VALUE CHAIN ANALYSIS OF FRUITS: THE CASE OF MANGO

PRODUCING SMALLHOLDER FARMERS IN DIRE DAWA

ADMINISTRATION

A Research Thesis Submitted to the School of post Graduate Studies of Dire Dawa
University in Partial Fulfillment of the Requirements for the Master of Business
Administration (MBA) Degree.

DIRE DAWA UNIVERSITY

COLLAGE OF ECONOMICS AND MANAGEMENT

BY : HINSENE BEGNA

ADIVISOR: MASFIN MEKKONINN (PhD Scholar)

CO-ADVISOR: AHMED ALIYI (MSC)

July, 2020

Dire Dawa, Ethiopia

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 APPROVAL SHEET

SCHOOL OF GRADUATE STUDIES

DIRE DAWA UNIVERSITY

As Thesis Research Advisors, we hereby certify that we have read and evaluated this Thesis
prepared, under our guidance, by Hinsene Begna entitled “Value chain Analyze of fruits: the
case of mango producing smallholder farmers in Dire Dawa administration, Ethiopia” We
recommend that it be submitted as fulfilling the thesis requirement.
Masfin Mekkoninn (PhD Scholar)
Major Advisor Signature Date
Ahmed Aliyi (MSC) ______ ___________
Co-Advisor Signature Date
As member of the Board of Examiners of the M.Sc. Thesis Open Defense Examination, We
certify that we have read, evaluated the Thesis prepared by Hinsene Begna examined the
candidate. We recommended that the Thesis be accepted as fulfilling the Thesis requirement for
the Degree of Master of Business Administrative (MBA).

Chairperson Signature Date

Internal Examiner Signature Date

External Examiner Signature Date

Final approval and acceptance of the Thesis is contingent upon the submission of its final copy to
the Council of Graduate Studies (CGS) through the candidate School Graduate Committee (SGC).

Declaration
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My signature below, I declare and affirm that this Thesis is my own work. I have followed all
ethical and technical principles of scholarship in the preparation, data collection, data analysis and
compilation of the Thesis. Any scholarly matter that is included in the Thesis has been given
recognition through citation.
This Thesis is submitted in partial fulfillment of the requirements for a Master of Business
Administrative at the Dire Dawa University. The Thesis is deposed in the Dire Dawa Library and is
made available to borrowers under the rules of the Library. I solemnly declare that this Thesis has
not been submitted to any other institution anywhere for the award of any academic degree, diploma
or certificate.
Brief quotations from this Thesis may be made without special permission provided that accurate
and complete acknowledgment of the source is made. Requests for permission for extended
quotations from or reproduction of this Thesis in whole or in part may be granted by the Head of
the School or Department when in his or her judgment the proposed use of the material is in the
interests of scholarship. In all other instances, however, permission must be obtained from the
author of the Thesis.
Name: Hinsene Begna Signature: _____

Date: July, 2020

School/Department: School of Economics and Management

AKNOWLEDGEMENT
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Above all, I thank the Almighty God for giving me health, patience and strength for the completion
of the study.

I am profoundly grateful and indebted to Mesfin Mekonnin (PhD Scholar) my major advisor, who
put his greatest effort in exploring workable research problems and leading me the way out to carry
out the overall analytical operation from his vast experience. Also I am highly grateful to Ahmed
Aliyi (MSC) My Co- Advisor for his invaluable personal support and advisory role in building up
the theoretical frameworks and in scrutinizing this thesis research.

In addition, I would like to express my sincere appreciation and gratitude to Sitti Medical and
Business College for facilitating my finance and minimize my responsibilities while I do this study,
specially to Abdunasir Abdullahi the founder of the College, truly your effort is part of my
success and all staff of Sitti Medical and business Colleges has their contribution for this success.

Additionally, I wish to convey recognition and my heartfelt thanks to Office of Agriculture and
Rural Development of Dire Dawa for the institutional support and cooperation during data
collection, I am also grateful to Dire multipurpose farmers cooperative societies union in Dire
Dawa city, wholesalers, Retailer, processor and consumer of Mango located in Dire Dawa city, I
also wish to express my heartfelt thanks to the many farmers and Traders who responded to my
questionnaires and anybody who has a hand on my success without mentioning each.

The study would have not been possible without the lovely backing and help I received from my
Wife Ayentu Yusuf by giving me time, relax and moral of appreciation to accomplish successfully.
To her I say thank you.

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 3 TABLE OF CONTENTS
CONTENT
AKNOWLEDGEMENT.....................................................................................................................III
TABLE OF CONTENTS....................................................................................................................IV
ACRONYMS AND ABBREVIATIONS............................................................................................VI
LIST OF TABLES.............................................................................................................................VII
LIST OF FIGURES..........................................................................................................................VIII
ABSTRACT..........................................................................................................................................IX
CHAPTER ONE.....................................................................................................................................1
INTRODUCTION..................................................................................................................................1
1.1 BACKGROUND OF THE STUDY.........................................................................................................1
1.2 STATEMENT OF THE PROBLEM.........................................................................................................3
1.4 OBJECTIVE OF THE STUDY............................................................................................................5
1.4.1 General objective...................................................................................................................5
1.4.2 SPECIFIC OBJECTIVE..................................................................................................................5
1.5 SIGNIFICANCE OF THE STUDY..........................................................................................................5
1.6 SCOPE OF THE STUDY....................................................................................................................6
1.7. LIMITATIONS OF THE STUDY..........................................................................................................6
1.8. ORGANIZATION OF THE THESIS......................................................................................................7
CHAPTER TWO....................................................................................................................................8
LITERATURE REVIEW......................................................................................................................8
2.1. Concept and definitions...........................................................................................................8
2.1.2Application of Value chain Analysis in mango....................................................................9
2.1.3 Mapping the Value Chain...................................................................................................10
2.1.4 Performance of the market.................................................................................................10
2.1.5 Value Chain Actors..............................................................................................................11
2.1.6 Concept of Cooperatives........................................................................................................12
2.2 EMPIRICAL STUDIES OF VALUE CHAIN OF AGRICULTURAL PRODUCTS.......................................18
CHAPTER THREE.............................................................................................................................30
RESEARCH METHEDOLOGY........................................................................................................30
3.1 DESCRIPTION OF THE STUDY AREA...............................................................................................30
3.2 RESEARCH DESIGN........................................................................................................................31
3.3 SOURCE AND TYPE OF DATA.........................................................................................................31
3.4 SAMPLING DESIGN.........................................................................................................................31
3.4.1 Target population...................................................................................................................32
3.4.2 Sampling procedure and Sample size....................................................................................32
3.5. METHODS OF DATA COLLECTION, DESIGN AND ADMINISTRATION............................................34
3.5.1 Methods of Data Collection...................................................................................................34
3.5.2 Questionnaire design..............................................................................................................34

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 3.5.3 Methods of Administration/ Quality Criteria.........................................................................35
3.5.3.1 Reliability test....................................................................................................................35
3.6. METHODS OF DATA ANALYSIS....................................................................................................36
ECONOMETRIC ANALYSIS....................................................................................................................39
3.7. ETHICAL CONSIDERATION...........................................................................................................42
CHAPTER FOUR................................................................................................................................44
RESULTS AND DISCUSSION..........................................................................................................44
4.1 DESCRIPTIVE STATISTICS..............................................................................................................44
4.1.1 Demographic and socio-economic characteristics of the sample households.......................44
4.1.2. Access to services.................................................................................................................46
4.2 VALUE CHAIN ANALYSIS.........................................................................................................47
4.2.1 Mango value chain actors and their role................................................................................47
4.2.2 Mango value chain mapping..................................................................................................50
4.2.3 GOVERNANCE OF MANGO VALUE CHAIN................................................................................52
4.2.4 MANGO COSTS OF PRODUCTION...............................................................................................52
4.2.5 MARKETING COSTS OF MANGO........................................ERROR! BOOKMARK NOT DEFINED.
4.2.6 Market channel and performance analysis of Mango value chain.........................................53
4.3 OPPORTUNITIES AND CONSTRAINTS OF MANGO VALUE CHAIN.....................................................57
4.3.1 Opportunities of production and marketing...........................................................................57
4.3.2 Constraints of mango production and Marketing..................................................................58
4.4 ECONOMETRIC ANALYSIS.............................................................................................................61
4.4.1 Determinants of Mango Market supply.................................................................................61
CHAPTER FIVE..................................................................................................................................65
5. SUMMARY, CONCLUSION AND RECOMMENDATION......................................................65
5.1. SUMMARY AND CONCLUSIONS....................................................................................................65
5.2. RECOMMENDATION......................................................................................................................67
REFERENCES.....................................................................................................................................69
APPENDEX..........................................................................................................................................71
QUESTIONARY..................................................................................................................................71

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ACRONYMS AND ABBREVIATIONS

AC………. …..Agricultural Cooperative

ADLI……….. Agricultural Development Lead Industrialization

AISCO…….. ..Agricultural Input Supply Corporation

ARDO………..Agricultural and Rural Development Office

ATJK…………Adami Tullu Jiddu Konbolcha (chemical)

DDBoARD………Dire Dawa Bureau of Agriculture and Rural Development

CSA…………..Central Statistical Agency

CSI…………... Credit and Saving Institutions

DDA-------------Dire Dawa Administrative

FAO…………...Food and Agricultural Organization

FCV………….. Food Consumption Value

GA………….. General Assembling

IPMS…………. Improving Productivity and Market Success

PPS………….....Population Proportionate to Size

RII………….... Relative Importance Index

SNV……….. …Netherlands Development Organization

SWOT…………Strength Weakness Opportunity and Threat

VCA…………..Value Chain Analysis

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 LIST OF TABLES
Table page
Table 1. Randomly selected ACs and probability proportionate to size_____________ 34
Table 2. Demographic and socioeconomic characteristics of samples ______________ 47
Table 3. Households’ access to extension, market information and credit services_____49
Table 4. Cost of production of Mango in the study area_________________________ 53
Table 5. Projected marketing margin of Mango value chain actors__________________55
Table 6. Margin distribution of Mango value chain actors along the marketing channel...56
Table 7- Importance and ranking of mango production constraint__________________ 60
Table8 Model Summary___________________________________________________62
Table 9 ANOVA________________________________________________________62
Table 10. Determinants of Mango market supply_______________________________63
Table 11 Appendix Cooks test______________________________________________79

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 LIST OF FIGURES
Figure Page

Figure 1 Mango value chain map_______________________________________53

Figure 2 Market channel Mango _______________________________________56

Figure 3 P-P plot of Normal distribution test______________________________80

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 ABSTRACT
Mango is a major fruit of Dire Dawa administration. This study was carried out with the main
objective to analyze value chain of fruits: the case of mango producing smallholder farmers in
dire dawa administration. In order to select sample respondents the researcher was employed
purposive, simple random sampling and snowball technique to select the primary cooperative,
draw household respondents of mango grower and trader respectively to extract qualitative and
quantitative data for the study. A total of 286 mango producers were selected through four-stage
sampling technique and 53 traders from different level were used to collect primary data using
questionnaire and semi-structured interview, it was analyzed by both descriptive such as statistics
for the demographic characteristics of the respondents, role of actors and to identify value
addition and profit distribution among the chain ,opportunity and constraint and econometric
analysis tool namely OLS to analysis the determinants of mango Market supply of smallholders
farmers in DDA was employed. The finding of research shows that the profitability and gross
marketing margin approach of market analysis showed that wholesalers and processor received
equally the highest marketing margin 34.17and highest profit share (37.8 %), while producers
received the least marketing margins (19.18%) from mango trade. Generally, all market
participants were operating at profitable level, but producers were relatively disadvantaged from
the market as they received lowest share from consumers’ price. Moreover, sex of household, land
allocated to mango, market distance, farming experience and extension service determined mango
market supply. Accordingly, market performance of mango has shown that producers were
relatively disadvantaged and various determinants contributed to reduced market supply of
mango. Therefore, strengthening of extension service and education of farmers and improvement
of farmers’ experience and infrastructure and enforcing primary cooperative and union toward
the goals of establishment is recommended.

KEY WORDS: Determinant, competitive advantage, cooperative, Mango, Value chain

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 CHAPTER ONE
INTRODUCTION
1.1 Background of the study

The concept of “value chain” was introduced by (Porter 1985) to describe the full range of activities,
which are required to bring a product or service from conception, through the different phases of
production, distribution to consumers, and final disposal after use. As the product moves from one
player in the chain to another, it is assumed to gain value (Hellin and Meijer, 2006). As such, the
value chain can be used as a tool to disaggregate a business into major activities, thereby allowing
the identification of sources of competitive advantage (Brown, 1997). This concept has, over the
years, been the object of a fast-growing literature in economics and management (Abecassis-Moedas,
2006).
Competition is the core of the success or failure of a company. Competition determines the accuracy
of the company’s activities that reinforce its performance, such as innovation, cohesive culture or
good implementation (Porter, 2008). Companies should focus on competing against economies of
scale, high production volume, broad economic sphere, as well as increasing agility in offering the
products (Bennett and Forrester, 1993). Competitive advantage should be seen as a dynamic process
and not just the final product (Cravens, 1996). This dynamic process must be managed effectively
not only to produce, but also the entire chain of business activities, both chains of raw materials
preparation and the final value given to the customer (Christopher, 2005).
To achieve competitive advantage, we need the right competitive strategy in a sector we compute.
Competitive strategy is often called as business strategies that focus on improving the competitive
position of products and services (Hunger and Wheelen, 2001). Competitive strategy is the search for
a favorable competitive position in an industry. Competitive strategy aimed at enforcing a favorable
position against the strengths that determine industry competition. Competitive strategy is not only a
response to the environment, but also an effort to establish the environment in accordance with the
wishes of the company (Porter, 1985). Value chain management (VCM) involves collaborative
allocation of resources, within and between the respective businesses in the chain to provide added
value at a lower cost and at a faster rate than competitive supply chains. Collaborative relationships
facilitate the flow of information (both inbound and outbound), as well as products and services (Lee
et al., 2007).

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Tropical and sub-tropical fruit can make a significant direct contribution to the subsistence of
small-scale farmers by providing locally generate nutritious food that is often available when
other agricultural crops have not yet been harvested. Fruit are a versatile product that,
depending on need, can be consumed within the household or sold. Marketing fresh and
processed fruit products generates income which can act as an economic buffer and seasonal
safety net for poor farm households. Diversification into fruit production can generate
employment and enable small-scale farmers to embark on a range of production, processing
and marketing activities to complement existing income-generating activities (Clarke, et.al,
2011).
Fruits are important ingredients of Ethiopian kitchen during fasting times. However, per
capita consumption of fresh fruits in Ethiopia equals around 7 kg per person per year, which
is 8 times lower than the average amount for the East Africa region, which stands at 55 kg per
person per year and 21 times far below the World Health Organization (WHO) and Food and
Agriculture Organization (FAO) recommended minimum level of dietary intake, and may be
due to low income, below capacity production and weak dietary habits resulting from
inadequate awareness of nutritional benefit (GAIN, 2018).

Farmer awareness about spacing of orchards, pruning, fertilizer application, access of new
varieties and pest and disease control is very low. In order to increase the production of
mango, many actions have to be taken. Training about agronomic practices such as proper
spacing, time of pruning, methods and time of fertilizer application, identification of pest
and disease and control mechanism, methods and time of harvesting, kind of packing
materials used, are vital to increase the productivity of mango. Distribution of pest and
disease resistance and early maturing varieties is another method to increase production
potential (Seid Hussena, and Zeru Yimer(2018).
The major issue restraining the development of the mango industry in Ethiopia is the lack of
organization like a farmer organization or cooperative amongst mango growers narrated by
(Tewodros Bezu 2014, James, et.al, 2008). Due to the highly seasonal nature of the mango
crop, and also the tendency to prioritize food security with grain crops, mango growing is
not the main livelihood activity for most farmers and is generally considered a
complementary activity to other farming practices (Tewodros Bezu 2014, James, et.al,
2008)
Likewise, absence of good marketing system that could benefit or attract the growers is the
additional bottleneck raised. As a result, the growers reflected their tendency towards

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cultivation of other cash crops like khat (Catha edulis) by uprooting the exiting trees. The
tendency to shift to other cash generating crops is also most common in other parts of the
country (Seid and Zeru, 2018)

A study made by Mengesha, S. et al., (2019) on Value chain analysis of fruits : The case of
mango and avocado producing smallholder farmers in Gurage Zone, Ethiopia, result implied
that all market actors for both fruits were operated at profitable level. The share of producers
was less than traders and consequently producers were relatively disadvantaged from
avocado and mango market. Also Experience in mango production, Extension service, Price
of mango, Land allocated to mango, Education level of household, Experience in avocado
production and Frequency of extension contact are a positive significant relationship to
determining marketed supply of mango and avocado. While Sex of household head, Active
labor force, Distance to nearest market are negative significant relationship with determining
marketed supply of mango and avocado.
A study made by Tewodros, B. A. (2017) on Assessment of factors affecting performance of
agricultural cooperatives in wheat market: The case of Gedeb Hasasa District, Ethiopia
explain that Agricultural cooperative marketing performance requires effective members
participation, members‟ decision-making abilities and members‟ loyalty; financial strength,
management and technical skills of committees, infrastructural access and adequate and
onetime market information and recommend Future research could also be consider for the
embedded of other factors like legal and political factors, technological factors,
organizational linkage factors, and cultural factors as construct factors and as predictors
variables.
Therefore, this research help to find the most beneficiary actor from chain, the weakest link
of the chain, constraint and opportunity actor in the chain and analysis the determinants of
mango value chain effectiveness of smallholders’ farmers in DDA.

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1.2 statement of the problem
Agriculture is central to Africa’s agenda, and efforts have made to link production with
agribusiness for better growth in the sector. Now a day, earns an average of 24 per cent of its
annual growth from its farmers and their crops value chains reveal common and well known
constraints, such as poor infrastructure; fragmented and risky markets; poorly functioning
input markets; difficulties accessing land, water, and finance; and inadequate skills and
technology. More revealing, however, is the big differences across value chains (World Bank,
2013).
Mango is perishable product and it is bulky and of relatively small individual value, and
requires rapid, cost-efficient transportation to buyers and consumers. Its quality also
deteriorates very rapidly and the ability to consistently provide high-quality products depends
on the commitment of all players in the supply chain. There are a lot of studies conducted on
value chain of different agricultural products (IPMS, 2011).
For instance; a study conducted by Benyam Tadesse and Fayera Bakala(2018) focused Value
Chain Analysis of Mango Sheka Zone, Southwest Ethiopia. The results of the study revealed
that, Classified value chain actor as direct and indirect and identify actively performed by
each actor, no Mango processors, insufficient supply of certified seed to the extent that
farmers, Commission men play role in Mango marketing system by facilitating Mango
transaction and linking producers with other actors.
Study conducted by (Kassa, 2017) on Strategic Analysis of Mango ( Mangifera indica )
Value Chain in Dilla Zuriya District , Dilla Ethiopia shows that the middlemen are the co-
coordinators in the value chain. They have access to market information with regard to prices
while the producers are the most vulnerable actors in the chain. Also the mangoes are not safe
because in this market area its comment to sell mangos by putting in a plastic sheet in the
ground and mixing of different type of mangos; defected, rotted, ripen, over ripen and unripe
mangos this can hasten the deterioration and reduce nutritional value of the products. Market
power small-scale mango growers lack market power as it is in the hands of middlemen and
traders who control the markets. This makes them vulnerable actors.
Recently, the number of cooperatives and their services delivery has shown improvement in
Ethiopia. According to FCA (2014), cooperatives created approximately 802,752 job
opportunities. Cooperatives also supply agricultural input since 2006/2007 up to 2014
approximately 3,504,194 ton DAP and UREA and since 2006/2007 up to 2014 approximately
3,693,219.88 quintal selected seed to members and non-members. In 2014, around 2496
consumers cooperative distributed 3,854,392,585 birr estimated consumption goods.
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According to FCA (2019) annual report indicates, there are 56,355 primary and secondary
cooperatives, both agricultural and non-agricultural sector, of which, 56,044 are primary and
311 secondary cooperatives. Throughout the country, the total member of primary
cooperative reached to 9,393,201 of which, 7,177,525 are male and 2,215,678 are female
members and holding a total capital of 11.3 billion birr. Much of this growth trend explained
by expansion of cooperatives in Oromia, Addis Ababa, SNNP, Amhara, Tigray and Somali,
where the number of cooperatives grew by 18431, 12132, 12002, 8843, 4813 and 1306
respectively.
And in the study area, Dire Dawa Administration which is found in eastern part of Ethiopia
has urban and rural cluster cooperative, there are 703 cooperatives and out of these, 38 are
multipurpose agricultural cooperatives, 28 are irrigational cooperative ( 28 traditional
irrigation and 2 mechanization irrigation), 212 are saving and credit cooperatives (58 from
rural and 154 city cluster), 88 are consumers’ cooperatives, 302 are mining cooperatives, 35
are service delivery and there is also one Agriculture cooperative union (DMPCU, 2019).
Since Mango is one of potential fruit produced in Dire Dawa administration it has a
significant contribution to the livelihood of small scale farmers in the area thereby
contributing to the income of the majority of smallholder producers as well as ensuring of
food security. Moreover, mango is playing a crucial role in creation of business and
employment opportunities for the many firms and commercial agents in the area. Although
mango production in Dire Dawa administration is high and transaction of mango from the
production point to the different spatial markets, mango value chain analysis has not yet been
conducted in studied area and hopeful indicators of success in cooperative movement, growth
and in their performance in Ethiopia as well in Dire Dawa area and the chain actor movement
of farmers competitiveness in value chain by cooperative has not clearly stipulated to
increase the supply of mango in study area.
Therefore, this study is conducted with the main purpose of investigating mango value chain,
distribution of market margin along the mango value chain and identifying constraints and
opportunities of mango production and the determinants of mango value chain effectiveness
of smallholders farmers in DDA which increase horizontal/vertical coordination and
integration on the subject and contribute to better understanding of improved strategies for
reorienting chain system for the benefit of smallholder farmers and traders.

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1.3 Research Questions
Under this study, the following research questions would have been addressed.

1. What are the Mango value chain actors and who is more benefiting from mango
value chain?
2. What are the existing market channels on Mango fruit value chain?
3. What are the constraints and opportunities for value chain actors of Mango fruit in
Dire Dawa Administration
4. What are the determinants of mango Market supply of smallholders farmers in DDA

1.4 Objective of the study

1.4.1 General objective
 . To analyze value chain of fruits: the case of mango producing smallholder farmers in
Dire Dawa administration
1.4.2 Specific objective
1. To Analysis Mango value chain actors and identify who is more benefiting from
mango value chain.
2. To describe important of marketing channels on Mango value chain
3. To identify the constraints and opportunities for value chain actors of Mango fruit in
Dire Dawa Administration
4. To analyze the determinants of mango Market supply of smallholders farmers in
DDA.
1.5 Significance of the study
Value chain actors are Input supplied, producer, Wholesalers, Broker, Retailer and consumer
and each of them have different role in chain. The role of this actor is identified by this
research and it provide good picture on identifying each actors in chain with their
contribution to the product chain, describes important marketing channels on Mango value
chain, fair distribution of benefit and recommend the possible strategy to fill the gap sought
by researcher, the study is significance for all actors in the value chain system to make
improvement on their day to day activities and their operation by having of the forwarded
supportive points of the researcher. It is also provides a holistic picture of existing challenges,
opportunities, and the determinants of mango value chain effectiveness of smallholders
farmers in DDA.

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Furthermore, the study is helping the researcher to gain insight on how to conduct research
and to fulfill the academic requirement of MBA. This work also serves as a source of
document, if the finding of this research is powerful and reliable at all level of research
standard; it is used for policy making of country and reference materials for researchers to
embark on the studies of the related kinds in other part of the countries.
1.6 scope of the study
Geographic area coverage of the study is limited to Dire Dawa Administration rural cluster,
with specific focus on Mango value chain analysis and the determinants of mango value
chain effectiveness of smallholders’ farmers in DDA. Conceptually, describing important
Mango marketing channels, value chain actors (Input supplied, producer, Wholesalers,
Broker, Retailer and consumer) and benefit distribution for each actors and the determinants
of mango value chain effectiveness of smallholders’ farmers in DDA is the center of the
study. Methodologically, The research approach used for this research is both quantities and
qualitative approach and both primary and secondary sources of data is collected by using
questionnaire, visiting sites and interview with key informants from the value chain actors,
starting from Mango producers up to the consumers for primary data
Secondary data is reviewed from published and unpublished reports of different level of
agricultural bureau. To analyze value chain of fruits: the case of mango producing
smallholder farmers in Dire Dawa Administration descriptive and explanatory research
design is adopted. Descriptive research design for this research includes demographic
characteristics of the respondents, role of actors and market performance, constraints,
opportunities of the Mango fruit value chain actor. Explanatory research design tries to
analysis the determinants of mango value chain effectiveness of smallholders’ farmers in
DDA to find out explanations of observed phenomena, problems, or behaviors and
relationship by linear regression. Cross section data type is used for the research..
1.7. Limitations of the study
The geographical limitation of the study is that it gave emphasis for only Dire Dawa
administration area. Methodological limitations is that, by its nature value chain needs
qualitative data collection instruments but the study used questionnaire, field survey
(observation) and interview due to time and budget constraints. Conceptually, the study
limitations were; that it does not incorporate the enabling environments to assess the value
chain. Finally due to pandemic disease of corona, the study was not done according to
proposed proposal and respondents were not free and rexes for close understanding of
existing situation and communicate freely with concerned body.
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1.8. Organization of the Thesis
The thesis is consists of five major chapters. Chapter one is presents the background,
statement of the problem, objective of the study, significance of the study and scope and
limitations of the study. Chapter 2 discusses the theoretical and empirical literature related to
the research. This is followed by the discussion of the methodology used in the research in
chapter 3. Chapter 4 is presents the results and discussion part of the study. Finally, the
conclusion and recommendation of the study is present in chapter 5.

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 CHAPTER TWO
LITERATURE REVIEW
2.1. Concept and definitions
A value chain is a chain of activities. Products pass through all activities of the chain in
sequence and at each activity the product gains some value. The chain of activities gives the
products more added value than the sum of added values of all activities. It is important not to
mix the concept of the value of the product with the costs of producing it (ErikHempel,
(2010)).
A value chain describes all the activities, functions, roles and organisations involved in
the production, delivery and consumption of products from raw materials to final
consumption and back again through reverse flows (Hastings et al., 2016). Colloquially,
this system is often described as ‘farm gate to plate’, or ‘beef to burger’, simple
descriptors for what are dynamic and complex systems (Hearnshaw and Wilson, 2013).
What Gets Valued?
Dagevos and Ophem (2013) offer a helpful four-way classification of value (which they term
Food Consumption Value – FCV) that incorporates a view of consumer sentiment aligned
with the consumer centric view of value chains outlined in the previous section. These four
views are

1. Product value –This adopts the traditional view of product attributes and
characteristics important to the consumer.
2. Process value – This focuses on the processes and practices used within the value
chain to produce the product.
3. Location value – This includes the point of purchase or consumption value but may
include value placed on how products get to the point of sale including the operational
activities of the supply chain.
4. Emotive value – This includes the consumer’s emotive response to consumption as
well as the brand/product story and any associated post-consumption moral/ethical
reinforcement or dissonance.

Value chain analysis (VCA) can be a useful tool as a firm seeks to achieve competitive
advantage. It describes the roles of the different actors involved in the production and trade of
a commodity, and the costs, benefits, opportunities and/or constraints accrued/faced by each
actor; and it also describes the relationships between these different actors in the chain. A

8
value chain is a way of conceptualizing the activities that are needed in order to provide a
product or service to a customer. It depicts the way a product gains value (and costs) as it
moves along the path of design, production, marketing, delivery, and service to the customer.
( Value Chain Analysis and Competitive Advantage Prescott C. Ensign 2012)
However, value chains can also be seen as a vehicle by which new forms of production,
technologies, logistics, labor processes and organizational relations and networks are
introduced. (Jacques, 2011)
Value chain actors: The chain of actors who directly deal with the products, i.e. produce,
process, trade and own them.
Value chain supporters: The services provided by various actors who never directly deal
with the product, but whose services add value to the product.
Value chain influencers: The regulatory framework, policies, infrastructures, etc.
Mango (Mangifera indica) is a fleshy stone fruit belonging to the panes Mangifera,
consisting of numerous tropical fruiting trees in the flowering plant family Anacardiaceae.
Mango is native to the south Asia from where it was distributed worldwide to become one of
the most cultivated fruit in the tropics. Mango (Mangifera indica) is a fleshy stone fruit
belonging to the panes Mangifera, consisting of numerous tropical fruiting trees in the
flowering plant family Anacardiaceae. Mango is native to the south Asia from where it was
distributed worldwide to become one of the most cultivated fruit in the tropics (FAO, 2009).
Mango Value Chain encompasses the full range of activities and services required to bring
the produce from farm to sale in local, national, or international markets. The value chain
includes input suppliers, producers, market actors, and buyers. (Khalid, eta. 2014)
2.1.2Application of Value chain Analysis in mango
Mango Value Chain encompasses the full range of activities and services required to bring
the produce from farm to sale in local, national, or international markets. Mango value chain
includes nursery developers, input suppliers, growers, pre-harvest contractors, transporters,
commission agents, wholesalers, traders, cold store operators, retailers, consumers, exporters
and processors. They are supported by a range of technical, business and financial service
providers (Khalid Mushtaqetal,. 2014)
The SNV–Southern portfolio supports the development of different agricultural commodities
value chains including a fruit value chain. The program seeks to harness the entrepreneurial
capacity of producers, processors and traders with an economic potential. The overall
objective of the Mango value chain is to improve the marketability of Mango fruit and
increase average price levels.
9
The application of value chain analysis in agriculture is growing due to market failure and
non-competitive setting of small scale agricultural production. Value chain and innovations
are also interlinked. Improvement in productivity and competitiveness of the value chain is
the litmus test for value chain innovation (Ananda and Gebremedhin,. 2009).
2.1.3 Mapping the Value Chain
The first step of a value chain analysis is the so-called mapping. In order to do so, the
boundaries to other chains need to be defined. The main idea is initially to identify the actors
and then to ‘map’ the traced product flows within the chain including input supply,
production, processing, and marketing activities. The objective is to give an illustrative
representation of the identified chain actors and the related product flows. A mapped value
chain includes the actors, their relationships, and economic activities at each stage with the
related physical and monetary flows. (AnjaFaße, etal,. 2010)
2.1.4 Performance of the market
It is reflection of the impact of structure and conduct on product price, costs and the volume
and quality of output (Cramers and Jensen, 1982). If the market structure in an industry
resembles monopoly rather than pure competition, then one expects poor market
performance. According to Abbott and Makeham (1981), market performance is how
successfully the firm’s aims are accomplished, which shows the assessment of how
well the process of marketing is carried out.
Market performance can be evaluated by analyzing the costs and margins of marketing agents
in different channels. A commonly used measure of system performance is the
marketing margin or price spread. Margin or spread can be a useful descriptive
statistics if it used to show how the consumer’s food price is divided among
participants at different levels of marketing system
Marketing margin; is percentage of final weighted average selling price taken by each stage
of marketing chain. It is a commonly used measure of the performance of a marketing
system (Abbott and Makeham, 1981). It is defined as the difference between the price the
consumer pays and the price that is obtained by producers, or as the price of a collection of
marketing services, which is the outcome of the demand for and supply of such services
(Cramers and Jensen, 1982 and William and Robinson, 1990; Holt, 1993).
Supply chains are concerned with what it costs and how best we can utilize our capacity
profitably. The main objectives of supply chain management are to maximize capacity
utilization and the focus is on pie-sharing, capacity and profit optimization, maintaining
status-quo.(Worku and Yemisrach,2012
10
2.1.5 Value Chain Actors
According to Muluken,.(2014) market chain actors can be defined as “a people who
directly involved in the exchange of goods; and it starts from input suppliers, producers, rural
traders or assemblers, processors, urban wholesalers, retailers and consumers.”
Market chain actors are grouped into four based on the function they contributed to the
market chain system: (Muluken,.(2014))
1. Production actors the actors whose roles are directly associated to basic
agricultural production, starting from input provision, for elaborating the market chain‟s
product(s). This category can comprise pre-production, production, harvest, or extractive
activities.
2. Post-harvest and processing: the actors whose roles are directly linked to post
harvest management (cleaning, sorting, and packaging) or processing of primary
goods into value added products.
3. Trading actors: the actors whose tasks are connected to the buying and selling of
the market chain’s product(s).
4. Provider of business development services: include individual actors, organizations, or
companies that offer business development services to the market chain.
Producer
It is principal link in the marketing chain of agricultural products. The producer produces the
products and supply to the next agent. From the movement he/she decides what to produce,
how to produce, how much to produce, when to produce, and where to sale.
Wholesalers
Wholesalers obtain large quantities of products from producers, store them, and break them
down into cases and other smaller units more convenient for retailers to buy, a process called
“breaking bulk.” Wholesalers get their name from the fact that they resell goods “whole” to
other companies without transforming the goods.
Brokers, or agents;
They don’t purchase the products they sell (take title to them). Their role is limited to
negotiating sales contracts for producers.
Retailers
Retailers buy products from wholesalers, agents, or distributors and then sell them to
consumers. Retailers vary by the types of products they sell, their sizes, the prices
they charge, the level of service they provide consumers, and the convenience or speed they
offer.
11
Consumer
It is the last link in the marketing chain. The participants and their respective functions often
overlap. The widest spread combinations are: traders- wholesalers that collect the commodity
and supply it to retailers, wholesalers-retailers (wholesalers that also sell directly to
consumers and wholesalers- exporters).
2.1.6 Concept of Cooperatives
The cooperative model has been adapted to numerous and varied businesses in 1942.Ivan
Emilanoff, (Kimberly A. Zeuli and Robert Cropp, 2004) a cooperative scholar, remarked
that” diversity of cooperatives is Kaleidoscopic and their variability is likely infinite. As a
consequence of this diversity, no universally accepted definition of a cooperative exists. Two
definitions, however, are commonly used.
1. According to the International Cooperative Alliance (ICA) 1995; “a cooperative is an
autonomous association of persons united voluntarily to meet their common economic,
social and cultural needs and aspirations through a jointly owned and democratically
controlled enterprise.”
Cooperative leaders around the world recognize the ICA, a non – governmental organization
as a leading authority on cooperative definition and values. The ICA definition recognizes the
essential elements of cooperatives; membership is voluntarily, coercion (force) is the
antithesis (contrast) of co-operation. Persons compelled to act contrary to their wishes are not
truly cooperating. True cooperation with others arises from a belief in mutual help; it can’t be
dictated in authentic cooperatives, persons join voluntarily and have the freedom to quit the
cooperative at any time.
Another widely accepted cooperative definition is the one adopted by the United Sates
Department of Agriculture (USDA) in 1987. “A cooperative is a user-owned, user-
controlled business that distributes benefits on the basis of use.” This definition captures
what are generally considered the three primary cooperative principles such as user
ownership, user control and proportional distribution of benefits.
The “user owner” principle implies that the people who use the cooperative members help
finance the cooperative and therefore, own the cooperative. Members are responsible for
providing at least some of the cooperatives capital. The equity capital contribution of each
member should be in equal proportion to that member’s use (patronage) of the cooperative.
This shared financing creates joint ownership, which is part of the ICA cooperative
definition.

12
The “user- control” concept means that members of cooperatives govern the business
directly by voting on significant and long-term business decisions and indirectly through their
representatives on the board of directors. Cooperative statues and bylaws usually dictate that
only active cooperative members (those who use the cooperative) can become voting
directors, although non-members sometimes serve on boards in a nonvoting, advisory
capacity. Advisory directors are becoming more common in large agricultural cooperatives in
the United States where complex financial and business operations require the expertise of
financial and industry experts. Only cooperative members can vote to elect their board of
directors and on other cooperative actions. Voting rights are generally tied to membership
status-usually one –member, one-vote and not to the level of investment in or patronage of
the cooperative. Cooperative law in a number of states in the United States and in other
countries, however, also permits proportional voting. Instead of one vote per member, voting
rights are based on the volume of business the member transacted the previous year with the
cooperative. Generally, however, there is also a maximum number of votes any member may
cast to prevent control by minority of members. For example, a grain cooperative might
permit one vote to be cast for each 1,000 bushels of grain marketed the year before, but any
single member would be limited to a maximum of ten votes. Democratic control is
maintained by trying voting rights to patronage. Equitable voting rights, or democratic
control (as written in the ICA definition), are a hallmark of cooperative.

“Distribution of benefits on the basis of use,” under this principle Members should share
the benefits, costs, and risks of doing business in equal proportion to their patronage. The
proportional basis is fair, easily explained and entirely feasible from an operational
standpoint. To do otherwise distorts the individual contributions of members and diminishes
their incentives to join and patronize the cooperative.

Cooperative benefits may include better prices for goods and services, improved services, and
dependable sources of inputs and markets for outputs. Most cooperatives also realize annual
net profits, all or part of which are returned to members in aptly called patronage refunds.

“Governments recognize that the co-operative movement is highly democratic, locally

autonomous but internationally integrated, and a form of organization of associations and
enterprises whereby citizens themselves rely on self-help and their own responsibility to
meet goals that include not only economic but social and environmental objectives, such as
overcoming poverty, securing productive employment and encouraging social integration.”

13
2.1.6.1 Agricultural co-operatives
Agricultural co-operatives are agricultural-producer-owned coops whose primary purpose is
increase member producers’ production and incomes by helping better link with finance,
agricultural inputs, information, and output markets. Publication of the ATA Agricultural
Cooperatives Sector Development Strategy 2012-2016.
The large-scale introduction of agricultural coops in the 1970s and 1980s, with compulsory
membership, was associated with declining agricultural output per capita. In Ethiopia, when
farmers were allowed to join or leave cooperatives at will in 1991, cooperative membership
fell drastically and yields rose.8 Certainly, there have been cooperative success stories in the
region for instance the dairy sector in Kenya, coffee in Ethiopia, and cotton in Mali, for
example. The examples of Taiwan, India, and Vietnam also show that cooperatives can be
instrumental in sector transformation. Unfortunately, to date, no African country has achieved
a sustained and large scale increase in Mango and crop yields as a result of cooperative action
and many cooperative development programs have failed to achieve their objectives or have
even been counterproductive.
The purpose of agricultural cooperatives is to help farmers increase their yields and incomes
by pooling their resources to support collective service provisions and economic
empowerment. Given their primary remit to contribute to smallholder farmer production,
agricultural cooperatives are seen as critical in achieving the government’s development
targets in the Growth and Transformation Plan, and focusing on other types of cooperatives
requires an alternative framework for analysis.
The main categories of agricultural co-operatives fall into mainstream activities of
agricultural undertaking including supply of agricultural inputs, joint production and
agricultural marketing.
Input supply includes the distribution of seeds and fertilizers to farmers. Co-operatives in
joint agricultural production assume that members operate the co-operative on jointly owned
agricultural plots. The third category consists of joint agricultural marketing of producer
crops, where farmers pool resources for the transformation, packaging, distribution and
marketing of an identified agricultural commodity.

2.1.6.2 Historical Development of Agricultural Cooperatives in Ethiopia:

The practice of cooperation to solve mutual problems through organized and coordinated
efforts has a long history in Ethiopia. Cooperation exists within the wide variety of
institutional and organizational landscapes, such as public and civil society organizations,

14
private companies and industries, and traditional and party-based governance institutions, etc.
(Lemma 2009). Parallel to the modern way of cooperation, traditional collective action
associations have also been playing a vital role among rural and urban communities.

The historical development of cooperatives in Ethiopia is briefly discussed under three perspectives.
These are (i) during the imperial regime, (ii) during the military rule, and (iii) under the present
government.
Cooperatives during the Imperial Regime (Before 1974)
In Ethiopia, successive regimes, starting from the Imperial period to the EPRDF government,
gave due recognition to the role of coops and made deliberate effort to promote the same.
However, the principles and approaches followed were markedly different, reflecting the
political thinking and ideology of the regimes. In its Five Year Development Plan, the
Imperial regime envisaged an important role for coops in transforming smallholding
agriculture. Thus, it set the stage by providing the first legal framework (the Farmer Workers
Cooperative Decree No. 44 later replaced by the Cooperative Societies Proclamation No.
241/1966). The legal framework was relatively comprehensive and contained most of the
essential contents of the legal framework issued more than three decades later in 1998 and
coops were rightly viewed as primarily voluntary undertakings. However, success was
limited during the period.
Cooperatives in the Military Regime (1974-1991)

The Military regime, which viewed coops as a key instrument to build a socialist economy
pursued the cooperatives agenda more aggressively. The approach followed combined
coercion with extensive support including priority access to resources, goods and services
(such as land, irrigation, bank loans at lower interest rate, capital goods, inputs and extension
services, and consumer goods). Whereas number of coops and membership size were
relatively large, it is not regarded as a particular success for a number of reasons (for details
see Partners Consultancy and Information Services, 2006). Coops were so unpopular that
following the demise of the Dergregime in 1992 most of them disappeared quickly. What is
worse is that they dissolved in such a disorderly manner (e.g. bank loans and other
obligations were not settled; no distribution of assets between members; etc.) that it created a
lasting suspicion and distrust of cooperatives the stigma of which is haunting cooperatives
until today. In an attempt for a fresh start with promotion of cooperatives, the incumbent
government issued a new legal framework (Proclamation No. 147/1998 and 402/2004). In

15
addition to being comprehensive it incorporated universally accepted principles of
cooperatives.

In the history of cooperative movement in Ethiopia, the government has taken serious
measures after 1996. The measures include, organizing and reorganizing different types of
agricultural cooperatives and establishing Cooperative Promotion Bureaus in regions. At the
Federal structure the government has been established the cooperative promotion desk under
the Prime Minister office. A proclamation No. 147/ 1998 to provide for the establishment of
cooperative societies had also declared by the Federal Government to bring all types of
cooperative societies under one umbrella. The Federal Cooperative Commission (currently
Federal Cooperative Agency) based on proclamation No. 274 / 2002 was established in
2002. More over to correct the short comings in the proclamation 147/1998 and amendment
402/2004 and regulation number 106/2002 became an important instrumental document in
the cooperative movement of the country.
Cooperatives under the present Government (Since 1991)
The present government provided a legal framework which is both comprehensive in many
respects (including its ability to accommodate coops in various sectors/sub-sectors) and
incorporates universally accepted principles of cooperatives including voluntary membership
(Proclamation No. 147/1998 and 402/2004). As a result some improvements have been seen
in cooperative societies in the country. Cooperative societies started to distribute inputs,
provide loan to their members, market produces of members in the domestic and foreign
market, Unions (secondary cooperatives) were formed with the assistance of Cooperative
Union Project (CUP) funded by VOCA/Ethiopia/USAID), dividend payments were made by
the unions as well as primary cooperatives. The number of Primary and secondary
cooperatives of different types with significant increase in number of member beneficiaries
is achieved.
Both ADLI (the government's development programme) and the Marketing Strategy
explicitly envisage cooperatives to play a critical role in the development and poverty
reduction efforts of the country (see Ministry of Finance and Economic Development 2003,
2003; Ministry of Agriculture and Rural Development 2005). In line with this a general
legislation setting out the formal rules and procedures by which the development and
activities of all types of co-operatives in the country are to be guided (Proc. Nos. 147/1998
and 402/2004) was issued. As such, it constitutes the incentive structure that shapes the
behavior of Co-operatives and their members. According to the proclamation, the objectives

16
of Co-operative Societies are to create savings and mutual assistance among its members by
pooling their resources, knowledge and property, to enable them to actively participate in the
free market economic system (Proclamation. No. 147/1998).
2.1.6.3 Role of Co-operatives in agriculture
There are several benefits that farmers receive from being part of a cooperative
organization.
Providing access to markets
Cooperatives are helpful in overcoming access barriers to assets, information,
services and input and output markets.
Agricultural cooperatives have played an important role in helping small-scale farmers to
cope with competitive and fluctuating markets and high transaction costs and to achieve
economies of scale, through bulk selling, in order to meet market demand (Clegg, 2006).
Agricultural cooperatives have also ensured that farmers are easily identified by traders and
this has helped to reduce the cost of market search, because it easily links them to the traders
(Holloway, Nicholson, Delgado, Staal, & Ehui, 2000).
Bargaining power
Agricultural cooperatives are helping farmers to gain a competitive advantage and hence,
this increases their opportunities to participate in the market. Cooperatives have also
increased the bargaining power of farmers, since they all ‘speak with one voice’ (Gideon
Onumah, 2007; Torgerson, 1977). Due to economies of scale (or other factors that limit
competition) a cooperative has market power, which would be an incentive for the farmers
to become part of the organization and thereby avoid price exploitation.
As a poverty reduction strategy
In relation to the social aspect of development, a cooperative presents an important model,
which can address the problem of the social exclusion of the poor and disadvantaged who
lack access to opportunities in a liberalized market economy (Birchall, 2004). Cooperatives
encourage local participation and inclusion which is central to poverty reduction. This has
been reflected in the UN guidelines, related to cooperatives in social development, as quoted
by Bibby and Shaw (2005, p. 17):

17
2.2 Empirical Studies of Value Chain of Agricultural Products
There are lots of research had been conducted in the field of market chain and value chain of
different agricultural commodities and there summary are puts as follow;
A study by Abel (2011) on farmers‟ involvement on value added produce finds out several
issues limiting the exploitation and maximization of value-added products. Some of them are
growers sold all their produce, and therefore did not see a clear need to become involved in
adding value to the remaining produce, lack of resources preventing them from adding value
to their foods, the lack of physical facilities to process food, the absence of financial means,
sanitary and other requirements are currently impeding many farm operators to fully optimize
or maximize their food production. And suggested that the involvement of government to
assist different growers to become beneficiary from their produces.
Chuong (2011) have conducted a study on value chain of white leg shrimp exported to the
U.S market. The researcher tried to identify the activities conducted by different actors in the
value chain and the corresponding costs and earning of those activities, evaluation of the
distribution of revenue, cost and profit and determining factors that protect shrimp farmers
from dealing directly with processing firms. He analyzed the date through profitability
analysis. The result of the findings showed that before shrimp exported to the U.S market,
they have undergone the farming, procurement, and processing. Concerning the distribution
of costs, revenue and profit along the chain, the result showed that distribution was in sync
with expectations and the research also revealed three basic reasons why farmers dependent
on middlemen including lack of facilities, delayed payment policy and risk aversion
In addition a study made by (Juhani, 2012) who conducted study on value chain analysis of
Mango in Tanzania with the objectives of examining the value chain of Mangoes, factors that
prevent the industry’s development and in addition evaluating agricultural policies affecting
Mango and presenting production and marketing chain in comparison with other crops. The
result revealed that the government does not affect much to neither the operation nor the
development of the chain and also confirmed that there are no straight policy barriers that are
hampering the conditions of smallholders. Regarding the problems, the result revealed that
bad seed quality is the major challenge followed by difficulty of getting loans and lack of
investments in case of production and poor road network being the biggest infrastructural
issue in Mango production. Thus, poor seed quality, low access to loans
Value chain study conducted on Mango Value Chain Analysis in Boloso Bombe Woreda,
Wolaita Zone, Southern Ethiopia by (Takele Honja,, Endrias, & Amsalu, 2017) indicated that
direct and indirect actors in value chain, value chain map, about 9 marketing channels were
18
identified together and out of that producer------Retailer------Consumer is the most in terms
of distributing and highest margin goes processors. The study recommended Capacity
building of farmers on agronomic practices, Cooperative is quite important for group
marketing and strengthening of farmers’ bargaining power and pooling of resources,
Creating marketing network among actors is quite important for value chain coordination,
innovation and development and policy initiatives aiming at increasing farmers’ access to
mango technologies, developing and improving market information.
Study by Wondim, & Desselgn, 2018) on Value chain analysis of Mango: reported that one
actor may add most and other may add least value, Processor and retailer are the most value
added next to the collectors in the chain. Also Lack of integration among chain actors and no
formal way of getting information regarding from value chain actor are the major constraint
of Mango value chain as well each actors have different constraint. Such as disease was most
constraint for producer, storage problem for supplier and wholesaler, shortage of supplies and
cost transport for collectors, Poor qualities and price fluctuation for retailer, light problem
and quality for processor and price change and perishable for consumer the major problems
in the study area. And suggested that the actors should come together to tackle complicated
Mango value chain development constraints and for further improvement and achievement of
common goal of the Mango production and marketing through developing innovation
platform, special attention should be given to organize farmers cooperative to produce quality
Mango with full package and education/training on consumption of Mango should be given
to consumers to fill knowledge gap.
A study made by (Benyam, & Fayera, 2018) focused Value Chain Analysis of Mango Sheka
Zone, Southwest Ethiopia of the results of the study revealed that, Classified value chain
actor as direct and indirect and identify actively performed by each actor, no Mango
processors, insufficient supply of certified seed to the extent that farmers, Commission men
play role in Mango marketing system by facilitating Mango transaction and linking producers
with other actors, farmers use all channels to sell Mango; but more use through retailer and
commission agent, Each of the Mango value chain actors adds value to the product as the
product passes from one actor to another, marketing margin of producers and local traders in
the study area was higher, and Constraints along Mango value chain actors were identified..
Finally, it was recommended that there should be encouraged technology of processing
Mango, the government and non government organization should be supply certified seed,
the farmer should be cooperate to increase their bargaining power and the farmer should use
short channel to decrease intermediate cost.
19
A study by (Selamawit,, Dubale,, Chigign,, Aklok, & Yonnas, 2019) on Value chain analysis
of fruits, mango and avocado producing smallholder farmers in Gurage Zone, Ethiopia
reveals that by using value chain map identify main actor, activities and supporters, the share
of producers was less than traders and disadvantaged from value chain, value chain of both
mango and avocado was ineffective due to poor horizontal/vertical coordination and
integration, sex of household, land allocated for mango, distance to nearest market, farm
experience, extension service, price information, and family labor were found to be
significantly determined marketed supply of mango. And suggest Strengthening of value
chain actors’ linkage, promoting collective marketing to ensure farmers benefit from produce
by collective marketing, extension service and farmers’ education needs to be greatly
strengthened, infrastructure like road accesses, continuous price and labor force used
information should be improved and farmers should be trained in their farms to enhance their
experience.
A study by Muthyalu, M. (2013) on The Factors that Influence the Participation of
Cooperative Members in the Agricultural Input and Output Marketing – A Case Study of
Adwa District, Ethiopia reveals that the level of participation of the farmer members in the
agricultural input and output marketing by cooperatives was significantly influenced by age,
shareholding, distance of the cooperative office to the residential Hh house, change in
standard of living due to joining of MPCs, membership in other cooperatives, land holding of
the sample Hh and Perception of the Hh on agricultural fertilizer price. And recommend
Government and NGOs should give support to cooperatives for important of their role in
input and output marketing and in meeting their objectives, for instance, storage facility,
transportation facility Communication facilities, Electricity , improving market infrastructure
and in capacity building.
A study made by Tewodros, B. A. (2017) on Assessment of factors affecting performance of
agricultural cooperatives in wheat market: The case of Gedeb Hasasa District, Ethiopia
explain that Agricultural cooperative marketing performance requires effective members
participation, members‟ decision-making abilities and members‟ loyalty; financial strength,
management and technical skills of committees, infrastructural access and adequate and
onetime market information and recommend Future research could also be consider for the
embedded-ness of other factors like legal and political factors, technological factors,
organizational linkage factors, and cultural factors as construct factors and as predictors
variables.

20
Study by Nachimuthu, D. K., & Derso, B. (2018) on Factors affecting members’ participation
in primary Dairy cooperatives in North Gondar zone of Amhara Region, Ethiopia shows that
All of the economic factors have a significant influence on members’ participation in
democratic right practices and business activities of dairy cooperative societies and The
binary logistic regression result also shows that from the hypothesized thirteen independent
variables only six significantly influenced the members’ participation. And recommend the
concerned bodies, members and dairy cooperatives should give emphasis on factors like
transport access, number of milking cows, price of raw milk, training access, patronage
dividend and access of credit to increase members’ participation in GA meeting, decision
making, election and economic activities of dairy cooperatives.
From these reviewed literatures the researcher organizes and conceder his reference articles
in three ways, first as concepts of value chain generated in business area and developed for
competitive tools by porter in business, the researcher use this and such reference even if it is
too old for the matter of basic concept of value chain. Second the most recent empirical study
on related topic was summarized in Matrices on the following table with their gaps identified,
methodology used, finding, recommendation and then after written as paragraph in research
empirical literature. The finding of these articles indicate that there are various channel of
agricultural value chain and from this channel Retailers and Brokers’ are more benefit then
other actor in the chain. As well severe production seasonality, seasonal price fluctuations,
transportation, lack of stable seed supply system, lack of market information, weak extension
support, poor pre-and post-harvest handling, prevalence of pest and diseases, lack of storage
value chain ineffective due to poor horizontal/vertical coordination and integration, sex of
household, land allocated for mango, distance to nearest market, farm experience, and family
labor are some of the critical problems encountered value chain of agricultural commodities
production in Ethiopia. Finally even if there are a numbers of researches done on value chain
analysis which has almost similar methodology and funding but the researcher select some of
them based on the most recent research done that doesn’t extend more than 10 years and
research that included variable related to objective of the researcher.

21
No Author Title Gaps Methodology Finding Recommendation

1 Wondim Awoke and Value chain information gap on 3 sampling 1. One actor may add 1.the actors should
Desselgn Molla (23 August analysis of identification of technique mainly most and other may come together to tackle
actor, value chain
2018) Mango: The purposive, add least value. complicated Mango
mapping and
Case of South stratification and Processor and value chain
identification of
Achefer and random sampling, retailer, the most development
(Wondim, & Desselgn, 2018) constraints and
Jabi Tehinan opportunities
value in the chain constraints and for
Data were collected
districts of was added next to the further improvement
using focus group
West Gojam collectors and achievement of
discussion, key
Zone, Ethiopia informant interview, common goal of the
2. Lack of integration
sample household Mango production and
among chain actors
interview and marketing through
observation,
as constraint of
developing innovation
qualitative& Mango value chain.
platform
quantitative tools 3. they have no

used to analysis((by formal way of getting 2.special attention

SPSS) information should be given to
regarding from vc organize farmers
actor cooperative to produce
4. disease was most quality Mango with
constraint for full package,
producer
5. storage problem 3. education/training
for supplier and on consumption of
whole saler Mango should be given
6. shortage of to consumers to fill
supplies and cost knowledge gap
transport for
collectors
7. Poor qualities and
price fluctuation
(retailer.
8. light problem and
quality for processor
9. price change and
perishable for
consumer
1.There should be
2 Benyam Tadesse1* Value Chain little evidence on Data source both 1. Classified value encouraged technology of
Analysis of the overall primary and chain actor as direct and processing Mango.
Fayera Bakala(April 25,
secondary data indirect and identify 2.The government and
Mango: The mapping of value
2018)
actively performed by non government
Case of Sheka chain actors &
Tools used to collect each actor organization should be
Zone, input for household survey, supply certified seed
Southwest generating

22
 2. There are no Mango 3.The farmer should be
Ethiopia demand driven focus group processors. cooperate to increase their
technologies of discussions, key 3. insufficient supply of bargaining power
informant certified seed to the 4 The farmer should use
production and
interviews, field extent that farmers short channel to decrease
marketing
observations, and 3. Commission men intermediate cost
market assessment. play role in Mango
marketing system by
three-stage sampling facilitating Mango
technique woreda- transaction and linking
kebele- individual producers with other
actors
Descriptive statistics
4. Farmers use all
& Value chain
channels to sell Mango;
analysis frameworks
but more use through
developed to
retailer and commission
analysis
agent
6. Each of the Mango
value chain actors adds
value to the product as
the product passes from
one actor to another
7. marketing margin of
producers and local
traders in the study area
was higher.
8. Constraints along
Mango value chain
actors were identified.

3 Selamawit Mengesha1, Value chain identify the value Data source both 1. by using value i) Strengthening of
Dubale Abate, Chigign analysis of chain actors and primary and chain map identify value chain actors’
secondary data
Adamu1, Aklok Zewde1 and fruits: The case their role, assess main actor, activities linkage.
Yonnas Addis(2 February, of mango and the value share and supporters
three-stage sampling
2019) avocado among ii) Promoting
technique woreda-
producing participants, and 2. the share of collective marketing to
kebele- individual
smallholder identify producers was less ensure farmers benefit

farmers in determinant Descriptive, gross than traders and from produce by

Gurage Zone, factors of avocado margin applied to disadvantaged from collective marketing.
Vc to know each vc
Ethiopia and mango market
share of participator iii) Extension service
supply in the
& econometrics 3. value chain of both and farmers’ education
study area model was
mango and avocado needs to be greatly
employed to
was ineffective due strengthened.
examine factors that
to poor
had effects on
horizontal/vertical iv) Infrastructure like
supply
coordination and road accesses,

integration; continuous price and

labor force used

23
 4. sex of household, information should be
land allocated for improved.
mango, distance to
nearest market, farm v) Farmers should be

experience, extension trained in their farms

service, price to enhance their

information, and experience.

family labor were

found to be
significantly
determined marketed
supply of mango

4 Takele Honja1, Endrias Mango Value investigating Sample drawn 1.direct and indirect 1.Capacity building of
Chain Analysis: mango value from all actors actors in vc farmers on agronomic
Geta and Amsalu
The Case of chain, market practices
Mitiku (Nov 2, 2017) both qualitative 2.value chain map
Boloso Bombe margin,
Woreda, identifying and quantitative 2.Cooperative is quite
types of data used 3.About 9 marketing important for group
Wolaita Zone, constraints and
channels were marketing and
Southern opportunities
both primary and identified together strengthening of
Ethiopia
& narrow the secondary sources farmers’ bargaining
data source used 4.Producer------
information gap power and pooling of
Retailer------
and better strategy resources
both close ended Consumer is the most
and open ended in terms of 3. Creating marketing
questionnaire distributing network among actors
tools used to is quite important for
collect data 5. Highest margin
value chain
goes processors
coordination,
descriptive
innovation and
statistics , Maps in 6.major problems of
development.
the process of mango production

examining & lack of technology,

4. policy initiatives
describing mkt limited supply of
aiming at increasing
function, SWOT improved mango
farmers’ access to
metrics used to variety, seasonality
mango technologies,
analysis const and and weather related
developing and
opportunity problems, lack of use
improving market
of credit service, lack
information
of irrigation, pests
and diseases,
harvesting and post
harvest handling

24
 problems,

7.Potential
opportunities suitable
agro ecological zone
with favorable
weather conditions,
abundance of locally
accessible inputs like
compost/farmyard
manure, plenty of
labor force, fertile
arable land and
market

8. marketing
constraint lack of
cooperative, perish
ability of mango,
lack of proper
storage and
postharvest
management, low
price of mango,
inadequacy of
transport facility and
lack of market
information,

9. potential market
opportunities, access
to transport facility
like road and vehicle,
access to credit

5 Chuong (2011) a study on identify the Sample drawn 1.Before shrimp To minimize middle
value chain of activities from all actors exported to the U.S actor have to
white leg conducted by market, they have coordinate to minimize
shrimp different actors in both qualitative undergone the such as facilities,
exported to the the value chain and quantitative farming, delayed payment
U.S market and the types of data used procurement, and policy and risk
corresponding processing aversion
analyzed the date
costs and earning
through 2. concerning costs,
of those activities,
profitability revenue and profit
evaluation of the

25
 distribution of analysis along the chain, the
revenue, cost and result showed that
profit and distribution was in
determining sync
factors that
protect shrimp
farmers from
dealing directly
with processing
firms

6 Juhani, (2012) value chain examining the Sample drawn Government does not Collective marketing,
value chain of from all actors affect much to penetration in to high-
analysis of
Mangoes, factors neither the operation value chains and
Mango in that prevent the both qualitative nor the development improved processing
industry’s and quantitative of the chain and also techniques may
Tanzania
development and types of data used confirmed that there provide in increasing
in addition are no straight policy chain participation.
both primary and
evaluating barriers that are
secondary sources
agricultural hampering the
data source used
policies affecting conditions of
Mango and smallholders.
both close ended
presenting
and open ended
production and bad seed quality is
questionnaire
marketing chain the major challenge
tools used to
in comparison followed by
collect data
with other crops difficulty of getting
loans and lack of
descriptive
investments in case
statistics , Maps in
of production and
the process of
poor road network
examining &

7 Abel (2011) farmers‟ finds out issues 1.growers sold all involvement of
involvement on limiting the their produce, and government to assist
value added exploitation and therefore did not see different growers to
produce maximization of a clear need to become beneficiary
value-added become involved in from their produces
products adding value to the
remaining produce,

2.lack of resources
preventing them
from adding value to

26
 their foods,

3.the lack of physical

facilities to process
food,

4.the absence of
financial means,
sanitary and

5.other requirements
are currently
impeding many farm
operators to fully
optimize or
maximize their food
production

8 Kayier Guien Chay, Amsale A Review on to take a looks on

Workeneh and Beshadu Production and production and
Shifera (2019) Marketing of marketing of
Mango Fruit mango fruit

Muthyalu, M. (2013 Hence, the the level of

9 The Factors farmers Government and
participation of the
were
that Influence usually farmer members in NGOs should
the price takers give support to
due to the
the agricultural
Participation fact that input and output cooperatives for
they have important of
of poor marketing by
marketing cooperatives was their role in input
Cooperative
skill and and output
Members in limited significantly
bargaining influenced by age, marketing and in
the
power. Still meeting their
Agricultural now no shareholding,
studies have distance of the objectives, for
Input and been made
cooperative office instance, storage
Output on the
identifying to the residential Hh facility,
Marketing – factors
house, change in transportation
A Case Study influencing
the standard of living facility
of Adwa participatio Communication
n of due to joining of
District, facilities,
members in MPCs, membership
Ethiopia the Electricity ,
agriculture in other
ral input cooperatives, land improving
and output market
holding of the
marketing
in the study sample Hh and infrastructure

27
 Woreda Perception of the
Hh on agricultural and in capacity

fertilizer price. building

Agricultural
10 Tewodros, B. A. (2017) Assessment Descriptive cooperative Future research could
research design and marketing also be consider for
of factors
Explanatory performance the embeddedness of
affecting research attempts
requires other factors like legal
effective
performance to simplify why
members‟ and political factors,
and how there is a participation, technological factors,
of
relationship members‟ organizational linkage
agricultural between two or decision-making factors, and cultural
cooperatives more aspects of a abilities and factors as construct
members‟
in wheat condition or factors and as
loyalty; financial
phenomenon predictors‟ variables
market: The strength,
management and
case of technical skills
Gedeb of committees,
infrastructural
Hasasa access and
District, adequate and
onetime market
Ethiopia. information

the concerned
11 Nachimuthu, D. K., & Factors there is poor All of the bodies, members
Derso, B. (2018) affecting coordination economic factors and dairy
cooperatives
members’ between the have a significant should give
participation dairy influence on emphasis on
in primary cooperatives members’ factors like
transport access,
Dairy and participation in number of
cooperatives stakeholders democratic right milking cows,
price of raw
in North are some of practices and
milk, training
Gondar zone the missing business access, patronage
of Amhara parts in the activities of dairy dividend and
access of credit
Region, effective cooperative to increase
Ethiopia. operation of societies and The members’
participation in
dairy binary logistic
GA meeting,
cooperatives. regression result decision making,
also shows that election and
economic
from the activities of dairy
hypothesized cooperatives.

28
thirteen
independent
variables only six
significantly
influenced the
members’
participation.

29
 CHAPTER THREE
RESEARCH METHODOLOGY
3.1 Description of the study area
The Dire Dawa administrative council consists of the urban and rural areas. The council has
no administrative zones but there are 9 urban kebele, and 38 rural kebele. Geographically, it
is located in the eastern part of the country enclosed by the State of Somalia and the State of
Oromia. It is found at a distance of 515 Kilo meters from Addis Ababa. The administration
has an estimated area of 128,802 hectares. From the total land size of the city administration,
97.73% accounts for the size of the rural area, while the remaining 2.27% covers the land size
of the urban area.
The administrative center of the Dire Dawa is subdivided into 9 urban kebele and 38 rural
kebele administrations, again those rural kebele are divided into four cluster. Biyo Awale
cluster (12 kebele), Haseliso cluster (9 kebele), Jeldesa cluster (8 kebele) and Wahil cluster (9
Kebele). The Dire Dawa population estimated to be 341,834, of whom 171,461 were men and
170,461 women. 233,224 or 68.23% of the population were urban inhabitants. The majority
of the inhabitants were Islam with 70.8%, 25.71% are Ethiopian Orthodox, 2.81% Protestant,
and 0.43% Catholic (CSA, 2007).
The livelihood base of the majority of rural population is agriculture in the mode of agro -
pastoralist. Landholding of farming families is less than half Hectare on average. The major
products are vegetables, fruits, cereals (maize, sorghum) and livestock (camel, cows, small
ruminants, bulls).
The rural cluster area and some kebeles have not uniformly suitable for agro-climatic
condition for production of different horticultural crops. Some kebele from Biyo Awale
(Adada, Bakke, Bishanbe, Biyyo Awale, Awale), Haseliso (Laga Harre, Genda Rige, Hula
Hulul) and Wahil (Laga Oda Gudunfata, Hulula Mojo, Dujuma, Kuriso) clusters are suitable
for agro-climatic production while Jeldesa cluster is desert and not suitable for production.
For making the farmers and pastoralists beneficial in their resources and solve their common
socio economic problems, a total of 38 multipurpose primary agricultural cooperatives
encompassing 6000 individual farmers and pastoralists were organized one primary
cooperative in each kebele and by making those primary cooperatives its founding members,
one secondary cooperative come on board with an initial paid up capital of Br. 2.38 million
by the year 2002 under a name Dire multipurpose farmers cooperative societies union at
the same time with primary cooperative.

30
3.2 Research design
The research design is constitutes the blueprint for the collection, measurement and analysis
of data (Kothari, 2004). For this study to meet the objective the value chain analysis of
mango fruit in Dire Dawa administration both primary and secondary sources of data was
been collected by using questionnaire, visiting sites and interview with key informants from
the value chain actors, starting from Mango producers up to the consumers for primary data
and Secondary data reviewed from published and unpublished reports of different level of
agricultural bureau. To analyze value chain of fruits: the case of mango producing
smallholder farmers in Dire Dawa Administration descriptive and explanatory research
design was adopted. Descriptive research design for this research includes demographic
characteristics of the respondents, role of actors and market performance, constraints,
opportunities of the Mango fruit value chain actor. Explanatory research design tries to
determinants of mango value chain effectiveness of smallholders’ farmers in DDA to find out
explanations of observed phenomena, problems, or behaviors and relationship by using OLS.
Based on time horizon, the research design for data type is cross sectional. According to
Michael (2014), a cross-sectional research design (also called a one-time correlation study) is
a research in which, each person participates on one occasion, and all variables are measure
at that time.
3.3 Source and type of data
This study was used both primary and secondary sources of the data that are consistent,
available, adequate and reliable for the objectives intended to be addressed. The primary
sources of the data include sample respondents mango producer as well as cooperative
members, key informants, extension workers, agricultural office workers and mango traders
and consumers and major Mango markets was visited and interviewed with related actors of
value chain was also conduct.
Secondary data was collected from published and unpublished reports of different level of
agricultural bureau (country, regional and zonal, woreda, and kebeles), report of CSA (central
statistical agency), websites and different published articles.
3.4 Sampling design
The sample for this study was drawn from all actors involved along mango value chain such
as cooperative members’ mango producers, rural collectors, wholesalers, processors, retailers
and consumers. Based on their distribution, mango value chain actors were selected by using
their appropriate sampling techniques (Probability and non-probability sampling techniques).

31
3.4.1 Target population
Target population was consisted of all agricultural primary cooperative members and
individuals from all functional levels of the chain wholesalers, retailers, processors and
consumers, and individuals outside the value chain such as cooperative expert and
agricultural experts of Dire Dawa Administrative.

3.4.2 Sampling procedure and Sample size

Sampling procedure for Mango producer and Sample size
To select the Mango producer respondents, multistage sampling method used. In stage one,
by considering Mugenda and Mugenda (2003), a sample of 10 to 30% is good enough to
define the sample frame of the target population, the available resource and time as well as
homogenous nature of the population, eight agricultural cooperatives (21%) of the population
defined as target sample and simple sample random is applied to select eight cooperative
from eleven cooperative suitable for mango production area.
In stage two, from the target sample of eight agricultural cooperatives (which have 1638
members), 321 sample respondents have been drawn using the mathematical equation
developed by (Yamane, 1967). The researcher used the following formula to define the
required sample size at 95% confidence level, degree of variability of= 0.05 and with desired
level of precision required = 5%.

N
n= 2 (1)
1+ N (e )

Where,
n: is number of respondent farmers,
N: is the total number of Mango grower farmers by cooperative members in sample
cooperative,
e: is the precision level.

1638
n=
1+1638( 0.05)2

=321

In stage three, the determined sample size distributed to each cooperative on the basis of
probability proportional to size (PPS).It is the quotient between the size of the population and

32
the size of the sample (MaMaEuSch, 2001). Probability proportional allocation formula
adopted according to (Kotari, 2004) as follow:

nN 1
n 1=
N

Where: n= determined sample size N= target population N1= total number of population in
each cooperatives n1= number of samples in each cooperatives (Table 1)

Table 1. Randomly selected ACs and probability proportionate to size

S. Name of primary Membership in number Probability proportionate

N agricultural to size for each cooperative
cooperatives Male Femal Total (PPS)
e
1 Lega oda Gudunfata 41 191 232 46
2 Hulula Mojo 26 276 302 59
3 Lega Harre 38 40 78 15
4 Genda Rige 43 64 107 21
5 Hula Hulul 305 0 305 60
6 Adada 25 83 108 21
7 Bishanbe 32 54 86 17
8 Bakke 20 400 420 82
Total - - 1638 321

In stage four, to select the specific individual respondent member from eight agricultural
cooperative societies, respondent was selected randomly for the interview.
Trader’s sampling

This includes intermediary value chain actors involved in mango marketing such as
wholesalers, assemblers, retailers, processors and consumers. Selection of these actors is
range from the study area to the major marketing centers Dire Daw. These actors besides to
producers; 6 wholesalers, 10 retailers, 12 Processor and 25 consumers were selected for
interview using snowball method.

3.5. Methods of Data Collection, Design and Administration

3.5.1 Methods of Data Collection

To collect adequate data for the study, Primary and secondary data sources was collected from
appropriate source. Primary data was collected from respondents of eight sample primary

33
cooperatives, wholesalers, retailers, processors and consumers through close ended and open
ended (semi- structured) questionnaire on constraint and opportunity, marketing performance
and market channels. And structured questionnaire was prepared in order to determinants of
mango value chain effectiveness of smallholders farmers in DDA in the study area, A
structured questionnaire with five points Likert - Scale was used to collect the opinions of
respondents to collect the data on constrain and opportunity. A structured questionnaire for
cooperative role personal interview and Participatory Rural Appraisal (PRA) tools such as
focus group discussion and key informant interview was used. Self-administered
questionnaires was distributed randomly to the members of primary agriculture cooperatives
and to wholesalers, retailers, processors and consumers distributed using snowball method in
Dire Dawa Administrative, Ethiopia.

Some secondary data was reviewed from published and unpublished reports of different level
of agricultural bureau (country, regional and zonal, woreda, and kebeles), report of CSA
(central statistical agency), websites and different published articles. Major Mango markets
was visited and interviewed with related actors of value chain will also conduct.

3.5.2 Questionnaire design

The design of a questionnaire was include both qualitative (to collect exploratory
information) and quantitative (to test specific hypotheses that have previously been
generated). In order to pitfalls and best designing questionnaires the researcher was followed
steps involved in developing a survey questionnaire and open and closed ended
questionnaires was also prepared based on how people answer questions is whether the
question is posed as an open-ended question, where respondents provide a response in their
own words, or a closed-ended question, where they are asked to choose from a list of answer
choices. These questionnaires was prepared in such a way that the choice of words and
phrases in a question is critical in expressing the meaning and intent of the question to the
respondent and ensuring that all respondents interpret the question the same way. The
questionnaires developed for this research have three sections. The first section was included
all demographic information of respondents. The second section was including separate
questionnaire developed for each actors of value chain including (producers, wholesalers,
processors, retailers and consumers) with five points Likert - Scale. And final section include
interview questionnaire that will be developed for extension agricultural office workers,
primary cooperative, union managers and staff.

34
3.5.3 Methods of Administration/ Quality Criteria
Validity is achieved when a particular scale or measure is able to measure accurately what it
intends to measure. On this score, validity of a questionnaire is confirmed by a pre-test of the
instrument with a smaller sample of common features as the sample/target and or accessible
population of your study. Notice that the pretest process encompasses the subsequent analysis
of the data collected. Then, compare the results of this scouting survey with research
questions/ objectives. This was give clue whether the questionnaire items agree with what
they suppose to measure. If they do, we say that the validity of the questionnaire is
confirmed.  It was provided you the opportunity to make adjustments and modifications to
the questionnaire items so that the items were appropriately measure issues they are meant to
measure.

3.5.3.1 Reliability and Validity assessment

Cronbach's Alpha
Cronbach's Alpha is a measurement of reliability that assumes equal indicator loadings (Hair
et al., 2014). The value of Cronbach Alpha is classified based on the reliability index
classification where 0.90 to 1.00 is very high, 0.70 to 0.89 is high, 0.30 to 0.69 is moderate,
and 0.00 to 0.30 is low (Babbie, 1992). After all the alpha coefficients were high, the
conclusion is drawn that the instrument had a good internal consistency of the items in the
scale and was appropriated for the study.

3.5.3.1 Reliability test

Composite reliability
The composite reliability varies between 0 and 1, with higher values indicating higher levels
of reliability. It is generally interpret in the same way as Cronbach's alpha. Specifically,
composite reliability values of 0.60 to 0.70 are acceptable in exploratory research, while in
more advanced stages of research, values between 0.70 and 0.90 can be regarded as
satisfactory (Nunally and Bernstein, 1994).

3.5.4.2 Validity 
Use expert panel to answer the question: Is the question or skills measurement in the test
"essential" to the intended measurement? Form a panel of subject mater experts (SME) and
then ask them whether your intended questions or survey is relevant to your intended research
issue? Use the Lawshe test: Content validation, which plays a primary role in the

35
development of any new instrument, provides evidence about the validity of an instrument by
assessing the degree to which the instrument measures the targeted construct.

Validity test
Convergent validity
An AVE of less than 0.50 indicates that, on average, more error remains in the items than the
variance explained by the construct (Hair et al., 2014). The convergent validity will be tested
to consider satisfactory because all latent variables have high loading above 0.5 (Black et al.,
2010; Hair et al., 2014).

3.6. Methods of Data Analysis

Descriptive statistics and econometric analysis were used to analyze the data collected from
Mango producers, whole sellers/suppliers, Retailers, consumers, primary cooperatives and
cooperative unions.
Descriptive analysis

This method of data analysis refers to the use of percentages, means and standard deviations
in the process of examining and describing marketing functions, facilities, services, and
household characteristics in the value chain.
Analysis of performance of value added

Marketing Margin: The analysis of marketing channels was intended to provide a systematic
knowledge of the flow of goods and services from its origin of production to final
destination. Marketing margin was calculated by taking the difference between producers
and export prices.
Calculating the total marketing margin was done by using the following formula. Computing
the Total gross marketing margin (TGMM) is always related to the final price paid by the
end buyer and is expressed as a percentage (Mendoza, 1995).

(2)

Where, TGMM =Total gross marketing margin.

Net Marketing Margin (NMM) was the percentage over the final price earned by the
intermediary actor of value chain as his/her net income once his/her marketing costs are
deducted. The equation tells us that a higher marketing margin diminishes the producer’s
share and vice-versa. It also provides an indication of welfare distribution among production
and marketing agents.

36
 (3)

From this measure, it is possible to see the distributed competence of markets in the value
chain. Higher NMM or profit of the marketing intermediaries reflects unfair income
distribution, which depresses market participation of smallholders. A competent
marketing system is where the net margin is near to reasonable profit. To find the benefit
share of each actor the same concept was applied with some adjustments. In analyzing
margins, first the gross marketing margin (GMM) was calculated. This is the difference
between producer’s (farmer’s) price and exporter’s price (price paid by final buyer) i.e.

MM = Consumer’s price – Farmer’s price (4)

Then, marketing margin at a given stage ‘i’ (GMMi) will be computed as:

(5)
Where, SPi is selling price at ith link and PPi is purchase
price at ith link. Total gross profit margin will also be computed as:

(6)

Where, TGPM is total gross profit margin, TGMM is total gross marketing margin and
TOE is total operating expense. Similar concept of profit margin that deducts operating
expense from marketing margin was done by Abraham (2013) and Marshal (2011).
Then profit margin at stage “i” is given as:

(7)

Where, GPMi = Gross profit margin at ith link GMMi = Gross marketing margin at ith
link
OEi = Operating
expense at ith link
TGPM =Total gross
profit margin
Producer share The producers ’share is the commonly employed ratio calculated
mathematically as, the ratio of producers’ price to Consumer’s price. Mathematically,
producers’ share can be expressed as:

(8)

37
 Where: PS= Producer’s share, Pp= Producer’s price, Ep = Consumers price
and MM = marketing margin.
The above equation tells us that a higher marketing margin, diminishes producers share in the
value chain and vice versa. It also provides an indication of welfare distribution among
production and Marketing agents.

Analysis of Mango value chain

To understand the characteristics of the chain actors of Mango and the relationships exists
between them, including the identification of all actors in the chain; the flow of product
through the chain; the work features and the destination; information was obtained by
conducting interviews and by collecting secondary data from various sources. The study has
employed value chain analysis which is very effective in tracing product flows, showing the
physical value adding stages, qualitative and quantitative flow of product along the chain
with identified key actors, their relationships with other actors in the chain and measured
distribution of their benefits. This could be captured through mapping the value chain.
Mapping the chain facilitates understanding of sequence of activities, key actors and
relationship involved in the value chain. This analysis was undertaken in qualitative terms.

Constrain of mango production was presented by calculating the Relative Importance

Index (RII) and Ranking of factors in each category based on the Relative Importance Index
(RII).

RII = 1 n1+ 2n2 +3n3+4n4+5n5........................

A*N
Where,
RII = Relative Importance Index,
n1, n2, n3, n4, n5 = Number of respondents answer each factor
1, 2, 3, 4, 5 = weight given for each factor (ranging from
1 to 5), A = highest weight (i.e. 5 in our case),
N = total number of respondents.
The importance indices were calculated for all constrain was ranked accordingly. In
order to identify how mango production can be affected. It is important to identify the
most constrain of mango production in study area.
Econometric analysis
Based on Greene (2003), the multiple linear regression models is specified as:

38
Y= f (age, sex, hhsize, exper, hhedu, Fchildsize, credit, extension,)
The econometric model specification of yield function in matrix notation is estimated by Yi
= (X1, X2, X3, X4, X5, X6, X7, X8, X9)
Yi = Yield
X1 = Age of the household head
X2 = Sex of the household head
X3 = Mango farming experience
X4 = household education
X5 = Family child size
X6 = household land size
X7 = Extension contact
X8 =Distance to main road in km or hrs

The model has been specified in such a way:

Where Yi = Mango yield

β = a vector of estimated coefficient of the

explanatory variables X’ = a vector of
explanatory variables
ui = disturbance term
The parameter estimates of the above model may not be Best Linear Unbiased Estimator
(BLUE) when some of the assumptions of the Classical Linear Regression (CLR) models are
violated, thus, it is important to check the presence multicollinearity among the variables that
affect yield of Mango in the area. Hence, before fitting significant variables into the model, it
was necessary to check these problems among the continuous and dummy variables and see
the association between the discrete variables, which seriously affect the parameter estimates.
According to Gujarati (2003), multicollinearity refers to a situation where it becomes
difficult to identify the separate effect of explanatory variables on the dependent variable as
there exists strong relationship among them. Alternatively, multicollinearity is a situation
where the explanatory variables are highly correlated. There a method which suggest the
existence of multicollinearity. In order to detect the

multicollinearity problem the Variance Inflation factor (VIF) = for each

coefficient in a regression as a diagnostic statistic is used, where R j represents a coefficient

39
for determining the subsidiary or auxiliary regression of each independent continuous
variable X. As a rule of thumb, if VIF value of a variable exceeds 10, which will happen if

Rj2 exceeds 0.9, there exists high degree of multi co linearity (Gujarati, 2003). Hence, in this
study, Variance Inflation Factor (VIF) was employed to estimate the degree of multi co
linearity among the explanatory continuous and dummy variables of the yield function.
Thus, the study attempted to determine factors that determine the yield using the cross-
sectional data of the following variables.

Variable Definition, Measurement and Hypotheses

Dependent Variable

Yield of Mango (Yield) It is a continuous variable which represents the yield of Mango
produced by the household measured in quintal (100 kg).
Independent variables
Age of household head (Age): It is a continuous variable and measured in years. Age is a
proxy measure of farming experience of household. Aged households are believed to be wise
in resource use and also young household heads have long investment horizon and it is
expected to have either positive or negative effect on production and supply of Mango and
avocado. (Selamawit,, Dubale,, Chigign,, Aklok, & Yonnas, 2019) on Value chain analysis
of fruits, mango and avocado producing smallholder farmers in Gurage Zone, Ethiopia), who
found that age of the household head have negative effect on the elasticity of mango and
avocado supply to the market, which shows that older households are tradition bounded and
expected to be reluctant to take up new technologies; hence it will negatively affect Mango
production and supply.
Sex of household head (Sex): It is a dummy variable taking 0= female and 1=
male. As farming mango and Avocado practice around home
(Selamawit,, Dubale, Chigign,, Aklok, & Yonnas, 2019) is said this variable had a negative
and significant effect on the volume of mango market supply and it was significant at 10%
significant level. Traditionally, fruit is assumed to be grown around home and more likely to
be grown by females. As a result, decision to supply and meeting households’ requirement
belongs to females.
Mango farming experience (Exper): It is the total number of years a farmer stays in
production of Mango. A household with better experience in Mango farming is expected to
produce more amounts of high quality and increase productivity of mango as a result, he/she

40
is expected to produce more amounts of Mango. Similarly study of
(Selamawit, Dubale,, Chigign,, Aklok, & Yonnas, 2019), shows that farmers with longer
farming experience are more knowledgeable and skillful. Therefore, this variable is
hypothesized to be positively influence Mango yield.
Education of the household head (Hheduc): It is a dummy variable measured in terms of
whether the household has a formal education or not which takes a value 1= literate and 0=
illiterate. Education broadens farmers’ intelligence and enables them to perform the farming
activities intelligently, accurately and efficiently. Moreover, formal education enhances the
information acquisition and adjustment abilities of a farmer, thereby improving the quality of
decision making (Fakoya et al., 2007). Human capital, represented by the household head’s
formal education (at least secondary level) is posited to increase a household’s understanding
of market dynamics and therefore improve decisions about the amount of output sold, inter
alia (Makhura et al., 2001). Therefore, this variable is hypothesized expected to influence
yield and volume of Mango sales.
Family child size (Fchildhsize): Household size of a respondent is a continuous variable
measured in terms of number of family members in the household. As Mango production is
labor intensive activity, the production in general and market supply of produce in particular
is a function of labor. However, family size might have positive effect on productivity and
marketable surplus of food crops.
Extension contact (Extension): Takes dummy variable 1= Yes and 0= No, which represents
household heads who are frequently contacted by extension agents represent “Yes” and who
have no contact represent “No”. Mango producer household who have contact with extension
agents are expected to be highly informed with modern agricultural information and new
technologies. On the other hand, households whom do not have contact with extension agent
have week access to new production techniques and technologies which results in reduction
of yield per hectare and consequently decreases quantity supplied to the market. Study by
Nachimuthu, D. K., & Derso, B. (2018) on Factors affecting members’ participation in
primary Dairy cooperatives in North Gondar zone of Amhara Region, Ethiopia found
positive relation between access to extension service for Dairy production and the amount of
diary product supplied to the market.
Land size (Land): This is the total land holding, which is a continuous variable. If the
producer has large land size he would allocate more land to his fruit. Thus, increase in size of
land is expected to have direct influence on market participation and marketed surplus.
According to Selamawit,, Dubale,, Chigign, Aklok, & Yonnas, 2019) in the study total land
41
owned has a significant effect to the amount supplied.
Distance to the main market (DMkt): It is a continuous variable measured in time take for
walking. Farmers marketing decisions are based on market price information, and poorly
integrated markets may convey inaccurate price information which leads to inefficient
product movement. According to Selamawit,, Dubale,, Chigign,, Aklok, & Yonnas, 2019).
Survey the households rely entirely on their own observations and interactions with other
traders for information on local and distant market prices. Therefore, it is hypothesized
distance to main centers negatively related to market participation and marketed surplus.

3.7. Ethical Consideration

After obtaining all level approvals and actors have to submit a signed informed consent form
indicating willingness to participate the researcher was continuous his research. The
researcher was also think about any local laws that govern how to collect and store data and
specially when data collected from individuals, he well must ask their permission to share it
with others, and store it securely for no longer than two years and stop survey from people
who didn’t say okay to response and explain first the purpose of collecting data detail. Also
principles that interviewers assess prior to initiating the interviews
Honesty: Be totally honest about who you are, who you work for and the purpose of the
interview. Start each interview with a clear explanation of the research purpose using terms
that are understandable and meaningful to the informant.
Deliberateness: Be deliberate about the way you speak to the informant. Never interrupt the
informant. Speak clearly and establish a comfortable pace (which often means slowing down
the way you would normally speak). Allow a space after the informant stops talking, in case
he or she wants to elaborate. Never ask leading questions.
Launching point: Begin each interview by establishing a common frame of reference
between you and the informant so that the informant understands what kinds of information
interest you. A value chain map can be very helpful for this because it immediately
communicates that you are interested in learning about the value chain. It also allows the
informant to understand where you think he or she fits in, and to correct you if you are
wrong.
Strategic ignorance: Make it very clear that you consider the informant to be the expert and
that you consider yourself the learner. Conduct yourself as if you were the student of the
informant, freely asking for clarification and examples.

42
Triangulation: Do not accept one informant’s opinion at face value. Gather the same type of
information from other informants—who may have a different experience or interpretation
before reaching any firm conclusions. As a general rule of thumb, you should hear something
similar from at least three distinct sources before you accept it as more or less accurate.
Privacy: Try to interview the informant where others can not listen in. Never share
information about an informant’s business with other firm owners. Avoid bringing observers
to an interview. Expand the net: At the end of the interview, ask if the informant can
recommend others to be interviewed, but do not force the issue if the interviewee shows
hesitancy.

CHAPTER FOUR
RESULTS AND DISCUSSION
This section deals with the major outcomes of the study. It is divided into four main sections.
The first section deals with descriptive and inferential statistics of the sample households.
The second section presents value chain analysis of Mango which includes value chain map,

43
actors and their roles, value addition and quality management of mango, value chain
governance, marketing channels, marketing costs and margins, and benefit shares of actors in
the value chain. The third section deals with the constraints and opportunities of Mango
production and marketing in the study area and the forth section presents results of
econometric analysis which contains the determinants of market supply of Mango by using
OLS.
4.1 Descriptive Statistics
In this study, out of 321 questionnaire distributed 28 was not returned and seven was avoided
and 286 survey was used for analyzed
4.1.1 Demographic and socio-economic characteristics of the sample households
In this study, based on the result of the survey, both male headed household and female
headed household are participated in production of Mango. The total sample size of farm
respondents handled during the survey was 286. Of the total sample respondents, 85.3% were
male-headed households and 14.7% were female-headed. Female-headed households
normally face greater challenges in rural community compared with male-headed
counterparts. This fact is also supported by Doss (1999) which stated that, in addition to farm
management tasks, the female headed household has considerable childrearing and household
management obligations that are not normally the prefecture of Ethiopian men. Such
demands can increase the vulnerability of female headed households to economic and other
shocks to their welfare.

In the study area, the average family size of sample households was 5.5 persons with the
minimum and maximum family size of 1 and 13 respectively and a standard deviation of
2.152 (Table 2). This figure is larger as compared to the national and regional average family
size of 4.7 and 4.8 persons respectively indicating the need for intervention and strengthening
of family planning program in the study area. Moreover, sample households were also
characterized by the presence of large number of children (50%) having age of less than 15
years which further imply shortage of active labor force to undertake various agricultural
operations.

Age of a household head also plays a role in household decision on use of different
agricultural technologies. The age of the head of the household is considered as a crucial
factor since it determines whether the household benefits from the experience of an older
person or has to base its decisions on the risk-taking attitudes of younger farmers. Table 2
reflects sample households exhibited variation in their ages ranging from 30 to 71 years.

44
70 (24.5) household is literate 216(75.5%) household is never attend formal education. These
results show that there is education gap among sampled producers, as it is has been studied
by Appleton and Balihuta (1996); Cotlear (1990) education may have both cognitive and
non-cognitive effects upon farmer’s labor productivity. Cognitive outputs of schooling
include the transmission of specific information as well as the formation of general skills and
proficiencies. Education also produces non-cognitive changes in attitudes, beliefs and habits.
Increasing literacy and numeracy may help farmers to acquire and understand information
and to calculate appropriate input quantities in a modernizing or rapidly changing
environment. Improved attitudes, beliefs and habits may lead to greater willingness to accept
risk, adopt innovations, save for investment and generally to embrace productive practices.
Table 2. Demographic and socioeconomic characteristics of samples
Variable Continuous Variable Dummy variable
Mean Std. Dev Min Max
No %
Age 49.28 10.992 30 71
Family Size 5.5 2.152 1 13
Sex
Male 244 85.3
Female 42 14.7
Education
Literate 70 24.5
Otherwise 216 75.5

years of experience in 8.88 2.926 2 19

farming (in years)
Land Size .2581 .307 0.25 2.10
Source: survey result, 2020
The survey result shows that sample respondents have had Mango farming experience
ranging from 2 to 19 years. The average years of farming experience related to Mango
production was 8.88 years. Also sample farm households own an average of 0.258 ha of farm
land and out of these the mean land allocated for production of Mango in the study area is 1/2
land owned (0.129) hectare.
4.1.2. Access to services
Access to extension service: Access to agricultural extension services is anticipated to have
direct influence on the production, processing and marketing activities of the farmers.
Farmers require a diverse range of information to support their farm enterprises. Information

45
is needed not only on best practices and technologies for crop production, which the
traditional public sector extension system provided during the Green Revolution, but also
information about postharvest aspects including processing, marketing, storage, and
handling(Van den Ban, 1998). The frequency of farmers to meet to the extension agents is so
higher, the more likely those farmers adopt a new technology and innovation. Here, it is not
necessarily true that extension contact with Extension agents can enable the farmers to update
their information, but a big attention has to be paid to the question “how often they meet their
respective extension agents?” To do this, the government has been attempting to fill the
required knowledge and achieve food self-sufficiency in the country by employing in each
Kebele administration three development agents (DAs). These development agents are living
around the farmers dwelling and they built strong social relationship with farmers. In
addition, farmers training center (FTC) has been built to provide practical demonstration
based skills to farmers. The effort to disseminate new agricultural technologies is influenced
by the efficiency of communication between the development (change) agent and the farmers
at grassroots level.
In the study area, development agents, district experts and friends are the most important
sources of extension services to transfer agricultural technologies and innovations to farmers.
Out of the total sampled households, 73.4 % meet the development agent weekly and once in
a two week basis, 26.6% of them have monthly contact. They provide limited extension
advice which focuses on technical aspects of improving Mango production and post-harvest
management. They also help farmers in selecting high yielding varieties and also prevention
of Mango diseases.
Access to market information: Market information, as it has been cited by (Le Van et.al,
2013) it occurs in the processes of buying and selling of agricultural inputs, outputs and
services (Tiago and Yen, 2007). Thus, agricultural market information includes demand and
supply of agricultural commodities and involved input and service sectors. The term shall
include all data transmitted via the market data interface and the reference data interface. To
specify the aspects of market information, Shaun et al (2008) indicated that basic market
information as commodity price data linked where possible with market demand conditions.
The objectives of these information is to assist farmers and be able to monitor the market and
make better decisions on where to sell their products and to negotiate for improved prices
rather than being compliant price takers.
It was observed that 47.2% of the sample households were receiving market information from
different sources and the rest 52.8% could not able to receive information . Based on the
46
survey 58.7% of sample respondents obtain market information from the Wholesaler, 41.3%
are from DA and kebele administration and the rest of the respondents replied that the obtain
market information from friends, radio and informal group discussion.
Access to credit service: The provision of credit has increasingly been regarded as an
important tool for raising the incomes of rural populations, mainly by mobilizing resources
for more productive uses. As development takes place, one question that arises is the extent
to which credit can be offered to the rural poor to facilitate their taking advantage of the
developing entrepreneurial activities. However, at low levels of income, the accumulation of
such capital may be difficult. Hossain (1988) also studied the benefits of loans that it can
increase family income and helps the poor to accumulate their own capital and invest in
employment-generating activities.
Having the above article in mind, from the collected evidence of sample household’s data, the
proportion of credit service users in the study area totally 100% of the respondents were not
receiving credit. The reason behind not access credit was explained by the farmers that there
is lack of credit service they are unable to use credit access.
Table 3. Households’ access to extension, market information and credit services
Access to service Yes No

N % N %
Access to extension service 210 73.4 76 26.6
Access to market information 135 47.2 151 52.8
Access to credit service 0 0 286 100
Source: survey result, 2020
4.2 Value Chain Analysis
4.2.1 Mango value chain actors and their role
Value chain actors are categorizes under two important sections; these are direct and indirect
actors. According to KIT et al. (2006), the direct actors are those involved in commercial
activities in the chain (input suppliers, producers, traders, retailers, consumers) and indirect
actors are those that provide financial or non-financial support services, such as credit
agencies, business service providers, government, NGOs, cooperatives, researchers and
extension. In the study area, there are different actors involved along the Mango value chain,
upstream from input supply to downstream exporters, playing different roles. The major
actors participating in Mango value chain and their roles are discussed below.

Input suppliers: The Administrative Agricultural office (rural extensional office) and NGOs

47
(safety net) operating in the area are the main responsible actors for the delivery of inputs like
improved seed and fertilizers in the study area. Development agents and kebele agricultural
experts are playing facilitation role in collecting farmers input requirement demand and
submitting to the Administrative agriculture office, then they communicate with the
stakeholders to fulfill the input demands of the farmers. They also play the same role during
input distribution. EIAR multiplier and melkas research center was Mango improved seed
supplier in the study area to those households participating in productive. Adami Tullu is the
supply of chemical in study area
Mango producers: All Mango producers in DDA are small scale producers. These farmers
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 mango growers perform
include hole, planting, fertilization, irrigating, weeding, pest/disease controlling, harvesting
and post-harvest handling. The suitable climatic conditions can make production of mango
highly demanded and competitive, and provide enormous opportunities in study areas.
However, these opportunities have not been exploited by the farmers due to low quality
supply resulted to the lower price they receive for their produce in the markets. As most of
Mango production in DDA was based on rain fed system and some are in irrigation there is
no sustainability of mango supply throughout the years.
Primary cooperatives: Primary cooperatives are established in each kebele of rural cluster.
However, the cooperatives didn’t purchase mango from their members and non-members.
Means that they area are not performing collecting, transporting and selling functions of
mango and others farmers products even from their members. The reason for is related to the
way of its foundation that the primary cooperative members was not associated based on
members interested and members fund contribution rather than it was political initiated and
as well the members is not given good awareness, participate, skill and knowledge of
management and leader committee of cooperative is a big problem. The cooperative was
founded in this area after the political leader here change was appear in some part of country
such as Oromia, Ahmara and Tigria by cooperative in 2002. The main function of
cooperative in this area is distributing only consuming/food goods (Oil, Sugar, Chemical,
animal feed and other input) only.
Cooperative union: In the study area, there is a one cooperative union called Dire
multipurpose farmers cooperative societies union. The union was established in 2002 with
38 primary cooperative. The union is located in DD city around Konel Bridge area and is not
48
engaged in facilitating marketing of different fruit and Vegetable of farmer product. Rather
distributing consuming/food goods (Oil, Sugar, Chemical, animal feed and other input) to
primary cooperative only. Similar to cooperative it has a foundation problem. The normal
foundation principle steps shows that to established union, first members of farmers
associated to form primary cooperative based on interest and common goals, then after
different primary cooperative come together at least with two primary cooperative union can
be established, finally union can form federation. However, Dire multipurpose farmers
cooperative societies union was established in 2002 before primary cooperative by political
leader fund contributed from external body without primary cooperative interest and
contribution. This in turn farmer and primary cooperative cannot control over union as well
as farmers have no control over primary cooperative on management and resource of
cooperative and Union.
Wholesalers (Suppliers): The wholesalers operating in DDA obtain their supplies of Mango
from farmers. They mainly operate in DD city markets. They handle the lion share of total
mango sold by farmers. They assemble, store and transport their mango before supplying to
Retailer, consumers in Dire Dawa and others wholesalers ( Gumuruk). There are six in a
numbers and control over all markets. They are a big barrier in city for any new traders to
enter in the market, even if a farmer bring his product to sell in city they block all customer
and lead to loss except them. So they go to rural and assemble by themselves on credit at
farmers gets at lowers price to pays after sale to avoid loss of perishable products.
Processors: These are private hotels, cafeteria and restaurants. Mango processing in the
study area is apparently skewed to juice making where cafés, restaurants, hotels and juice
houses take the leading position in juice preparation. They purchase fully ripe mango from
retailers and wholesalers for the processing of juice and jam. They play role in satisfying
form utility of mango consumers in the study area. Hotels, restaurants, and cafeteria process
juice and supply to the consumers in their locality. The major inputs that processors use for
processing of juice and jams are fully ripe mango, lemon, sugar, mango processing
equipments, and cup. The main quality requirement of mango processors is purchasing of
colorful red yellow mango, fully ripen, physically undamaged and not bruised mango. The
main value adding activities performed by the mango processors in the study area is freezing,
and better storage.
Consumers: These are final users of mango emerging from study area. Consumers for this
particular study mean those households who bought and consume mango. They are
individual households; they bought mango for their own consumption only either in
49
 processed or fresh form. They buy mango either in fresh or processed form from farmers,
retailers, wholesalers and processors. Consumers prefer physically undamaged, not
bruised, less fibrous and red mango for their immediate consumption.
Supportive actors: Value chain supporters or enablers provide support services and
represent the common interests of the value chain operators. They remain outsiders to the
regular business process and restrict themselves to temporarily facilitating a chain upgrading
strategy. Typical facilitation tasks include creating awareness, facilitating joint strategy
building and action and the coordination of support activities (like training, credit, input
supply, etc.). The main supporters of the mango value chain in the study area are
Administrative Office of Agricultural and Rural Development (DDBoARD), International
Development Enterprise (IDE) DD catholic, DMF, GRAD (USAID project), SNV, Melkasa
research center, and DDA Trade development office and cooperative development office.
DDBoARD support though providing inputs and technical advice on Mango production.
Melkasa research center assists Mango value chain through providing by identifying and
disseminating new varieties of Mango. Even though cooperative development office and
trade development office is inefficient to support Mango value chain.
4.2.2 Mango value chain mapping
To analyze the specific activities through which actors can create a competitive advantage, it
is useful for actors as a chain of value creating activities. Value chain mapping enables to
visualize the flow of the product from conception to end consumer through various actors.
According to McCormick and Schmitz (2001) it also helps to identify the different actors
involved in the Mango value chain, and to understand their roles and linkages. Having this
fact in mind, the current value chain map of Mango in DDA is depicted in figure below. Value
chain map in the study area depict us actors involved in Mango value chain and activities
performed by different value chain actors. It also demonstrates that flow of Mango production
inputs from input suppliers to producers as well as flow of the product from farmers through
different value chain actors to the consumers. There is also information flow regarding the
quality and price of Mango from cooperatives, DDBoARD to producers.
Figure 1 Mango value chain map

Consumers Mrk and

I II III IV V cooperative
Consumption

promotion

Credit
50
and Fina
 Processe
r
Retailer Other place
Wholesaler
Marketing and Distribution

Bank
Wholesale

DDA
Production

Farmer/ Mango producer

Informal
credit
Input Supplier

supply
EIAR
multiplied S NGO Malkes RC DDBoARD ATJK chemical

Chain Actors
Enabl
e

Represent flow of product

Represent the flow of bulk Product
Represent two ways flow of information
Represent one ways flow of information
Figure 1 Mango value chain map of the study area
Source: Own sketch from survey result (2020)

4.2.3 Governance of Mango Value chain

The dominant value chain actors play facilitation role. They play significant role in the flow
of commodities and level of local market prices. In effect they govern the value chain and
most other chain actors subscribe to the rules set in the marketing process. The study result
indicates that a wholesaler is the key value chain governors. The local market is heavily
dependent on Mango local set price, and therefore the mango value chains are highly

51
influenced by the wholesale market price. Due to the lack of a proper market information
system and minimal bargaining power, farmers are forced to sell their product at the price
offered by wholesale at Kefira fruit market area. There is no strong vertical linkage between
value chain actors; as well as there is horizontal linkage between wholesalers, cooperative
unions and primary cooperatives, farmers with farmers and consumer with each other weak.
On the other hand, poor quality coordination in the cluster was observed from the collected
data. Overall, the governance of the mango value chain is wholesale driven with minimum
trust between various actors. Wholesalers market is always complaining that the farmers are
not providing quality product while farmers are blaming the wholesalers for offering low
prices as well as even, it is challenge for farmer to sell their product in city because the
wholesalers have strong and loyal relation with all retailer and processor and influence not
purchase from any actors except them.
4.2.4 Mango costs of production
Mango producing farmers of the study area, incur costs mostly during the production phase
rather than during marketing their produce. They incur production cost of 210 birr per quintal.
The estimated land cost is opportunity cost of land which is rental value of land in the study
area. Furthermore, in the study area, Mango is produced using family labor. Therefore, all
estimated labor costs are opportunity costs. The largest cost item in the study area is land
value which accounts for 61.91% of total cost of production. Other cost components are as
indicated in table 4.

Table 4. Cost of production of Mango in the study area

Production items Cost per quintal (Birr) Share (%)

Land cost (opportunity cost) 130 61.91

Input cost (Birr) 40 19.05

Cost during conserving for production 30 14.29

52
 Transportation 10 4.76

Total cost of production per quintal 210 100

Source: survey result, 2020

4.2.5 Market channel and performance analysis of Mango value chain

4.2.5.1 Market channels
In DDA there are established market places namely Kafira and different retail market in
different kebele (such as Saido, Konel, Ashaw and Meskelgn). These markets are established
based on criteria set by administrative market place and crowed of customer. Seven main
alternative channels were identified for Mango marketing. It was estimated that 246 qts of
Mango from study area were marketed in 2019. This fruit is grown as a cash fruit and
consumption, because they are more popular for consumption in the domestic market. Within
Ethiopia, as diet consumption it is relatively low as a result of low income per GDP and all
the produced quantity is supplied to the market as well as more processed Mango ( packed
juice is imported) in the study area. The main marketing channels identified from the point of
production until the product reaches the final consumer through different intermediaries were
depicted in figure 2.
As shown in Figure 2, in channel I farmers sell Mango to Consumer and it account for
7.97%. Retailers channel II directly sale to Processor and consumer. This accounts for about
5.89% of Mango. Channel III is the longest path of Mango selling destination through which
producer sell Mango to wholesalers. Through this channel, whole sellers purchase on credit
from farmer which accounts for about 85.98% sold by sample households and paid after
sales. And they have three alternatives to sell to Retailer (35.3%) at each market in DDA and
Consumer channel (53%) and other place wholesaler Gumuruk (11.5)

Figure 2 Market channel Mango

Channel I Producer Consumer (19.6 Qts)
Channel II Producer Retailer Consumer (3.7 Qts)
Channel III Producer Retailer Processor Consumer (10.8 Qts)
Channel IV Producer Wholesalers Retailer Consumer (56.2 Qts)
Channel V Producer wholesalers Retailer Processer Consumer (18.3 Qts)

53
 Channel VI Producer wholesalers Consumer (112.3 Qts)
Channel VII Producer wholesalers other place wholesale (24.3 Qts)

Producer (246 Qts)

7.97% 5.89%
85.96%

Wholesaler

35.3 53% 11.5%

Retailer Other place
Wholesaler

24.6% 74.4%

Processer

Consumer

Figure 2 Market channel Mango

Source: Own sketch from survey result (2020)
4.2.5.2 Performance of Mango market
The performance of Mango market was evaluated by considering associated costs, returns
and marketing margins. The methods employed for analysis of performance were channel
comparison and marketing margin. The analysis of marketing channels was intended to
provide a systematic knowledge of the flow of goods and services from its origin of
production to final destination. The distribution of costs and gross income at different levels
is important in this regard. Mango requires greater attention during post harvesting,
packaging and transporting from the point of production to the final market. The marketing
cost of the Mango mainly involves the cost of post-harvest activities incurred while kept in
storage and process. This includes cost of post-harvest value addition in terms of packaging
(material and labor costs), process, handling (sorting, cleaning, loading, and unloading),
storage and transportation.
Marketing margin can be used to measure the share of the final selling price that is captured
by a particular agent in the value chain. The relative size of various market participants’

54
gross margins can indicate where in the marketing chain value is added and/or profits are
made. In order to calculate the marketing margin of an agent, the average price of Mango for
that particular agent was taken. In order to measure the market share of each agent, the
marketing channel where all agents have participated was selected. Marketing margins,
associated costs and benefit share of value chain actors and marketing margins through
different main channels was presented below.
Table 5. Projected marketing margin of Mango value chain actors
Producer Wholesaler Retailer Processor Horizontal
summation
Purchase price - 680.50 880 1350 2910.5
Production cost 210 - - 210
Marketing cost
Labor for packing - 20.00 6 - 26
Loading and unloading - 8 8 8 24
Material cost - 10 10 6 26
Transport cost 20 30 15 15 80
Sorting and grading - 5 - - 5
Loss 10.50 15 10 10 45.5
Processing cost - - - 200 200
Total marketing cost 30.50 88 49 239 406.5
Overhead costs 10.00 50 17 50 127
Total cost 40.50 138 66 289 533.5
Selling price 540.50 1268.5 1096 1,939 4844
Marketing margin 330.50 588.5 216 589 1723.5
% share of margin 19.18 34.17 12.53 34.17 100
Profit margin 290 450 150 300 1190
% share of profit 24.37 37.8 12.6 25.21 100
Source: survey result, 2020
4.2.5.3 Value distribution of actors in Mango value chain
The survey result showed that 19.18%, 34.17%, 12.53% and 34.17% of the final consumer’s
price is shared by producers, wholesalers, retailers and Processor respectively. The profit
gained by producers, wholesalers, retailers and processor was 290, 450, 150 and 300 birr/qt
respectively. Each of the Mango value chain actors adds value to the product as the product
passes from one actor to another. In a way, the actors change the form of the product through
packaging or transporting to other places (place utility). This result coincide with the finding
of (Selamawit,, Dubale, Chigign,, Aklok, & Yonnas, 2019) on Value chain analysis of fruits,
mango and avocado producing smallholder farmers in Gurage Zone, Ethiopia) that a farmers
are vulnerable from the chain while wholesaler and processors are earn more profit share.
4.2.5.4 Distribution of benefit among Mango value chain actors
Since it is difficult to capture all the agricultural marketing costs, to make meaningful
interpretation of the profitability operation of intermediate actors, it is better to use the gross

55
 marketing margin. Accordingly, the Gross Marketing Margin (GMM) is the percentage over
the price earned by the producer/saller after his net income once his selling prices are
deducted. Thus gross marketing margin can be used to measure benefit captured by a
particular actor in the value chain. Based on this fact, it is possible to see the benefit
distribution among Mango value chain actors for different marketing channels. Higher gross
marketing margin or profit of the actor shows greater share of benefit. As indicated in Table
below, benefit share from Mango is lesser in channel II which is 50.68% of total benefit.
Wholesalers and processors are more benefited in channel III and five which equals to 72.1%
of total benefit.
Table 6. Margin distribution of Mango value chain actors along the marketing channel
Actor I II III IV V VI VII
Producer Selling price 540.50 880 680.5 680.5 680.5 680.5 680.5
Value added 330.5 670 470.5 470.5 470.5 470.5 470.5
TGMM 0 50.68 72.1 50.68 72.1 57.39
Wholesaler Purchase price 680.50 680.50 680.50
s Selling price 1268.5 1268.5 1268.5
Value added 588 588 588
GMMw% 46.35 46.35 46.35
Retailer Purchase price 880 880 880 880
Selling price 1096 1096 1096 1096
Value added 216 216 216 216
GMMr% 19.7 19.7 19.7 19.7
Processor Purchase price 1340 1340
Selling price 1939 1939
Value added 589 589
GMMp% 30.37 30.37
Other place Purchase price 1100
whole Selling price 1850
Value added 510
GMMow% 27.56
Source: survey result 2020
4.2.5.5 Value addition and quality management of Mango
In regarding to quality issues of Ethiopia’s Mango there is a gap among at farm level, the
quality prerequisite at export market level and within domestic consumption. From the
thought of collected data, farmers are employing similar agronomic practices on mango and
other fruit which used to be sold at local market. Farmer’s reluctance to accept and
implement extension services and poor field management is the other head ache for
preserving quality and productivity. According to discussion with Kebele agronomy experts
at DDA, agronomic practices for Mango production are lower than Papayas and orange due
to mango require that more management during flowering from disease even though it is

56
more tolerance for dry. Although yields for Mango are claimed to be higher than Papaya and
Orange, due to lack of good husbandry often means that Mango yields are lower than other
fruit. Due to the above factors farmers are reluctant and discouraged to increase productivity,
expand production and maintain quality of Mango at farm gate.

Accordingly, as it was observed from the sample survey 65.2% of the respondents were not
interested to expand the production of mango, where as 34.8% of them replied that they have
a plan to expand production. The reason behind refusal of expansion was tried to be
explored, based on the households response is due to shortage of improved and high yielding
varieties they have no idea to expand production of Mango.
Regarding the market aspects, as the researcher observed in the market, traders were trying to
be serious enough in controlling the market and they set market price as they like. There is
no controlling mechanism from government.
There are factors that impede the production of Mango in the study area. The majority of the
sample producers indicated that decrease in productivity and poor usage of chemical; smaller
plots for cultivation of Mango and Shortage of quality improved Variety.
4.3 Opportunities and constraints of mango value chain
A number of challenges, opportunities and intervention points for further institutional and
organizational innovation for upgrading the value chain of mango in the study area were
identified by the different value chain actors. In this section, the major constraints and
opportunities are briefly discussed.
4.3.1 Opportunities of production and marketing
Agribusiness, particularly the food sector, is rapidly consolidating and increasingly
responding to the changing tastes and preferences of consumers and in turn consumers have
higher incomes than ever before. They are focusing more on convenience, quality, variety,
service, health and social consciousness (Anderson and Hanselka, 2009). They are also faced
with the increasing value of (and demands on) their time. Anderson and Hanselka (2009)
again believed that, in a nutshell, consumers are more value conscious than ever. This creates
opportunities for producers to add value to their products. Ethiopia is a lower cost producer of
mango than the United States or Canada, which produce the bulk of mango worldwide. The
country is also closer to its export markets than its main competitors, so has a cost, transport
advantage, high demand of processed and imported package mango juice will be substituted
can be an opportunity. Having this resource and the potential opportunity of the area in its
experience in mango production, possibly the Administrative can specialize on mango

57
growing. Another opportunity in Mango value chain is the increased demand for the product
in the international market which would be followed by better farm price for producers. As
the price increases farmers will be interested to produce Mango. Consequently farmers will
have an incentive to expand their output. Moreover, Ethiopian government now has a policy
that promotes investment in agro industry and market oriented agricultural production. As
Dire Dawa is a nearest to boarder of export and market of foreign current follow it is an
opportunity for agro industry center to export.
4.3.2 Constraints of mango production and Marketing
From Table 7 the results show that the respondent ranked the most important mango
production constraint in rural cluster of Dire Dawa Administration and the constraints were
Drought (RII=0.9070), Land Size (RII=0.9007), Timely availability of improved Varity
(RII=0.8231), Access to markets and information (RII=0.7650), Diseases (RII=0.6734),
Prices of improved variety (RII=0.6483), Soil fertility(RII=0.5972), Availability of credit to
buy seed(RII=0.4860), Floods (RII=0.3699) and Timely availability of fertilizer
(RII=0.3189).
Decrease in productivity due to poor Drought: According to the survey result of Mango in
the study area, quintals per hectare of land produced is decreased as mango grown is rain
based and change time to time similar with the finding of A study made by
(Benyam, & Fayera, 2018) focused Value Chain Analysis of Mango Sheka Zone, Southwest
Ethiopia of the results that drought is the most critical constraint.

Smaller plots for cultivation of Mango: According to the survey result, small plots for
cultivation of mango due to population growth and urbanization decrease in productivity and
resulted in shift of attitude, growing other fruit and Vegetable grown 2-3 times per a year.
Timely availability of improved and Shortage of quality improved variety: Lack of an
adequate variety industry in Ethiopia created shortage of Mango. According to the study, it is
the third constraints in study area are by RII.
Lack of credit access: The availability of credit service is important source of cash for
farmers to buy agricultural inputs needed and it is the influential factor to increase production
and marketed surplus of Mango, there is no of the sample households obtained credit from
formal sources. From the collected data only 100% of the respondents have no access to
credit. As a result farmers were forced to use input below the recommended rate and lack to
use improved variety.

58
 The Importance and Ranking of constraint of mango production by respondents
Table 7- Importance and ranking of mango production constraint
  Str. Disagree Sligh. Agree Str. RII Ranking
Disagre Agree Agree
e 1 n1+ 2n2 +3n3+4n4+5n5 A*N (5*286)
Timely availability 0 0 26 201 59 1177 1430 0.8231 3
of improved variety
Prices of improved 0 11 197 76 2 927 1430 0.6483 6
seed
Availability of credit 0 164 121 1 0 695 1430 0.4860 8
to buy variety
Timely availability 129 144 13 0 0 456 1430 0.3189 10
of fertilizer
Soil fertility 0 78 134 74 0 854 1430 0.5972 7

Access to markets 0 22 48 174 42 1094 1430 0.7650 4

and information
Land Size 0 0 31 80 175 1288 1430 0.9007 2
Drought 0 0 28 77 181 1297 1430 0.9070 1
Floods 74 181 31 0 0 529 1430 0.3699 9 
Diseases 0 66 66 137 17 963 1430 0.6734 5

Source: survey result, 2020

60
Marketing constraints
In addition to constraints on production, Mango marketing is embarrassed by different
problems. The most serious ones are the following:
Price volatility: Mango marketing is associated with high degree of price fluctuation and
high bargaining power of wholesalers and farmers are highly vulnerable in study area.
Additionally, the price of mango is influenced by imported packed juice that affects the price
and productivity of mango in any given year in this area is varies. The primary cooperatives
that are established to increase the bargaining power of farmer at each kebele, however they
are not performing for the goals they established. Rather they perform activity such as
distributing consuming/food goods (Oil, Sugar, Chemical, animal feed and other input) only.
Not marketing, facilitate or connect farmer product with market primary cooperative as well
Union.
Lack of market linkage service: Farmers have inadequate knowledge on marketing and
have low bargaining power. Extension agents assigned in each kebele are limited to provide
only on production aspects, but the farmers carry out marketing of agricultural products
without significant support from any institutions and usually they used to be exploited by
brokers residing around the kebeles, sometimes the brokers are price makers, they offer
biased information on price aspects. Although farmers get information from kebele
administration, DA’s and traders, the information they acquire was relied only on the
production aspects. Similar to study made by (Benyam, & Fayera, 2018) focused Value
Chain Analysis of Mango Sheka Zone, Southwest Ethiopia of the results market information
is the most constraint of producer.
4.4 Econometric Analysis
4.4.1 Determinants of Mango Market supply
Before running the model, it was necessary to see the problem of Model summary and
multicollinearity among the variables. According to Gujarati (2004), there are various
indicators of multicollinearity and no single diagnosis will give complete information about
the problem. So before regress the model is passed along the following procedure.
Adjusted R Square model shows how dependant variable are being explain by predictors
variable. So the table of this study shows that the included predictors’ variable are able to
explain quantity of mango supplied by farmer by 78.8% which shows most of variable are
included in the model while only 22.2% variable is not included or affected because of
different factors. As a result it is a good model and shows that the model is fit for the
purpose.
61
Table8 Model Summary
Model Summary
R R Adjusted R Std. Error of the Durbin-Watson
Square Square Estimate
0.891 0.794 0.788 0.800 1.510
Source: Source: survey result, 2020
ANOVA Result is a pre estimation of the model and it shows us the summery of model
coefficient of all predictors’ whether we precede or not to make decision for further
processes. The result of this analysis shows that P- value is 0.000 and significant as well as
there is at least one predictor variable that included and affects the quantity market supplied
by farmer.
Table 9 ANOVA
ANOVA
Sum of Df Mean Square F P- Value
Squares
Regressi 681.984 8 85.248 133.082 .000
on
Residual 177.437 277 .641
Total 859.420 285
Source: Source: survey result, 2020
Analysis of determinants of farm level supply of Mango was found to be important to
identify factors determining Mango productivity. In this regard, eight variables were
hypothesized to affect the supply of Mango. Multiple linear regression models were
employed to identify the factors. For the parameter estimates to be efficient, assumptions of
Classical Linear Regression (CLR) model should hold true. Hence, multi colliniarity and auto
correlation, Inflation distance and Normal distribution detection test were performed using
appropriate test statistics for each as follows. First, multi colliniarity variance inflation factor
test (VIF) were employed, which were in ranges of 1.063 and 2.378. It showed that there was
no severe Multi collinearity problem between explanatory variables in the model. Second
auto correlation was checked by Durbin-Watson and the result lies between 1.5 and 2.5 and
there are no auto correlations. Third, COOKs was employed to check Inflation distance
between the observation and the result shows less than one and for detail the result is also
attached on appendix. Finally to test Normal distribution PP plot was checked and most of
observation are distributed around straight line.

62
Table 10. Determinants of Mango market supply
Model Coefficients
Un standardized Standardized T P- 95.0% Confidence
Coefficients Coefficients value Interval for B
B Std. Error Beta Lower Upper
Bound Bound
(Constant) 4.573 .456 10.024 .000 3.675 5.471
Sex .410 .161 .084 2.548** .011 .093 .726
Educational -.571 .168 -.142 -3.401*** .001 -.902 -.241
qualification
Family child size -.035 .031 -.043 -1.129 .260 -.096 .026
age group .006 .006 .035 .895 .372 -.007 .018
years of experience .304 .020 .513 15.423** .000 .265 .343
in farming (in *
years)
plot Size .479 .159 .085 3.015*** .003 .166 .792
Distance to main -.350 .080 -.134 -4.353*** .000 -.508 -.192
road in km or hrs
access to 1.009 .165 .257 6.107*** .000 .684 1.334
extension service
***, **and * represents level of significance at 1%, 5%, and 10% respectively
F = 133.082, R2= 0.794, adjusted R 2 = 0.788 and n= 286
Source: Source: survey result, 2020
After the regression out of nine factors hypothesized to affect market supply of Mango in
study area six are significantly affecting the dependent variable (Table 10), namely,
experience in Mango farming, extension, Distance to main road in km or hrs , Sex, Educational
qualification, and land holding with 1%, 1%,1%.,5%, 1%and 1% significant level respectively.
Experience in Mango farming is one factor that affects quantity supplied of Mango
positively, on average a one year increment in experience of Mango farming will increase
quantity supplied by 0.304 quintal. Similarly, if extension contact and land holding increase
by one unit, the quantity supplied will increase by 1.009 and 0.479 quintal respectively.

Sex is also another factor, which positively affects quantity supply at 5% significance level.
On the average, one male participate is increase than female by quantity supplied of 0.410
quintal. Similarly, Educational qualifications have positively significant and on average a one
education qualification of Mango farming will increase quantity supplied by 0.571 quintal
then illiteracy.

63
Distance of Mango growers to nearest market was also negatively significant at 1%, because
farmer in the area or Mango area far a ways from market. One KM a far a ways from nearest
market will decrease quantity supplied by 0.350 quintal.

64
 CHAPTER FIVE
5. SUMMARY, CONCLUSION AND RECOMMENDATION
5.1. Summary and Conclusions
The specific objectives of these studies are to map Mango value chain and identify role of the
actors, to conduct market performance analysis along the value chain, to identify constraints
and opportunities of Mango value chain at DDA and to analyze determinants of Mango
Market Supply.
The data were collected from 286 mango producing households, 6 wholesalers, 10 retailers,
12 Processor and 25 consumers and management of primary cooperative members and
cooperative union members located in DDA for general interview. The data was collected
using interview by preparing structured questionnaire and checklist. The households are from
eight potential Mango producing kebeles of the DDA of rural cluster. The analysis was made
using descriptive statistics and econometric model using SPSS and STATA software
packages. All the sampled household heads were Mango producers. Marketed surplus of
producers is found to be important elements in the study of Mango value chain. Therefore,
ordinary least square model was used to identify factors determining marketed supply of
Mango and Relative Importance Index (RII) and Ranking of factors in each category is used
in order to order the most constrain and opportunity of mango production in study area.
The main findings of this research are summarized as follows.
From the 286 interviewed Mango producing households, 85.3% were male- headed and the
rest 14.7% were female-headed households. About 40 years was the average age of the
sampled respondents. The average family size was 5.5, and the overall educational status of
the sampled households was composed of 75.5% illiterate and 24.5% literate household
heads. About 95.7% of sampled households had access to extension service on general fruit
and vegetable production. Regarding market information, about 47.2% of them have access
to market price information and they got this information from surrounding market,
development agents and kebele administration. There is no farmer Access to credit for farmer
for expansion and improve mango production.
Value chain analysis approach is used to describe actors in Mango value chain and their
respective functions. These actors are input suppliers, small scale Mango producers,
wholesalers, Retailer and processor. There are no local assemblers, because they have no
sufficient capital and the existence of well barriers of wholesales and no primary and
secondary cooperative are marketing farmer product because they are not working toward the
goals of establishments to facilitate and marketing farmer product rather they are sticks of
65
politics and serve only the pockets of some individual who are in position management by
distributing consumption food and run other business such as trading peanut (salit).
Wholesalers buy mangos from producers. To some extent they add value through sorting,
storage, assembling and transporting it to processor and Retailer agents provide the
responsibility of selling activities to consumer and other agent. In doing so, also wholesalers
add value to the Mango as well sell Mango to exporters who directly sale to Djibuti and
Somali land which included as wholesalers in other place area.

The vertical linkage between farmers with wholesalers is observed to be weak. There is no
transparency and mutual trust, most of the time farmers get biased price information from
wholesalers. The linkage between farmers with primary cooperatives is also weak, primary
cooperatives are not performing based on their motto, the organizational structures of primary
cooperatives is observed to be very weak and fragile, since they cannot consider themselves as
independent social entity they are usually guided by cooperative unions, they used to operate
by the commission obtained from the cooperative union as they are established after union
and members have no control over the role and responsibility as well on resource of union as
well on cooperative and they are simple symptom of union and cooperative rather as a true
organization to minimize the largely exploited by farmer and to transform small scale farmers.

In the study area, value addition of the chain actors, the producer’s share of the wholesales
and processor price was found to be the higher in channel III and V, with estimated share of
72.1%. This reflects that channel III and V provide producers with lion share of value
created. This is due to the presence of value addition by processor, after wholesale and
retailers collect Mango from farmers at effective market price and deliver to the processors,
due to the presence of value added the profit that goes to shared to each actor is higher than
when it is consumed as fresh or without process to users.

Mango producers in the study area incur costs mostly when they start the production through
purchasing of production inputs rather than marketing their produce. They incur an average
of Birr 210/quintal as cost of producing Mango and gain the maximum profit from channel
III and V which equals to Birr 450 and 300 birr respectively. Mango processor incurs more
costs as compared to other Mango value chains actors of the study area. Decrease in
productivity due to drought, smaller plots for cultivation of Mango, Shortage of quality
improved Variety supply, Poor extension service, No availability of credit service and
prevalence of disease and scarcity of rain fall are the main challenge faced by producers.

66
Ordinary least square regression analysis (OLS) was used to analyze factors affecting yield
of Mango and six variables were found to affect significantly. Experience in Mango farming,
extension, Distance to main road in km or hrs, Educational qualification, and land holding
affected marketed supply affected positively and Sex affect negatively.

5.2. Recommendation
There are existences of the main value chain actor for mango such as Input suppliers; mango
producers, wholesalers, retailers and processor were identified. However, value chain of
mango was ineffective due to poor horizontal/vertical coordination and integration;
competition with actors in the chain. Also even though the primary cooperatives that are
established to increase the bargaining power of farmer to influence on marketing of their
product in value chain and increase their bargaining power in all aspect at each kebele, they
are not performing towards the goals of their establishment. Therefore the government and
the concerned body have to enforce the cooperative by giving training, awareness, capacity
building to works towards their main goals.
Estimation of value added and benefit distribution indicated that producers benefit is low
because the wholesalers are more influential on the set of market price and there is no
controlling mechanism of the market price on farmer product as well farmers are not access
to credit to improve husbandry practice on mango. Therefore, there is a need to strengthen
the potential of existing primary cooperatives through providing consistent skill development
trainings, providing financial services to operate throughout supply season and making them
independent social business entity. As producers need to enjoy their profit margin the
primary cooperatives should have to be supported to have temporary collection centers of the
produce at centered farm gate as well to maintain quality and add value on mango by them.

Even though, Ethiopian government now has a policy that promotes investment in agro
industry and market oriented agricultural production by empowering smallholder farmer as
well DDA is a nearest to boarder of export and foreign current follow is an opportunity for
mango product to further process for domestic and export consumption, RII ranking of
constraints shows that Drought, Land Size, Timely availability of improved Varity, Access to
markets and information, Diseases and Availability of credit to buy variety are the most
seven constrain identified in study area respectively. So the concerned bodies have to
encourage farmer to use technology oriented irrigation on their plot size efficiently and
improved Varity should availability to them to increase productivity of farmer.

Generally the researcher recommended the establishments of cooperative should be based on

67
initiative of members and cooperative have to work on farmers’ product marketing and
facilitating it. Final the researchers recommend the following channels to minimize
intermediate that exploit farmer benefit and to make farmer more competitiveness.

Farmers Primary cooperative Union

Retailer/wholesale Consumers

Ordinary least square model results indicated that household Distance to main road in km or
hrs is negatively and significantly affected the quantity supplied; this gives implication to the
way that no enough infrastructure of farmers to increase easily transport of farmers to
purchase inputs and sell product at a given time.
On the other hand, the OLS result also discovered that house hold education is positively and
significantly affected the marketed supply, so changing the attitudes of farmers is a crucial
factor in improving the production and marketing performance of households. In case of
production, household heads with very limited education encounter difficulty in successfully
managing the field, fertilizer and pesticide applications, post-harvest value addition and
scanning the market and also fail to understand that what to produce in line with taste and
preference of consumers demand, especially in the presence of ineffective extension services.
So stakeholders’ and Agricultural and Rural Development Offices have to create awareness
about the specialty of Mango market. Continuous education and training on productivity will
have a positive impact on their attitudes.
The other important point is, from the analysis result extension contact is the significant
factor which determines the market supply of Mango, so to strengthen the existing extension
service provided to farmers, efforts should be made to train farmers for relatively longer
period of time. As it has been discussed on descriptive part of this research, there is high
turnover of extension workers in the study area 2-3 per kebele, so through providing
incentives and appropriate promotion to extension agents their capacity has to be built to
increase the productivity of this commercial fruit.
Further research have to be conducted on the factor affecting farmer bargaining power by
cooperative in VC and the government policy and implementation should be focus on the
finding of the research so to change the competiveness of farmer in the value chain.

68
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11(May), 102–109. https://doi.org/10.5897/JDAE2018.1038

APPENDEX
QUESTIONARY
DIRE DAWA UNIVERSITY
Department of Economics and Management
Survey Questionnaires
Dear respondents, I kindly request you to support me by giving relevant information on this
questionnaire. Its aim is to get information on Mango value chain analysis in Dire Dawa
Adminstiration. The questionnaire is prepared by student Hinsene Begna who is a gratuate
student in department Management and Economics at Dire Dawa University for the purpose
of master thesis in partial fulfillment of the Master of Business Administrative (MBA.
Therfore please dig(√)on boxes provided or fill the blank spaces accordingly.
Section 1
I General Information
1. Name of Kebele/cooperative
2. Code of respondent

3. Age: years

4. Sex: 1. Male 2. Female

5. Marital status of household head ________
1. Single 2.Married
3. Divorced 4.Widows
6. Family members and their education level
7. Household head education level

8. Distance to main road Km or hours walk

9. Distance to FTC/ DA center Km or hours walk

10. Distance to the nearest farmer cooperative from residence (km)………minutes of

walking time

71
 11. Years of experience in farming (in years)

Section 2
II. MANGO PRODUCTION FOR PRODUCERS (FARMERS)
Section 2.1 Plot characteristics, investment and input use

Fruit(s) Fruit
plot size (Sub)plot ownership Soil fertility Irrigation
grown variety
(timad) Codes C Codes E (Codes J)

1 2 3 4 5 6

Amount
bought
Items Unit price Total cost
Cost of fertilizer
Cost of seed
Land Preparation cost( Birr)
Cost of chemicals
Weeding cost (Birr)
Harvesting cost (Birr)
Transporting
Land
Codesvalue
C (if rented) Codes E Codes J
Owned Good Irrigated
Rented in 4. Borrowed in 5.Borrowed out Medium Rainfed
Rented out 6. Other, specify…. Poor

Section2.2 : Input use and Fruit harvested/cost

Amounts of Mango Produced per unit area of land in quantal___________?

72
73
 Section 2.3: Marketing of Mango

Quantity
Time
sold (kg) Mode of
Period to Relatio Time taken to
Market Mont (sum Who Sales transpo rt Actual
Price Buyer payment after n to Quali taken to get to
type h sold should be sold tax or Codes G transport
(ETB Codes selling, weeks buyer ty sell crop the
Codes Code equal to Codes charges cost (ETB)
/kg) D (if immediate Codes Code (minutes market
A sC Column 7 B (ETB)
write zero) E sF ) (minutes
of Section
)
D)
4 5 6 7 8 9 10 11 12 13 14 15 16 17

73
 Section 2.4 Access to Financial Capital, Information and Institutions

If Yes in If Yes in column 3

column 2,
Needed then Debt
Reason for loan credit? did you Did you
Source How Annual outstanding
Codes get it? get the
of much interest including
A Codes A amount
Credit, did you rate interest rate
you
Codes get charged at end of
requested
D (ETB) (%) season
Codes A (ETB)
1 2 3 4 5 6 7 8
1. Buying seeds
2. Buying fertilizer
3. Buy herbicide and pesticides

4. Buy farm
equipment/implements
5. Invest in transport (bicycle etc)
6. Buy oxen for traction
7. Buy other livestock
8. Invest in irrigation system
9. Invest in seed drill or
minimum tillage system
10.Non-farm business or trade

11. To pay land rent

12. Buy food

Codes ACodes D
No1. Money lender Microfinance Relative
Yes2. Farmer group/coop Bank AFC
3. Merry go round SACCO Other, specify..

74
 2.5 Market access
Did you get market If yes in Ever failed to sell

information before column 2, due to lack of No. of buyers who came to buy at

you where did buyers or poor farm gate last season (2019/2020)

Mango decided to sell the you get the price? Codes A

Buyers Lackof

Assemblers or

Farmer group or
crop? (code A) information?

Consumers
Wholesalers
Poor price

brokers
(Code B)

coops
Rank 3

1 2 3 4 5 6 7 8 9

Section 2.6: Constraints in access key inputs and Mango production

Str. Agree Somewha Disagree Str. Remark

Agree t agree Disagree

Input and production constraints

Socioeconomic
1. Timely availability of improved seed
2. Prices of improved seed
3. Availability of credit to buy seed
4. Timely availability of fertilizer
5. Price of fertilizer
6. Access to markets and information
7. Land Size
Biophysical
8. Drought
9. Floods
10. Pests
11. Diseases
12. Soil fertility

Section 3: Trading Activities

75
 1. What is the purchasing price of 1quantal of Mango-------------birr?
2. What is the selling price of 1 quintal of of Mango ------------birr?
3. What is your total cost of marketing of Mango?(Birr)
4. What is your total profit of marketing of Mango? (Birr)
5. From whom you purchase Mango?
6. To whom you sell Mango?
a. 1. Retailers 2. Consumers 3. Wholesalers
7. From where did you buy Mango?
8. Where did you sell Mango?
Section 4 Checklist for Key Informants and Focus Group Interview

1. Name of the organization:

2. Specific role in the organization:
3. Location and contact information: Region-------------,Zone------------,Woreda ,
Kebele , P.O.Box ,Telephone
4. Type of the organization: public------------, private----------, NGO--------------
5. Organizational mission-----------------------, vision -------------------and objectives ------------
6. What is the role of your organization in Mango value chain in the study area? ----------------
7. What are the challenges and opportunities you faced in undertaking those roles assigned to
your organization?
8. Linkage /interaction/ partnership/ coordination between actors ----------------------------------
9. How do you understand factors affecting farmers’ decision in Mango value chain in your
locality?
10. How do you understand factors affecting farmers’ level of participation in Mango value
chain in your locality?
11. How do you understand women’s role in Mango value chain in your locality? --------------
12. Among major actors in Mango value chain, who is benefiting more and who is benefiting
the least according to your view?
Thank you very much for responding to the questions.
Name of enumerator---------------------------- Signature: ---------------------- Date: --------
End of the interview!! Thank you very much for responding to the questions.
Name of the Enumerator: …………………………………..Date of
Interview………………
Table 11 Appendix of Cooks test

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0 0.0001 0.00039 0.00101 0.00254 0.00913

77
 0 0.0001 0.00039 0.00102 0.00258 0.0092
0 0.0001 0.0004 0.00104 0.00258 0.00928
0 0.0001 0.00041 0.00106 0.00263 0.00932
0 0.00012 0.00041 0.00109 0.00278 0.00967
0 0.00013 0.00041 0.00114 0.00279 0.01082
0 0.00013 0.00041 0.00114 0.00281 0.01112
0.00001 0.00013 0.00042 0.00116 0.00298 0.01146
0.00001 0.00014 0.00042 0.00117 0.00299 0.01198
0.00001 0.00014 0.00043 0.00117 0.00313 0.01213
0.00001 0.00014 0.00043 0.00119 0.00337 0.01284
0.00001 0.00015 0.00044 0.00119 0.00358 0.01289
0.00001 0.00015 0.0005 0.0012 0.00365 0.0136
0.00001 0.00015 0.00051 0.00124 0.00376 0.01466
0.00001 0.00016 0.00052 0.00131 0.00377 0.01538
0.00001 0.00016 0.00052 0.00137 0.0038 0.01604
0.00001 0.00017 0.00055 0.00137 0.00382 0.01628
0.00001 0.00017 0.00056 0.0014 0.00386 0.01796
0.00002 0.00018 0.00056 0.00141 0.00388 0.02201
0.00002 0.00018 0.00057 0.00146 0.00414 0.02231
0.00002 0.00018 0.00058 0.00146 0.00439 0.02236
0.00002 0.00018 0.0006 0.00152 0.00453 0.02318
0.00002 0.00019 0.00062 0.00155 0.00454 0.02392
0.00002 0.00019 0.00064 0.0016 0.00476 0.02446
0.00002 0.0002 0.00069 0.00161 0.00481 0.02519
0.00002 0.0002 0.00069 0.00174 0.00488 0.0271
0.00002 0.0002 0.00071 0.00177 0.00491 0.03303
0.00003 0.0002 0.00072 0.00179 0.00492 0.0333
0.00003 0.00021 0.00072 0.00181 0.00494 0.03481
0.00004 0.00022 0.00075 0.00183 0.00508 0.03827
0.00004 0.00022 0.00075 0.00183 0.00516 0.03836
0.00004 0.00023 0.00075 0.00183 0.0052 0.04208
0.00004 0.00023 0.00076 0.00189 0.00523 0.04248
0.00004 0.00023 0.00078 0.00189 0.00558 0.04718
0.00004 0.00025 0.00078 0.00193 0.00565 0.05561
0.00004 0.00027 0.00079 0.00204 0.00593 0.12087
0.00006 0.00028 0.0008 0.00206 0.00597
0.00006 0.00029 0.00081 0.00206 0.00599
0.00006 0.0003 0.00082 0.00212 0.00636
0.00006 0.00031 0.00082 0.00217 0.00667
0.00006 0.00033 0.00085 0.00223 0.00683
0.00006 0.00033 0.00086 0.00225 0.00716
0.00006 0.00034 0.00087 0.00226 0.00731
0.00007 0.00035 0.00088 0.00228 0.00793
0.00007 0.00035 0.00091 0.00234 0.00826
0.00009 0.00036 0.00091 0.00237 0.00856
0.00009 0.00036 0.00092 0.00245 0.00879
0.00009 0.00038 0.00093 0.00247 0.00883
0.00009 0.00038 0.00094 0.00248 0.0089
0.0001 0.00039 0.001 0.00251 0.00893

Figure 3 P-P plot of Normal distribution test

78
79