechanisms among the chain of actor(USAID, 2008)

2.1.4. Measuring of Value Chain Analysis

A fundamental aspect of global value chain research was, how value itself, is conceptualized and
measured. The analysis of these structures answers to a set of questions like how does the
production process take place, who participates at the stage? Where do different stages take
place? How are they linked, who benefits? These answers are required to find the pertinent
points of intervention for a successful integration of poor population sections (Kodigehalli B,
2011)

9
According to (Baker D, 2006)the value chain described as flows of product, adding of value to
the product at different stages, identifies key actors and their relationships in the chain, identifies
enterprises that contribute to production and characterizes by its network structure, value added
and its governance form

2.1.4.1. Network structure

From network theory and supply chain management we draw the network structure of the value
chain. Network theory combines both horizontal and vertical relationships between actors.
Supply chain management focuses on vertical connections between economic actors aiming to
jointly produce for a market (Trienekens H.J, 1997).
The performance of an agricultural value chain depends on how well the actors in the value chain
are organized and coordinated, and how the chain is supported by business development
services. Verticality, in value chains implies that conditions at one stage in the chain are likely to
be strongly determined by conditions in other stages. In the vertical chain, there is direct,
indirect, expected, and unexpected ways. It should be noted that intra-chain linkages are mostly
of a two-way nature. A particular stage in a value chain may affect and be affected by the stage
before or after it ( Berhanu Gebremedhin..et al.. 2009)

2.1.4.2. Value addition

Value added is the adding of value to the product or service or innovation that encourage or
improves the existing product by introducing new products or new product uses. This allows
farmer to create new markets, or differentiate a product from others and gain have advantage
over competitors(AAFC, 2000)
Value addition is one aspects of marketing that deal with practice that change or transform
primary product in to good that have additional value. Value adding activity based on their
simplicity and difficult. The simplest are washing, cleaning grading, bulking and stroge, this
activity are conducted by the control of framer and the complicated are ginning, roasting,
refrigerating, milling, cutting, mixing, dehydration, cooking and packaging. These activities are
generally undertaken by specialist market chain actors or service providers (Muluken Marye,
2014)
Value addition to horticultural crops is of considerable importance when considering post-
harvest operations of vegetable.
10
It was an economic waste if production losses are high due to poor handling. Reduction of
wastage therefore must be concern in order to improve on the quantity of the product acceptable
to the consumer “as fresh” oras ‘finished product. Production, harvesting and post - production
systems of horticultural crops play a very important role in bringing these crops to the consumers
cheaply. For ease of differentiation, post-harvest operations in this write up were divided into
two parts. These are post-harvest handling and post-harvest food production (Omo Ohiokpehai,
2003)
2.1.4.3. Governance structure.
Governance is defined as how control is exercised within the value chain actors and plays a
major role in how production capabilities are upgraded; determining sustainability of the value
chain and distribution of an equal benefit among the value chain actors. Governances a depiction
of the dynamic distribution of power, learning, and leadership in standards and strategy setting
among a value chain’s firms. (Marshal E and Schreckenberg K, 2006).
Government is central concept to value chain analysis. The starting point for interest in global value
chains is the fact that some firms directly or indirectly influence the organization of global
production, logistics and marketing systems. Through the governance structures they create, they
take decisions that have important consequences for the access of developing country firms to
international markets and the range of activities these firms can undertake (Gereffi G. et al.., 2011)

2.1.5. Marketing Channel and actors in onion Value chain.

The analysis of marketing channel was intended to provide a systematic of flow of goods and
services from their origin (producer) to their final destination (consumer). This knowledge is
acquired by studying the participants in the processes. Those who perform physical marketing
functions in order to obtain economic benefits. In carrying these functions, marketing agents
achieve both personal and social goals. They add value to production and by so doing help
satisfy consumer needs. The price pays for the goods) the physical commodities and services (i.e.
transportation, bulk breaking, grading) for the services and renders compensated the marketing
agents for this effort. This price also serves as a signal to all actors in the marketing channel, i.e.
input supplier, producers, whole sellers, retailer ‘sand influence actors(Mendoza G, 1995)
Input supplier actors: At this stage of the value chain, many actors are involved directly or
indirectly in agricultural input supply in the study area. Onion growing farmers are also

11
participated in this stage. All such actors are responsible to supply agricultural inputs like
improved seed varieties, fertilizers, herbicides, pesticides and farm implements that are essential
inputs at the production stage.
Producer: Onion growers are the major actors who perform most of the value chain functions
right from farm inputs preparation on their farms or procurement of the inputs from other sources
to post harvest handling and marketing. The major value chain functions that onion growers
perform include ploughing, planting, fertilization, irrigating, weeding, pest/disease controlling,
harvesting and postharvest handling.
Wholesaler: Wholesalers are mainly involved in buying onion from producers in larger volume
than any other actors are and delivering to the retailers and consumers. They also store and
assembly product and markets are the main centers for onion in the surrounding areas. They have
better storage, transport and communication access than other trader does.
Broker: A broker is an individual or party that arranges transactions between a buyer and seller
for a commission when the deal is executed.
Retailers: Retailer involvement in the chain includes buying of onion, transport to retail shops,
grading, displaying and selling to consumers. They are the last link between producers and
consumers. They mostly buy from wholesalers and sell to urban consumers.
Consumer: those purchasing the products for consumption. Private consumers purchase onion
directly from producers, retailers and wholesalers though most of the consumers purchase from
retailers. Farmers also make important segment of the rural consumers since they consume part
of their produces.
Influencer actors: these actors that include regulatory framework and policies such as revenue
authority, trade and market development office, land administration and environmental
protection office.

2.2.Status of onion Value chain analysis and Production in Ethiopia

Ethiopia is country differentiated by agro‐climatic condition that makes it suitable for the
production of a broad range of fruits and vegetables, altitude, level ranging from below sea level
to over 3000 meter above sea level and gives it a wide range of agro ecological diversity ranging
from humid tropics to alpine climates, where most types of vegetable crops can be successfully
grown (CSA, 2014).

12
Commercial production of horticultural crops, including vegetables, has also been increasing in
recent years because of expansion of state farms ( Ethiopian Horticulture Development
Corporation) and increasing private investment in the sector by national and international
entrepreneurs (EHDA, 2011)
Among this crop onion considered as one of the most important vegetables crop produced on
large scale in Ethiopia for both commercial and consumption purposes and grows well under
mild climatic conditions without extreme heat or cold or excessive rainfall (FAO,2005)
Onion was introduced to the agricultural community of Ethiopia in the early1970s when
foreigners brought it in, Currently, the crop is produced in different parts of the country for local
consumption and for export of flowers to European markets (ETFRUIT, 1992).
In recent years, the demand for onion increased for its high bulb yield, seed and flower
production potential. The establishment of state owned enterprises contributed substantially to
the increase in the production and expansion of area under onion in the country with limited
amount of seed production experiences. Onion seed production depends on the cultivar,
location, growing season and adequate plant protection measures (Lemma Desalegne and
shimelis Aklilu, 2003)
However, yet the production of the crop is not exploited due to the production and productivity
of the crops are dependent on the potential of genetic factor of the individual crops and the
environment where it has been grown (Acquaah G, 2015). Even if, the country has a great
potential to produce onion every year for both domestic and export market, other problems affect
the marketing activities of onion produce in Ethiopia. Some of them are price fluctuation or low
pricing at peak supply period, lack of standards for produce, lack of coordination among
producers, inadequate availability of market research and marketing information, weak linkage
in the chain, lack of storage facilities and poor road access ((Almaz G. et.. al.., 2014)

2.3. Review of Empirical studies on Agricultural Marketable Supply

Different scholar had been conducted in the field of market and value chain analysis on different
agricultural product, from different studies conducted on agricultural product; some of them are
described as follow.
Studies conducted by (Philips, 2007) indicted that absences of research and market information
in Ethiopian, leads value chain of honey wasted infinite benefits. This study was further

13
evidenced by (Kassa Belay, 2003),who stated that, lack of government support such as,
inadequate research and training, lack of policies and strategies have increased knowledge gap
among the Ethiopian small-scale farmers.
Study conducted by (Gebremedhin w. et al.., 2008) state that low level of improved agricultural
technologies, risks associated with weather conditions, diseases and pests and increasing
population pressure the land holding per household is declining leading to low level of
production to meet the consumption requirement of the household.
According to a (Mahilet Mekonnen, 2013)marketable supply of malt barley were significantly
affected by output of malt barley, selling price, market information and distance to the market by
Appling two stages least squares (2SLS) regression model.
(Kassa., 2014) Conducted study on factors affecting milk market participation and volume of
supply in Ethiopia by using Heckman two-stage selection model, the study showed that milk
yield per day, dairy farming experiences and numbers of members in household significantly
affected volume of milk supply.
(Ayelech, 2011)identified factor affecting the marketable surplus of fruit by using OLS
regression model and the result of the study indicated that education level of house hold head,
quantity of fruit produced, fruit production experience, extension contact, lagged price and
distance to the market place were affecting the marketable surplus of fruit
study conducted by (Debela, 2013)analyzed the determinants of onion supplied to the market
using Tobit model and the results of the study indicated that non-farm income of the households,
total land size of the households, total quantity of onion produced and access to credit services
affected positively and significantly the quantity of onion supplied to the market while total
family size showed significant and negative relation with quantity of onion supplied to the
market.
According to (Abebaw Mamo and Girma Degnet, 2012) gender, educational status of house
holds together with access to free aid, Agricultural extension service, market information, none
farm house hold income, adoption of modern livestock input, volume of sale and time spent to
reach the market have statistical significant effect on whether or not a farmer participate in
livestock market and his/her choice of marketing channel. They used binary logit and
multinomial logit model to explore the patterns and determinant of small holder livestock farmer
market participation and market channel choice using micro level survey data from Ethiopia.

14
(Riziki J.M. et al, ..2015)Conducted study on determinants of choice of marketing outlets for
African indigenous vegetables among the agro-Pastoral Maasai of Narok and Kajiado counties of
Kenya using multinomial logistic regression model, the study pointed that quantity of African
Indigenous Vegetables sold, agricultural market distance, sex, educational level, household size,
levels of value addition, farming experience in agro-pastoralist, off-farm income and marketing
costs are the main factors that affecting choice of marketing outlet by the agro-pastoral.
(Chalwe, 2011) Conducted study on Zambian smallholder bean producer and identified factors
that affect choice of marketing channels by adopted a probit model. Results from such model
indicated that the choice of marketing channel were directly affected by the price of beans, scale
of operation (as measured by the quantity of beans harvested, and quantity sold), distance to the
market, farming mechanization used and livestock ownership.
On the other hand, modal results for decision to sell indicated that price mechanization and
farmers age significantly affected farmer decision, meaning that price was very important factor
in stimulating both selling decisions and channel selection.
(Yimer Ayalew, 2015) employed using multiple liner regression models and estimated that
educational level of house hold head, market information, distance to the nearest market,
extension service, and quantity of fruit produced were significantly affected marketable surplus
of fruit.
A study conducted in Darolebu district of Oromia region on factor affecting vegetable supplied
to the market, using Tobit model, showed that irrigation access, farming experience and total
land cultivated in vegetable production were significantly affected vegetable supplied to the
market (Tadesse, 2011)
(Habtamu, 2015)identified factor affecting potato market participation of farmer and extent
participation of farmer in Hadiya zone, Ethiopia by using Heckman sample selection model and
the result of the study showed that sex of house hold head, extension service, credit access,
tropical livestock unit, lagged price and number of oxen were significant factor for volume of
potato sold.
(Tewodros, 2014), stated that access to market information, farm size, education level, access to
credit, membership to an organization and distance to the nearest market significantly affected
market participation decision of haricot bean producers. accordingly, the extent of market

15
 participation among haricot bean producers was significantly affected by farm size, and access to
credit.

2.4. Conceptual Framework of onion value chain

Identification of actors and channels related to production and marketing of onion were
presented in a conceptual framework, based on theoretical concepts and empirical studies. The
production process was start from at the stage of input supply, then covers to production by
producer, processing and marketing by trader and ends up with the consumption of a certain
product by consumer and quantity of onion production supplied to market were influenced by
several expected variables, such as age of house hold head, sex of house hold , family Size of
house hold , education level of house hold , farming experience of house hold , distance from
the nearest market, Farm size allocated, quantity of Fertilizer utilized , Credit access, irrigation
access and extension service). The conceptual frame work for onion value chain were
represented by below figure.
2. 1 . CONCEPTUAL FRAMEWORK OF ONION VALUE CHAIN

Actors in onion value chain and marketing channel

Input supplier Producers Traders Consumers

Institutional factors
Personal factors
 Credit access
 Age of hous head
 Extension service
 Sex of house hold
Quantity of onion  Distance from market
head.
production supplied  Irrigation Access
 Family Size
to the Market
 Education level of
house hold
 Farming
Experience
Economic Factor
 Farm size allocated
 Fertilizer applied

Source: own sketching

16
 CHAPTER THREE

METHODOLOGY OF THE STUDY

3.1. Description of the Study Area

The study was conducted in south Bench woreda in Bench Maji zone and the geographically
bordered on the south by Guraferda, on the west by Sheko, on the north by Mizan- Aman
Administration on the northeast by semine bench, on the east by she Bench and on the southeast
by Meinitegoldiya, which was approximately 27.5 km from zonal administrative town Mizan-
Aman, 867 Km from Hawassa (Regional capital) and 592.5 Km from Addis Ababa. The woreda
have 27 Keble with the total number of populations 132,535, among this the number were 11,178
males and 121,357 females.
The woreda have three ecological zones, Kolla (5%), Woynadega (80%) and dega (15%).
The astronomical location of the woreda were found between 6.730-7.010 latitude and
35.37.36.70 longitudes. The amount of annual rainfall of the woreda ranges from 1,801 up to
2000 mm and amount of temperature ranges between 15.10-250 degree centigrade. The economy
of the woreda depends on cereal crop, vegetable crop, pastoralist, fruit and natural forester. The
most cereal crop produced in the area were maize, sour gam, wheat and barley and vegetable
crop were onion potato and tomato. Among the vegetable crop onion contribute the largest share
and used as both for generation of income and for house hold consumption purpose. The total
land area of the woreda is 255,099 hectors. From this total land area, 46,378.25 hectors were
covered by agricultural land, 9375 hector were covered by pastoralist, 15,243hector were
covered by natural forest, 47,176 were covered by fruit and other crop and 385.5 hector were
covered by onion crop(SBWNRDOA, 2018).

17
 Geographical Map of South Bench Woreda Keble

3.2. Sources and Method of Data Collection.

In order to address the objective of the study both primary and secondary source of data were
used with cross- sectional data. The primary source of data was collected from onion producers
and traders (wholesaler and Retailer) involved in onion value chain using questionnaire and
focus group discussion (FGD) with key informant. The questionnaire was designed both for
producers and trader (retailers and wholesalers). The structure of the questionnaire was designed
in both open and close ended and focus group discussion (FGD) were hold with model onion
producers based on their production capacity with trader. Secondary source of data was collected
from published article and unpublished reports of different level of agricultural bureau (country,
regional and zonal and woreda,), report of central statistical agency, websites and different
published articles.

18
3.3. Sampling Technique and Sample size determination
To select sample of onion producer and trader multi-stage and simple random probability
sampling technique were used respectively. To select sample of onion producer multi- stage
probability sampling technique were used with three stages procedure.
In the first stage, south Bench woreda were select purposively based on the amount and volume
of production, accessibility and communication and 27 kebele were found.
In the second stage, with the consultation of woreda agricultural experts five-onion producer
kebele (Gelitin, kerishaka, Gedu, kokin and Kashu) were selected randomly and 3000 onion
producer were found.
In the third stage a list of onion producer was prepared for each selected Keble and sample of
onion producer were selected by simple random sampling technique and sample size was
determined and allocated to each selected kebele through proportionately.
The number of selected sample from each kebele represented in table 3.1 were (24,26, 20, 30
and 18). The following formula were used in the determination of sample size because the
proportion of total population is known (Yamane Taro, 1967)
N
n = 1+N(e)2 Where n= is the sample size needed ------------------------------Equation (1)

N = is the population size and e is the level of precision(e) or sampling error equal to 9%, used
to obtain a sample size required to represent a true population.
The minimum level of precision is acceptable at 10%, However for this study 9% precision level
was used, because if precision level is less than 9% the sample size is large and expensive for data
collection. Then, the sample size (n) were calculated as follows
N 3000
n = 1+N(e)2 = n = 1+3000(0.09)2= 118 ------------------------------------------Equation(2)

Therefore, a total of 118 onion producers were select for this study from five Kebele

19
Table 3. 1.Sample of onion producer in five selected Keble
No Selected Total number of onion producer Total number Sampled producer
Keble
1 Gelitin 600 24
2 Kerishika 700 26
3 Gedu 520 20
4 Kokin 750 30
5 Kashu 430 18
6 Total 3000 118
Source: south bench woreda natural resource and development agricultural office (2018)
The sites for the trader (wholesaler, and retailer) surveys were obtained in the market. On the
basis of flow of onion crop, three markets (Deberwork, Gelitin and Zozo) were select as, the
main onion marketing sites for this study. To select sample of trader (wholesaler and retailer)
simple random sampling technique were used from specified markets place. The total numbers of
trader (wholesaler and retailer) were 204. In three selected market 65 sample of trader
(wholesaler and Retailer) were selected. From three selected market sit (Deberworke, Gelitin and
Zozo) 9, 5 and 6 sample of wholesaler trader were selected respectively and 20, 14 and 11
sample of retailer were selected deberworke, Gelitin and zozo respectively.
Table 3. 2.Sample of onion trader in three selected market
No Trader Number of Total number of trader
Deberwork Gelitin zozo selected
sample
1 Wholesaler 9 5 6 20 52
2 Retailer 20 14 11 45 152
3 Total 29 19 17 65 204
South Bench woreda Gibiyit and Hibret sira office and own computation (2019).
65 samples of traders were selector this study from three selected market site. Therefore, total of
183 samples size were use, 118 producers and 65 traders of onion.

20
3.4. Methods of data analysis
To conduct this study both descriptive and econometric model were used for data analysis.

3.4.1. Descriptive method of data analysis

Descriptive statistics were used to analyze the data that were collected from different sources in
the form graph, table and to find frequency, mean, percentage, maxi min and standard deviation.

3.4.2. Analysis of onion marketing performance

Marketing margin analysis deal with comparison of price at different level of marketing chain
over the same period. It measures the share of final selling price that is captured by particular
agent in the marketing chain and always related to the final price or the price paid by end
consumer, expressed in percentage (Mendoza 1995). Computing the total gross marketing
Margin Computing the total gross marketing margin (TGMM) is always related to the final price
paid by the end buyer and is expressed as percentage (Mendoza, 1995)
𝐶𝑜𝑛𝑠𝑢𝑚𝑒𝑟𝑝𝑟𝑖𝑐𝑒−𝑝𝑟𝑜𝑑𝑢𝑐𝑒𝑟𝑝𝑟𝑖𝑐𝑒
𝑇𝐺𝑀𝑀 = × 100-----------------------Equation (3)
𝑐𝑜𝑛𝑠𝑢𝑚𝑒𝑟𝑝𝑟𝑖𝑐𝑒

Where TGMM is the total gross marketing margin. It is useful to introduce the idea of farmer
portion or producer gross marketing margin, which is the share of price paid by consumer that
goes to the producer. To find the benefit of each actor the same concept will be applied with
some adjustment. For the analyzing margin first total gross marketing margin will be calculated.
The producer gross marketing margin calculated as
𝐶𝑜𝑛𝑠𝑢𝑚𝑒𝑟𝑝𝑟𝑖𝑐𝑒−𝑚𝑎𝑟𝑘𝑒𝑡𝑖𝑛 𝑔𝑟𝑜𝑠𝑠 𝑚𝑎𝑟𝑔𝑖𝑛
𝐺𝑀𝑀𝑃 = × 100%-----------Equation (4)
𝑐𝑜𝑛𝑠𝑢𝑚𝑒𝑟𝑝𝑟𝑖𝑐𝑒

𝐺𝑀𝑀𝑃 = 1 − 𝑇𝐺𝑀𝑀 Or
𝑆𝑆𝑖−𝑝𝑝𝑖
𝐺𝑀𝑀𝑖 = × 100 ---------------------------Equation (5)
TGMMi

Where GMMi is the marketing margin at given stage.

SSpi is the selling price at ith link and
PPi is the purchase price at ith link.
GMMi: is gross marketing margin at each stage
𝑃𝑥 𝑀𝑀
PS = Pr × 100 = 1- pr × 100 ----------------------------Equation(6)

Where, PS = Producer’s share

Px = producer price of onion

21
 PR = Retailer price of onion
MM = Marketing Margin.

3.4.3. Specification of Econometric model

The first Cobb-Douglass regression was estimated by using aggregate time series data from Us
manufacturing sector on labor, capital and physical output with the goal of understanding the
relationship between the level of output and quantity of input employed in the production (Cobb
and Douglas, 1928).
According to(EI-Fell. M.A.A, 1993), Many economists were recommended to use Cobb Douglas
production function model for analysis of farm of data. In this study the model was used to show
the effect of factor on the output of onion thorough input output relationship.
Cobb Douglas production functional form econometric model were specified in the following
𝛾𝑖 = Αχibi ℮𝜈𝑡 ----------------------------------------Equation (7)
where
Yi = Dependent variable (quantity of onion production supplied)
Xi = Explanatory variable
bi = Coefficients to be estimate or total factory of productivity.
℮ = Natural logarithmic
𝜈𝑡 = Disturbance term or error term.
The generalized transformed form of the above Cobb-Douglas production regression function
was represented as followed.
n n

ln Yi = ln A + ∑ 𝛽𝑖𝑙𝑛𝑥𝑖 + ∑ 𝛽𝑖𝑥𝑖
i=1 j=1

where ： ln ∑ni=1 𝛽𝑖𝑙𝑛𝑥𝑖 is the continuous variable in the form of ln

∑nj=1 𝛽𝑖𝑥𝑖 is the dummy/categorical/ variable
The log linear form of the above model was described as follow
lny = ln Α − 𝛽1 ln𝑋1 + 𝛽2 ln𝑋2 + 𝛽3 lnX3 + 𝛽4 lnX 4 − 𝛽5 lnX5 + 𝛽6 lnX6 + 𝛽7 X7 + 𝛽8 X8 +
+ 𝛽9 X9 + 𝛽10 X10 + 𝛽11 𝑋11 + ℇ𝑖
Where: lnYi: is quantity of onion production supplied to the market
X1 = Age of house hold head (AGHH)
X1= Family size of house hold head (FAMZ)
22
 X3 = Farming experience of house hold(EXPR)
X4 = Farm size allocated for onion production (FSA)
X5 = Distance from the market (DNMKT)
X6 = Quantity of fertilizer utilized (QFU)
X7 = Education level of the household head (EDUHH)
X8 = Sex of the household head (SHH)
X9 = Extension service (EXS)
X10 = Credit access (CRA)
X11 = Access to irrigation (AIRRG)
Ln = Natural logarithm
Ao= Constant

3.5. Definition of Variables and Working Hypothesis.

3.5.1. Dependent variable

Quantity of onion production supplied to Market (Yi): it is continuous dependent variable,
represents the actual supply of onion by farm to the market, measured in quintal.
3.5.2. Independent Variables
In order to identify the factor affecting quantity of onion production supplied to the market based
on economic theories and the findings of different empirical studies, the following explanatory
variables were analyzed to affect the dependent variable.
Sex of the Household Head (SHH): This is a dummy variable (takes a value of 1 if the
household head is male and 0 otherwise). In this studies variable assumed positive relation with
quantity of onion supplied to the market, (Bebe B. et al.., 2012) noted that majority of the female
are resource constrained given that they do not own critical resources in vegetable marketing to
obtain additional income. As a result, male household heads have more chance to choose
appropriate market outlets than female household heads.
Family Size (FAMSZ): This variable is a continuous explanatory variable and measured in
number and refers to the total number of family in the household. it was assumed that any
family member might decide to participate in onion production and marketing. Since production
is the function of labor, availability of labor and assumed to have positive relation with quantity
of onion supplied to the market. The study conducted by (Asfaw, 2014) on durum wheat value
23
chain analysis in Gololcha district Bale zone witnessed that more number of family member’s
decreases volume of durum wheat marketed.
Education Level of the Household Head (EduHH): This is a dummy variable with a value of
one if a household head had been literate and zero otherwise. Educational status of the farmer
determines the speed with which the farmer to adopt agricultural technologies.
Those who can read and write stand a better chance of understanding things faster. Moreover,
better-educated farmers tend to be more innovative and are therefore more likely to adopt the
marketing systems. The variable had positive and significant relationship to the independent
variable.
(Grover D. et al, ..2012)found level of education affected marketed surplus of wheat and rice
positively and significantly. Therefore, in this study, education level of house hold was
hypothesized to affect quantity of onion supplied to the market positively and significantly
Farming Experience (EXPER):it is a continuous variable measured in number of years.
A household with better experience in onion farming were assumed to produce more amounts of
production and, as a result, assumed to supply more amounts of onion to market.
Moreover, a household with better farming experience are more likely to change and/or aware of
production, marketing and differences in profitability in the different marketing outlets.
(Ayelech, 2011) and (Akalu, 2007) have also found respective commodity farming experience
affected quantity of avocado and tomato supplied positively.
Therefore, farming experience was expected to affect potato marketed surplus positively.
In this study the variable assumed positive relationship with quantity of onion supplied to the
market.
Distance from the nearest market (DNMKT): this is continuous variable, measured in walking
hours from household residence to the market center. In this study distance from the nearest
market were hypothesis to influenced the quantity of onion supply negatively.
The finding of (Efa Gobena .et al, ..2016) indicated that, as farmers far from the nearest market,
the quantity of teff supplied to the market would decrease.
Extension service (EXS): This is dummy variable that is measured in the number of days that
farmer had contact with extension agent for agricultural work supervision.
The objective of the extension service is introducing farmers to improved agricultural inputs.
In this study the variable has positive relationship with dependent variable.

24
(Abera, 2015)study showed that contact with extension agents positively influence the market
supply.
Farm size allocated (FSA): This is a continuous variable measured in hectare and have a
positive and significant relationship with the dependent variable. In this studies the variable
theorized positive relationship with dependent variable.
(Aysheshm, 2007)found that land allocated to sesame production influenced marketable supply of
sesame positively.
Quantity of fertilizer utilized(UFA): It is a continuous variable measured in quintals and
represents the quantity of chemical fertilizer utilized in onion production per hectare of land.
In this study the variable assumed positive and significant relationship with quantity of onion
supplied to the market. Yield. An increase in yield in turn had significant and positive effect on
the volume of maize supplied to the market (Muhammed, 2011)
Credit Access (CRA): This is a dummy variable taking a value of one if the household takes
have access to loan and zero otherwise. Use of credit would enhance the financial capacity of the
farmer to purchase the necessary inputs. The variable has positive and significant effect on
quantity of onion production to the market
A study conducted by (Bradbear, 2003) states that in poor societies, lack of credit is a major
constraint to everyone concerned with selling and buying honey.
Access to irrigation (AIRRG): this dummy variable which take value of one if house hold has
access to irrigation and zero otherwise. In this study the variable has positive relationship with
the dependent variable.
A study by (Tadesse, 2011) found that households having irrigation access tend to sell more
volume of vegetables than households who have no irrigation access.
Age of house hold head (AGHH): it is continuous variable measured in year and had negative
and significant effect on quantity of onion production supplied to the market
(Abraham, 2013) proved that aged farmer provides more of their vegetable product to market.
The result suggests as farmer have high potato production experience the amount potato supplied
to the market increased through its effect on potato in the first stage.
3.6. Model Diagnostic test
When some of the assumptions of the classical linear regression (CLR) model were violated,
the parameter estimates for the above model may not be Best Linear Unbiased Estimator

25
(BLUE). It is important to check the presence of multicollinearity, heteroscedasticity and
Omitted Variables test among the variables that affect supply of onion in the study area.
Multi- collinearity test: To detect multicollinearity problem among the explanatory variable
Variance of inflation factor (VIRF) were used. Which is represented as by the following
equation.
1
VIRF = 1−Rj2 , Rj2 represents a coefficient of determination of each independent variable

As a rule of thumb, (Gujarati D.N, 2003.) if the VIF value of a variable exceeds 10, which were
happen if R j 2 exceeds 0.90, then, that variable is said to be highly collinear. Therefore, for
this study displayed that there is no multicollinearity problem.
Test for heteroscedasticity: heteroscedasticity is one the problem leads to violate the
assumption of CLRM. It is mostly occurring in cross sectional data due to misspecification of
the model that lead violation of CLRM assumption.
It mostly occurs in cross sectional data due to misspecification of the model. in this study to
detect heteroscedasticity Bresusch-pagan test was used, so the robust standard error was used to
overcome the examined problem.

26
 CHAPTER FOUR

RESULT AND DISCUSSION

This chapter presents the finding of the study, with detailed analysis of data collected from both
primary and secondary source.
The first section of the study offerings demographic and socio-economic characteristics of
sampled producer and trader and actor participated with their marketing channel. The Second
section presents constraint and opportunity in onion value chain. The last section was
deliberating the results of Econometrics analysis.
4.1. Descriptive Analysis
4.1.1. Demographic characteristic of onion producer (Categorical variable)
Sex of household respondent: Table 4.1 revealed that out of total household’s head interviewed
45.76% Sample of house hold head were male and 52.24 % were female.
Educational level of the respondent: The survey out come in Table 4.1 showed that 44.92% %
of the sampled household heads were illiterate and 22.03% and 17.80% attended primary school
and junior school respectively the remaining 15.25% sample of house hold Head were secondary
Educated households use improved input to get good production and supply more products to the
market with the right price, at the right time and to the right place.
Access to Credit Service: Credit service is very important instruments for households to
purchase inputs, materials, pesticides, hire labors on time at required time and boost the
productions compared to non-credit users. With regarding to access 41.53 % sample of
respondent have no credit accessand58.47%sample of respondent were having access to credit
service.
Access to irrigation service: Out of sample of respondent interviewed 61.02 % Sample of
house hold reported that they have no Access to irrigation service and 38.98% sample of house
hold have irrigation service user.
Access to extension service: Extension service provision expected to have direct influence on
the production and marketing behavior of the farmers. The higher access to extension service the
more likely that farmers assumed to adopt new technologies and innovation.

27
with regarding to the service 55.93% sample of house hold head have no access to extension
service and 44.07% of the respondent have access to extension service.
Table. 4. 1. house hold Characteristic of onion producer(categorical variable)
Number of Percentage
respondent
Variable
Sex of House Hold
Male 54 45.76
Female 64 54.24

Total 118 100

Marital status
Married 65 55.08
Single 52 44.07
Total 118 100
Educational level

Illiterate 53 44.92
Literate
Primary (1-4) 26 22.03
Junior (5-8) 21 17.80
Secondary (9-10) 18 15.25

Total 118 100

Credit access
None access 69 58.47
Access 49 41.53
Total 118 100

Extension service
Service 52 44.07
None service 66 55.93
Total 118 100
Irrigation service
None Irrigation service 72 61.02
Irrigation service 46 38.98
Total 118 100
Source own survey result, 2019

28
4.1.2. Demographic characteristic onion producer (continuous variable)
Family size of the respondent: According to Table 4.2 the mean of family size of sampled
house hold was 4.14 with minimum value of 2 and maximum of 9 and standard deviation of 2.06
Age of the respondent: The average age of sampled of house hold head was 34.05 with the
minimum age of 16 and the maximum of 65 and standard deviation of 10.50
Farming Experience of the respondent: The average mean of farming experience for the
sample of respondent was estimated 17.30 with minimum of 2 and maximum of 35 and standard
deviation of 7.47
Table 4.2. House hold Characteristic of onion producer (continuous variable)
--------------------------------------------------------------------------------------------------------
Variable Mean Std. Dev. Min Max
----------------------------------------------------------------------------------------------------------
AGHH 34.05 10.50 16 65
EXPER 17.30 7.47 2 35
FAMSZ 4.14 2.06 2 9
------------------------------------------------------------------------------------------------------------
source: own computation,2019

4.1.3. Demographic characteristics of sampled traders

Sex of the respondent: The sample population of trader respondents considered during the
survey was 65. As shown in Table below out of total trader interviewed the survey result
showed that 53.85 % Sample of trader were male and 46.15% were female.
Educational level of the respondent: The survey result displays that 15.35% Sample of trader
were illiterate. However, However, 29.23% and 21.54% attended primary school and junior
school respectively where as 33.85% attended secondary school. Education level plays an
enormous role in ensuring trader access and important to manage the business as well as
indecision-making.
Access to credit service: With regarding to the credit access 46.51% Sample of respondent
have no credit; access and 53.85% sample of respondent were having access to credit service

29
Table 4.3. Demographic characteristics of sample of traders(categorical)
Categorical Variable No of Frequency Percentage
observation
Sex 65

Male 35 53.85%
Female 30 46.15
Marital status 65
Single 37 56.92
Married 27 41.53
Educational level of trader 65
Illiterate 10 15.38
Literate
Primary (1-4) 19 29.23
Junior (5-8 14 21.54
Secondary(9-10) 22 33.85

Credit Access 65
No access 30 46.15
Access 35

Source: own survey result, 2019

Age of the trader: The average age of sampled trader was 35.82 with the minimum age of 18
and the maximum of 75 and standard deviation of 12.32.
Marketing Experience: The mean of trader marketing experience for the sample of respondent
was estimated 16.4 with minimum of 2-year experience and maximum of 35 year and standard
deviation of 7.98
Family size of the respondent: The mean of family size for the sample of trader was 12.52
with minimum value of 2 and maximum of 9 and standard deviation of 1.84.

30
 Demographic characteristics of sample of traders(continuous)
Continues Variable Mean standard Min Max
deviation
FAMZ 65 12.52 1.84 2 9
AGT 65 36.01 12.32 18 75
EXPR 65 16.41 7.98 2 35

Source: own survey result, 2019

4.1.4. Socio- economic characteristic of sample of trader

Socio- economic characteristic including financial asset such, working capital, source of capital
and source of loan. As depicted in Table 4.4, out of sample of trader 38.46% were used their
own capital. In addition, the remaining sample of trader 7.69% and 53.84% were used from gift
and loan service during the survey year.
Table 4.4. Source of working capital for trader.
Source of working capital Frequency Percent
Own 25 38.46
Gift 5 7.69
Loan 35 53.84
total 65 100
Source: own survey result, 2019
The survey result in table 4.5 revealed that 9.2% Sample of the respondent were used loan
service from Bank. The remaining 30.76% and 13.84% of the respondent were obtained from
omo-micro finance institutions and relative/ family/.
Table 4.5. Source of loan for trader
Source of loan Frequency Percentage
Bank 6 9.2
Microfinance institutions 20 30.76
Relative/family 9 13.84
No loan service 30 46.15

Source: own survey result, 2019

31
4.2. Actor participated in onion value chain and marketing channel
In this study, the major sample of applicant participated in onion value chain were categorized as
below.
A. Input supplier
This is the first stage in onion value chain, many participants involved in this activity. seed
suppliers (traders), and private agricultural chemicals suppliers are the main actors in supplying
inputs to farmers. Onion farmers also participated in this stage in preparing their own inputs and
supplying input to fellow farmers. In combination, these actors supplied fertilizers (both DAP
and Urea) and composite chemicals and other used their animal manure. According to table
below 4.6, Out of the total interviewed households 29.66% were used DAP fertilizer, 36.44%
used Urea fertilizer, 8.47% used animal manure and 25.42 were used chemical compost.
Table 4.6. Utilization of fertilizer for onion production
Utilization of fertilization Frequency Percentage
Urea 43 36.44
DEAP fertilizer 35 29.66
Animal Manure 10 8.47
Compost Chemicals 30 25.42

Source own survey result, 2019

Labor is an important factor in the production according to table 4.7 out of sample of respondent
interviewed 19.49% and 16.94% were used family labor in the production and 35.55% and
27.96% were hired labor involved in the production of onion.
Table 4.7. Source of family labor for onion production
Source of labor Frequency Percentage

Family labor
Male 23 19.49

Female 20 16.94

Hired labor
Male 42 35.55

Female 33 27.96

32
Source: own survey result, 2019,
Table 4.8 represent that 15.25% sample of trader got loan service from bank was and 18.64%
and 7.62% reported that micro finance and relative/family/were the source of loan.
Table. 4.8. Source of loan for producer
Source of loan Frequency Percentage
Bank 18 15.25%
Micro finance 22 18.64%
Relatively/family 9 7.62%
No credit service 69 58.47%

Source: own survey, 2019

B. Producers
Produce play important role in onion value chain. Mostly they produce for consumption and for
selling it to different channels. In the study area there is no constant channels to where farmers
sell their products. What input to use, when to saw seed and harvest, how much to consume, and
how much to sell by considering the available resources is decided by the farmers in the study
area, the average land allocated for onion production by farmers in the production year was 2.92
per hector with a maximum of 6 and minimum of 1.1 and standard deviation of 1.51 and average
quantity of onion produced during the survey year was 31.40 qt with minimum of 5 and
maximum of 63.
Table 4.9. Average land holding and onion production pattern for sample farmers in south bench
woreda, 2018
-----------------------------------------------------------------------------------------------------------
Variable Mean Std. Dev. Min Max
-----------------------------------------------------------------------------------------------------------
Yi 31.40 15.23 5 63
FSA 2.92 1.51 1.1 6
-----------------------------------------------------------------------------------------------------------
Source: own survey result ,2019
According to table 4.10,6.7 % sample of the respondent were reported that they were contacted
once in a week, 16.03% sample of house hold head were visited twice in a month, 21.18%

33
sample of house hold head contact once in two weak and 55.93% sample of respondent have no
contact with extension service provider.
Table 4. 10. Frequency of extension service
Description Frequency Percentage
Weekly 8 6.7
Twice in month 19 16.01
Once in two week 25 21.18
No contact 66 55.93

Total 118 100

Source: own survey, 2019
Out of the sample of house hold involve in onion production 38.98% used irrigation and 61.01%
were used rain fed (meher season).
Table4.11. Onion land coverage and output obtained
production Method Areal coverage(Ha) Frequency Percentage
Irrigations 5.21 46 38.98
Rain fed 17.41 72 61.01
Total 22.66 118 100
Source own survey result, 2019
Table 4.12 survey result indicates that 23.72% and 45.76% Sample of the respondent were
categorized between 2-10 and 11-20 and 31.35% and 0.84% sample of the respondent were
categorized between experience of 21-30 and above 31 respectively.
Table 4.12. Farming experience Categories of the respondent
Experience Frequency Percent
2-10 26 23.72%
11-20 54 45.76%
21-30 37 31.35%
Above 31 1 0.84%
Source own survey result, 2019
The survey result represented in table 4.13 out of the total quantity of onion produced during the
survey year, 92.12%qt were supplied to the market and7.87%wereconsumed.

34
Table 4. 13 Quantity of onion produced during the survey year during 2018
vegetable crop Quantity produced Quantity sold in Quantity Average
in quantal Quantal consumed in selling
quantity price(birr/qt)
Onion 2,056 1,894 162 15
Source: own survey ,2019
In Table 4.14, out of total sample of onion producer interviewed 29.66% reported that the trend
of onion price was constant and the remaining 21.18% and 49.15% reported the price trend were
increasing and decreasing respectively. With regrading to trends of onion selling price for trader
49.23% sample of trader respondent that the trend of onion price in the market was at increasing
and the remaining 35.38% and 15.38% sample of trader reported that the trend of onion price
was decreasing and constant respectively
4.14. Trend of onion average selling price in the study area
Trend of selling price Producer Trader

Frequency Percentage Frequency Percentage

Increasing 58 49.15% 32 49.23%

Decreasing 25 21.18% 23 35.38%
Constant 35 29.66% 10 15.38%
Source: own survey result ,2019
The survey result obtained from sample of respondent in table 4.15 indicates that 49.15%, and
39.83%, of the respondent were categorized under age between 16-30 and31-45 and the
remaining 11% sample of the respondent were categorized above 46 respectively.
Table 4.15. Age group category of the respondent
Age categories Frequency Percentage
16-30 58 49.15%
31-45 47 39.83%
Above 46 13 11%
own survey results, 2019
Distance from the nearest market is very important factors for market supply. Households who
are nearest to the market obtain enough information about price, demand, supply and incur
minimum market cost as compared to the households who are far away from the market. market
centers are one of an important factor in making information available for onion producer and
35
help them in improving livelihood. Table 4.16 presented, average distance of producers traveled
to nearest market place was 3.28km and standard deviation of 1.51 with minimum of 1.1 Hr. And
maximum of 6.5 Ha
Table 4. 16. Average distance of the respondent from market center to production center
-------------------------------------------------------------------------------------------------------------
Variable Mean Std. Dev. Min Max
------------------------------------------------------------------------------------------------------------
Quantity of onion produced(Yi). 31.4015.23 5 63
Average distance from mkt center(DNMKT). 3.28 1.511.1 6.5
-------------------------------------------------------------------------------------------------------------
Source: own survey result 2019
In table below 4.17 out the total sample of respondent interviewed 54.23% of the respondent
were used donkey as transportation, 25.42% of the respondent used human labor, 11.01% of the
respondent were used truck and 9.32% of the respondent were used Vehicle
Table 4. 17. Means of transportation used by House Hold Head.
Means of transport Frequency Percent

Donkey 64 54.23
Human labor 30 25.42
Truck 13 11.01
Vehicle 11 9.32
Source: own survey result ,2019
C. Wholesaler
Wholesalers are well-known for purchase of bulky commodities with better financial and
information capability. They are mainly involved in purchasing of onion from producers in
larger quantity than any other actors and supply either to other wholesalers, retailers or
consumers. Sometimes they also purchase from farmers by going to their farms and from nearest
rural market. Wholesalers at local market sell onion through cell phone communication with
traders in different market. They sold to another wholesaler in other market. Occasionally, some
wholesalers come from other areas, the Survey Result showed that wholesalers also transport
onion to Mizan-Aman in large quantity. Data given below in Table 4.18 show, that 69.23% and
30.769% sample of wholesaler trader were purchased onion from farmer and local collector

36
respectively and 92.30% and 7.69% sample of wholesaler trader sold to retailer and consumer
respectively.
Table 4. 18. Wholesalers response from whom they purchase and to whom they sell
From Frequency Percentage To whom do you sell Frequency Percent
whom onion
you buy
onion
product
Farmers 45 retailer 60 92.30%
69.23%
Local 20 30.76% Consumer 5 7 .69%
collectors
Total 65 100 Total 65 100
Source own survey result 2019
The total quantity of onion produce during the survey year was 2,056 quantiles.
According to table 4.19, out of the total quantity of onion supplied to the market by farm 52.05%
were purchased by sample of wholesaler trader during the surveying year.
Table 4.19 quantity of onion purchased by sampled wholesaler 2018
From quantity purchased in quantal Percentage
Farmer 9,86 52%

Source, own survey 2019.

D. Retailer
Retailers are the key actors in onion value chain in the woreda. They are the last link of onion
value chain between consumers, wholesalers and other actor and most of them are unlicensed. As
observed during the survey, there are considerable number of retailers who trade onion.
Retailers were purchased 38.7% of the total quantity of onion from farmer and 61.27% from
wholesaler then resale to final consumer.

37
Table 4. 20. Quantity of onion purchased by sampled retailers in, 2018
From Annual quantity purchased (qt) Percentage
Farmer 6,20 38.72%
Wholesaler 9,81 61.27%
Total 1,601 100%
Source: own survey ,2019
The total quantity of onion supplied to the consumer by farmer and Retailer during the served
year was 15.3% and 84.68% respectively.
Table 4. 21. Quantity of onion supplied to consumer by sampled retailers and farmer in 2018
From Annual quantity purchased (qt) Percentage
Farmer 2,88 15.3%
Retailer 1,593 84.68%
Total 1881 100%
Source: own survey ,2019
Table 4.22 indicated, that 30.76% and 69.23% sample of retailer trader were purchased onion
from farmer and wholesalers respectively and 23.07% and 69.23% sample of Retailer trader sold
to consumer and Restaurant respectively
Table 4. 22. Retailers response from whom they buy and to whom they sell in, 20
From whom Frequency Percentage to whom do you sell onion Frequency Percentage
you buy

Farmers 20 30.76 Consumers 15 23.07%

Wholesalers 45 69.230 Restaurant 45 69.23%
Total 65 100 Total 65 100

Source: own survey result, 2019

Marketing channel
Marketing channel are the rout through which agricultural product moves from producer to
consumer. The length of channel varies from commodity to commodity, depending on quantity
to be moved from producer to consumer demand and degree of regional specialization in the
production. Onion marketing channel illustrated were constructed based the data collected in
three selected market and five selected onion producer kebele. The result displays that three

38
marketing channel were identified for onion which were acquired from producer and trader
survey. The estimated quantity of production were 2,056 quintals in the survey year of 2018.
Out of this 1,894 Qt were supplied to the market by farm in the market (SBWNRDOA, 2018).
Onion marketing channel
Three onion marketing channel were identified from point of production to the final consumption
in the study area. The channel identified in the study were producer -wholesaler- retailer-
consumer, producer- retailer- consumer and producer-consumer channel.
Out of the total quantity of onion supplied to the market 981qt were carried out through,
Producer- wholesaler- Retailer channel, which account the largest channel 6,20qt were carried
out through producer- retailer- consumer and 2,88qt were carried out through producer -
consumer channel.
Channel 1. Producer-wholesaler - Retailers- consumer: this is the longest channel, which
account 51.79% of marketed onion during the survey year.
Channel 2. Producer –retailer – consumer: This the second most important marketing channel
in terms of quantity and represent 32.73% total quantity of onion marketed.
Channel 3. Producer – consumer: This the shortest channel in which the producer directly
sells to the consumer at the marketed day, which account 15.20% total quantity of onion market.

39
 Figure 4.1. Onion marketing channel for south Bench woreda

Producer (1,894qt) 986qt Wholesaler

981qt

620qt
Retailers

100%
288qt
100%
Consumer

Own sketching from survey data, 2018.

marketing Margin
In this sub section of different marketing margins, the average selling prices of different
participants in the onion value chain (farmers, wholesalers and retailers) were calculated.
Marketing margin is one of the commonly used measures of the performance of a marketing
system. It is defined as the difference between the price the consumers pay and the price the
producers receive. Computing the total gross marketing margin (TGMM) is always related to the
final price or the price paid by the end consumer, expressed in percentage (Mendoza G,
1995)Gross marketing margin (GMM) is the gap between prices at consecutive levels in the
marketing channel. Therefore, for this study the marketing margins were computed as following.
According to table 4.23 the gross marketing margin of wholesaler and retailer was 5 and 3 and
the total gross marketing margin was 25% with producer share of 75%

40
Table 4. 23. Marketing margin of onion value chain
Value Chain actor Selling price Purchasing price GMMi
Producer 15 - -
Wholesaler 17 15 5
Retailer 20 17 3
Consumer 20 -

Source, own survey result, 2018

GMM of Wholesaler = (PR - PF)
GMMW = 20 − 15 = 5
GMM of retailers = (PR - PW)
GMMR 20 − 17 = 3
Where PF = Price of producer
PR = Price of retailer
PW =Price of wholesaler
𝐶𝑜𝑛𝑠𝑢𝑚𝑒𝑟 𝑝𝑟𝑖𝑐𝑒−𝑝𝑟𝑜𝑑𝑢𝑐𝑒𝑟 𝑝𝑟𝑖𝑐𝑒
𝑇𝐺𝑀𝑀 = × 100 ----------------------------Equation (8)
𝑐𝑜𝑛𝑠𝑢𝑚𝑒𝑟 𝑝𝑟𝑖𝑐𝑒

Whereas TGMM is total gross marketing margin

20−15
𝑇𝐺𝑀𝑀 = × 100 = 25%
20

producers gross marketing margin is the proportion of the price paid by the end consumer that
belongs to the farmer as a producer.
𝐺𝑀𝑀𝑃 = 1 − 𝑇𝐺𝑀𝑀
1—0.25 = 75%
𝑃𝑥 𝑀𝑀 15
PS = Pr × 100 = 1- pr × 100=20 × 100 = 75%

Where px = is price of producer

Pr =is price of retailer

41
4.3. Constraints and Opportunity in onion value chain analysis
In this section a number of constraint and opportunity in the value chain in the study area were
identified by asking the different value chain actors through focus group discussion. The major
constraints and opportunities are briefly discussed at different stages of the value chain.

4.3.1. Major Onion Production Constraint at Producer Level

Low supply of input: seed were supplied from other area by private traders that lack on time
delivery, certification and desired. out of the sample of producer interviewed 8.47% sample of
respondent reported that production of onion in the study area were limited by low supply of
input.
Low irrigation facility 11% of the respondent reported that production of onion is
limited/constraint by low irrigation facility
Poor disease control: Prevalence of pest and disease like powdery mildew affected onion. 21.18%
sample of the respondents reported that production onion was limited by poor diseases control
Lack of technical training: in the study area out sample of respondent interviewed 15.25%
sample of producer reported that quantity of onion that were produce are limited by lack of
training
high cost of inputs: In the study area farmers face many problems related to fertilizers. The
price of input is high and households cannot buy at the required time because of financial
problem. the survey result indicates that 25.42% sample of house hold reported that quantity of
onion produced are limited by high cost of input
low demand: 18.6% sample of house hold reported that the amount of onion produced are
limited by low demand respectively.
Table 4. 24. constraints of onion production at farm level
Constraint Number of respondent Percentage
Low supply of input 10 8.47%
Low irrigation facility 13 11%
Poor disease control 25 21.18%
Lack of technical training 18 15.25%
High inputs cost 30 25.42%
Low demand 22 18.64%

42
 4.3.2. Major Onion Marketing Constraint at Producer Level
Unfair pricing and fluctuation: In the study area repeated low pricing was reported at peak
supply period that were not based on the actual supply and demand interaction. Out of sample of
producer interviewed 10.16% of the respondent reported that onion marketing was constrained
by unfair pricing and fluctuation, because benefit of wholesalers over weighs than others and
they control the market chain.
Lack of credit: the survey result indicts that 21.11% sample of the respondent reported that
marketing problem were lack of credit service.
Lack of strong cooperation: Although there are multipurpose and irrigation farmer’s
cooperatives in the study area which were established to safeguard farmers’ and rights over their
input supply and market of products. The survey result indicate 29.66% sample of the
respondent reported that lack of strong of strong cooperation were the constraint in onion
production.
Lack of market information: out sample of respondent interviewed 17.79 % reported the main
constraint in onion production were lack of information.
Poor linkage with value chain actor: actor was not coordinated to increase their bargaining
power. There was no any marketing institution to safeguard farmer’s interest and rights over
their marketable produces. Even the existing few irrigation cooperatives lacked skill and capacity
on how to go about. Rather, competition among farmers was the usual phenomenon.
with regrading to the linkage of value chain 21.18% sample of producer were reported poor
linkage among the actor hinder in the value chain of onion production that is supplied to the
market
Table 4. 25.Constraints of onion marketing at farm level
Constraint Number of respondent Percentage
Unfair pricing and fluctuation 12 10.16

Lack of credit 25 21.11

Lack of strong cooperation 35 29.66
Lack of market information 21 17.79
Poor linkage with value chain of actor 25 21.18
Source: own survey, 2019

43
4.3.3. Major Onion Marketing Constraint at Trader level
The problem reported by trader in the study area market were discussed below
Unfair pricing fluctuation: This were one of the constraint in the study area market. Out
sample of trader interviewed 15.38% marketing were unfair pricing and fluctuation and
shortage of supply: 7.69% of the respondent reported that the constraint of onion value chain
was due to shortage of supply.
Brokers intervention and too much competition: out of sample of trader 24.61% and 35.38%
respondent, reported that market problem was limited by Brokers intervention and too much
competition respectively.
High transport cost and Shortage of truck: 7.69% and 9.2% sample of trader, responded that
market problem were limited by High transport cost and Shortage of truck
Table 4. 26. Constraints of onion marketing at trader level
Problem faced in the market Frequency Percentage
Unfair pricing and fluctuation 10 15.3%
Shortage of supply 5 7.6%
Brokers intervention 16 24.6%
Too much competition 23 35.3%
High transport cost 5 7.6%
Shortage of truck 6 9.23%
Source: own survey result, 2019

4.3.4. Opportunity along the onion value chain

South bench woreda is one is of the natural endowed woreda having production and marketing
opportunity and problems, which were identified during survey year with focus group discussion
and questionnaire.
Production opportunity along the onion value chain
Availability of rain fall that facilitate the production of onion in generating income in short
period, its better productivity in small land, its use as cash income source or livelihood
consumption, increasing price and its continuous demand in the market were some opportunity
of onion by most of the producer.
The woreda are also naturally endowed though they have some production and marketing
opportunity.
44
some of the potential to mention are the following. The woreda are very suitable to produce not
only onion product but also other market oriented commodities. of course the potential crop
tropical crop like mango, banana, orange and avocado production are some of available potential
on the top of this relatively fertile arable land and abundant of weather condition are some to
mention.
Government suitable agricultural police designed to support farmer at grass root level especially
emphasis given for horticultural production in growth and transformation plan (GTP).
The arrangement of development agent at each kebele based on their academic back ground,
Furthermore the provision of infer structure facilities like roads, telecommunication, and
financial support institution are the infer structure advantage that facilitate the production and
marketing of onion in the study area.
Marketing opportunity along the onion value chain
On the other hand, availability of market demand though out the year, growing number of buyer,
high experience in onion trade
The result of the study shows that the producer intended to expand onion to the above
opportunity. The natural advantage of proximity to air condition and availability of rain
throughout the year are still the opportunity which could facilitate commercialization in the
woreda and increasing the use of mobile telephone were advantage to improve system.

4.4. Econometric Analysis

For this study 11 explanatory variables were identified as factors affecting quantity of onion
production supplied to the market. The theorized variables were Age of house hold, families
size of house hold, sex of house hold, educational level of house hold, farming experience,
Extension service, Credit access, irrigation access, farm size allocated for onion production,
distance from the nearest market, and quantity of fertilizer utilized. From eleven explanatories,
seven variables were found to be significantly, positively and negatively affecting quantity of
onion supplied to the market, such as Age of house hold, farm experience, families size of
households, educational level of house hold, distance from the nearest market, Credit access and
quantity of fertilizer utilized more influenced quantity of onion production supplied to the
market.

45
 Sex of the Household Head (SHH): This is a dummy variable which takes value of one if the
household head is male and zero otherwise. In this study the variable was found to be positive
with quantity of onion production supplied to the market. The positive sign shows being a male
head of a household increase onion quantity supplied to the market by 0.07% quintals as
compared to that of female-headed households, keeping other variables constant. The reason
behind that females can take higher care than males about household’s consumption by saving
from produce to feed household; this can reduce the quantity of onion supplied to the market.
This were consistent with the finding of ( (Mahlet.et al, ..2015)who found that gender of the
household head positively and significantly influenced marketed supply of potato. The authors
stated as the reason that male headed households have better financial capability, better land size,
better extension contacts, and better access to market information than female headed
households.
Education Level of the Household Head (EduHH): This is a dummy variable with a value of
one if a household head had been literate and zero otherwise. Educational status of the farmer
determines the speed with which he/she likely to adopt agricultural technologies. Those who can
read and write stand a better chance of understanding things faster. Moreover, better-educated
farmers tend to be more innovative and more likely to adopt the marketing system.
The survey results of this study revealed that level of Education positively and significantly
affect quantity of onion supplied to the market 5% level of significant that indicate if onion
producer gets education, the amount of onion supplied to the market increases by 0.11% quintal,
keeping other factors constant. This were in line with finding of (Ayelech, 2011)who found that
if paddy and avocado producer gets education, the amount of paddy and avocado supplied to the
market increases, respectively.
Extension service (EXCT): This was dummy variable measured in the number of days that
farmer had contact with extension agent for agricultural work supervision. The objective of the
extension service was introducing farmers to improved agricultural inputs.
The result of this study revealed that a unit (day) increase in contact of extension agent results in
0.033% quintal increment in quantity of onion supplied to the market. The study was in line with
pervious study conducted by (Ayelech, 2011), found that if fruit producer gets extension, the
amount of fruits supplied to the market increases.

46
irrigation access(AIRRG): As it was expected having irrigation access had a positive effect on
quantity of onion production supplied to the market. The result of this study indicates as
compared with non-irrigation users’ farmers who had irrigation access increase quantity of onion
output supplied to the market by 0.039% quintal, keeping all other explanatory variables
constant. This is because farmers who have irrigation access can produce onion more than that of
non-irrigation user and in other ways according to information obtained from farmers and
agricultural experts in the district onion cultivated in irrigation was less affected by disease and
insects as compared with rain fed produced onion. A study by (Tadesse, 2011) found that
households having irrigation access tend to sell more volume of vegetables than households who
have no irrigation access.
Credit access (CRA): This is a dummy variable taking a value of one if the household takes
loan and zero otherwise. As hypothesized the influence of credit access on marketed surplus of
onion was positive. The result revealed that those who have got credit access would increase the
quantity of onion production supplied to the market by 0.094% quintal, keeping all other
explanatory variable to be constant. In line with finding of (Alemnewu Abay, 2010) study found
that if pepper and teff producer gets credit, the amount of pepper and teff supplied to the market
will increase.
Farming Experience (EXPER): it is a continuous variable measured in number of years and
have positive relationship with dependent variable.
(Toyiba shafi.et al, ..2014) found that experience in papaya production had a positive and
significant effect on papaya volume marketed. In this study farming experience have a positive
and significant effect on quantity of onion production supplied to the market at 1% level of
significantly, the result of this study shows that a one-year increase in experience of onion,
production lead to increase elasticity marketable supply of onion by 15.43%, keeping other
explanatory variable constant. Farmer with loner period of experience in production was
assumed to have a better knowledge than those who have lower experience in farming, because
through time producer acquire skill about marketing and supply better than those who has less
experienced.
Distance from Nearest Market (DNMKT): This is continuous variable, measured in walking
hours from household residence to the market center. In this study distance from the nearest
market have negative and significant effect on quantity of onion production supplied to the

47
market, the result of the study revealed that a one hours increase in distance of house hold
residence from the nearest market center the, probability elasticity marketable supply of onion
was decreased by 26.78% keeping other explanatory variable constant. This is because of those
households who was closer to the market assumed to have more probability of choosing better
market outlet, the lesser would be the transportation charges, reduced walking time, and reduced
other marketing costs, better access to market information and facilities. The study was in line
with the finding of (Chalwe, 2011), showed that distance to nearest market was significantly and
negatively related to best channel choice decision. The author reason out that most of beans
farmers are poor in resource endowment and lack transport resources, transportation costs
associated with moving the produce to the market therefore discourage farmers to participate in
markets far from their premises.
Farm size allocated (FSA): This is a continuous variable measured in hectare and had positive
relation with dependent variable. The result of this study showed that when the farm size
allocated for onion production increased by one hectare the elasticity marketable supply of onion
increased by 8.08%, keeping other explanatory variable constant. The study agrees with the
findings of (Bosena, 2008) ,that land allocated under cotton affected market supply positively.
Quantity of fertilizer utilized (QFU): It is a continuous variable measured in quintals and
represents the quantity of chemical fertilizer applied in onion production per hectare of land. In
this study variable the was theorized to affect quantity of onion supplied to the market positively
and significantly at 1% level of significantly. The result of the study revealed that one percent
increase in quantity of fertilizer utilized lead to increase elasticity marketable supply of onion by
35.5%, keeping other explanatory variable constant. According to study conducted by
(Muhammed, 2011), the more the rate of fertilizers used, the higher the yield. An increase in yield
in turn had significant and positive effect on the volume of maize supplied to the market.
Family Size of House hold (FAMSZ): This is a continuous explanatory variable and refers to
the total number of family in the household. In this study family size had positive and significant
impact on quantity of onion supplied to the market at 1% level of significant. A study
conducted by (Wolday, 1994), presented that household size had significant and positive effect
on quantity of teff marketed and negative effect on quantity of maize marketed. In general, the
result of this study revealed that, when the number of family increased by one percent the
elasticity of marketable supply of onion changed by 29.47% keeping other explanatory variable

48
constant, this is because the more number of family members an individual had the more
probable to produce and more supply to the market
Age of house hold head (AGHH): This a continuous variable measured in year and have
negative and significant effect on quantity of onion production supplied to the market, because as
one becomes old result’s decline in mental and physical abilities lead to deterioration in the
production and hesitant to take up new technologies or it also assumed that as age increase the
production capacity will decrease and amount of marketed supply decline.
Generally, the result of the study showed that when age of house hold increase by one year or
percent, elasticity of marketable supply of onion were decreased by 31.22%keeping other
explanatory variable constant.(Abraham, 2013) proved that aged farmer provides more of their
vegetable product to market. The result suggests as farmer have high potato production
experience the amount potato supplied to the market increased through its effect on potato in the
first stage
The F- test calculated value (11,106) = 41.87and R2 was computed to be implying that 79.24% of
the variation in the dependent variable was explained by the explanatory variables under
consideration and Adj R2 was 77%.

49
Table 4. 27.Logarithmic estimation of factor affecting quantity of onion production supplied to
the market.
Robust
Variable Coef. Std. Err. t-value P>|t|
---------------------------------------------------------------------------------------------------------------------
EDUHH .1111362**. 0538869 2.06 0.042
CRA .0945382* .0554663 1.70 0.091
IRGA .0396906 .0471798 0.84 0.402
EXS .0334062 .0590697 0.57 0.573
SHH .0709365 .0522979 1.36 0.178
lnAGHH -.3122955*** . 0878184 -3.56 0.001
lnFAMZ .2947059 *** .1179509 2.50 0.014
lnEXPR .1543432*** .0598593 2.58 0.011
lnFSA .0808464 . 0565404 1.43 0.156
lnDNMKT -.2678653***. 0899874 -2.98 0.004
lnQFU .3550103***. 0961118 3.69 0.000
Cons 3.224646***. 3514197 9.18 0.000
Obs 118
Prob > F 0.0000***
F (11, 106) 41.87
-----------------------------------------------------------------------------------------------------------------------------
Computed from survey data of Stata 14 output (2018).
Note: P< 0.1, p<0.05 and p<0.01
(*),(**)and (***) represent statistical significant at 1%, 5% and 10%.The dependent variable was
quantity of onion production supplied to the market(Yi), in quantal transformed to
logarithms(lnYi).
For the parameter estimates to be BLUE the assumptions of CLRM should hold true. Hence,
multicollinearity, heteroscedasticity and test for omitted variables) were performed using
appropriate tests.
Test for multicollineartity: Multicollinearity problem arises due to a linear relationship among
independent variables; and becomes difficult to identify the separate effect of independent

50
variables on the dependent variable because of the existence of strong relationship among them.
VIF has been used to check the existence of muliticollineratity problem among explanatory
variables. The test result showed that all values of VIF was less than ten (10) and the mean of
variance of inflation factor(VIF) was 1.96, which indicates no multicollinarity problem among
explanatory variables in the modal (Appendix Table 7.1)
Test for heteroscedasticity: Heteroscedasticity is a situation in which variance of the disturbance
term is not constant. If there is heteroscedasticity problem in the data set, the parameter estimates
of the coefficients of the independent variables cannot be BLUE.
In this study, Breusch-Pagan /Cook-Weisberg test/ was employed to detecting the
heteroscedasticity problem and the test result indicate that the researcher was failing to reject the
null hypothesis of constant variance at P-value =0.000, this implies there is heteroscedasticity
problem in the data set. There for the parameter estimate of the coefficient of the independent
variable cannot BLUE. so, the robust standard error, was used to overcome the examined
problem in Stata command (Appendix figure 7.6).

51
 CHAPTER FIVE
Conclusion and policy Recommendation
5.1. Conclusion
This study was aimed to investigate the value chain analysis of onion market in south bench
woreda in Bench maji with specific objective of factor affecting quantity of onion production
supplied to the market by farm, identifying major actor in onion value chain and constraint and
opportunity along the onion value chain in both production and marketing.
In order to adders the objective of the study both primary and secondary source of data were
used with cross- sectional data. The primary data was collected from onion producers and trader
(wholesaler and Retailer) using questionnaire and focus group discussion (FGD) with key
informant and Secondary source of data was collected from published article and unpublished
reports of different level of agricultural bureau.
118 sample of onion producer were selected from five selected kebele through multi stage
probability sampling technique and 65 sample of onion trader were selected from three market
center (Deberwork, Gelatin and Zozo) through simple random method of sampling technique.
To analyze the collected data both descriptive and Econometric analysis were used.
Descriptive statistics were used to measure frequency, mean, percentage, and standard deviation
and Cobb-Douglas production function modal (CDM) were used to identify factor affecting
quantity of onion production supplied to the market by farm.
Out of 118 sample of producer selected from five kebele 52.54% were male headed and 47.46%
were female headed. The result revealed 44.92% % of the sampled household heads were
illiterate and 22.03 % and 17.80% attended primary school and junior school respectively the
remaining 15.25 % sample of house hold attended in secondary school.
Out of 65sample of trader selected from three market sit 53.85 % Sample of trader were male
and 46.15% were female. The survey result displays that 15.35% sample of trader were illiterate.
However, 29.23% and 21.54% attended primary school and junior school respectively where as
33.85%attended secondary school. The average age of sampled trader was 35.82 with the
minimum age of 18 and the maximum of 75 and standard deviation of 12.32 and average mean
of marketing experience for the sample of respondent was estimated 16.4 with minimum of 2-

52
year experience and maximum of 35 years. The main source of loan for the trader was bank,
micro finance institution and relative/family/ According to the survey outcome 9.2 % sample of
the respondent borrowed from bank, and the remaining 30.76% and 13.84% of the respondent
were loan from omo-micro finance institutions and relative/ family/.
The major constraints that impede onion production at farm level were low supply of input, low
irrigation facility, Poor disease control, lack of technical training, high cost of inputs and low
demand and at marketing level that hinder farmer onion market were unfair pricing and
fluctuation, lack of credit, lack of strong cooperation, lack of market information and poor
linkage with value chain of actor.
At trader level the major marketing constraint were unfair pricing and fluctuation, Shortage of
supply, brokers intervention, too much competition, high transport cost and shortage of truck.
Availability of rain fall, that facilitate the production of onion in generating income in short
period, better productivity in small land and use it as cash income source or livelihood
consumption. Government suitable agricultural police designed to support farmer at grass root
level especially emphasis given for horticultural production in growth and transformation plan
(GTP) and deployment of development agent at each kebele based on their academic back
ground were some of opportunity in the production and availability of market demand though out
the year, growing number of buyer, high experience in onion trade, increasing the use of mobile
telephone were some the opportunity of onion.
the major sample of applicant in onion value chain were producer, wholesaler, retailer,
consumer and other.
The average land allocated for onion production by producer in the production year was 2.92 per
hector with a maximum of 6 and minimum of 1.1 and standard deviation of 1.51 and average
quantity of onion produced during the survey year was 31.40 qt with minimum of 5 and
maximum of 63. The survey result indicated that 2, 056 qt of onion were produced during the
survey year and 1,894 qt were supplied to the market by farm. Retailers were purchased 38.78 %
of the total quantity of onion from farmer and 64.02% from wholesaler then resale to final
consumer and 52.05% were purchased by sample of wholesaler trader and 15.3% and 84.68%
quantity of onion supplied to consumer by sampled retailers and farmer during the surveying
year.

53
About three different market channels of onion were identified in the study area. The market
channel was, Producer-Wholesaler-Retailers- consumer (51.79%), producer-retailer- consumer
(31.1%) and producer- consumer (15. 20%). The largest quantity of onion passed through
Producer-wholesaler - Retailers- consumer marketing channel and small quantity of onion passed
through producer –consumer channel.
The total gross marketing margin (TGMM)of producers gross marketing margin account 25%
and 75% respectively.
Econometric result indicates that quantity of fertilizer utilized, distance from the nearest market,
family size of house hold head, educational level of house hold head, farming experience and
Credit access were significantly and positively determined the quantity of onion supplied to the
market. Therefor the variable entail special consideration to increase farmer margin from onion
production and marketing so special focus need to be on these variable.

5.2. Policy Recommendation

Based on the outcome of this study the following recommendation are given by considered the
future intervention strategies for policy maker, development actor, researcher and south bench
woreda natural resource development and agricultural office to have strong interest in promoting
onion production and marketing for equal benefit among value chain actor. Onion production
should be intensified and diversified to satisfy the wider, woreda market demand and generating
of high income for all market players.
It is highly recommended to improve the input supply system so that the farmer receive the right
type of production input, quantity and quality supply system at the right type, improving system
will protect farmer from purchasing low quality input by high input cost.
There was poor linkage and low coordination among the value chain actor in the study area and
farmer are price taker, because of wrong information transmitted by trader thus concerned bodies
to give attention to benefit farmer through providing training on how farmer supply quality
product to obtained perfect information and bargaining power.
The Econometric result outcome of this study displayed that quantity of chemical fertilizer
utilized were affected the amount of onion supplied to the market positively and a significantly,
thus farmers applied chemical fertilizer in order to increase their productivity and improve
livelihoods. As smallholder’s farmer they were highly constrained in cash and did not have

54
enough money this result lack of providing credit service that reduce or totally avoid the
application of fertilizer and they are forced to purchase chemical fertilizer for the sake of
fulfilling the sales targets at the woreda level.
With regarding to this situation in order to promote the quantity of onion that is produced and
supply more to the market the concerned bodies should recommended to reduce the cost of
chemical fertilizers utilized and providing subsidies through loan service is better option to
make them cheap for purchase to increase productivity with per unit area of land, turn to
increase market supply of onion, because they were faced scarcity of cash and fear of exclusion
from purchasing of fertilizer and avoid the extension contact.
Distance from the nearest market is an important significant variable for the farm in the
marketing of onion crop, as the result the concerned bodies should improving rural infrastructure
such as road and transportation facilities and market infrastructure to assist poor farmer for faster
delivery of farm produce product and to increase market supply of the product and increase their
income and choice of appropriate out let.
The finding of econometric result showed that age of household headed affected quantity of
onion supplied to the market significantly with regrading to this cultivation and market supply
of onion crops at older age demands enormous working labor force so at older age entirely to
participate in production of onion it will recommended that introducing simple technology is
better option to minimize cost of production, time devoted and higher demand of labor force
for farming to increase marketable supply of onion.
Credit access was positively and significantly affected amount of onion supplied to the market,
as we know small holder farmer are not a homogenous based on their resource and capability and
unable to invest in agricultural production, duet shortages of working capital and lack of liquidity
So it is optional the woreda agricultural office together with credit institution should formulate
educational program to educate farmer on credit attainment and use.
The econometric model regression analysis revealed that farming experience and education have
positive and significant effect on quantity of onion marketed supply. so improving technical
knowhow of farmer on farming experience is optional, because experienced farmer had better
knowledge of cost and benefit associated with various marketing out let and facilitating and
improving the technical knowledge and skill of farmer in the production will be recommended to
increase marketed supply of onion.

55
Education is believed to build knowledge about improved input, new technology and marketing
of the product. There for provision of formal and informal education should be improved.
In econometric regression result family size of house hold was found to be positively and
significantly affected farm quantity of onion marketable supply, with regrading to this larger
number of family size requires larger amount for consumption, this decrease the amount of onion
supplied to the market by house hold. so it will have recommended that to increase the efficiency
of production and supply more amount of onion to the market by reducing number of family
labor, is better to announce simple technological mechanism that substitute family labor like
tractor is to increase the supply of onion to the market
For over all, the study recommended that those significant variable need to be promoted to boost
the amount of the onion market supply. In order to increase the productivity of onion there is
need of public, private, research center and farmer themselves working together so as to increase
access to improved and disses resistance seed verity.

56
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64
 APPENDIX

APPENDIX A
Appendix table 7. 1. Test for multicollineartity both dummy variable and continuous variable
-------------------------------------------------------------------------------------------------------------
Variable VIF 1/VIF
--------------------------------------------------------------------------------------------------------------
lnFAMZ 4.14 0.241301
lnQFU 3.83 0.261278
lnDNMKT 2.52 0.397502
lnFSA 1.70 0.587295
lnAGHH 1.54 0.650813
lnEXPR 1.49 0.670880
CRA 1.45 0.690514
IRGA 1.39 0.720266
EXS 1.30 0.768188
EDUHH 1.10 0.910249
SHH 1.06 0.939373
Mean VIF 1.96
---------------------------------------------------------------------------------------------------------------

65
 Appendix table 7. 2. Econometric result generated

Appendix table7. 3. constraints of onion production at farm level

Constraint Number of respondent Percentage
Low supply of input 10 8.47
Low irrigation facility 13 11
Poor disease control 25 21.18
Lack of technical training 18 15.25
High cost of inputs 30 25.42
Low demand 22 18.64
Appendix table7. 3.Constraints of onion marketing at farm level
Constraint Number of respondent Percentage
Unfair pricing and fluctuation 12 10.16
Lack of credit 25 21.11
Lack of strong cooperation 35 29.66
Lack of market information 21 17.79

66
Poor linkage with value chain of actor 25 21.18
Appendix table 7. 4 constraints of onion marketing at trader level
Problem faced in the market Frequency Percentage
Unfair pricing and fluctuation 10 15.384
Shortage of supply 5 7.692
Brokers intervention 16 24.61
Too much competition 23 35.38
High transport cost 5 7.692
Shortage of truck 6 9.23

APPENDIX B
APPENDXI 7.5. Normality test

67
 APPENDIXC

Questionnaire

Dear, Respondent
I am a Master Student at Jimma University Undertaking Master of Science in development
economics. I am identifying you as a respondent to this questionnaire to gather information on
the value chine analysis of onion market in south bench woreda. Kindly I was request you to fill
this questionnaire as honestly as possible. All of your responses were handling with
confidentiality. Thank you for your cooperation. Please answer the questions freely. The
information you provide were treating with utmost Confidentiality and were only be use for
academic research purposes.
Instructions to Enumerators
Make brief introduction before starting any question, introduce yourself to the farmers,
greet them in local ways and make clear the objective of the study
Please ask each question clearly and patiently until the farmer gets your points.
Please do not use technical terms and do not forget local units
During the process write answers on the space provided.
Date of interview ------------ month----------------- year ---------------------
Name of the enumerator: ------------------ Name of supervisor: ----------------

7.1. Producer Questionnaire

Part one: Demographic characteristic of households and area information put

mark in the box below (√)
Name of the respondent: ------------------------
Zone------------------ Woreda--------------- kebele ---------- town---------------
1. Age of the house hold head:
A. 116-24 B. 25-34 C. 35-44 D. Above 45
2. Marital status of respondent A single B. Married

3. Sex of the Household Head: A. male (1) B. female (0)

68
 4. Educational level of hose hold head:
A 1-4 B. 5- 8 C. 9 - 12
5. Family Size of house hold head to onion production
i. Have your adequate family labor for your farm activities? A. Yes B. No
ii. If your answer is yes, what is the amount of family labor and labor hired for your
production in 2018.
Source of labor

haired amount of labor Family labor

Male Female Male Female

6. farming experience related to Production and marketing of onion

i. How long have you practiced in the production of onion express in year? A.
2-11 B. 12-20 C. 21-30 D. Above 32
ii. What amount of onion are produced during 2018?
Vegetable Quantity Quantity Quantity Average selling
crop produced(qt) consumed(qt) sold(qt) price
Onion

i. How is the price trend of onion in the market?

A. increasing B. decreasing C Constant
Part Two: Economic Factors
1. do you own or rent land for your onion production in 2018?
------------------------------------------------------------------------------
2. What is the size of land covered by onion crop?
Description Hectare
Owned land
Rented land
Total land holding

3. did you used improved seeds in your own or rented land in the recent harvest year?

69
 A. Yes B. No
4. If your answer for question number 3 is yes, how many hectare of land did you use
improved seeds? -----------------------------------------------------------
5. Did you used fertilizer inputs in your own or rented land in the recent harvest year
2018)?
A. Yes (1) B. No (0)
6. If your answer for question 5 is yes, how many kilograms of inputs did you used in your
own and rented land?
A. Own (Kg) ----------- B. Rented (Kg) ---------
7. What are the inputs material used for onion production?
A Urea B. DEAP C Manure D. Compost Chemicals
(Herbicides, pesticides)
Part three: institutional Factors
1. do you have access to irrigation facilities for onion production? A. Yes B. No
2. If your answer for Q.1 is yes, what is source, frequency of use.
Vegetable crop Method of production

irrigations Rain fed

Onion crop output in

quantal
3. Do you have extension contact with regarding to your onion production in the 2018 cropping
Season? A. Yes B. No
4. If your answer for question 3 is No, why? Express your reason -
----------------------------------------------------------------------------------------------------
5. If yes, your answer for question (4) how often extension agent contacted you?
A. Weekly C. Once in two week
B. Twice in the year D. Monthly
6. Did you get credit service for your production onion?
A. Yes B. No
7. If yes for question 6, where did you get.
70
 A. Micro finance B. Informal Credit service C. Bank
8. Distance from production area to the market center.
NO Item Description(KM)
2 Distance from production center to woreda market.
3 distance from production to gravel road
1. How long did you travel, to reach the market? -----------------------
2. What factors do you consider, when you sell your product?
A. Transport availability C. Closeness in distance
B. Fairness of scaling D. Price
3. What type of transportation you used?
A. Vehicle C. Manpower
B. Cart D. donkey
Part Four: market channel and actors in onion value Chain?
1. Do you have perfect information about onion marketing channel for your product?
A Yes B. No
2. If your answer for question 1, is yes, what type of information did you get?
A. market place information C. Price of product information
B. Demand for the product information D. Supply of product information.
3. Which market channel do you follow?
A. Farmers Wholesalers Retailers Consumers
B. Farmers Retailers Consumer
C. Farmers - input supplier Consumers
D. Farmers consumer
4. Who are the actors participated in onion value chain?
---------------------------------------------------------------------------------------------
5. With regarding to your onion value chain what seem like marketing channel all about?
------------------------------------------------------------------------------------------------------------
-----------------------------------------------------------------------------------------------------------
-----------------------------------------------------------------------------------------------------------

71
Part five: constraint and opportunities of onion value chain.
1. What are the constraint and opportunity of onion value chain in your woreda? Indicate the
causes with its possible solutions below.
No Problem faced in the study Yes(1) If yes, what do you What is your
area No (0) think the cause of solution to solve
this problem? each problem?
A Production problems
Low supply of input
Low irrigation facility
Poor disease control
Lack of technical training

High cost of inputs

Low demand
B Transportation problem
High transport cost
Poor road access

Shortage of truck

C marketing problem

disease and pest problems

unfair pricing
Lack of credit
Lack of strong cooperation

Lack of market information

Poor linkage with value chain
of actor

2. What opportunities did you get from onion production?

-----------------------------------------------------------------------------
3. What expectation do you have over the value chain activities of your product in your area?

72
 7.2. Questionnaire for trader
Part one: Demographic characteristic of trader and areal information put mark
in the box below (√)
Name of the respondent: -------------------------
Zone------------------Woreda--------------- kebele ---------- town ---------------
1. Age of the house hold head:
A 14-24 B. 25-34 C. 35-44 D. Above 45
2. Marital status of respondent A single B. Married C divorced
3. Sex of the Household Head: A. male (1) B. female (0)
4. Educational level of hose hold head:
A 1-4 B. 5- 8 C. 9 - 12
4. Have your partnership in trading how many are they?
Number of partnership
Male Female Total

5. How long have you been in onion marketing experience? express in year------------------
i. Did you sell onion in the year 2018)? A. Yes B. No
ii. If your answer for Q1 is yes, how much and to whom did you sell and buy your
product?
iii. How is the price trend of onion in the market?
A. increasing B. decreasing C Constant
6. What is your source of working capital for onion trading?
A. Own C. Loan
B. Gift D. Others specify-------------------
7. If loanQ6 from whom did you get credit service?
A. Bank B. Microfinance institutions C. Relative/family
D. Other traders --------------------------------------
Part two: constraint and Opportunity in onion value chain in your study area
town.

73
 NO Problem faced in the study area. Yes If yes what do you think What is your
or was/ were) the cause/s) of suggestion to solve
No this problem? each problem?
A Marketing
1 Unfair pricing and fluctuation
2 Shortage of supply
3 Brokers intervention
4 Too much competition
5 Transportation cost
6 High transport cost
7 Shortage of truck
8. What are the opportunities in onion trading?
------------------------------------------------------------------------------------------
9. What is the general overview of the value chain activities of onion in the area? --
--------------------------------------------------------------------
Part three: Evaluation of existing market channel and actors in onion value
chain.
i. Do you have perfect information about onion marketing channel for your product?
A. Yes B. No
ii. Which market channel do you follow?
A. Farmers Wholesalers Retailers Consumers
B. Farmers Retailers Consumer
C. Farmers - input supplier Consumers
D. Farmers consumer
4. Who are actors participated in onion value chain? ----------------------------------------------
----------------------------------------------------------------------------------------------------------
----------------------------------------------------------------------------------------------------------
5. With regarding to your onion value chain what seem like marketing channel all about

Part four: Questionnaire for Farmers focus group discussion

Instruction
74
Group members should:
 Respect each other’s and their views
 Strive to be honest and transparent
 Recognize and acknowledge social reactions
Moderator should
 Act as catalyst between individuals of the group
 Strive to enhance capacity of rural people in analysis of problems and opportunity.
 Make sure that the group keeps to the topic but flexible in handling additional information
 Take care of time management
 Listen carefully to any group member and does not much
Name of Woreda --------------------------
Name of Kebele ----------------------------
Date ---------------------------------
1. Who are the main actors participated in onion value chain?
------------------------------------------------------------------------------------
2. What are the opportunities production& marketing of onion?

-------------------------------------------------------------------------------------

3. What are the constraint in onion production and marketing?

--------------------------------------------------------------------------------------

4. What is your possible solution to rectify the production and marketing related
problems?

75
 APPENDIX D

ውድየዝህቃልመጣይቅምለሻቼ
እኔበጅማዩኒቪርስትበብዝነስእናበኢኮኖሚስኮሌጅበእኮኖሚክስድፓርትመንትበልማትምጣኔሀብትሁለትኛዲግረፕረግራምበመ
ከትተለለይእጋኛለሁ፡፡
የዝህቃልመጣይቅዋናአለማውየሹንኩርትምረትገብያአጣቃቅምስንስለትትንተነበሚልርዕስምረምርለይመርጀለመስበስብናው፡፡
ስለዝህእናንተንለዝህቃልመጠይቅአድርግመረጫለሁ።ይህንቃልመጣይቅንበታመኝነትእንደትሟሉበአክብሮትእጣይቃሎ።
አርሶአደርቃለመጠይቅ
የቃልመጠይቅሰም: ---------------------------------------------
ወርዳ ----------------------- ቀበሌ----------------- ከታማ------------
1. ዕደሜ: ሀ14-24 ለ 25-34 ሐ 35-44 መ. Above 45
2. ዖታሀዉንድ（1) ለሴት（0）
3. የትደርሁንተሀያገባለያለገባሐየፈታ
4. የትምህርትደርጀ：ሀ 1 - 4 B. 5 - 8 C. 9 - 12
5. ስለቤተስብመጠንከሹንኩርትምረትጋርየተያየዘ( family size)
1. ለእርሽመርትበቂየሆነየቤተስብመጠንአለ(ሺ)？ሀአዎ ለአይደለም
2. ለጥያቄቁጥረአንድ(1) አሆከሆነሰንትጉለበትስርተኛንቀጠረክ?(2017/2018)
የጉለበትስርተኛዎች ደምዝበአማካይ

ወንድ ሴት ድምራ

5 ከሹንክርትምረትጋራየተያየዘየግብርነልምድ(farming experience)
1. ስንትዓመትየሹንክርትምረትልምድአለክ(ሺ)?--------------------
2. ስንትኩንታልሹንኩርትበዝህአመትአመረትክ2018)?ለማንነውየሚትሽጠዉ?
የአትክልትምረት የምረትመጠንበኩንታል ለመብልየሆነው የተሸጠው ዋጋው የገበያቦታ
ለማንናውየሚትሽጠው

ሹንኩረት

3. የሹንኩርትገብያአዝማምሁእንደትናው
ሀእጨመርናውለእየቀነስሐአንድአይነት
6ስንትሄክትረማሳነውለሹንኩርትምርትየሚትጠቀመወ( Farm size allocated for onion production
76
 1. ማሳዉየግልነውወይሰየክረይነው ------------------------------------------------
2. ስንትሄክትረማስነውበሹንኩርትምርትየተሽፈነው？
ገላፆ በሄክተራ
የግልማሳ
የክረይ
አጣቃላይሄክተራ

4. ከመሰኖአጠቃቅምጋራየተያየዘየሹንኩርትምርት(irrigation access)
1. ለሹንኩርትምርትመሰኖትጠቃመለሃ？ሀ. አዎ ለ. አይደለም
2. ለጥያቄቁጥር 1 አዎከሆነስንትኩንትልአመርትክ？
የተገኛውየምረትውጤትበሄክትር
የአትክልትስብል በመስኖ በዝነብ ድምር

ሹንኩርት

5. ከሹንኩርትምርትጋርየተየያዘየሰለጣናአገለግሎት2018ምንይመስላል (extension service).

1. ከሹንኩርትምርትጋርየተየያዘሰለጣና(20017/2018)ወስደሃል? ሀ.አዎ ለ.አይደለም
2. ለጥያቄቁጥር 1 አዋከሆነስንትጊዜነውሰለጣናንየሚተገኛት？
ሀ. በስምንትለ.በዓመትሁለተሐ.በስምንትበሁለተመ.በወር
3. በለሙያውከሹንኩርትምርትጋርየተየያዘምንዓይነትሰለጣናናውየሚስጣችሁ？
ሀስለመድበርያአጣቃቅምስለጣናለስለምረትቦታቅይየርሐስለምረትአያየዝመስለአለጋዝግዥት
6. ከሹንኩርትምርትጋርየተየያዘየብድርአገለግሎት(credit access)

1. የካፒታልምንጭምንድናው？
ሀ. የግል ለከስጦታ ሐ. ከብድር መ. ሌሎችግለፃ --------------------
2. ለጥያቄቁጥር 1 መልስህ（ሺ）አዎከሆነብድሩንከማንነውየሚታጋኛው
ሀ. ካባንክለ. ከኦምማይከሮፈይነንስ ሐ. ከቤተሰብ መ. ሌለውንግለፃ
7. ከምረትቦታእስከገበያቦታያላውምንይመስላል(distance from the market)
1. ምረትህንስትሽጢምኑንግንዘቤውስጥበመስገበት？
ሀትርንስፕረትለዎጋንሐቅርበትመሌለውንግለፃ--------------------

77
 2. ምንአይናትትርንስፕረትነውያሚትጠቅመው
ሀየጭነትመክነለጋራሐስውኅይልመአህያ
8. የመሬትማደበረያአጣቃቅምለሹንኩረትምርት
1. በዝህአመትመሬትማደበረያተጣቅማሃል(2017/2018)?
ሀ. አዎለ. አይደለም
2. ለጥያቄቁጥር 1መለስአዎከሆነስንትኩንታልመሬትማደበረያናውተጠቀመከው?
ሀ. በግልማስላይ ------------------------- ለ. በክርይማሳ ----------------------------
3. ለሹንኩረትምረትየሚትጠቅምጥሬዕቃምንድናው?
ሀ.ዩራያ ለ. ዳፒ ሐ. ፒግ መ. እበት
9. በሹንኩርትጥቅምስንስለትውስጥያለውየገበያስርጥእናተዋናይዎችምዘና
1. ከሹንኩርትምረትጋርየተየያዘትክክለኛመርጀአለ? ሀአዎለ.አይደለም
2. ለጥያቄቁጥር1 መልስአዎከሆነምንአይነትመርጀነውየሚትጋኛው？
ሀ.የገበያቦታመርጀ ለ.የተጠቃምዎችፈላጓትመርጀ ሐ.የዋጋመርጀ መ.የአቅርቦትመርጀ
3. የተኛውየገበያስርጥነውየሚትከትለው?
ሀ.አርሶአደረጅምለሽያጭችራቻሮሽያጭተጠቃም
ለ.አርሶአደረችራቻሮሽያጭተጠቃም
ሐ.አርሶአደረጥሬዕቃአማረችተጠቃም
መ.አርሶአደረተጠቃም
4. በዝህገበያመስመረደስታኛነህሀአዎለአይደለም
5. በሹንኩረትጥቅምስንስለትላይየሚስተፉትተዋናይዎችሁእነማንናችው

6. በሹንኩረትጥቅምስንስለትገርየታያየዘየገበያስርጥምንይመስላል
10. በሹንኩርትአጠቃቀምስንሰለትውስጥያሉትእንቅፈትዎችእናሥረዕድሉ
No በጥናትአካበቢላይያለውችግር አዎ(1) መልስህ(ሺ)አዎ(1)ከሆነችግሩምንድ የችግሩመብተምንይመስ
አይደለ ነው？ ላል？
ም (0)
A የምረትችግረ
ዝቅታኛአቅርቦት
ዝቅታኛተጣቃም
ዝቅታኛመስኖአጠቃቀም

78
 ተባየዎችንአለመቆጠጠረ
ስለጣነንአለመወሰድ

ካፉታኛየጥሬዕቃወጭ

B የትርንስፕርትችግረ
ካፉታኛየትርንስፕርትወጭ
የመንገድ

የጭነትጋሪ

C የገበያችግረ

በሽታዎችንተባየዎችንአለመቆጠ
ጠረ
ትክክለኛዎገአለመኖራ
ብድርያለመገኛትችግረ

ጠንከረማህበርያለመኖረ

1. ምንአይነትዕድልነውከሹንክርትምረትየምትገኛው
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2. ከሹንክረትምረትጥቅምስንስለትገርየታያየዘምንአይነትዕቅድአለክ（ሺ）?

3. በጥነትቦታአከበቢየሹንክርትምርትበአጠቃላይምንይመስላል?

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79
 ነጋደዴዎች ቃለ መጠይቅ
የቃልመጠይቅሰም---------------------------------------------
ዞን --------------------- ወርዳ ------------------- ቀበሌ--------------ከታማ------------
1. ዕደሜ: ሀ14-24 ለ 25-34 ሐ 35-44 መ. Above 45
2. ዖታሀዉንድ（1) ለሴት（0）
3. የትደርሁንተሀያገባለያለገባሐየፈታ
4. የትምህርትደርጀ：ሀ 1 - 4 B. 5 - 8 C. 9 - 12
5. አበሮአንተጋራየሚሰሩትአለ？
አብሮየሚሰሩትብዘት ደምዝበአማካይ
ወንድ ሴት ድምራ

6. ስንትዓመትየሹንኩርትምረትነጋዴነትልምድአለ(ሺ）
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7. 2018 ሹንኩርትሽጣሃል？ሀ. አዎለአይደለም
8. ለጥያቄቁጥር 5 መልስአዎከሆነስንትኩንታልሽጢክ？ለማንናውየሚትሽጣው？
የተሽጠውበኩንታል ለማንነወየሚትሽጠው
1= ለገጠረነጋዴዎች ምን ያህል ኩንታል ትጣቀመለ/ሽ/
2= ለተጠቃምዎች
3= ችራቻሮሽያጭ
4= ጅምለሽያጭ

9. በ2018ሹንኩርትገዝትሃለ？ሀ.አዎ ለ.አይደለም
10. ለጥያቄቁጥር 7 መልስአዎከሆነስንትኩንታልገዛ？ከማንናውየሚትገዘው
የተገዛውበኩንታል የመግዥያዘዴ ከማንናውየሚትገዘው
በብር= 1 1= ከገጠርነጋዴዎች-----
በብድረ= 2 2= ከተጠቃምዎች-------
በወለድ = 3 3= ከችራቻሮሽያጭ-----
4= ከጅምለሽያጭ-------

80
 11. የአንድክሎግረምሹንኩርትዋጋስንትነው？-------------------------------------
12. የሹንኩርትገብያአዝማምሁእንደትናው?
ሀ. እጨመርናው ለ. እየቀነስ ሐ. አንድአይነት
13. ምረትህንስትሽጢምኑንግንዘቤውስጥበመስገበት？
ሀ. ትርንስፕረት ለ. ዎጋን ሐ. አቅርቦት መ. ሌለውንግለ___
14. ምንአይናትትርንስፕርትነውየሚትጠቅም？
ሀ.የጭነትመክነ ለ.ጋራ ሐ.ስውኀይል መ. አህያ
15. የአንተዋናውካፒታልምንጭምንድናው
ሀ .የግል ለከስጦታ ሐ.ከብድር መ. ሌሎችግለፃ --------------------
16. ለጥያቄቁጥር 13 መልስህ（ሺ）አዎከሆነብድሩንከማንነውየሚታጋኛው
ሀ.ካባንክ ለ.ከኦምማይከሮፈይነንስ ሐ.ከቤተሰብመሌለውንግለፃ---------
17. በጅምላሺያጭእነበችረቻሮመከከለህብርትአለ？_______________________
18. በአርሶአደርእነበጅምላሺያጭመከከለህብርትአለ？------------------------------------------
19. በሹንኩርትአጠቃቀምስንሰለትውስጥያሉትእንቅፈትዎችሁምንድናችውእነሥረዕድሉምንድነው?
No የሚታየችግር አዎ(1) መልስህ（ሺ） የችግሩመፍተምንይመስላል
አይደለም (0) አዎ(1)ከሆነችግሩምንድነው ？
？
A የገበያችግረ
ዝቅታኛየሹንኩረትዎጋ
ዝቅታኛተጣቃም
የዎጋግሽፈት
ደለላጠልቃገብነት
የንግድተወደደሪዎችመብዝት

B የትርንስፕርትችግረ
ካፉታኛየትርንስፕርትወጭ
የመንገድችግረ

የጭነትመክነችግረ

81
 20. ከሹንክርትምረትየምትገኛውምንአይነትዕድልአለ？
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21. ከሹንክርትምረትጥቅምስንስለትገርየታያየዘምንአይነትዕቅድአለክ（ሺ）

22. በጥነትቦታአከበቢየሹንክረትምረትበአጠቃላይምንይመስላል？
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23. በሹንኩረትአጠቃቀምስንስለትውስጥያለውየገበያስርጥወይምመንገደእናተዋናይዎችሁምንይመስላሉ?
1. ከሹንኩረትምረትጋርየተየያዘትክክለኛመርጀአለ(ሺ)？ሀአዎ ለአይደለም
2. ለጥያቄቁጥር 1 መልስአዎከሆነምንአይነትመርጀነውየሚታጋኛው
ሀ.የገበያቦታመርጀ ለ.የተጠቃምዎችፈላጓትመርጀ ሐ.የዋጋመርጀ መ.የአቅርቦትመርጀ
3. የተኛውየገበያሰርጥነውየሚትከትለው?
ሀ.አርሶአረጅምለሽያጭችራቻሮሽያጭተጠቃም
ለ.አርሶአደረ ችራቻሮ ሽያጭ ተጠቃም
ሐ.አርሶአደረ ጥሬዕቃአማረች ተጠቃም
መ.አርሶአደረ ተጠቃም
4. በሹንኩርትአጠቃቀምስንሰለትጋርተያይዞየገበያስርጥምንይመስላል？
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5. በሹንኩርትአጠቃቀምስንስለትጋርተያይዞየሚስተፍትተዋነይዎችሁእነማንነችው?
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አርሶ አደር የቡድን ውይይት ቃለ መጠይቅ
ትዕዘዝ ለመረጂ ስበሳብ
የቡድንአባለችከዝህባታችያለውንትዕዘዝመከተለአለባችው
 እርስ በርስ በሀስበ ልየነት መከበበረ
 በታመኛነ ትበግልፃነት መታገል አለባችው
 ቡድኖች እርስ በረስ በመወያየት ችግሩን ግልፃ አለበችው

ቡድኖችንየሚያሰተረቅ（modator)
 በቡድኖችንመከከልለውጥየሚያመጠሰውመሆንአለበት
 ቡድኖችንበችግሩላይውይይትእንድያደርጉብርታትንመስጠት
 ሰዓትአጠቃቅምንመቆጠጣር

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 የቡድንውይይትንመደመጥ

የወርደውሥም-----------------------------------
ቀበሌ-----------------------------------------------
የተስታፈዎችብዘት---------------------------------
ቀን-----------------------------------------------
1. በሹንኩረትአጠቃቀምስንስለትጋር ተያይዞ በገበያ ስርጥ ላይ የሚስተፍት ተዋነይዎችሁ እና ማን ነችው？

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2. ሹንክርት ምርትና ገበያበ ወርደው ውስጥ መኖሩ ምን አይነት ዕድል ይፈጠረል ብለችሁ ተስበላችሁ？

3. ለሹንክርት ምርትና ገበያ እንቅፈት የሆነው ምንድናው？

4. ከምርትእናገበያጋራየተያየዝችግረን ለመፈታት ትክክለኛ መፈቴሃ ምንይመስላል？

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