ANALYSIS OF HARICOT BEAN MARKET CHAIN: THE CASE OF

META DISTRICT, EASTERN HARARGE ZONE OF OROMIA

NATIONAL REGIONAL STATE, ETHIOPIA

M.Sc. Thesis

By

TESHOME TEREFE

January 2013
Haramaya University
 ANALYSIS OF HARICOT BEAN MARKET CHAIN: THE CASE OF
META DISTRICT, EASTERN HARARGE ZONE OF OROMIA
NATIONAL REGIONAL STATE, ETHIOPIA

A Thesis Submitted to College of Agriculture and Environmental Science:

School of Agricultural Economics and Agribusiness
School of Graduate Studies
HARAMAYA UNIVERSITY

In Partial Fulfillment of the Requirements for the

Degree of MASTER OF SCIENCE IN AGRICULTURE
(AGRICULTURAL ECONOMICS)

By
Teshome Terefe

January 2013
Haramaya University

i
 SCHOOL OF GRADUATE STUDIES
HARAMAYA UNIVERSITY

As thesis research advisors, we hereby certify that we have read and evaluated this thesis
is prepared under our guide, by Teshome Terefe entitled ‘‘Analysis of Haricot Bean
Market Chain: The Case of Meta District, Eastern Hararge Zone of Oromia National
Region State, Ethiopia.’’ We recommend it be submitted as fulfilling the thesis
requirement.

Lemma Zemedu (PhD) ____________ _________

Major Advisor Signature Date

Jema Haji (PhD) _____________ __________

Co-advisor Signature Date

As members of the Board of Examiners of the M.Sc. Thesis Open Defense Examination,
we certify that we have read, evaluated the thesis prepared by Teshome Terefe and
examined the candidate. We recommended that the Thesis be accepted as fulfilling the
thesis requirement for the degree of Master of Science in Agricultural Economics.

___________________________ _____________ _________

Chairperson Signature Date

___________________________ ______________ _________

Internal Examiner Signature Date

__________________________ _____________ _________

External Examiner Signature Date

ii
 DEDICATION

I dedicate this thesis manuscript to my brother Demis Terefe (1978-2009).

iii
 STATEMENT OF THE AUTHOR

I the undersigned declare that this Thesis is my original work and has not been presented
for any degree in any University and all the source of materials used for the Thesis have
been dually acknowledged. It has been submitted in partial fulfillment of the requirements
for M.Sc. degree in Agricultural Economics at the HARAMAYA UNIVERSITY and is
deposited at the University Library to be made available to borrowers under the rules of
the Library.

Brief quotations from this thesis are allowable without special permis.sion provided that
accurate acknowledgement of source is made. Requests for permission for extended
quotation from or reproduction of this manuscript in whole or in part may be granted
by the head of the major department or the Dean of the School of Graduate Studies
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.

Name of the author: Teshome Terefe Signature __________________

Place: Haramaya University, Haramaya

Date of Submission: January 2013

iv
 ACRONYMS

CIAT Central International Agricultural Tropical

CR Concentration Ratio
CSA Central Statistics Authority
ECX Ethiopian Commodity Exchange
EIAR Ethiopian Institute of Agricultural Research
EHAO East Harargie Agricultural Office
EPPA Ethiopian Pulse Profile Agency
FAO Food and Agriculture Organization
FAOSTAT Food and Agricultural Organization Statistics
GDP Gross Domestic Product
GMMp Producers Gross Market Margin
IARC International Agricultural Research Centre
ILRI International Livestock Research Institute
IMR Inverse Mill’s Ratio
IPMS Improving Productivity and Marketing Success
MEDaC Ministry of Economic Development and Corporation
NGO Non Governmental Organization
NMM Net Marketing Margin
OLS Ordinary Least Square
QSAE Quality and Standards Authority of Ethiopia
RMA Rapid Market Appraisal
SCP Structure Conduct Performance
SNNPR Southern Nations, Nationalities and Peoples Region
TGMM Total Gross Marketing Margin
USD United States Dollar
USAID United States Agency for International Development
VAT Value Added Tax
VIF Variance Inflation Factor

v
 BIOGRAPHICAL SKETCH

The author was born in Gobessa town, Arisi zone-Oromia National Regional State in May
1984. He attended his elementary and secondary education at Shirka Elementary School
and Bokoji Senior Secondary School, respectively. He completed his B.Ed. degree in
Physics from Haramaya University in 2008 and immediately after that, he joined the
School of Graduate Studies of Haramaya University in 2008 and obtained M.Sc.degree in
Physics in 2010. He joined the same University to pursue his M.Sc. in Agricultural
Economics.

vi
 ACKNOWLEDGEMENT

First, I would like to praise the Almighty God for the blessing, providing me the
opportunity, strength and patience in the entire period of my study. I would like to extend
my heartfelt gratitude to my major advisor Dr. Lemma Zemedu and co-advisor Dr. Jema
Haji for their positive, valuable, reliable professional guidance, constructive comments,
suggestions and encouragement starting from proposal development up to thesis research
writing and completion.

My special thanks again go to my brother Abera Terefe. It is because of him that I got the
courage to proceed with my education, feel confident and dream more. I would also like to
forward my warm appreciation and great thanks to my friends, Abebe Adugna, Jemal
Hashum, Shewakena Tesfaye, Tekola, Birhanu Adugna, Dereje Regassa, Abel Negash and
others for their encouragement, technical, material and moral support during this study.

My thanks also goes to Haramaya University Agricultural Economics Department head

Mr. Fresenbet Zeleke, Prof. Chauarasia and others for their valuable support. I extend my
gratitude to Meta district development workers and producers who cooperated with me
during data collection.

Above all, I would like to thank my family as a whole, especially my father Terefe
Gebreyes, my mother Tayech Kebede, my sisters Shitaye, Nafkot, Minda, Muna and Asres
for their encouragement, and special treatment both morally and psychologically for their
key and principal role in the success of my life. I am proud of you.

vii
 TABLE OF CONTENTS

STATEMENT OF THE AUTHOR iv

ACRONYMS v
BIOGRAPHICAL SKETCH vi
ACKNOWLEDGEMENT vii
TABLE OF CONTENTS viii
LIST OF TABLES xi
LIST OF TABLES IN APPENDIX xii
LIST OF FIGURES xiii
ABSTRACT xiv
1. INTRODUCTION 1
1.1.Background of the Study 1
1.2. Statement of the Problem 3
1.4. Objectives of the Study 4
1.5. Scope and Limitations of the Study 4
1.6. Significance of the Study 5
1.7. Organization of the Thesis 5
2. REVIEW OF LITERATURE 6
2.1. Definition and Concepts of Haricot Bean 6
2.2. Production and Agronomic Practices of Haricot Bean in Ethiopia 7
2.3. Definitions and Concepts of Marketing 13
2.4. Structure, Conduct and Performance of Markets 16
2.4.1. Structure 16
2.4.2. Conduct 16
2.4.3. Performance 17
2.5. Review of Empirical Studies 18

viii
 TABLE OF CONTENTS (Continued)

3. RESEARCH METHODOLOGY 20
3.1. Description of the Study Area 20
3.1.1. Population 22
3.1.2. Topography, soils and climate 22
3.2. Sources of Data Requirements 23
3.3. Sample Size and Sampling Technique 24
3.3.1. Producers’ sampling 24
3.3.2. Traders` sampling 24
3.4. Methods of Data Collection 25
3.5. Methods of Data Analysis 25
3.5.1. Descriptive statistical analysis 25
3.5.2. Econometric analysis 29
3.6. Definition of Variables and Hypothesis 31
3.6.1. Dependent variables 31
3.6.2. Independent variables 32
4. RESULT AND DISCUSSION 35
4.1. Socioeconomic Characteristics of Sample Households 35
4.1.1. Sex, marital status, religion and educational level 35
4.1.2. Age and family size of the sample households 36
4.1.3. Farm characteristics 37
4.1.3. Use of storage 41
4.1.4. Access to services and Haricot bean production 43
4.1.5. Distance from development centre and from market 47
4.1.6. Means of transportation used by sample households output marketing 48
4.1.7. Inputs for haricot bean production 49
4.2. Characteristics of Market Participants 50
4.2.1. Producers 50
4.2.2. Assemblers 50
4.2.3. Wholesalers 51
4.2.4. Cooperatives 51

ix
 TABLE OF CONTENTS (Continued)

4.2.5. Retailers 51
4.2.6. Demographic characteristic of sample traders 52

4.3. Analysis of Structure-Conduct-Performance 54

4.3.1. Market structure of haricot bean 54
4.3.2. Conduct of haricot bean traders 57
4.4. Determinants of Haricot Bean Market Supply 66
4.5. Major Constraints and Opportunities in Haricot Bean Production and Marketing 72
4.5.1. Major constraints of haricot bean marketing 72
4.5.2. Opportunities of haricot bean production and marketing 72
5. SUMMARY, CONCLUSION AND RECOMMANDATIONS 74
5.1. Summary 74
5.2. Conclusion and Recommendations 76
6. REFERENCES 79
7. APPENDICES 83

x
 LIST OF TABLES
Table Page
2.1. Cultivated area and production of haricot bean 8
2.2. Characteristics and agronomic practice of improved haricot bean varieties 10
3.1. Total population of Meta District 22
3.2. Land use of Meta District 23
4.1. Demographic characteristics of sample producers 37
4.2. Age and family size of the sample households 38
4.3. Land holding and allocation among participants and non-participants 39
4.4. Number of oxen and livestock 39
4.5. Experience of household in farm activity and income 40
4.6. Average haricot bean production per household 41
4.7. Use of storage for haricot bean and average storage duration in months. 42
4.8. Producers with credit access and purpose of borrowing, 2011 44
4.9. Producers’ access to market information, 2011 45
4.10. Access to extension services 46
4.11. Prevailing time required to the market centre and development centre 48
4.12. Means of transportation used by sample households in haricot bean marketing 49
4.13. Inputs used for haricot bean production in 2011 49
4.14. Sex, religion and marital status of sample traders 52
4.15. Age, family size and experience of traders 53
4.16. Education level of traders 53
4.17. Barriers of entry into the haricot bean market for wholesalers 55
4.18. Price setting strategy of haricot bean 58
4.19. Market margin of producers 60
4.20. Rural assemblers’ market margin 61
4.21. Urban Assemblers market margin 62
4.22. Average total cost and market margin of wholesalers 63
1.23. Marketing cost and margin of retailers 64
4.24. Summary of marketing cost and market margins of producers and traders 65
4.25. Gross marketing margin 66
4.26. Maximum likelihood estimates of Probit model 68
4.27. Factors influencing quantity supplied to the market 71

xi
 LIST OF TABLES IN APPENDIX

Appendix Table Page

1. Variance inflation factor of explanatory variables 83

2. Conversion factors used to compute tropical livestock units 84

xii
 LIST OF FIGURES

Figure Page

1. Map of the study area 21

2. Marketing channel of haricot bean 59

xiii
ANALYSIS OF HARICOT BEAN MARKET CHAIN: THE CASE OF META
DISTRICT, EASTERN HARARGE ZONE OF OROMIA NATIONAL REGIONAL
STATE, ETHIOPIA

ABSTRACT

Production and marketing of haricot bean is constrained by different factors.

Furthermore, the marketing chain, market competition, market structure, conduct and
performance of haricot bean and their characteristics were not well identified in the
study area. Hence, the overall objective of the study was to analyze the market system
and factors affecting the supply of haricot bean in the study area. A total of 150 sample
households and 36 traders were selected using simple random sampling method for
interview. To identify factors affecting market supply Heckman’s two-stage model was
used. The result revealed that only 14% of producers have the power to set haricot bean
price and 22.67% of price was set by market, while above the average 63.33% of price
was set by traders. There were six identified haricot bean market channels. Wholesalers
and rural assemblers take the largest share, purchasing 52.23% and 29.41% of producers
production, respectively. Wholesalers obtained the highest profit, which accounts for 1.70
Birr per kilogram. From a total of sampled producers, about 43% of haricot bean
producers were found to be non-sellers of haricot bean due to different reasons. The
four-firm Concentration Ratio implies that haricot bean market was characterized by an
oligopolistic market. Variables like size of output, extension contact, improved seed and
number of oxen have a positive effect on households’ decision to sale haricot bean; while
family size and non-farm income determined volume of sale negatively. The coefficient of
lambda was significant, indicating that the influence of unobservable factors in the
producers’ decisions to participate was significant. As identified, producers were not
beneficial from the production of haricot bean. Therefore, government attention is
needed in improving the efficiency in production and marketing chain through
strengthening institutions like cooperatives. The finding suggested that, improved seed
and effective market information service have to be established to provide accurate and
timely market information to producers.
Key words: Haricot Bean, Market Chain, Structure- Conduct-Performance, Marketing
margin

xiv
 1. INTRODUCTION

1.1. Background of the Study

Agriculture is the mainstay of Ethiopia’s economy and the largest source of foreign exchange
earnings. Ethiopian economy is largely dependent on agriculture, employing 85% of the labor
force and accounting for nearly 43% of the gross domestic product (GDP). The same sector
contributes about 90% of the country's foreign exchange earnings and supplies about 70% of
the country’s raw material required for agro-based large and medium sized local industries.
As per the National Accounts data, agricultural crop production accounts on average for 60%,
livestock 27%, and forestry and other sub-sectors 13% of the total agricultural value added
(EHAO, 2011).

For economic growth, markets may provide the incentives for profit-maximizing participants
to develop new technologies, products, and sources of supply, new markets and new methods
of exploiting them. Markets can also provide a mechanism of surplus extraction and inter-
sectoral resource transfers, most commonly from agricultural to non-agricultural sectors.
Moreover, the development and expansion of markets can create increased demand through
various means. For example, markets provide a source of productive employment and income
generation (Scarborough and Jonathan, 1992).

Marketing activities also have an intrinsic productive value, in that it adds time, place and
possession utilities to products and commodities. Through the technical functions of storage,
processing, and transportation and through exchange, marketing increases consumer
satisfaction from any given quantity of output. An efficient agricultural marketing is crucial
for effective agricultural and rural development, particularly with regard to sustained increase
in agricultural production, producer’s income and improvement of the food security
capabilities (Arora, 1997).
Grain legumes play an important role in the world food and nutrition requirements, especially
in the dietary pattern of low-income group of people in developing countries. They are
considered as “poor man’s meat”, are important inexpensive sources of protein, dietary fiber,
and starch (Perla et al., 2003). They contain almost 2 or 3 times more protein than cereals
(Deshpande et al., 2000). Because of their high protein and lysine content, they also represent
good sources of supplementary protein when added to cereal grains and root crops, which are
low in essential amino acids. In addition to their food value, pulses also play an important role
in cropping systems because of their ability to fix nitrogen and thereby enrich the soil fertility.

In Ethiopia, common bean is one of the most important cash crop and source of protein for
producers in many lowlands and mid-altitude zones. The country’s export earnings is
estimated to be over 85 % of export earnings from pulses, exceeding that of other pulses such
as lentils, horse (faba) bean and chickpea (Negash, 2007). Overall, common bean ranks third
as an export commodity in Ethiopia, contributing about 9.5 % of total export value from
agriculture (FAOSTAT, 2010). Total national production was estimated at 421,418 ton in
2008, with a market value of US 132,900,609 million (FAOSTAT, 2010).

The sustainability of haricot bean production is mainly based on efficient production and
marketing system. The qualitative and quantitative analysis of haricot production and
marketing chain determines the level and extent of production efficiency and market
perfections.

Even though haricot bean is largely grown in Ethiopia, the national average yield in general
and Meta district in particular is low ranging from 0.5 to 0.8 tons per hectare, which is far
below the corresponding yield recorded at research sites (2.5 to 3 tones per hectare) using
improved varieties (EPPA, 2004). The low national mean yield observed for haricot bean
could be attributed to various constraints related to low marketing facility, lack of access to
improved varieties of seed and poor cultural practices (Alemitu, 2011). Hence, this particular
study was initiated to fill this gap.

2
1.2. Statement of the Problem

Agricultural marketing is the main driving force for economic development and has a
guiding and stimulating impact on production and distribution of agricultural produce. The
increasing proportion of the population living in urban centers and rising level of income
require more organized channels for processing and distributing agricultural products.The
weak performance of agricultural markets in Ethiopia has been recognized in various studies
as a major barrier to growth in the agricultural sector and overall economy (Dawit 2005).

Astewel (2010) also explained that in Ethiopia the performance of agricultural marketing
system is constrained by many factors such as: poor quality of agricultural produce, lack
of market facilities, weak extension services which ignored marketing development and
absence of marketing information. The flow of agricultural produce from the producer to
the consumer involves a long chain of intermediaries, who, without creating value-added,
merely keep on stretching the chain.

Mohammed (2007) stated that the knowledge gaps in the crop sector in Ethiopia were
inefficiency of the market system (which includes inefficient marketing chain,
improper transmissions of price to producers and the type of product produced by
producers i.e. whether it satisfy the consumers taste and preference). The production of
haricot bean is constrained by different factors. Furthermore, the market chain of haricot
bean and their characteristics have not yet studied and analyzed for different part of the
country, especially Eastern part of Ethiopia.

Systematic and adequate information on the process of market competition, on market

structure, conduct, performance were not well identified in the study area. Only few studies in
the country have focused an adoption and were limited to a specific area. Hence, this study
has tried to investigate market chain of haricot bean and factors affecting the supply this of
this crop to the market in the Eastern part of Ethiopia and reducing information gap for the
benefit of producers and traders.

3
1.3. Research Questions

This study has attempted to answer the following research questions:

1. What are the major haricot bean marketing channels in the study area?
2. Through which actor large percent of the product enters to the market?
3. Who gets the major share of the marketing surplus in haricot bean marketing channels in
the study area?
4. What are the constraints and opportunities of haricot bean marketing in the study area?
5. What factors affect the supply of haricot bean to the market?

1.4. Objectives of the Study

The general objective of this study is to analyze the haricot bean marketing chains in Meta
District Eastern Hararge zone of Oromia National Region State.
The specific objectives are:
1. To examine the structure, conduct and performance of haricot bean market; and
2. To identify the determinants of household’s haricot bean supply to market.

1.5. Scope and Limitations of the Study

This study was aimed at assessing haricot bean market chain in Meta district of eastern
Harargie Zone. The study was limited to Meta district with specific crop category, haricot
bean. The commodity approach to market study was followed to analyze the marketing
chains of haricot bean. Lack of time series data is the other limitation of the study.

4
1.6. Significance of the Study

Improving marketing facilities for agricultural crops in general and haricot bean sector in
particular enables producers to plan their production more in line with market demand,
schedule their harvests at the most profitable times, a n d decide t o which markets to send
their produce and negotiate on a more even footing with traders. Besides, a proper haricot
bean marketing system also enables to increase production and market efficiency. Hence, this
study covered the haricot bean production in the supply potential area and analyzed the
performance of the marketing activity along the different marketing channels of the crop,
which was a major input to formulate appropriate marketing policies.

Moreover, this information could also help consumers, traders, investors, and others, who
need the information for their respective purposes. Besides this, it also partially fills the gap
in this regard. The other significance of this study is that other researchers can also use it as a
reference for further research on the area.

1.7. Organization of the Thesis

This thesis is organized into five chapters. Chapter 1 focuses on provides a brief background
concerning the topic under the study. It introduces the problem, objectives, research
questions, scope, limitation and significance of the study. Chapter 2 presents reviews of
related literature. The description of the study area, research designs and instruments,
sampling techniques, the research procedures and econometric model chosen for the study
were discussed in Chapter 3. In Chapter 4, both descriptive and econometric results were
presented and discussed in detail. Chapter 5 presents the summary, conclusion and policy
implications of the findings of the study.

5
 2. REVIEW OF LITERATURE

This chapter provides the theoretical framework for the research on haricot bean production
and marketing. It has five sections. Section 2.1 presents concept about haricot bean marketing.
Section 2.2 discusses haricot bean production trend in Ethiopia, basic concept of marketing,
marketing system, marketing channels, market chain analysis, marketable surplus and
marketing functions are presented. Section 2.3 is about structure, conduct and performance of
haricot bean market. Sections 2.4 reviews empirical evidences from abroad and Ethiopia on
haricot bean production and marketing system.

2.1. Definition and Concepts of Haricot Bean

Haricot bean Phaseolus vulgaris belongs to order Rosales, family Leguminosae subfamily
Papilionideae tribe Phaseolinae (Demelash, 2003). It is an important crop in the provision of
food security and as a commercial product in Ethiopia. There are three main haricot bean type in
Ethiopia, based on color: red, speckled beans and white beans and within each color type beans
are further sub-classified according to the size classes; for example red beans are sub divided
into small red, medium red and large red types.

Producers in the southern Rift Valley areas of the country typically grow the red bean type for
food security, whereas white beans are produced almost exclusively for export market in central
east Rift Valley. Currently, haricot beans cover the dominant part of the Ethiopia’s pulses
export. However, the share of pulses in general in the export market has been limited by
external demand for quality (Gezaheng and Dawit, 2006). In addition to other production
constraints that limit the volume of production, lack of high yielding varieties with improved
resistance to diseases and other constraints has been the major production constraint of
common bean in Ethiopia in general (Alemitu, 2011).

6
2.2. Production and Agronomic Practices of Haricot Bean in Ethiopia

Haricot bean is a principal food crop particularly in Eastern and Southern part of Ethiopia,
where it is widely intercropped with maize and sorghum and khat to supplement producers’
income (EPPA, 2004). The two major haricot bean producing regions are Oromiya (i.e.
Eastern Shoa and Eastern Hararge) and Southern Nations, Nationalities and People’s
Region (SNNPR), which produce 70 and 60 thousand tones per year, respectively, and
these two regions make up 85% of the total production (CSA, 2005).

As Table 2.1 shows that the national average production of haricot beans for three
consecutive years, 2009/10, 2010/11 and 2011/12 production years were 1,980,143,
2,468,973 and 2,928,78900 kg, respectively. The estimated mean yield/ha of haricot bean in
Ethiopia is 910.21 and 1092 kg/ha. In Oromia National Regional State rain fed haricot bean
production, for the three consecutive years were identified to be 1,018,598, 1,004,000 and
1,200,19600 kgs, respectively.

Harargie is situated in the eastern part of Ethiopia. It is the only highland area with adequate
climatic conditions for rain-fed agriculture. East Harargie in general and Meta district
specifically produce haricot bean both as a sole and intercropping system. Accordingly, data
for the three consecutive years shows 25,930, 9,16900kg and 11,52520kg as a sole crop were
as 277,091, 355,64600kg and 369,68400kg in 2009/10, 2010/11 and 2011/12 respectively.
Specifically in Meta district the total production 6,722, 2,26000kg and 3,43700kg from a
sole cropping system where as 58,880, 33,44700kg and 44,93000kg from inter cropping
system.

7
 Table 2.1.Cultivated area and production of haricot bean
Production years 2009/10 2010/11 2011/12
Category Production Area Produc- Area (ha) Produc- Area Produc-
system (ha) tion (Qt) tion (Qt) (ha) tion (Qt)
Ethiopia Average 219,965 1,980,143 241,810 2,468,973 268,159 2,928,789
Oromia Average 93,066 1,018,598 108,006 1,004,000 106,001 1,200,196
East Sole crop 3,486 25,930 891 9,169 1,909 11,525.2
Harargie
Inter-cropped 68,154 277,091 79,600 355,646 81,861 369,684

Meta Sole crop 1,266 6,722 225 2,260 300 3,437

Worwda
Inter- cropped 7,335 58,880 7,335 33,447 7,400 44,930

Source: EHAO, 2011

Based on the rapid appraisal, haricot bean ranks 3rd as major cash crop next to khat and coffee
in the district. Estimate of haricot bean production and its use shows that 69 % of white
haricot bean is used for sale, 24% of red haricot bean for household consumption and the
remaining 7% is used as source of seed (EHAO, 2011). White varieties are mostly produced
for the market.

In Ethiopia producers typically grow old cultivars such as Mexican 142, Red Wolaita and
Black Dessie, which were released before three decades ago. The average productivity for
these variety is 700-1000 kg/ha. Producers’ seed is generally impure, as seed is recycled for
many years (Setegn and Legesse, 2010).

8
The possible increment in output results from the introduction of improved varieties of seed.
Consequently, a lot effort have been made by regional research centers and higher learning
institutes in developing some improved cultivars focusing specific adaptation to their
respective regions. The productivity of these improved varieties with improved management
practices ranges between 2000-3000 kg/ha.

As depicted in Table 2.2, these varieties, if used with recommended input packages, have the
potential to increase pulse yields two to three fold. The merits of these varieties have been
confirmed by nationwide technology demonstration programs conducted throughout the
country with producers, researchers, extension agents and other stakeholders. Yet, despite the
release of this large number of improved pulse varieties, that are adapted to a wide range of
rainfall, soil and altitude regimes, the use of certified improved seeds by producers is very
low. A combination of factors explain low adoption: on the one hand, supply side constraints
including extension, limit the knowledge of smallholder on production practices and benefits
of diversification (EIAR, 2010).

9
Table 2.2. Characteristics and agronomic practice of improved haricot bean varieties
Variety Yield Seed Seed Rate (kg) Suitable Area
Qt/ha size Raw Broad cast

Varieties mainly for export market

Awash-1 20-24 Small 90-100 100-120 Central rift valley
Awash 22-32 Small 90-100 100-120 All over the country
Melka
Argene 20-22 Small 90-100 100-120 Central rift valley
TA01JI 22-25 Small 90-100 100-120 Central rift valley
Chore Small 90- 100 100-120 All bean growing regions
Chercher Small 90-100 110-120 Harargie highlands
Varieties mainly for domestic consumption/market
Roba-1 21 Small 90-100 100-120 All bean growing regions
Nasir 23-25 Small 90-100 110-120 All bean growing regions
Dimtu 20-23 Small 90-100 110-120 All bean growing regions
Goberasha 22-25 Large 110-120 120-130 Jimma and similar areas
Ayenew 22-24 Medium 80-100 100-120 East and West Harargie
Gofta 22-24 Medium 80-90 90-110 East and West Harargie
Tabore 20-24 Medium 80-90 100-120 Southern Ethiopia
Wedo 12-22 Large 110-120 120-130 North Eastern Ethiopia
Melka 18-23 Medium 110-120 120-130 Central rift valley
dima
Hawasa 21-24 Medium 60-70 90-100 Central rift valley
dume
Anger 23-30 Medium 110-120 120-130 Bako and similar areas
Ibado 20-29 Large 110-120 120-130 Southern Ethiopia
Omo -95 17-32 Small 90-100 100-120 Southern Ethiopia
Haramaya 20-32 Medium 110-115 115-125 All bean growing East Harargie
Denknesh 25-32 Medium 90-100 100-120 Central rift valley
Batu 18-25 Large 110-120 120-130 All over the country
Dame 18-30 Large 110-120 120-130 All over the country
Source: EIAR, 2010

10
Demelash (2003) stated that the world haricot bean production is estimated to be about 17
million metric tons on an average of 26 million hectares, which makes the crop the most
widely produced legume. It is an important source of protein and energy in human diets in the
tropical and sub-topical developing countries, particularly in the Americas and Eastern and
Southern Africa. It is produced for its green pod and dry seed which are both edible.
Moreover, haricot bean is an important under storey component crop in various intercropping
systems throughout the world (Demelash, 2003).

In the Ethiopia context, there are two main seasons for haricot bean production, the short rain
season (Belg) from March to May and long rains ( Meher) season June to August. Most
producers focus their effort on the main season production and several producers indicated
that rainfall in the short season is too unreliable to invest in commercial bean production. The
main marketing season is from September to January, with residual trading in February. The
main production areas in the countries are within the Rift Valley area, which runs diagonally
across Ethiopia from top right to bottom left of the country. The two major bean-producing
regions are Oromia and Southern Nations, Nationalities and Peoples’ Region (SNNPR),
which Produces 70 and 60 thousand tones, respectively. These two regions make up 85% of
the production (ILRI, 2008).

The eastern part constitutes mainly Harerghe highlands where low land pulses are dominant
crops grown mainly for food. Generally, red food beans and small whites are grown in the
eastern part. The western part including Wellega, Kefa and Illubabor, which accounts for
17.50 percent of land area occupied by low land pulses. The northwestern part includes Pawe
and Chagnie area accounting for five percent of land area occupied by low land pulses. The
northern part includes Sirinka, Kobo, Mekele and Adet areas accounting for less than five
percent of the area under lowland pulses.

11
Subsistence small-scale production primarily produce haricot bean (Setegne and Leggese,
2003). It is grown heavily in low land area (300-1100m) and some mid- high land areas
(1400-2000m) of the country nationally; area under haricot bean production is estimated at
300-500 thousand hectares

Ethiopia’s export of pulse crops was over five percent of the world’s exports during 1960-65
(Alemitu, 2011). Further, (Setegn and Legesse, 2010) noted that since 1961, only haricot
bean had gained more export value out of the major pulse crops in Ethiopia. The share of
haricot bean exports worth 37 million birr was 85 percent of the total exports of pulses (IAR,
1990). Setegn et al. (2001) also noted that the amount of haricot bean exported by Ethiopia
from 1993/94 to 1997/98 has been increasing and the country on the average obtained over
16 million US dollar per annum as foreign exchange. Ethiopia on the average obtained more
than 29 million birr per annum for the period 1965-2001).

Pulses are extensively consumed in traditional dishes; the common forms of preparation of
dry beans are Niffro (boiled grain) mixed with sorghum or maize. Haricot beans are also
consumed as vegetables (leave, green pods) in some parts of the country. Early maturity and
double cropping often make beans the first food to become available after the annual
“hungry gap”, and some sometimes the only food crop to survive in seasons with a short
growing period. The protein content is 22 percent and its amino acid composition (lysine)
compliment cereals and other stable foods in the diet. Ethiopian haricot beans were liked by
canning industry because of their low moisture content (11-11.5%), and small size of the
beans and good flavor (Demelash, 2003).

According to EARO (2000), producers sale dry beans, fresh beans, immature pods and dry
bean flour in food markets throughout the country, particularly in regions away from the
central high lands. One of the motives behind producers in planting haricot bean is for sale
so that he or she can cover food or other requirements at critical time where other crop types
are at field. Mohammed (2007) noted that in Ethiopia, 75 percent of haricot bean produced is
marketed. Wortman et al. (1998) also noted that in the central rift valley area of the country,
more than 90 percent of pea beans are marketed.

12
2.3. Definitions and Concepts of Marketing

Market: Market is an economic institution that enables sellers and buyers of a defined good
or service to negotiate the legitimate transfer of the good or service between them and over
space and/or time. Rehima (2006) stated that market is an area in which exchange can
take place. It also means the people living there who have the means and the desire to buy a
product. Thus, there can be a local market, a domestic market, and a world market. The limits
of this kind of market are set not by a physical boundary fence but by the ease of
communication, transportation, political and monitory barriers to the free movement of goods
and money.

Marketing: Marketing is a group of business activities in order to create and promote

consumer demand and to direct the flow of goods/services from the original producer to the
final consumer in the process of distribution. It is continuous process of discovering and
translating consumer wants into appropriate products and services, creating demand for these
products under keen competition, and serving the demand with the help of channels of
distribution. Demelash (2003) defined marketing as a process by which individuals and
groups obtain what they need and want by creating and exchange products and values
with others involves work. Marketing means different things to different people: to the
homemaker it means shopping for food; to the producer it means the sale of his produce; to
the fertilizer distributor it means the selling to the producer. According to Kotler (2003),
marketing is a social process by which individuals and groups obtain what they need and
want through creating, offering, and freely exchanging products and services of value with
others. For managerial definition, marketing has often been described as ‘the art of selling
products’.

Marketing system: Marketing system in terms of what is otherwise known as marketing

channel. In broad terms, marketing system may be defined as the totality of product channels,
market participants and business activities involved in the physical and economic transfer of
goods and services from producers to consumers. The concept of marketing system includes

13
both the physical distribution of economic input and products and the mechanism of process
or coordinating production and distribution.

Marketing channels: A market channel is the system of marketing institutions through

which goods or services are transferred from the original producers to the ultimate users or
consumers. Most frequently, a physical product transfer is involved, but sometimes an
intermediate marketing institution may take title to goods without actually handling them. In
line with this, Astewel (2010) stated that, marketing channels is an “alternative routes of
product flows from producers to consumers”. They focus on the marketing of agricultural
products, as does this study. Their marketing channel starts at the farm-gate and ends at the
consumer’s front door. The marketing channel approach focuses on firm’s selling strategies
to satisfy consumer preferences. Kotler (2003) also explains marketing channels as a set of
interdependent organizations involved in the process of making a product or services available
for use or consumption. Most producers do not sell their goods directly to the final users;
between them stands a set of intermediaries performing a variety of functions. These
intermediaries constitute a marketing channel also called a trader channel or distribution
channel.

Market chain: According Lundy et al. (2004) market chain is used to describe the
numerous links that connect all the actors and transactions involved in the movement of
agricultural goods from the farm to the consumer, it means agricultural goods and products
flow up the chain and money flows down the chain. Agricultural commodities are produced
by large number of producers and consumed by large number of households. With the
exception of foodstuffs consumed on farm or sold locally, they are bought and sold a number
of times between the farm gate and the final consumer. While moving these two points, the
commodity is loaded, off-loaded, transported stored, cleaned, graded and processed. The
medium that runs from a producer down to a final user, through which the commodity passes
and which embodies these transaction and activities conventionally referred to us a market
and processing chain, a supply chain or a value chain (FAO, 2005) if it is same with the
follow up paragraph citation please merge the ideas together and cite only once .

14
A marketing chain is used to describe the numerous links that connect all actors and
transactions involved in the movement of agricultural products from the farm to the
consumer (Lunndy et al., 2004). It is the path of one good flow from their source of original
production to ultimate destination for final use. Functions conducted in a marketing chain
have three things in common; they use up scarce resources, they can be performed better
through specialization, and they can be shifted among channel members (FAO, 2005).
According to Hobbs et al. (2000), the term supply chain refers to the entire vertical chain
of activities from production on the farm, through processing, distribution, and retailing to
the consumer. In other words, it is the entire spectrum, from gate to plate, regardless of how
it is organized or how it functions.

Marketable surplus: According to Atteri et al. (2003), marketable surplus can be defined as
the residual production of agricultural produce left with the producer after meeting his
requirements of family consumption, farm needs (seed and feed), kind payments, etc. The
importance of increasing marketable surplus for meeting the increasing demand for food,
raw materials and other agricultural products by the non-farming population is well
recognized.

Marketing functions: Marketing functions are activities that are performed in getting farm
product from the producer to the consumer. According to Saccomandi (1998), functions
can be classified based on objectives logistical, marketing and economic objectives.
Logistical functions are related to the concentration, transport and preservation of products.
Marketing functions are dedicated to classification, packaging, development of demand and
market information. A clear understanding of marketing function with an investigation of
strengths and weakness help where to improve the marketing system Economic functions
include financing, risk bearing and facilitation of exchange.

Marketing of agricultural products consists primarily of moving products from production

sites to points of final consumption. In this regard, the market performs exchange functions
as well as physical and facilitating functions. The exchange function involves buying, selling
and pricing.

15
Transportation, product transformation and storage are physical functions, while financing,
risk bearing and marketing information facilitating marketing (Astewel 2010).

2.4. Structure, Conduct and Performance of Markets

2.4.1. Structure

Market Structure includes those characteristics of the organization of the market that seem to
exercise strategic influence on the nature of competition and pricing within the market. The
term market structure refers to the number of buyers and sellers, their size distribution, the
degree of product differentiation, and the ease of entry of new firms into an industry.
According to Scarborough and Jonathan (1992), the most important characteristics of market
structure includes; the degree of seller’s and buyer’s concentration which refers to the number
and size distribution of firms in relation to the size of the market, the degree of the product
differentiation among outputs of the various sellers in the market and barriers to entry or
freedom to entry and exit from the market: this refers to the conditions for entry of new firms
into the market or exit of existing firms.

Market structure can also be defined as characteristics of the organization of a market, which
seem to strategically influence the nature of competition and pricing behavior within the
market. According to Wolday (1994) the organizational features of a market should be
evaluated in terms of the degree of seller concentration, entry barriers (licensing procedure,
lack of capital, know-how, and policy barriers), degree of transparency and degree of product
differentiation that condition or influence the conduct and strategies of competitors.

2.4.2. Conduct

Market conduct refers to the behavior that firms pursue in adopting or adjusting the market in
which they sell or buy. The major aspects according to Scarborough and Jonathan (1992)
include pricing and selling policies and tactics, overt and tacit inter-firm co-operation, or
rivalry, and research and development activities.

16
Wolday (1994) in his research stated that market conduct as the practices or strategies of
traders in maximizing their profits. Among these practices are the use of regular partners,
long-term relations with clients, and suppliers, the use of intermediaries, and trade within
personalized networks.

2.4.3. Performance

Performance of the market is reflection of the impact of structure and conduct on product
price, costs and the volume and quality of output and if the market structure in an industry
resembles monopoly rather than pure competition, then one expects poor market
performance (Rehima, 2006).

According to Astewel (2010), 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. Is produce assembled and delivered on time and without wastage? Is it well packed
and presented attractively? Is its quality reliable and are terms of contract observed? Is the
consumption of the products increasing and sales in competitive market expanding? There
are such practical indicators of how well a certain marketing system is operating.

Commercial enterprises, and their management, are judged by their ability to produce
acceptable profits. Prudent managers are likely to take the strategic view when making pricing
decisions. That is, they will not necessarily seek to maximize profits in the short-term at the
expense of long-term objectives. Example, profits may be low, or even negative, during a
period when the company is seeking to penetrate a new market. Again, heavy investments in
capital equipment and/or reserve and deposit may adversely affect the short-term profitability
of an enterprise, but are likely to provide a foundation for longer-term commercial success.

17
2.5. Review of Empirical Studies

In different parts of Ethiopia, many studies conducted in analyzing the market participation
and volume of sale for different crops. Gebremedhin and Hoekstra (2007) identified
determinants of household’s market participation of three crops (teff, wheat and rice) from
three districts of Ethiopia (Ada, Alaba and Fogera). For analysis, they used community level
and household level data. At the household level, Probit model was used to analyse the
determinants of household choice to produce these market oriented crops.

Also Heckman two-steps estimation was applied for the two crops (due to data availability
rice result was not given) and the result shows that distance to market place didn’t have
effect on market orientation, there was a U-shaped relation between age of household head
and market orientation of household in the cereal crops, availability of cultivated land,
traction power, and household labor supply, are important factor that induces households to
be market oriented.

On the other hand, Adugna (2009) tried to assess structure-conduct-performance of fruit and
vegetable marketing, analyze market supply determinants, and analyze the institutional
support services of extension, input supply and credit. He also analyzed profitability of
fruit and vegetable production and marketing.

A survey by Wolelaw (2005) identifies the main determinants of rice supply at farm level.
The study uses Cobb Douglas production function model to estimate the limiting factors.
The result that identified were, the current price, one year lagged price, actual consumption
in the household, total production of rice in the farm, distant to the market and
weather conditio variables were significant to influence the supply of rice. On the same
area, Astewel (2010) identified the factors that affect rice profitability and market chain
at Fogera district. The studies pointed out both production and market constraints and more
recommendations were forwarded.

18
Similar research result by Beyene and Phillips (2007) have designated that, absences of
research and market information in Ethiopian honey value chain have wasted the nation’s
incalculable benefits. This study was further evidenced by Belay (2003) who stated that, lack
of government support such as inadequate research and training, policies and strategies, have
increased knowledge gap among the Ethiopian small-scale producers.

Abay (2007) identified the major factors that affect the supply of vegetables (onion and
tomato) at Fogera District. His study revealed that owned oxen number, family size, and
distance from development agent and experience has affected marketable supply of onion and
tomato. In similar way, Adugna (2009) identified major factors that affect marketable supply
of papaya in Alamata District. Adugna’s study revealed that papaya quantity produced
influenced marketable supply positively.

Similarly, Bezabih and Hadera (2007) explore use of low level of improved agricultural
technologies, risks associated with weather conditions, diseases and pests, as the main reasons
for low productivity. Moreover, due to the increasing population pressure the land holding per
household is declining leading to low level of production to meet the consumption
requirement of the household. As a result, intensive production is becoming a means of
promoting agro-enterprise development in order to increase the land productivity.

A study by Negash (2007) examined the extent of improved haricot bean variety use based on
a sample survey of 160 households (HH) in 4 PAs (Alemtena, Laygnew Lenda, Gofessa and
Kunche Yaye) from a total population of 1,066 haricot bean growing households. According
to this study, 31 % of the households used improved varieties in 2007 compared to 11 % in
2004 (baseline situation). The progressive trend in use of improved haricot bean variety
agrees with finding of the IPMS household survey conducted in 2009.

Haricot bean is an important pulse crop distributed and grown in different parts of Ethiopia
depending on climatic and socio-economic factors. In eastern parts of the country, it is also
widely distributed and grown by producers for various uses (Alemitu, 2011).

19
 3. RESEARCH METHODOLOGY

This chapter consists of description of the study area, research design (sampling design and
sampling methods), data collection methods and data types and methods of data analysis.

3.1. Description of the Study Area

This study was conducted in Meta district in Eastern Hararge Zone of Oromia National
Regional State in the eastern Ethiopian highland. Meta District is one of the 19 districts of the
Eastern Harargie Zone of Oromia National Regional State. Agriculture is the main source of
income of the population in the district. Except for few hills, the district has agriculturally
suitable land in terms of topography. Despite the recurrent drought has also been a major
problem in the area.

Meta district is located at about 462 km from Addis Ababa and 64 km west of Harar, Meta is
bordered from the south west by Deder on the north west by Goro Gutu, on the north by the
Somalia region, on the north east by Kerssa, and on the south east by Bedeno. There are 51
Kebeles and two towns in Meta included (Chelenqo and Kulubi).

20
 Figure 3.1. Map of the study area

Figure 3.1a: Map of Ethiopia

Figure 3.1b: Administrative map of Oromia Figure 3.1c: Administrative map of Meta

21
3.1.1. Population

Table 3.1 revealed that that the population of the district is estimated to be 277,559 of which
117,864 are male and 122,421 are female a total of 240,624 (93.9%) are residing in rural
area. On the other hand 21797 male and 15138 female a total of 36,935 or 5.19% of its
population are urban dweller. This is less than the zone average of 13.31% with an estimated
area of 657 square kilometer. Meta has an estimated population density of 365.7 people per
square kilometer, which is greater than the zone average of 102.6.

Table 3.1. Total population of Meta District

Total population in 2011
Male Female Total 2007 estimate
Residential area
Rural 117,864 122,421 240,624 223,100
Urban 21797 15138 36,935 29,169
Total 139,661 137,559 277,559 252,269
Source: CSA (2007)

3.1.2. Topography, soils and climate

The total area of the district was estimated about 70800ha. The altitude of Meta district ranges
from 1400 to 2100 m.a.s.l while the minimum annual temperature ranges between 14 o C and 34
o
C. The mean annual temperature is 27 oC. Nearly all of the land in the District is in the low
land except some mountaintops, which fall outside.

According to the available data, the mean annual rainfall for the area ranges from about 850 to
around 1200 mm. About 90% of area of the district receives mean annual rainfall between
900 and 1100 mm.

The soils in the area are predominantly sandy and some are soils with sandy loom properties.
There are about four types of soils in the area where about 65% of the size of the district is
sandy and sandy loom and about 31% are Vertisols or soils with vertic properties. On the
other hand, clay black accounts for about 4 %.

22
Table 3.2. Land use of Meta District
Land use type Area (ha) %

1 Cultivated land 39221 55.46

2 Forest land 2580 3.64
3 Trees, shrubs, Bush land 15803 22.32
4 Grazing land 588 0.83
5 Community land 7028 9.93
6 Rocky and Gorge land 5583 7.89
7 Total area of the district 70800 100.00
Source: District Agriculture Office (2011)

Table 3.2 illustrated that from the total area of the district, only 55.46% was cultivated. About
22% of the land was covered by forest and bush. The other, 9.93 % and 7.89 % of the total
area was community and rocky and gorge land respectively

Most of the farm land was allocated for annual crops where cereals covered 51,472
hectares; pulses cover 9819.98 hectares; oil seeds 6137 hectares; root crops 1034.29
hectares; and vegetables 882.08 hectares (CSA, 2010). The major crops include sorghum,
maize, wheat, barley, in order of area coverage. According to IPMS (2005), average land
holding was about 0 .9 ha with minimum and maximum of 0.4 and 2.8 ha, respectively.

3.2. Sources of Data Requirements

The study was conducted using both primary and secondary data. The primary data were
collected using two types of questionnaires, one for producers and the other for traders of
haricot bean. The information included the socioeconomic characteristics of producers and
traders involved in this business using questionnaires.

Primary data were collected from producers on factors affecting market supply, size of
output, access to market, market information, and annual income from non- farming
activities, land holding, extension service contact, credit access, family size, production of
food grain from producers using questionnaire.

23
On the other hand, the questionnaire for traders covered traders’ characteristics such as,
trading activities and marketing costs, annual volumes of sales, purchases, storage time, and
source of market information. Beside this informal survey was used to gather information
from different market participants in the haricot bean marketing chain. The study also used
information regarding haricot bean production and marketing from secondary sources
such as district and zonal agriculture and rural development offices.

3.3. Sample Size and Sampling Technique

For this study, simple random sampling method was employed. It has two parts that are
traders and the producers’ survey. The traders’ survey was employed in three sample markets.
The sample markets include Dire-Dawa and two local markets, Kulubi and Chelenko from
Meta district.

3.3.1. Producers’ sampling

Sample producers were selected from those who produce haricot bean. From 51 kebeles of
Meta district 12 kebeles grow haricot bean. From these five kebeles were selected
randomly and from a these five kebeles 15% of the population, a total of 150 producers
were randomly selected and interviewed.

3.3.2. Traders` sampling

In order to have representative traders secondary information and a discussion was made with
the District Agricultural and District Trade and Industry Offices. The sample assemblers were
selected from two local markets (Kulubi and Chelenko) during main market days. Hence, 15
rural assemblers and seven urban assemblers, a total of 22 assemblers were selected and
interviewed.

24
In the case of wholesalers, sample respondents were selected from the sampling frame obtained
from the trade and industry office of the District. Based on the list from the sampling frame,
eight wholesalers were selected randomly from the District. On the other hand, only six
retailers were observed. As a result, all of them selected purposively and interviewed.

3.4. Methods of Data Collection

Two independent questionnaires were designed for producers and haricot bean traders. Semi
structured formal interview guidelines were prepared and piloted before data collection in
order to include all the necessary information. Formal survey a n d interviews was made with
randomly selected producers and traders using questionnaires. On the other hand, an
informal survey in the form of Rapid Market Appraisal (RMA) technique was employed
using checklists for both producers and traders to obtain additional supporting information
for the study.

3.5. Methods of Data Analysis

For analyzing the data, two methods of data analysis (descriptive statistics and econometric
analysis) were used.

3.5.1. Descriptive statistical analysis

In this method of data analysis, percentages, means, variances and standard deviations were
computed to examine and describe marketing functions, market performance, market
conduct, farm household characteristics, resource ownership, and role of intermediaries,
market and traders characteristics.

3.5.1.1. Structure conduct and performance (S-C-P) model

The model examines the causal relationships between market structure, conduct, and performance
is usually referred to as the structure, conduct, performance (S-C-P) model.

25
The S-C-P approach evaluates the marketing system at the industry level for a specific
commodity. The critics on this approach are its assumption that firms interact horizontally and
this interaction determines the conduct of the marketing system. But in reality these interactions
are themselves influenced by other variables that are characteristics of the individual firms that
comprise the industry. Hence the structure, conduct and performance of the haricot bean
marketing system were studied in terms of the sub sector organization approach or firm analysis
along with the industry as a whole system. That is the application of S-C-P approach to haricot
bean market chain analysis in the market (sub sector approach) was applied in this study to
examine the haricot bean marketing system in the study area. In this approach the following are
the major areas that are investigated; commodity characteristics, consumption pattern, supply
situation, price relationship and seasonality, marketing institutions and infrastructures. In
agricultural economics, the most frequently used model for evaluating market performance is
based on the industrial organization model. The study used S-C-P model to evaluate haricot
bean market.

Market Structure : The structure of the sub sector organization that affects the industry or
market structure can be analyzed using information like the location, timing, and clustering of
functions, the number of stages, the number of parallel channel, the type of information, the cost
and distribution of products and the type of exchange and existing exchange institutions. The
nature of these conditions and response and adaptability of the marketing actors determine the
firms’ decision environment and then the market structure. Barriers to entry can also influence
the structure of a marketing system. It is simply any advantage held by existing firms over those
firms that might potentially produce same output in a given marketing system. Potential entry
barriers were investigated based on: demand conditions, product differentiation, price elasticity,
and control over input supplies, legal andninstitutional aspects, economies of scale, capital and
technological factors to analyze the market structure.

Market conduct: There are no universally accepted methods for the analysis of elements of
market conduct. The existence of formal and informal producing and marketing groups that
affect the bargaining power of marketing agents. The availability of price information and its
impact on the prevailing prices.

26
The accessibility of alternative market channels and their relative efficiency in the flow of
goods and services from the point of production to the point of consumption. The exchange
practice and pricing behavior of the marketing firms were analyzed to examine the influence
of the existing market structure on the market conduct. The conduct of firms were also
analyzed using information such as: type of exchange used, supply, demand, and price
forecast, information and quality specification, timing and means of exchange and response to
changes in market places.

Market performance: The performance of an industry for a particular commodity can be

evaluated in terms of technical and pricing efficiency. Marketing costs and marketing
margins, influences on consumption, distribution and market access are best efficiency
parameters to analyze the performance of a market. Performance in light of the firm view can
be explained by allocative accuracy, efficiency and transaction cost, distribution and capital
cost efficiency, etc.

3.5.1.2. Concentration ratio (CR)

The concentration ratio is a way of measuring the concentration of market share held by
particular suppliers in a market. "It is the percentage of total market sales accounted for by
a given number of leading firms". The greater t h e degree of concentration the greater is
the possibility of non-competitive behavior existing in the market. To be a perfect market,
there should be sufficient number of firms (buyers and sellers).

CR = ∑s i i= 1, 2, 3,…n
i =1

Where, Si is the percentage market share of the ith firm and n is the number of relatively larger
firms for which the ratio is going to be calculated.

3.5.1.3. Marketing margin

The marketing margin determination surveys were conducted parallel to channel survey.
Scott (1995) pointed out that to obtain information concerning the margins, agents have to

27
answer the question “what price did you pay?” and “what was the selling price?” The cost and
price information used to construct marketing cost and margin were gathered during field
work conducted. Computing the total gross marketing margin (TGMM) is always related to
the final price paid by the end buyer and is expressed as percentage (Mendoza,1995).

Total Gross Marketing Margin = End buyer price - First seller price X100
End buyer price

It is useful to introduce the idea of ‘producer’s portion’, or ‘producer’s gross margin’

(GMMp) which is the portion of the price paid by the consumer that goes to the
producer. The producer’s margin is calculated as:

GMMp = End buyer price - marketing gross margin X100

End buyer price

Where, GMMp = the producer's share in consumer price

The net marketing margin (NMM) is the percentage of the final price earned by
the intermediaries as their net income after their marketing costs are deducted. The
percentages of net income, that can be classified as pure profit (i.e. return on capital),
depends on the extension to such factors as the middlemen’s own (working capital) costs.

NMM = Gross margin – Marketing costs X100

End buyer price

Where, NMM = Net marketing margin

Market cost: This include handling (packing and unpacking cost, loading and unloading
cost), transportation cost, production loss, storage cost, processing cost, capital cost,
commission and other unofficial payments. The various institutions involved in haricot bean
marking system and their role were indentified using information from informal survey. The
cost component of haricot bean production and their profitability were also analyzed.

28
Furthermore, the different market channels and the percentage share of these channels were
identified. The result of this market investigation was compared with the perfectly
competitive market conditions to measure the marketing efficiency.

3.5.2. Econometric analysis

3.5.2.1. Factors affecting market supply

If all households are assumed to be participating in the market the OLS model is applicable in
identifying factors that affect the level of participation in the market. In reality, all households
may not participate. Some households may not prefer to participate in a particular market in
favor of another; while others may be excluded by market. If the OLS regression is
estimated excluding the non-participants from the analysis, the model would have sample
selectivity bias problem (Gujarati, 2003).

The Heckman bivariate normal selection model represents the classic way for dealing with
selection on un observables. Selection on un-observables occurs when the error term in the
outcome equation is correlated with the treatment, or with selection into the sample being
used for estimation. Hence, this problem can be overcome using the Heckman’s sample
selection model where a Probit model for the participation or ‘selection’ equation is estimated
and a regression model, which is corrected for selectivity bias, is specified to account for the
level of the amount marketed.

Therefore, for this study Heckman two-stage sample selection model were used. This model
have two step estimating procedure. In the first stage, a ‘participation equation’, attempts to
capture factors affecting participation decision. The second stage provides heckit analysis that
determines the level of participation. The probability of participation was modeled by
Maximum Likelihood Probit, from which the inverse Mill’s ratios can be estimated. The
specifications for Heckman’s two-stage models are as follows:

29
 i. The participation Equation: The Probit model is specified as:

Yi = xi’i+ i, i = 1, . . . , n

Where: Yi is a dummy variable indicating the market participation that is related to it as

Yi = 1 if Yi > 0, otherwise Yi = 0
i are the variables determining participation in the Probit model,
xi’ is unknown parameter to be estimated in the Probit regression model,
i is random error term

ii. Regression (OLS): Selection model is specified as:

Q = Zi α i + µλ + η
Where: Qi is the volume of haricot bean supplied to market

α i is a vector of unknown parameters to be estimated in the quantity

supply equation
Z i is a vector of explanatory variables determining the quantity supplied

µ is the parameter that helps to test whether there is a self selection bias in
market participation
ηi is the error term.
Lambda, which is related to the conditional probability that an individual household will
decide to participate (given a set of independent variables) is determined by the formula.

In this study STATA version 11 was used to analyze the collected data. Before fitting
important variables in the model, it was necessary to test multicolinearity problem among the
variables, which seriously affects the parameter estimates. As Gujarati (2003) indicates,
multicolliniarity refers to a situation where it becomes difficult to identify the separate effect
of independent variables on the dependent variable because existing strong relationship
among them. In other words, multicollinearity is a situation where explanatory variables are
highly correlated. The existence of multicollinearity was tested by using Variance Inflation
Factor (VIF).

30
As R2 increase towards 1, it is an indication of colinearity of explanatory variables. The larger
the value of VIF, the more troublesome or collinear is the variable Xi. As a rule of thumb if
the VIF greater than 10 (this will happen if R2 is greater than 0.90) the variable is said to be
highly collinear (Gujarati, 2003). Multicollinearity of variables can also be tested through
tolerance.

Tolerance is 1 if Xi is not correlated with the other explanatory variable, whereas it is zero if it
is perfectly related to other explanatory variables. A popular measure of multicollinearity
associated with the VIF is defined as


VIF (Xj) = 1  R j
2

1

2
Where, R j is the multiple correlation coefficients between explanatory variables, the larger

the value of Rj2 is, the higher the value of VIF (Xj) causing higher collinearity in the variable
(Xj).

3.6. Definition of Variables and Hypothesis

To identifying factors influencing haricot bean supply, the main task is to analyze which
factor influences and how? Therefore, potential variables, which are supposed to influence
haricot bean market participation and quantity of haricot bean supply, need to be explained. In
view of that, the major variables expected to have influence on both the producers’
participation decision and quantity supply are explained as follows.

3.6.1. Dependent variables

Market participation decision (MKTPD): This is a dummy variable, which takes value 1 if
the producer decides to participate in marketing of haricot bean and 0 otherwise.

Quantity supplied (QSU): It is a continuous variable that represents the actual supply of
haricot bean in Qt by farm household to the market.

31
3.6.2. Independent variables

Sex of the respondent (SEX): It is a dummy variable taking zero if female and 1 if male. It is
hypothesized to affect both participation and supply of haricot bean will be one variable to be
considered.
Age of household head (AGE): It is a continuous variable and measured in years. Aged
households heads are believed to be wise in resource use, and it is expected to have a positive
effect on market participation and marketable surplus.

Education of household head (EDUCHH): It is a categorical variable and refers to the

formal schooling of a respondent during the survey period. Accordingly household heads are
sort out in to six categories (illiterate who cannot read and write, read and write, 1-4, 5-8, 9-12
and >12). Households who had education determines the readiness to accept new ideas and
innovations, and easy to get supply, demand and price information and this enhances
producers’ willingness to produce more and increase volume of sales. Therefore, education
will be hypothesized to positively influence market participation and marketable surplus.
Holloway et al. (1999) observed that education and visits by an extension agent had
significant and positive effect on quantity of milk marketed in Ethiopian highlands.

Total size of land owned (TSLO): Total size of land that the respondent owned measured in
hectares. The expected sign will be positive. The more land owned the more will be the
probability to allocate for haricot bean crop and more to supply.

Family size (FAMSIZ): Family size is the number of family members in the household. It is
a continuous variable. The higher number of family members an individual has the more size
of land allocated to the haricot bean and more to supply.

Number of oxen owned (Ox): This is a continuous variable that refers to the number of oxen
the respondents owned in 2011. Households with high number of oxen may be engaged in
more of haricot bean production that increases the producers’ volume of haricot bean supply.
So, in this study, it is expected to influence positively market participation and volume of
haricot bean.

32
Extension service (EXTENTION): A dummy variable representing extension service as a
source of information on technology. Those producers who have contact with extension
workers are more likely to know the advantage of haricot production for market.

Therefore, contact with extension agent is assumed to have direct relation with market
participation and volume of marketable surplus.

Total livestock unit (TLU): This is a continuous variable defined in terms of tropical
livestock unit (TLU). Farmer could sale more haricot bean when he or she produces more.
On the other hand, when the household has less production; he must either borrow money
or sale his livestock to meet household needs. Farmers who have low production of
haricot bean need to specialize in livestock production and hence it has an inverse
relationship with crop production and marketable surplus. Study by Rehima (2006) on pepper
marketing at Alaba and Siltie in SNNPRS of Ethiopia showed that TLU showed a negative
sign on quantity of pepper sales.

Distance from development center (DISFDEVC): This variable was considered to see the
intensity of extension service. The nearer a farmer is to a development agent the more
frequent would be his chance to get an advice. Hence, the expected sign for this continuous
variable measured in single feet hours was negative. As a farmer dwelled far the lesser would
be the probability of participation decision.

Income from non-farming activities (IFNFA): It is a dummy variable, which is obtained

from non-farming activities by the household head. This income may strength farming
activity or reluctant to produce haricot bean to generate money from haricot bean rather than
getting income from non-farming activities. Therefore, getting income from non-farming
activity is assumed to have inverse relation with market participation and marketable surplus.

Credit access (CREDA): This is a dummy variable, which refers to credit access for haricot
bean production. Access to credit will enhance the financial capacity of the producer to
purchase the necessary inputs. Therefore, it is hypothesized that access to credit will have
positive influence on market participation and volume of sale.

33
Distance from market (DISTFMKT): This is a variable used to measure access to
markets measured in travel hours for a feet single trip. It is a continuous variable and
expected to influence participation and supply negatively.
Again Astewel (2010) explained that those households located closer to market centers will
experience lower costs since they can get information more easily. The study by Sirak et al.
(2007) on the analysis of cattle marketing participation in South Africa shows that distance to
the preferred market channel is negatively related with the probability of selling. Also Abay
(2007) found that the likelihood of sales at the market increases significantly (positive)
with an improvement with market facilities and a decrease in travel time from the village to the
market.

Access to improved varieties of seed (SEEDU): It is dummy variable, which is 1if they have
access to improved seed and 0 otherwise. Producers who have access to improved varieties of
haricot bean inputs can increase the productivity of this commodity. Access to improved
seeds varies among producers located in different PAs. Some producers have better access
than others due to their proximity to research centers or because they are close to locations
where informal seed exchange is better developed. Consequently, it was hypothesized that
accesses to improved varieties of seed have positive influence on market participation and
volume of sale.

Fertilizer application (FERTIAPPLI): is a dummy variable, which takes a value one if the
producers use fertilizer for haricot bean production and zero otherwise. Haricot bean
production, like any other crop, requires use of different inputs. Hence, fertilizer application
is assumed to have a positive effect on haricot bean quantity supplied.

Market information (MKTINF): It is a dummy variable, which takes a value one if the
producers have access to market information and zero otherwise. Producers marketing
decisions is based on market price information, and poorly integrated markets may convey
inaccurate price information, leading to inefficient product movement. Therefore, it is
hypothesized that market information is positively related to market participation and
marketable surplus.

34
 4. RESULT AND DISCUSSION

This chapter presents the result obtained using both descriptive statistics and econometric
models, on haricot bean production and marketing in Met a district especially, on size of
output, marketing channels, and the marketing agents. It quantifies costs and margins for
key traders, identifies factors affecting haricot bean market participation and volume of sales
in the study area.

4.1. Socioeconomic Characteristics of Sample Households

4.1.1. Sex, marital status, religion and educational level

The survey result in Table 4.1 depicted that 70% of sample households were male and the rest
30% were female. Regarding religion, the majority of sample household heads (81%) were
Muslim; where as 14% and 5% of the sample household heads were Orthodox and Protestant
respectively. With regard to marital status, 81% of total sample respondents are married.
While 15% and 4% were divorced and single, respectively.

Education enables the person to do basic communications and interact with different
valuable situation. Hence, educational background of the sample household heads is believed
to be an important factor that determine the readiness of household heads to accept new ideas
and improve their market participation decision. The survey result showed that about 46.67%
of the sample household heads were illiterate.

Among the sample households, about 14.67% of them could read and write whereas
18.67%, 13.3% and 4.67% had joined primary, junior school and secondary education school
respectively. These groups were able to interpret market and other information better than
those who had less or no education. The chi-square test indicated that there was a significant
difference between participants and non-participants at 1% significance level in their
education.

35
Table 4.1. Demographic characteristics of sample producers
Variables Description Participation decision 2 –value
Non-Participant Participant Total %
Sex Male 42 63 105 70 0.216
Female 22 23 45 30
Religion Orthodox 10 11 21 14
Muslim 53 68 121 81 2.966
Protestant 6 2 8 5
Single 2 4 6 4
Marital Married 52 70 122 81 0.416
status Divorced 10 12 22 15
Education Illiterate 43 30 73 48.67
level of Read/write 10 12 22 14.67 8.92 ***
household 1-4 7 21 28 18.67
head
5-8 4 16 20 13.33
9-13 0 7 7 4.67
Source: Survey result, 2011
*** means significance, at 1% significance level

4.1.2. Age and family size of the sample households

Age of the household head is one of the major factors, since it determines whether the
household benefits from experience, or has to base its decisions on the risk-taking attitude of
a younger producers. The result of the study depicted that the age of respondents ranged
from 20 to 74 years with average age of 37.31 years. The independent sample t-test revealed
that there is a significant difference at 1% level of significance on mean age of producers in
the sample kebeles. The average family size of sample farm households was 8.14. The
minimum and maximum family sizes were found to be 1 and 16, respectively. A significant
and negative relationship is observed between age and size of output and market participation
decision at 5% significance level (Table 4.2).

36
Table 4.2. Age and family size of the sample households

Variables N Mean S.D Min Max t-value

Age None participant 64 39.28 10.90 20 74 2.13**

Participant 86 35.85 8.80

Family size None participant 64 8.14 3.78 1 15 4.39***

Participant 86 5.71 3.00

Source: Survey result, 2011
*** and ** means significance, at 1% and 5% at significance level respectively

4.1.3. Farm characteristics

4. 1.3.1. Land holding

Productive land is the basic asset of producers. Land is the basic input and factor of
production for any investment. The average land holding of the sample household was 0.93
hectare. The minimum and maximum holding sizes were 0.25 and 2.25 hectares, respectively.
The majority of the respondents owned less than 1.5 hectares of land. This shows that farming
in the study area is of subsistence type. The results of the survey showed that from the total an
average land size of 3.707 timad (0.93 ha) owned by a producer average 2.83 timad (0.73 ha)
of land were cultivated. Whereas an average of 0.73 timad was allotted for homestead and
0.19 timad unplanted. There is a significant difference in land holding and cultivated land
among participants and non- participants at 5% level of significance (Table 4.3).

37
Table 4.3.Land holding and allocation among participants and non-participants
Variables Participation Minimum Maximum Mean t- value
Decision
Total size of land Non-participant 1.00 9.00 1.5135 8.079***
owned Participant 1.00 8.00 5.2208
Total cultivated land Non-participant 0.50 6.00 1.0262 6.530**
Participant 0.60 8.00 1.8005
Homestead land Participant 0.20 1.55 0.225 5.415**
Participant 0.42 1.55 0.500
Fallow land Non-participant 0.00 1.00 0.188 9.034***
Participant 0.00 100 0.040
Source: Survey result, 2011
***, ** and Significance, at 1% and 5% significance level , 1ha= 4timad

4.1.3.2. Number of oxen and livestock

Oxen are the most important source of traction power in the area. Therefore, who own more
oxen would be in a position to undertake farm activities on time and when required.

Table 4.4. Number of oxen and livestock

Variables Mean S.D Min Max t-value

Number of Non-participant 2.28 2.72 0 5 1.994*
oxen Participant 3.95 1.05 1 6

TLU Non-participant 8.14 3.78 3 17

Participant 5.71 3.00 1 15 0.924

Source: Survey result, 2011

*** and *Significance, at 1 % and 10% significance level respectively

38
Oxen provide draft power and are the major inputs in haricot bean production process. While
this is the case, the result indicates that 58.6% of the total sampled households had about 2
oxen only 8% of them have not oxen. Table 4.4, depicted that number of oxen is significant at
10% level of significance among participants and non-participants.

The livestock varieties found in the study area are cattle, goat, sheep, donkey, mule, horse,
poultry, camel and bee colony. Livestock is kept both for generating income and for traction
power. To assess the livestock holding of each household, the Tropical Livestock Unit (TLU)
per household was calculated. During the calculation of TLU ox was removed from
calculation, to avoid double counting of ox. In terms of TLU, about 93% of the total sampled
household had an average of more than four livestock.

4.1.2.4. Experience of household in farm activities and income

Table 4.5, depicts that the average years of farming experience for total sampled household
were 21.45 years. The survey result indicates that the independent sample t-test revealed that
there was difference at less than 1% level of significance on the mean years of farming
experience. The table suggests that farming is the main source of household income in the
study areas. The average annual farming income of the sample household for the year
2011was Birr 11,909.67 ranging from Birr 1000.00 to Birr 40,000.00 per household.

39
Table 4.5. Experience of household in farm activity and income

Variables Participation Minimum Maximum Mean t- value

Decision
Experience in farm Non-participant 2 45 16.18 4.35**
activities (yr) Participant 1 45 22.22
Income from farm Non-participant 1,000 19,000 11,572.67 0.673
activities (Br) Participation 1,100 40,000 13,7000.50
Experience in nonfarm Non-participant 0 20 10.74 0.694
activities (yr) Participant 0 18 10.20
Income from nonfarm Non-participant 0 19,000 1,960.47 0.755
activities (Br) Participant 0 11,000 1,850.00
Source: Survey result, 2011
** Significance, at 5% significance level

The other sources of income for the producers in the study area were off-farm activities. The
major off-farm income generating activities practiced in the area were petty trading (dukana),
charcoal and firewood selling. The survey results indicates that the average income from non-
farm activity were Birr 1,960.47 with minimum value of non-farm income generating activity
(zero) to a maximum value of Birr, 6,000 per annum.

4.1.2.5. Haricot bean production

The average output of haricot bean was estimated to be 673.5kg ranging from 1 to 17 with
significant variability among participant and non participant producers in the district. All
haricot bean producers in Meta district derived the biggest share of their income from next to
Khat and coffee production. There is a significant difference in the level of total production
per household between participant and non-participant with the highest production in Non-
participant mean of 503kg and the lowest in participant mean of 845kg (Table 4.6).

40
Table 4.6. Average haricot bean production per household per kilogram

Participation Decision Mean S.D Min Max t-value

Variable
Total size of Non-participant (43%) 503 315.2 100 1700 5.754***
output Participant (57%) 845 228.9
Source: Survey result, 2011: Numbers in the parenthesis are standard deviation
***Significance at 1% level of significant

4.1.3. Use of storage

Storage services make easy for the smooth and continuous flow of products marketed and
create time utilities. The survey result showed that 36.67% from non-participants and 43.3%
of participants used storages for their haricot bean produce until it is marketed.

The average storage periods identified were 4.41and 3.57 months with non-participant and
market participant producers in the study area (Table 4.7). For the rest producers the major
reasons for their early sales are the early cash requirement to settle past loans expenses soon
after harvest.

The survey also revealed that the main reasons for storage were expectations of better prices,
but not that much as long as possible due to spillage or poor handling. From the study it
observed that moisture loses does not have significant effect on quantity loss. Unlike for other
agricultural products, the price of haricot bean is mainly influenced by international prices.
However, from the RMA it was observed that few wholesalers and exporters stored haricot
bean for longer period waiting for better prices.

41
Table 4.7. Use of storage for haricot bean and average duration in months storage.

Variable Market participation decision

Use of storage Non- participant Participant Total
55 65 120
Motive behind storing
Expecting high price 29 36 65
Lack of market demand 11 17 28
Saving purpose 10 10 20
Others specify 5 2 7
Total 55 65 120

Duration of storing in (month)

0 9 21 30
1 0 2 2
2 1 3 4
3 4 4 8
4 5 12 17
5 22 25 47
6 23 19 42
Total 64 86 150

Mean 4.41 3.57

Source: Survey result, 2011: Number in parenthesis represents Standard deviation

Adugna (2009) affirmed that to benefit out of storage of haricot bean, it is required to have
modern storage at strategic village markets assuming that economies of storage is profitable.
For small-scale producers, cooperatives can play role in this regard by giving storage services
at fair price. To maintain the quality of stored haricot bean and alleviate the investment
requirement of quality store construction, government support is crucial and it is essential to
establish a warehouse receipt system.

42
4.1.4. Access to services and Haricot bean production

4.1.4.1. Access to credit

Credit is important to facilitate the introduction of innovative technologies, for input, and
output marketing arrangements. It is the most important factors that promote production and
productivity thereby increasing marketable surplus and ultimately farm income. However,
from the 150 sampled respondents who were asked whether they need credit or not, about 54
from non-participant and 71 from participant a 125 (83.3%) of the respondents pointed out
that they need credit and about 43.3% of them had received credit. The chi-square result
shows that there is no significant difference between participant and non-participant at less
than 10% level on credit need.

Table 4.8. Producers with credit access and purpose of borrowing, 2011
Variable N %
Credit access 65 43.33
Credit need (yes) Market participation decision Total 2-value
Non-participant Participant
54 71 125
Purpose For fertilizer 3 6 9 1.562*
of credit Food grain 9 9 18
Total To purchase animal(oxen) 31 40 71
To rent in land for food 8 7 15
grain production
To pay tax 3 7 10
To purchase seed 0 2 2
Total 54 71 125
Source Traders 1 1 2 1.12*
of credit Bank 1 4 5
NGO 20 16 36
Microfinance institute 6 12 18
Peasant association 1 1 2
Friends 2 0 2
Total 31 34 65
Source: own Survey result, 2011
Note: significant at 10% level of significance,

43
Major credit sources were NGO and Microfinance institution in order of importance. NGO
supplied for the majority (55.38%) of the sampled producers; micro finance institute and bank
supplied credit to 27.69% and 7.69% of the producers respectively. Many producers
confirmed that had it not been accessed with NGOs credit, it would have been hardly possible
to cover basic expenses during shortage of fund and their operation could have been failed.
Though the size of finance is very limited, 27.27 % of traders extended credit for production
purposes (Table 4.8).

4.1.4.2. Access to market information

Market information is mostly said to be more perishable than the commodity itself. Access to
timely and accurate market information is the basic element in not only haricot bean but also
other commodity marketing. Adugna (2009) argued that the existence of information barriers
makes unexploited market opportunities, seasonal gluts and producers with inadequate quality
specification and control, inequitable returns to producers, pre-harvest losses and
fundamentally poor returns to production and marketing system as a whole. The survey result
depicted out about 78.13% of non- participant and 81.4% of participant haricot bean
producers had market information access and quality of information is questionable. On the
average 80 % of the sampled producers has accessed market information with significant
difference in access between participant and non-participant.

Table 4.9. Producers’ access to market information, 2011

Market information Market participant decision Total 2- value

Source Non-participant Participant

From Trades 10 26 36 7.89*

Radio 1 1 2
Telephone 3 4 7
Personal observation 9 18 27
Broker 27 21 48
Total 50 70 120
Source: Survey result, 2011
Note: * significance at 10%

44
The sampled respondents revealed that the major source of market information were
brokers, traders, personal observation, telephone and others. About 32% of haricot bean
producers have market information from broker.

4.1.4.3. Access to extension services

Regardless of the country’s huge and extensive investment in promoting producers extension
works, the study result revealed that only 46% of the sampled producers received extension
services with significant variability among PAs. In addition, the contact of development
agents with producer producers was not frequent and regular. The services rendered were very
limited. As one can see from Table 4.10, about 52.17% service given was on postharvest
handling. On the other hand, the chi-square test shows that there is no significant difference
between participant and non-participant in accessing extension service

45
Table 4.10. Access to extension services

Variables Participation Decision 2 -

Frequency of Extension visit Non participant Participant Total % value

Not at all 34 47 81 54

Weekly 5 9 14 9.3 0.899

Once in two week 2 6 8 5.3
Monthly 15 14 29 19.3
Twice in a year 8 5 13 8.67
Once in a year 0 2 2 1.33
Any time when I ask them 0 3 3 2
Total 69 81 150.0 100

Advise
seed bed application 1 4 5 7.25 1.641
Spacing 3 4 7 10.145
Post harvest handling 17 19 36 52.17
Chemical application 2 4 6 8.7
Fertilizer application 7 8 15 21.7
Total 30 39 69 100

Source: Survey result, 2011

The result from the RMA showed that some development agents do not have the time to offer
technical advices due to the fact that in the afternoon they chew khat or either they are
involved in their own personal business (farming and trading) or assigned into other non-
related activities by their bosses. Thus, it is worth to mention the necessity of efficient and
committed development agents (DA) for their needy technical advices, which is aimed to ring
significant changes on the occupation of producers in the area.

46
4. 1.4.4. Access to road and transport

It is evident that the availability of well functioning good roads, transport network and
commercial vehicles and telecommunication infrastructures are very important. Transport
facilities used to create place utilities of the product. As Kinde (2007) stated, transport is an
important factor in the marketing channel linked surplus regions to deficit areas. It thereby
allows producers in surplus areas to profit from better prices on other markets and consumers
in deficit areas also to benefit from lower prices from surplus markets. The price difference is
due to the freight costs involved and a profit for the trader in charge of mediation.

Haricot bean is mainly transported from Meta district local markets (Kulubi and Chelenko) to
Dire Dawa then to the ports (Djibouti) and after processing to Port different countries by
(ECX Global) export Company. According to the survey result, all traders used medium and
big size trucks and producers used pack animals, animal pulled carts to transport output to
local markets.

4.1.5. Distance from development centre and from market

Developmental center is an important factor in making information available and help

them. Hence, from Table 4.11, it was observed that sample producers in the study area
travels in a range of 15min to a maximum of 90min or 1.30 hrs with an average of 49.47
min to access the local extension office (developmental centers).

47
Table 4.11. Prevailing time required to the market centre and development centre

Variables Participation N Mean Std. D Min Max t-value

decision
Average distance of Non-participant 64 51.70 20.613 15 95 0.468
plot from development Participant 86 47.80 18.639 20 95
center (in minute) Total 150 49.47 19.534 15 95
Distance of households Non-participant 64 66.12 24.242 25 120 3.962**
house from market Participant 86 58.23 23.850 20 100
(in minute) Total 150 62.00 24.255 20 120
Source: Survey result, 2011
Note: * * significance at 5%

Distance from producers house to proximity market is also the other factor which determine
producers participation decision. The average distance needed for producer to travel to the
market was about 62 min per single trip with a minimum of 20 and maximum of 120 minute.

The result indicted that there is a significant difference in distance t o travel to the market
center at 5% level of significance, but there was no any difference in distance to travel to
development centers participant and non-participants.

4.1.6. Means of transportation used by sample households output marketing

Meta district has about 28kms asphalt road, on the main road inline of Harar - Addis Ababa,
12 kms all weather gravel road, and 18 dry weather road. Hence, about 53.3% of producers
transport haricot bean to local markets by head/back loading, 40.7% of sample producers
use animals cart and only 6% can access vehicles to transport their produce.

48
Table 4.12. Means of transportation used by sample households in haricot bean marketing

Means of transportation N %
Head/back loading 80 53.3
Animals cart 61 40.7
Vehicle 9 6.0
Total 150 100.0
Source: survey Result, 2011

4.1.7. Inputs for haricot bean production

In agriculture and other production activity adequate type and proportion of inputs application
improve the productivity of haricot bean and leads to the increase in production and supply.
As it can be seen from Table 4.13, below, about 13.33% and 40.67% of the total sample
producers used urea and organic fertilizer respectively for haricot production. The survey
result revealed that there were no significant differences between participant and non-
participant in fertilizer application.

Table 4.13. Inputs use for haricot bean production in 2011

Types of variable Market participation decision Total % 2-value

Variable Non-participants Participants
Fertilizer Urea 11 9 20 13.33 1.44
Application DAP 28 41 69 46
Organic 25 36 61 40.67
Insecticide 9 17 26 17.33 0.833
Herbicide 10 21 31 20.67 1.73
Seed variety White 35 56 91 60.67 2.19**
used Red 22 25 47 31.33
Colored 7 5 12 8
Total 64 86 150 100
Source: Survey result, 2011
** Significant at less than 5% level respectively,

49
The survey result in Table 4.13 illustrates that a small proportion of sample households used
insecticide and herbicide. This is due to shortage of supply and because most of producers
bought them from market. However, the chi-square advocates that there is no significant
difference between participant and non-participant in both insecticide and herbicide usage.
Improved seed is one of the major inputs that affect the productivity and production of crops.
However, the table indicates that the majority of the sample household used unknown seed
variety from market and their own production. Producers responded that this is the major
problem, which affects the productivity and production of their haricot bean. According to the
table, about 60.67% and 31.33% of the total sampled household used White and unknown
seed variety, respectively. In line with this, traders also revealed that the product of Meta
district haricot bean was ranked on the 7th by ECX. The chi-square test confirmed that there is
no significant difference between participant and non-participant.

4.2. Characteristics of Market Participants

4.2.1. Producers

Producers are the first link in the marketing chain. Haricot bean producers in Meta district
harvest haricot bean and supply the majority of their produce to market or second agent.
Haricot bean is produced as an inter crop with different crops like maize, sorghum and khat
hence it is produced by a small-scale producers. Producers in most cases sell their haricot
bean produce to collectors/assemblers, wholesalers and consumers.

4.2.2. Assemblers

Assemblers are the first link between producers and other traders. There were no legally
registered rural or urban assemblers in Meta district. Nevertheless there are about 54 rural 12
urban assemblers were observed in the study area. The survey result shows that rural
assemblers take 29.41% and urban assemblers take 10.71% of the producers’ marketed
haricot bean in 2011. They buy haricot bean directly from producers and sell to wholesalers
depending on the agreement made prior and some few rural assemblers sale to retailers.

50
4.2.3. Wholesalers

Wholesalers in the study area operating in haricot bean marketing concentrate the various
markets purchase and play significant role in price formation. They have better information
access than those other market actors (producers, retailers and assemblers) in the district.
Wholesalers had timely price information access from exporters. They have accounted the
biggest share of the channel purchasing 52.23% of the haricot bean supplied directly by
producers to the market and 40.12% from assemblers. Not of wholesalers in the study area
sale haricot bean to other party other than exporters after some time storage.

4.2.4. Cooperatives

In Meta, district only three-producer cooperatives had been established with the objective of
increasing producers bargaining power and to benefit them from economies of scale. All the
three producer cooperatives are found to be inefficient; they are not well organized, have very
little business operation and suffers from lots of administrative and technical problems. As per
the response of randomly selected member of the cooperaretive showed that, members of the
cooperatives are not beneficial and the marketing share of cooperatives in the district had
found to be insignificant and currently they are not functional

4.2.5. Retailers

Retailers are characterized by their limited capacity of purchasing and handling products
and low financial and information capacity and they reach a commodity to ultimate
consumes. In this study following the channel of haricot bean, market retailers were not
found at terminal market Dire Dawa. Nonetheless, retailers at district market (Kulubi and
Chelenko) were identified. They purchase directly from producers and rural assemblers and
sale to local consumers
.

51
4.2.6. Demographic characteristic of sample traders

4.2.6. 1. Sex, religion and marital status of sample traders

Table 4.14 depicted that 22 (61.1%) of the sample traders are male and the remaining 38.9%
of the sample traders are female. Accordingly, wholesalers are 100 % male, rural Assembler
60 % male, Urban Assembler 42.9 % male and the retailers are 33.6% male. With regard to
religion of traders, 30.5% of them are Orthodox, 66.7% are Muslim and the remaining 2.8%
were protestant. The sampled data showed that the majority of respondents about 80.6% were
married, the remaining share of single and divorced were 13.9% and 5.5% respectively.

Table 4.14. Sex, religion and marital status of sample traders

Variables Wholesalers Rural Urban assemblers Retailer % Total
N=8 assemblers N=7 N=6 N = 36
N = 15
Sex Male 8 100 9 60 3 42.9 2 33.6 61.1 22
Femal 0 0 6 40 4 57.1 4 66.4 38.9 14
Religion Orthodox 2 25 4 26.7 3 42.9 2 33.6 30.5 11
Muslim 5 62.5 11 73.3 4 57.1 4 66.4 66.7 24
Protestant 1 12.5 - - - - 2.8 1
Marital Single - - 3 20 1 14.3 1 16.7 13.9 5
status
Married 8 100 11 73.3 5 71.4 5 83.3 80.6 29
Divorced 0 - 1 6.7 1 14.3 - 5.5 2

Source: Survey Result 2011

4.2.6.2. Age, family size and experience of traders

The average age of wholesalers is 41 years, rural assembler is 33.07 years, urban assembler is
41.71 years and retailers are 33.5 years respectively. The households’ average family size of
the wholesalers is 6.25, rural assembler 4.53, urban assembler is 7.14 and retailer 4.
Experience of the respondent in trade on average 6.62 for wholesalers, 3.93 for rural
assemblers, 4.86 for urban assembler and 2.33 for retailer (Table 4.15).

52
Table 4.15. Age, family size and experience of traders

Variables Wholesalers Rural Assembler Urban assembler Retailer

N= 8 N =15 N=7 N=6
Age of traders Mean 41 33.07 41.71 33.5
Std.D 5.43 6.93 12.08 7.12
Min. 34 23 25 25
Max. 50 45 57 42
Family size Mean 6.25 4.53 7.14 4
Std.D 1.49 2.8 3.53 2.6
Min. 4 0 0 0
Max. 8 9 11 8
Experience in Mean 6.62 3.93 4.86 2.33
trading
Std.D 2.45 1.83 1.57 1.03
Min. 3 1 3 1
Max. 11 7 7 4
Source : Survey Result 2011

4.2.6. 3. Education level of traders

Table 4.16. depicted that 33% of the traders attended their high school education, 30% junior
school, 28% of them attended their elementary school, where as only 6% of them categorised
under read and write.

Table 4.16. Education level of traders

Wholesalers Rural Urban Retailer Total

Variables Assembler Assembler

N % N % N % N % N %
Education Read/ write 0 0 2 13.3 0 0 0 0 2 5.5
level 1-4 2 25.0 4 26.7 1 14.3 3 50.0 10 27.8
5-8 2 25.0 5 33.3 2 28.6 1 16.7 11 30.5
9-12 4 50.0 4 26.7 4 57.1 2 33.3 12 33.3
Source: Survey Result 2011

53
4.3. Analysis of Structure-Conduct-Performance

The study employed structure-conduct-performance analysis to evaluate degree of

competition, behavior of the marketing actors and their achievement in haricot bean
marketing in Meta District.

4.3.1. Market structure of haricot bean

Market structure is the characteristics of the market that significantly affect the behavior and
interaction of buyers and sellers (Adugna, 2009). The structure of the haricot bean marketing
system should be evaluated in terms of the degree of market concentration, barriers to entry
(licensing procedure, lack of capital and know how, and policy barriers), and the degree of
transparency.

4.3.1.1. Degree of market concentration

Market concentration refers to the number and relative size distribution of buyers or sellers in

a market. Many studies indicate the existence of some degree of positive relationship between

market concentration and gross marketing margins. It is generally believed that higher market

concentration implies a non-competitive behavior and thus market inefficiency. Concentration

index measures the percentage of traded volume accounted for by a given number of

participants. Empirical studies in the fields of industrial organization suggest certain levels of

concentration at which non-competitive behavior of market participants begin in different

industries. The survey result indicated that there were few licensed traders in the study area.

Hence, the concentration ratio was calculated by taking the average volume of haricot bean

wholesalers purchased in a day in peak production period in 2011.

54
Kohls and Uhl (1985) suggested that a four-firm concentration ratio (CR4). That is, the
market share of the largest four firms of less than or equal to 33% is generally indicative of a
competitive market structure while a concentration ratio of 33% to 50% may indicate a weak
competition and 50 % or above show strongly oligopolistic market structures respectively.
Hence, in this study concentration ratio of the four dominant wholesalers was obtained to be
68% which is an oligopolistic market structure.

4.3.1.2. Barriers to entry into the haricot bean market

a) License

The survey result showed that there were only 18 licensed wholesalers were registered with an
initial capital of 50,000 birr each according to a minima set by ECX. Thus, barriers to entry
into the market reflect the competitive relationships between existing traders and potential
entrants. If the barriers to entry are low, new traders can easily enter into haricot bean
markets and compete with established traders. According to this study, there were
restrictions to enter in to the haricot bean markets with respect to license. In the specified
district, except wholesalers and cooperatives, no assemblers and retailers have trade license.

Table 4.17. Barriers of entry into the haricot bean market for wholesalers
Indicator N Percent
Licensing procedure 3 37.5
Capital 3 37.5
Credit access 2 25
High competition to control producers 1 12.5
Information asymmetry and quality of haricot bean 1 12.5
Total 8 100
Survey Result 2011

As per the response of some volunteers getting new trade license in haricot been wholesaling
market is difficult. The issuing process is highly bureaucratic and complex.

55
Even though there were no official restriction, legal prohibition, and regulation on the specific
trade license quote but the administration officers usually advise new comers to shift to other
products like maize and sorghum. Informally highly prohibited new haricot been wholesale
traders not to enter in to the market. In addition, they discourage the traders with long and
routine issuing processes.

b) Capital investment

Wholesalers in the study area hence, claimed that the most important barrier to entry was
high competition with prior control of producer and lack of investment capital. They also
reported that as they were constrained from receiving credit from micro finance due to
bureaucracy and complicated process to get credit. To enter in the market more capital is
needed because they have to purchase more output while regular customers are coming
during harvesting (peak purchase) time. They did not allow producers go without purchase
the available amount of haricot bean they brought, if they do so they will lose their
customer at least in the short period.

c) Level of education

Table 4.16, depicted that equal proportion (25%) of sample wholesalers had received
elementary and junior school education. About half of the sample wholesalers had completed
their high school education. This indicates that almost all traders have formal education hence
education is not barrier to entry.

d) Lack of experience

The survey result in Table 4. 15 implies that the average trading experience of wholesalers
was about 6.62 years in haricot bean trading business ranging from 3 to 11 years. This may
explain that there is no barrier to entry in haricot bean trade with respect to years of
experience.

56
4.3.1.3. Market transparency

The study result showed that only 14% of producers have power in price setting decision,
while above the average (63.33%) of price was set by traders hence, producers of haricot bean
in the specified market are price takers (Table 4.18). Any market where all relevant
information is fully and freely available to the public. Nearly every analyst agrees that
transparent markets are desirable and lead to greater efficiency. Laws and regulations exist in
most jurisdictions encouraging or mandating transparency. A minority view holds that these
laws and regulations intended to create transparent markets in fact reduce efficiency. With
respect to the majorities idea there were no market transparency in the study area.

4.3.2. Conduct of haricot bean traders

Market conduct refers to the behavior with respect to various aspects of trading strategies such
as buying, selling, transport, storage, information and financial strategy and other key
operating variables (Greene 2000). In other words, it is the set of competitive strategies that a
trader or a group of traders uses to run their business
.
4.3.2.1. Price setting strategy

The method of price formation is significantly important in market conduct. The survey result
showed that about 63.33% of the sampled traders set purchase price themselves, 13.33% of
them reported that their price is set by market, 9.33% of the traders set price by negotiation,
and the rest reported that producers set prices. This implies that haricot bean traders had
significant role in price setting.

57
 Table 4.18. Price setting strategy of haricot bean
Variable Market participation decision Total % 2
Non-participant Participant
Price Producer 7 14 21 14 4.23*
setter Traders 45 50 95 63.33
Set by demand 9 11 20 13.33
and supply
Negotiation 3 11 14 9.33
Total 64 86 150 100
Source: survey result, 2011
Significant at 10% level of significance,

4.3.3. Performance of haricot bean market

Performance consists of the achievements, outcomes, and answers provided by the market
(Greene, 2000). It reflects the economic achievements that flow from the industry as each
firm pursues its particular line of conduct. Market performance is the success of a market in
producing benefits for consumers Kohl and Uhl (2002). In the present study the performance
of market were analyzed using channel comparison and marketing margin.

4.3.3.1. Marketing channels

Marketing channel is the sequence of intermediaries through which whole product passes
from producers to consumers (Rehima, 2006). 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 (ultimate consumers or export). The estimated volume of
production of haricot bean in the district was about 2,86600kgs. In this study, six haricot
bean market channels were identified. As can be understood from Figure 4.1 the major
haricot bean buyers from producers were wholesalers 52.3% followed by rural
assemblers with a percentage share of 29.41%. Likewise, the channel comparison based on
the volume that passed through each channel were analyzed. Correspondingly, the channel
of producer–wholesaler–exporter carry on the largest followed by producer- rural
assembler- wholesaler- exporter carry on a volume of 149700kg and 84300kg respectively.

58
 Channel-I Producer --Consumer = 8400kg (2.94%)
Channel-II Producer– Retailer –Consumers = 12300kg (4.29%)
Channel-III Producer– Wholesaler – exporter = 149700kg (52.23%)
Channel-IV Producer – Rural assembler - Wholesaler – Exporters = 84300kg (29.41%)
Channel-V Producer – Urban assembler – Wholesaler - Exporter = 30700kg (10.71%)
Channel-VI Producer – Rural assembler – Retailer – Consumer = 1200kg (0.42%)

10.71%
29.41%

Producer
Urban Assembler
Rural Assembler
52.23%
10.71% 28.99%

4.29%
Wholesale 0.42% 2.94%
r
Retailer

91.98% Consumer

Exporter 4.71%

Figure 4.1. Marketing channel of haricot bean

Source: Own computation of 2011

59
4.3.3.2. Marketing margin analysis of haricot bean market actors

The marketing margin refers to the difference between prices at different levels in the
marketing system. The total marketing margin is the difference between what the
consumers pays and what the producer/producer receives for his haricot bean, in other words, it
is the difference between retail price and farm price. A wide margin means usually high
prices to consumers and low prices to producers.

The total marketing margin may be subdivided into different components; all the costs
of marketing services and profit margins or net returns. An analysis of marketing costs
would estimate how much expenses are incurred for each marketing activity. It would also
compare marketing costs incurred by different actors in the channel of distribution.

4.3.3.3. Market margin of producers

The market margin of producers were obtained by deducting the cost incur for
production, packing material, tax and transportation including loading and unloading cost
from sales value. Table 4.19 implies that the profit for producer is obtained to be
0.6721birr/kg

Table 4.19.Market margin of producers

Cost items Cost per unit (birr/kg) Percentage share

Production 3.925 91.00

332.43 94.53
Packing material 0.155 3.60
Tax 0.1229 2.80
Transportation 0.11 2.60
Total 4.3129 100
Sales value/kg 4.985
Profit 0.6721

Source: Survey result 2011

60
4.3.3.4. Marketing cost and margin of rural assemblers

The survey result in Table 4.20 pointed out that the main cost components of rural
assemblers were transport cost, packi ng m at eri al and personal travel costs which
accounts for 32 .9%, 22.3% and 15.7% respectively of the total cost, while in urban
assemblers the main cost components are sorting cost, information cost and personal
travel costs which ranges from 13-19 % of the total cost.

Table 4.20. Rural assemblers’ market margin (N=15)

Cost items Cost per unit (birr/kg) Percent

Transport cost of vehicle 0.120
18.8
Head/backload transport cost 0.090
14.1
Personal travel cost 0.100
15.7
Packing material cost 0.142
22.3
Loading and unloading cost 0.080
12.6
Information cost 0.0015
2.4
Cost of storage loss 0.0018
2.7
Cost of loss in transport and handling 0.002
3.1
Sorting cost 0.0026
4.0
Other cost 0.0027
4.2
Total cost /kg 0.637
100
Purchasing price 4.965
Total 5.602
Selling price 5.91
Profit 0.308

Source: Survey result 2011

61
4.3.3.5. Marketing cost and margin of urban assemblers

With regard to urban assembler, the maximum cost was packing material cost followed by
loading unloading cost, which takes 32.45% and 18.29% respectively of their total cost.
Comparing Table 4.19 and Table 4.20 it is clear that urban assemblers are profitable than rural
assembler; however no urban or rural assemblers have trade license hence they were not
allowed to purchase haricot bean in the urban market during market day. Nevertheless
illegally, they collect haricot bean product during market day waiting the producer on the road
before they arrive Kulubi or Chelenko district market.

Table 4.21. Urban Assemblers market margin ( N = 7)

Cost items Cost per unit (birr/kg) Percent

Transport cost of vehicle 0.040 9.14

Personal travel t 0.050 11.42
Packing material 0.1420 32.45
Loading and unloading 0.080 18.29
Information cost 0.014 3.2
Head/backload transport 0.020 4.57
Storage loss 0.017 3.89
Cost of loss in transport and handling 0.018 4.11
Sorting 0.0265 6.05
Other cost arrangement 0.030 6.85
Total 0.4375 100
Purchasing price 5.02
Total 5.4575
Sales value 5.94
Profit 4.825
Survey result 2011

62
4.3.3.6. Marketing cost and margin of wholesalers

Table 4.22 depicts the summary of marketing costs and market margins of haricot bean
wholesalers in the study area. The survey result showed that on average, the total marketing
cost of haricot bean of wholesalers was 1.173 Birr per kilogram. The largest cost for
wholesaler was observed to be personal travel cost, which accounts 32.39%, next to this
transport expense, Cost of storage loss and cost of packaging material taking about 16.19%,
12.78% 1 2 . 1 1 % o f the total wholesalers cost respectively.

Table 4.22. Average total cost and market margin of wholesalers

Cost Items Cost Birr/qt Percent

Storage cost 1.00 0.85
Packing material cost 14.20 12.11
Loading unloading 10.00 8.53
Transport expenses 19.00 16.19
Losses 15.00 12.78
Tax 10.00 8.53
Watching and warding cost 1.23 1.05
Salaries of employees 2.3 1.96
Interest rate /cost 2.97 2.53
Personal travel cost 38.00 32.39
Market Search costs 2.40 2.05
Overhead Costs 1.20 1.02
Total 117.3 100
Average Purchasing price 592.50
Total 709.80
Average Sales Value 879.80
Profit 170.00
Source: survey result, 2011

63
4.3.3.7. Marketing cost and margin of retailers

The survey result indicated that at the terminal market (Dire Dawa) in line with the haricot
bean of Meta district except exporters there were no retailers. Hence, the consumer’s prices
were calculated only at Kulubi and Chelenko district markets.

Table 2.23. Marketing cost and margin of retailers

Cost Items Kulubi Chelenko

Cost Birr/kg Percent Cost Birr/kg Percent
Cost of packaging material 0.142 32.76 0.142 34.46
Loading unloading cost 0.0375 8.65 0.0300 7.28
Transport cost of vehicle 0.058 13.38 0.05 5 13.35
Head/backload transport cost 0.0250 5.77 0.020 4.85
Cost for store rent 0.040 9.22 0.035 8.49
Cost of storage loss 0.012 2.76 0.015 3.64
Sorting cost 0.057 13.14 0.050 12.14
Personal travel cost 0.052 11.99 0.050 12.14
Other cost arrangement 0.010 2.30 0.150 3.64
Total cost/kg 0.4323 100 0.412 100
Average purchasing price 5.465 5.460
Total 5.8927 5.872
Average sales value 6.188 6.170
Profit 0.2907 0.298
Source: Survey result 2011/12

From Table 4.23, it was observed that the marketing cost of haricot bean were 0.4323 Birr
per kilogram for Kulubi market, while 0.412 Birr per kilogram at Chelenko market.
Correspondingly, the profit for the two markets was almost the same (i.e. 0.2907 and 0.2980
Birr per kilogram for Kulubi and Chelenko) respectively.

64
4.3.3.8. Marketing costs, gross margin and profit margin of traders

Table 4.24, presents the marketing cost and profits of different marketing actors in the
channel. Consequently wholesalers get the highest profit, which is 1.7000 birr per
kilogram followed produces taking 0.6721Birr/kilogram respectively.

Table 4.24. Summary of marketing cost and market margins of producers and traders
Item cost Cost Birr/kg
Producers
Total cost 4.3129
Sales value 4.9850
Profit 0.6721
Rural Assemblers
Total cost /kg 0.637
Purchasing price 4.9650
Total 5.602
Sales value 5.910
Profit 0.308
Urban assemblers
Total cost /kg 0.4375
Purchasing price 5.0200
Total 5.4575
Sales value 5.9400
Profit 0.4825
Wholesalers
Total Cost/kg 1.1730
Average Purchasing price 5.9250
Total 7.0980
Average sales Value 8.7980
Profit 1.7000
Retailers
Total cost/kg 0.4222
Average purchasing price 5.4625
Total 5.8824
Average sales value 6.1790
Profit 0.2943
Source: Survey Result 2011

65
Table 4.25. Gross marketing margin

No Marketing Channels (%)

Margin I II III IV V VI
1 TGMM 0.00 19.32 43.30 43.30 43.30 19.32
2 GMMP 100 80.68 54.70 54.70 54.70 80.68
3 GMMra - - - 15.65 - 15.65
4 GMMua - - - - 16.07 -
5 GMMw - - 43.30 27.65 27.23 -
6 GMMr - 19.32 - - - 4.35
Source: Survey Result 2012

According to the report, among the traders haricot bean wholesalers get the highest marketing
margin, even if they incur the highest marketing cost.

4.4. Determinants of Haricot Bean Market Supply

The Heckman model was estimated by using a two-step procedure. In the first step, the Probit
model was estimated to identify factors affecting decision to participate. In the second step the
adjusted for selectivity bias (heckit) model was estimated to identify the significant factors
affecting volume sold.

4.4.1.First stage estimation (probit model)

For the first stage, households decide whether they were a sellers, or not. Table 4.26, revealed
that the Probit model identified that 7 variables were found to be the significant factors
affecting the producers market participation decision. The major variables affecting market
participation decisions family size (FAMSIZE) income from non-farm income activity
(IFNFA), size of output (SISEOPT), total size of land owned (TSLO) and market information
(MKTINFO), number of oxen (OX) and extension visit (EXTENSION) respectively.
Those identified factors affect participation decision in both directions (negatively or
positively). That means except family size and income from nonfarm activity all the

66
significant variables increase the chance of selling haricot bean. In line with this (Astewel,
2010) stated that size of output, total livestock unit and market information significantl y
affects the chance of household selling of rice to the market positively. Moreover, Goetz
(1992), in his study of household food marketing behavior found that better information
significantly raised the probability of market. Those producers with better market information
are in a better position to supply their surplus production to the market.

67
Table 4.26. Maximum likelihood estimates of Probit model

Variables Coefficients Standard Error t-ratio Marginal effect

Constant 5.810 2.541 2.290 10.797
SEX 0.354 0.355 1.000 0.002
AGE 0.007 0.020 0.380 0.041
FAMSIZE -0.029* 0.052 -0.560 -0.073
SISEOPT 0.400** 0.118 3.410 0.070
IFNFA -0.900*** -0.568 -5.140 -0.021
TSLO 0.960** 0.347 2.760 0.600
TLU -1.054 -0.372 -2.830 -0.005
OX 2.722** 0.212 3.410 0.007
EXTENSION 1.028* 0.407 2.530 0.011
DISTFDEVC -0.001 -0.007 -0.140 -0.014
CREDA -1.242 0.584 -2.130 -0.097
DISTAFMKT 0.002 -0.007 -0.030 -0.016
MKTINFO 0.209** 0.083 2.530 0.002
FRTIAPPLI 0.183 0.228 0.800 0.001
SEEDU -0.080 0.304 -0.260 0.007
EDUHH
edu1 -0.944 -0.0459 -0.820 -0.002
edu2 1.346 0.0047 1.150 0.006
edu3 0.583 0.0021 0.510 0.001
edu4 -0.954 -0.0061 -0.780 -0.009
Number of Observations = 150
Log likelihood function = -223.414
Prob > chi2 = 0.000
2
Chi = 246.230
Prediction Success = 90%
Restricted log likelihood = -89.905
Source own computation 2011
***,** and * Significant at 1% and 5% and 10% level of significance respectively

68
4.4.2. Second Stage (OLS estimation) of the selection model

According to Heckman (1979), a sample selection bias refers to the problems where the
dependent variable is only observed for a restricted and non-random sample. Ordinary least
square estimation hence leads to both biased and inconsistent estimates of the parameters. To
overcome the problem Heckman suggested adding inverse Mills ratio (sometimes referred as
hazard rate) as a regressor in to the model enables the parameter estimates become unbiased
and inconsistent. The effect of participation decision also on the level of supply is indicated
on the parameter estimates of the IMR, which is obtained from the probit mode in the first
step of the Heckman two-step procedures.

Table 4.27 summarizes the result of the ordinary least square estimation corrected for the
selection bias (second step in Heckman’s selection model). Under this there are 16 potential
explanatory variables including LAMBDA. Out of these 6 variables, Family size (FAMSIZE),
size of output (SISEOPT) extension visit (EXTENSION), availability of improved seed
(SEEDU), income from non-farm activity (IFNFA), and inverse Mill’s Ratio (LMBDA), had
significant effect on quantity of haricot bean supplied. The F-test value 4.95 for the selection
model was significant and the adjusted R2 was 97.6%.

Sise of output (SISEOPT): The size of output is positively related with quantity supplied and
significantly, at 1% probability level which is the similar significance level. The result shows
that a one kg increase in the haricot bean production causes a 0.729 kgs increase the amount
of marketed supply. Total haricot bean production influenced the amount of marketed supply
of haricot bean positively showing that producers who produce more sell also more, which is
consistent with the general expectation.

Income From nonfarm Activity (IFNFA): The model identified that non-farm income of
the household heads negatively affected quantity supplied. On average, if a haricot bean
producer gets non- farming income causes a 3.805 kgs reduction in the quantity of haricot
bean supply.

69
This may be explained by the fact that producers who have better non-farm income will not
tend to generate cash from sell of haricot bean rather from their non-farm income.

Family size (FAMSIZE): Family size affects haricot bean quantity supplied to the market
negatively. As the number of family member increased by one unit causes a 0.113 kgs reduction
in the quantity of haricot bean supply.

Access to improved seed variety (SEEDU): Access to improved varieties of seed

significantly affects quantity supplied. It causes 3.074kgs incensement in haricot bean supply
to market. In line with this, Alemitu, (2011) stated that although haricot bean is largely grown
in Ethiopia, the national average yield of haricot beans is low ranging from 0.5 to 0.8 tone
per hectare, which is far below the corresponding yield recorded at research sites (2.5 – 3
tons per hectare) using improved varieties. The low national mean yield observed for haricot
bean could be attributed to various constraints related to low adoption of improved
agricultural technolgies.

Extension visit (EXTENSION): The other significant variable was extension contact, which
affected positively the marketed supply of haricot bean. If all producers gets extension contact
the amount of haricot bean supplied to the market significantly increases. This suggests that
access to get extension service avails information regarding technology, which improves
production that affects the marketable surplus.

Inverse Mill’s Ratio (Lamda): The inverse Mill’s Ratio affects the quantity of haricot bean
supplied positively with 10% significance level and it indicates that in Heckman two-stage
model, the correction for selectivity bias is significant.

70
 Table 4.27. Factors influencing quantity supplied to the market
Variables coefficients Standard Error t-ratio Marginal effect
SEX -0.272 0.265 -1.030 0.248
AGE 0.010 0.014 0.740 0.037
FAMSIZE -0.113** 0.039 -2.880 -0.036
SISEOPT 0.729*** 0.088 8.280 0.002
IFNFA -0.805* 0.097 -2.051 0.050
TSLO 0.454 0.323 1.400 0.088
TLU -0.319 0.381 -0.840 -0.008
OX 0.181 0.176 1.030 0.021
EXTENSION 0.757** 0.293 2.580 0.082
DISTFDEVC -0.007 -0.006 -1.210 -0.018
CREDA 0.208 0.315 0.660 0.004
DISTAFMKT -0.006 0.005 -1.210 0.004
FRTIAPPLI 0.280 0.187 1.500 0.046
SEEDU 3.074*** 0.234 8.310 0.085
EDUCHH
edu1 -0.120 -0.499 -0.240 -0.097
edu2 0.343 0.595 0.580 0.005
edu3 0.098 0.529 -0.190 0.0092
edu4 0.373 0.603 0.620 0.009
Lambda 0.388* 0.565 1.690 0.095
Rho 0.362
Sigma 1.074
R-squared = 0. 9810 Adjusted R-squared = 0. 976
Number of Observations = 86
Log likelihood function = -223.415
Prob > chi2 = 0.000 F = 4.95**
2
Chi = 246.230
Prediction Success = 90%
Restricted log likelihood = -89.905
Source own competition, 2011
***,**, * Significant at 1%, 5% and 10% respectively

71
4.5. Major Constraints and Opportunities in Haricot Bean Production and Marketing

4.5.1. Major constraints of haricot bean marketing

Haricot bean production and marketing in Meta district is constrained by many factors. The
major constraints that hamper production and marketing of haricot bean were determined
including inverse mills ratio (coefficient of lambda) which determines the hidden factors.
According to the sample respondents, weak extension support service, lack of access to
credit, insufficient product handling, limited supply of improved seed from the production
side and unfair price quotation, lack of standards and lack of strong cooperative
from the marketing side are some of the most important problems reported by sample
respondents of haricot bean producers.

Regardless of the availability of several improved haricot bean seed varieties, Meta district is
constrained by the non-existence of improved varieties that properly fits the district agro
ecology. Besides, lack of agro chemicals supply at the right time and at fair prices is the other
chronic problem identified during the study. As per the response of DAs, producers are
reluctant in using the improved variety of seed contributing factor for the reduction of output,
yield and thus marketed supply.

4.5.2. Opportunities of haricot bean production and marketing

Some varieties of these crops are climbers, widely used on homestead fences. Bush types are
used for soil conservation purpose, besides their main use of income generation and
consumption. Early maturity and a moderate degree of drought tolerance have made the role
of the crop vital in producers’ strategies for risk aversion in drought prone low land areas of
the central, eastern, and southern parts of Ethiopia. Moreover, haricot bean is an important
understory component crop in various intercropping systems throughout the world. It is
grown as sole crop as well as intercrop with either cereals or tree crops. Many traders are
surviving by involving in haricot bean trade. Besides, during seed processing (cleaning)
significant amount of women labor force is involved in hand picking process.

72
The other opportunity is the existence of governmental and non-governmental
organizations like ECX, Mercy corps, QSAE and IPMS world vision Ethiopia USAID) that
create market linkage with different market actors, facilitates experience and knowledge
sharing within and outside the district and supply improved seed on producers demand,
experience and knowledge sharing outside the district.

73
5. SUMMARY, CONCLUSION AND RECOMMANDATIONS

In this chapter, major findings of the study and its results are summarized. Based on the
finding of the study, conclusions are drawn and recommendations are forwarded.

5.1. Summary

This study was conducted in Meta District, Eastern Harargie Zone of Oromia National region
state. In the study area, haricot bean is an important crop, which serves as a cash crop next
to khat and coffee. The overall objective of the study was focused on the analyzing the
structure, conduct and performance of haricot bean market. It also identified the major
determinants of market participation decision and quantity supplied to market. Data were
generated by both closed and open-ended questionnaires. Moreover, secondary data obtained
from district trade and industry office, EHAO and CSA.

Using simple random sampling method 105 male and 45 female a total of 150 sample
households were selected and interviewed from 5 kebeles. On the other hand, 8 wholesalers
15 rural assemblers, 7 urban assemblers and 6 retailers a total of 36 traders were selected and
interviewed. Qualitative data were collected using group discussion among selected haricot
bean growers and development agents who were working in the respective kebeles.

The result of this study identified that there were poor access to inputs especially to improved
seeds and agrochemicals. Inputs are not supplied on time and at right place. From the
sampled households 13.33% used urea, 46% DAP and the rest uses organic fertilizer for
haricot bean production. On the other hand, about 17.33% of the sample producers use
insecticide and 20.67% herbicides.

From the study result, it was learnt that though the quality haricot bean was poor ECX assured
that Meta district haricot bean to have the 7th rank and also timing was poor and uncertain.
Besides this, only 46% of the producers in Meta district had access to extension services and
the advice were mainly on postharvest handling.

74
The results of the study showed that only 14% of producers have power in price setting
decision. And 22.67% of the prices were set by market, while 63.33% of the prices were set
by traders. Hence, the producers of haricot bean in the specified area are price takers.
According to the results of the conducted survey result, there was no any purchase
relationship based on ethnicity, family linkage and cloth relation among trades.

In this study, six haricot bean market channels were identified. As can be understood from
the analysis, 52.3% of the major haricot bean receivers from producers are wholesalers
followed by rural assemblers with the percentage share of 29.41. Likewise, the channel
comparison based on the volume that passed through each channel was analyzed.

Correspondingly, the channels of producers–wholesalers–exporters take the largest share

which is about 149700 kg followed by producer- rural assembler-wholesaler-exporter whose
share is about 84300kg.

From the total of the sampled producers of households, about 43% of haricot bean
producers were found to be non-sellers of haricot bean mainly for different reasons.
Producers have different market trouble to sell their product. The major determining factors
for market supply were estimated by using Heckman’s two-stage model. Thus, out of sixteen
hypothesized variables, six of the variables were found to affect significantly the household
marketable supply of haricot bean. Variables that affect the household supply of haricot bean
include family size, size of output, extension visit, improved seed varieties income from
nonfarm activity.

With respect to the direction, the model indicated the size of output or quantity of haricot
bean produced, the extension contact with producers, access to improved seed variety and
the inverse mills ratio having a positive effect on households decision to sell haricot bean. On
the other hand family size and income from nonfarm activity determine the volume of sale
negatively. The coefficient of lambda was significant, in showing the influence of
unobservable factors in the producers decisions to participate significantly.

75
The four-firm Concentration Ratio (CR4) of haricot bean market indicated the share of the
largest four traders in the total volume of haricot bean purchased. It was characterized by high
level of market concentration. This implies that haricot bean market in the district was
characterized by an oligopolistic market.

In broad-spectrum, the analysis of the study can be concluded as a corner stone to

understand the haricot bean market chain system. Producers are not beneficial from the
production of haricot bean. The most prominent points discussed in this paper are increasing
the number of producers in production, alleviating the identified problems of market haricot
bean and increasing the number of market participants of the specified commodity. It is a
means of income providing business opportunities for all actors i n t he market chain
including the producers. They isolate the producers from the traders and make price
margins to the disadvantage for the producers. Therefore, government attention is needed in
improving the inefficient market chain through strengthening institutions like cooperatives.
On the other hand, the extension support service given to the producers in the study area was
poor.

5.2. Conclusion and Recommendations

Based on the results of this study, the following conclusion and recommendations are given
to be considered in the future intervention strategies, which are aimed at the promotion of
haricot bean production and marketing in the study area.

A number of factors affected market participation decision and volume of sales of haricot
bean in the study area. Those identified factors are family size, size of output, extension
contact, income from nonfarm activity and access to improved seed as main determinants
of market participation decision for a household. For the volume of supply, household head’s
family size and income from non-farm activity, size of output, number of oxen, extension visit
and access to improved seed varieties were the important variables that determine the volume
of haricot bean sale in the market.

76
The study also revealed that haricot bean producers are working on limited plots of land as a
sole crop and mostly produce by intercropping as well as socio-economic factors without using
improved agricultural inputs. Therefore, increasing production and productivity of haricot
bean per unit area of land is a better alternative to increase marketable supply of haricot bean.
Introduction of improved varieties, application of chemical fertilizers and using modern
technologies should be promoted to increase production.

The results of the study indicated provision of extension service improves market
participation of haricot bean. Producers have to link production with marketing. Moreover, it
is good to enlighten producers to produce based on market signals, consumer preferences.
On the top of that producers should get advice on the proper methods of handling, storing,
transporting, and above all improving quality of haricot bean. Hence, it is recommended to
assign efficient extension system, updating the extension agents’ knowledge and skills with
improved production and marketing system.

Traders should have license to carry out at any level of trade. Some of the traders
have continued carrying out trading without license. Both urban and rural assemblers and
retailers are engaged in this business without license. This has made the legal traders in a
disadvantage position when competing in the market. Therefore, public authorities in
collaboration with representatives of traders should devise means of controlling those engaged in
illegal trade.

The finding of the study identified that family size significantly affects the volume of supply.
With limited production, supporting a larger and extended family size would have been
difficult for the producers. This problem can be avoided through the intervention of
integrating family planning with health extension service and with respective concerned
bodies.

The evidence obtained from this study illustrated that producer cooperative are weak in
organizational structure, because of low capital and l ack of infrastructure. As a result this
leads to poor contribution in market stabilizing of the producers’ output.

77
Moreover member of the cooperatives are not beneficial from the cooperative. Therefore,
government and non- governmental bodies should take corrective measure in general and
by members of the cooperative in particular. Cooperatives are assumed to play an
important role in improving the bargaining position of the producers creating lower
transaction costs and reducing the level of oligopolistic market type by creating competitive
market.

The result of the survey indicated that the overall haricot bean marketing system was found
to be traditional, disjointed and inefficient. Thus, the district administrations and
government should certify and inspect competing haricot bean product traders to ensure
quality standards and to facilitate the haricot bean production and marketing process. In
line with, this the district agricultural office, district trade and industry office, producers
cooperatives and traders should work together to increase the efficiency of the market and
to gain normal profit in the market chain by giving great attention to the mode of
production and marketing to bring about stable income from it for all market actors.

78
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 7. APPENDICES

Appendix Table 1. Variance inflation factor of explanatory variables

Variables VIF (1-R2)-1 1/VIF

TLU 9.66 0.1035

TSLO 9.12 0.1097
SIZEOPT 3.18 0.3145
CREDA 2.06 0.4865
OX 1.76 0.5677
EXTENSION 1.46 0.6862
FAMSIZE 1.38 0.7226
AGE 1.34 0.7456
DISTAFMKT 1.15 0.8685
MKTINFO 1.13 0.8865
EDUCHH 1.09 0.9201
SEEDU 1.07 0.9376
SEX 1.06 0.9404
FRTIAPPLI 1.04 0.9640
Mean VIF 2.42
Source : Owen computation

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 Appendix Table 2. Conversion factors used to compute tropical livestock units

Animal category TLU

Calf 0.25
Weaned calf 0.34
Heifer 0.75
Cow or ox 1.00
Horse/mule 1.10
Donkey adult) 0.70
Donkey young) 0.35
Camel 1.25
Sheep or goat adult) 0.13
Sheep or goat young) 0.06
Chicken 0.013

Bull 0.75

Source: Storck et al., 1991

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Appendix 1. Individual interview schedule for trades

Analysis of Haricot Bean Market Chain: The Case of Meta District, East Hararge Zone of
Oromia Region, Ethiopia. Traders’ questionnaire. By Teshome Terefe
Questioner number-----------------------------------
Name of enumerators--------------------------
Date-----------/------------------/------------------
I Area information
1.1 Name of Market-------------
1.2 .Distance from residence to the market----------------Km /walking time in minutes
II Socio-demographics
1. Name of trader-------------------------
2. Age of trader --------Years
3. Sex of trader
1 Male--------------- 2 Female---------
4. Marital status of trader?
1 Single 2 Married 3 Divorced 4 Widows
5 Total family size-----------------
6. Educational level of trader?
1 Illiterate 3 1- 4 5 9-12
2 Read and write 4 5-8 6 > 12
7. Major businesses (es) in 2011/12 in order of importance write 1st for the most important,
2n d for the next important etc.)
1Wholesaler 4 urban assembler 7 commission man
2 Retailer 5 processor 8 other (specify) --------
3 Producer trader (village collector) 6 Broker (‘delala’)
8. Total number of family members in own business--------------------
9. Total number of persons employed in your business in 2011/12?

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 Employee Permanent Temporary
M F M F
Family members
Non family members
Total
10 For how long have you been in this business? -------Years
11. When did you do your business in2011/12?
1 Year round 3 when purchasing price low high supply)
2 During holidays only 4 other (specify) -----------

III Capital
III. 1 Fixed business capital
12. Initial fixed capitals when you start this business
Asset No. Average Total Asset No. Average Total
capacity value capacity of value
of each qt) each qt)
Store Separate Weighing scale
Residence Animal cart

Mobile telephone Hand pool cart

Telephone land line Pack animal
Vehicle personal Milling
truck machine
Motor cycle Shopshed)
Bicycle Other (specify)
II. 2 Financial capital

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13 What was the amount of initial working capital when you start this business?----------Birr
14. What was the amount of your working capital in 2011/12?-------------Birr
15.What was the source of the working capital in 2011/12?
1 own 2 loan 3 gift 4 Share 5 others (specify)
16.If it was loan, from whom did you borrow?
1 Relative/family 3 private money lenders 5 NGO 7 Friends
2 other traders 4 micro finance institution 6 Bank 8 other, (specify)-------
17. How much was the rate of interest? _______Birr for formal--------------for informal
18. what was the reason behind the loan?
1 to build store 2 to purchase a car 3 for working capital 5 other (specify)-----
19. How was the repayment schedule?
1 Monthly 3 Semi-annually 5 other (specify)-----
2 Quarterly 4 when you get money
20. Is there change in accessing finance for haricot bean trade these days?
1 improved 2 deteriorated 3 no change
III.3 Social capital
21. How did you attract your supplier?
1 By giving better price relate to others 3 by visiting them
2 by fair scaling weighing) 4 other (specify)------------------------------
22. How did you attract your buyers
1 By giving better price relate to others 4 by visiting them
2 Quality of your product 5 by giving credit
3 by fair scaling weighing ) 6 other (specify)
23. How many regular buyers did you have in 2011/12 ?
1 Wholesalers urban)----- 5 ESEF---------- 9 Urban assembler -------
2 Wholesalers rural)------- 6 consumers urban)------ 10 Other gov’t organizations---
3 Retailers (urban) ----------7 consumers urban)----- --11 millers/processors(uurban)--
4 Retailers (rural)-----------8 processors(rural)---------12 Other (specify)-----
24. How many regular suppliers did you have in 2011/12?
1 Wholesalers urban) ----- 4 Retailers(rural)-------- 7 Producer--------
2Wholesalersrural)-------- 5 Urban assembler-------- 8 Other(specify)----

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 3 Retailers urban) ---------6 Producer traders village collector)-----
IV Purchase practice
25.From which market and supplier did you buy haricot bean in 2011/12?

Purchas Purchased Relati %age Average How many average Term of

ed from from sellers, onship share of quantity weeks did you price per payment
Market, (use code) (use seller purchased operate in this qt 1=cash
(use code) per market market in 2= credit
code) in a week 2004/05 3=advan
(qt) ce
payment

Where From sellers : Relationship:

1Village market 1 producers 1 The same religion
2 Chelenko 2 Retailers Urban) 2 The same ethnic
3 Kulubi 3 Retailers Rural) 3The same origin
4 DD 4 wholesalers 4 Close relative
5 urban assembler 5 Exclusive relation
7 you don’t know 6 Meet socially
7 Other (specify)

26. From which market (s) did you prefer to buy most of the time in 2011/12? Use from the
above table
27. Why did you prefer this market (s)?
1 Better quality 2 High supply 3 shortest distances 4 other (specify) ---------
28. How did you set the purchase price in 2011/12?
1 set at the time the advance is given 3 it is the market price at the time of delivery
2 negotiated at delivery 4 others-----------

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29. If purchasing price was set at the time of the advance is given, how did you agree?
1 Orally 2 written agreement 3 Other (specify)---------
30.Who purchase haricot bean for you in 2011/12?
1 Myself 3 Family members 5 Friends
2 through broker 4 commission agent 6 other---------
31.If others purchased for you how you did pay them?
1 ------birr/quintal 3% on purchase price
2 Above the price you decide 4 Other (specify)---------
32. If you used broker, what were problems created by them in 2004/05?
1 took your sellers & buyers to other traders 4 cheating quality
2 cheating scaling weighing) 5 wrong price information
3 charged high brokerage 6 Other (specify)-------
33. If you used commission men, what were problems created by commission men in
2011/12?
1 didn’t buy enough quantity 3 cheating on price 5 Cheating on quality
2 cheating scaling (weighing) 4 charged high commission 6 Other (specify) -------------
34. What was the advantage of using brokers in 2011/12?
1 You could get buyer and sellers easily 4 Brought many buyers and sellers
2 reduce transaction costs 5 purchased at low price
3 save your time 6 Other (specify)-----------
35. What was the advantage of commission men in 2011/12?
1 You could get enough quantity 4 charge low commission 7 Other (specify)-----------
2 save your time 5 purchased at low price
3 you could get quality pepper 6 reduce transaction cost
36. On average, how many days operate in haricot bean trading in 2011/12? --------------days
37. At what time of a day was it preferable to purchase haricot bean in terms of price?
1 Before 12 am 3 2-4 pm 5 any time
2 12-2 pm 4 4-6pm 6 Other (specify)---------
38. Was the price of Haricot bean the same on the same day in a marketing center in 2011/12?
1= Yes 2= No

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39. Is your usual purchasing price higher than your competitors? 1= yes 2 = no
40. If yes in Q. 48 what was the reason?
1 to attract more supplier 3 to kick out your competitor from the market
2 to buy more quantity 4 to get better quality haricot bean 5 others (specify)-----------
41.How did you measure your purchase?
1 by sack 2 by basket 3 by weighing kg) 4 by ‘feresula’ 5 others-----
42. Who set your purchasing price in 2011/12?
1 Myself 3 negotiation between me and the seller 5 other traders from Addis Ababa
2 The seller 4 by market 6 other (specify) -------------
43. If you decided on the purchasing price, how did you set the price?
1 Individually 2 collude consultation with other traders 3 other (specify)-------------
44. When did you set purchasing price?
1 Early in the morning of the market day 4 One day before the market day 7 others----
2 At midday of the market day 5 At the evening of the market day
3 At the time of purchase 6 After you sell the produce in other market

V Selling practices

45 Who decided on your selling price 2011/12?

1 Myself 3 Purchaser 5 negotiation between me & the purchaser
2 By the market 4 other traders 6 Other (specify)----------
46. If you decided on the selling price, how did you set the price?
1 Individually 2 consult with other traders 3 Other (specify)----------
47 When did you set selling price?
1 Early in the morning of the market day 4 One day before the market day
2 At midday of the market day 5 at the evening of the market day
3 At the time of selling 6 others (specify)-----------------
48.. Did you have a brochure/ notice board for customers that describe your firm’s apabilities?
1=Yes 2=No
49.. How many sellers were there in this market in 2011/12?------------sellers

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50. How many buyers for you in this market in 2011/12? ------------buyers
51.What was the major problem to enter Haricot bean trade?
1 License 2 lack of capital 3 government policy 4 Other (specify)-------------
52. Are there restrictions imposed on unlicensed haricot bean traders? 1= Yes 2= No
VI Marketing Services
53. Did you pay tax for the haricot bean you purchase in 2011/12? 1= Yes 2=No
54. Did you pay tax for the haricot bean you sell? 1= Yes 2=No
55.What was the basis of tax?
1 Per sack-------Birr 3 per basket-------Birr 5 Per kg-----Birr
2 Per quintal-------Birr 4 Fixed payment-------Birr 6 other (specify)-------
56. What is your opinion regarding the marketing fee paid in this market as compared to your
transactions?
1 Low 2 High 3 Average 4 I don’t know
57. Is Haricot bean trading in your locality needs a trading license?
1= Yes 2= No 3= not mandatory
58. If yes, how do you see the procedure to get the license? 1 Complicated 2 Easy
59. Did you have pepper-trade license? 1=Yes 2= No
60. How much did you pay for haricot bean trade license? _____Birr
61. How much is the renewal payment? ________Birr
62. Did you store haricot bean before you sold in 2011/12? 1= Yes 2= No
63. If yes for how long did you store maximum?-------------- days

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64. Indicate your average cost incurred per quintal in the trading process in 2011/12?
Marketing cost components in the Source (use Source (use code)----- Source (use code)---
chain code)--- --
Birr/qt Birr/qt Birr/qt
Purchased price of quality Haricot
bean per quintal
Packaging material
Labor employed to fill the bag and
stitch
Load
Unload
Brokerage
Transportation: Vehicle
Cart
Head/back load
Sorting
License fee
Taxes and fee
Wage for permanent employee
Storage cost
Storage loss
Water
Electricity
Manufacture cost
Telephone expense
Watching and warding
Information cost
Personal travel & other expense
Others (specify)
Total costs
Selling price of quality haricot bean
per quintal
Purchased from:
1Producers urban assembler 3 Retailers Rural) 5 wholesalers Rural)
2 Retailers Urban) 4 wholesalers Urban) 6 producer trader (village collector )
7 Other (specify)-----------

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VII Information and Transportation
65. How did you get information on supply, demand & price of haricot bean in other markets?
Use code Source of information multiple answer is possible)
Supply 1 Other haricot bean traders 4 personal observation 7 TV
Demand 2 Radio 5 Broker 8Others------
Price -
3 Telephone 6 News paper
66. Are you willing to pay for market information in the future? 1=Yes 2=No
67.Was there transportation problem? 1= yes 2= No
68. If yes what was the problem?
1 No transportation service 2 high price 3 it was seasonal 4 other--
69. How was this market roads look like in rainy season for vehicle transport?
1 It was difficult 2. No problem
70. If it was difficult, for how long impassable for vehicle?----------------Months
71. How did you get vehicle transport to come to this market?
1 Daily 2 only market day 3 contract 4 other----
72.What mode of transportation did you use from collection point to store?
1 Head/back load 3 Pack animal 5 other--------
2 Vehicle 4 Cart

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Appendex 2.Individual interview schedule for producer

Analysis of Haricot Bean Market Chain: The Case of Meta District, East Hararge Zone of
Oromia Region, Ethiopia. Producers’ questionnaire. By Teshome Terefe
Questionnaire number: _______________________
Name of enumerator: ___________________________
Date: _______/_________/__________
I Area information
1 Name of Kebele Administration------------
3 Distance of your residence from the nearest market center _______walking time (minute)
4 Distance of your residence to the nearest development center ______walking time(minute)
II Demographics
1 Name of household head ___________________________
2 Sex of household head 1 Male 2 Female
3 Age of household head _____________years
4 Religion of household head
1 Orthodox Christian 2. Muslim 3. Protestant 4. Catholic 5. Other (specify) ---
5. Marital status household head Code
1. Single 2 Married 3 Divorced 4 Widows
6. Education level of household head
1 Illiterate 3 1- 4 5 9-12
2 Read and write 4 5-8 6 > 12
7 Age, sex & education level of family members
Name Age Sex M, F Education level. use code from Q.6)

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8 Experience and revenue from ------activities
Activity Did you participate in activities Years of Annual
1=yes 2=No experience income (Birr)
Farming
Non-farming
III Resource ownership and tenure
9. Total Land holding___________timad in 2011
10. Cultivated area ______timad 3 Fallow land _____timad 5 Others (specify)__timad
IV Production
11. Production of Haricot bean and other food grains in 2011 EC
Type of Area in Quantity Quantity For seed Quantity Price/qt
crop timad produced (qt) consumed (qt) (qt) sold (qt)
1 Khat
2 Sorghum
3 Maize
4 Wheat
5 Barley
6 Haricot
7 Bean
bean
8 Pea
9 Lentil
10 Groundnut
11 Potato
12 Other
Your cash crop relative to level of cash 1
income 1=primary, 2=secondary and 3= 2
tertiary) 3

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12 What was your input for haricot bean production & their sources in 2011/12?
Type 1=Yes Source Amount Value 1=Cash
2=N0 (code) use (kg) Birr) 2=Credit
Fertilize Urea
DAP
Organic
Insecticide
Herbicide
Seed: 1= White
2= Red
3= Bure

From: 1 From market 2 Bureau of Agriculture 5. Other (specify)

3. Development center 4. Own production
13. Did you store Haricot bean in 2011/12? 1=Yes 2 =No
14. If yes, how long did you store it? ______ Months
15. How did you store haricot bean?
1 Filling in sack & placing in ‘kot’______2. in store______3 other (specify) ____
16. If you stored, what was the motive behind store?
1 Expecting high price 3 Saving purpose
2 Lack of market demand 4 other (specify)______
17 If you expected a better price, did you sell at what you expected? 1=Yes 2 =No
V Access to Services
18. Did you have extension contact in relation to haricot production in the 2011 cropping
season? 1= Yes 2=No
19. If yes, how often the extension agent contacted you?
1 Weekly 3 Monthly 5 Once in a year
2 Once in two week 4 Twice in the year 6 any time when I ask them
20. What was the extension advice on? 1 Seed bed preparation
2 Spacing 3 Post harvest handling 5 fertilizer applications
4 transplanting 6 chemical applications 7 other (specify) ---------

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 21. Did you need credit in 2011/12? 1= Yes 2 =No
22. Did you take credit in 2011/12? 1 =Yes 2=No
23. If yes, how much did you take?----------Birr
24. For what purpose did you take the credit?
1 Fertilizer 4 to rent in land for food grain prod 7 Other (specify)---
2 Seed for grain 5 to pay tax
3 to purchase animals (oxen) 6 to purchase food grain
25. From whom did you get credit?
1 Relative 3 Bank 5 micro finance institution 7 Friends
2 Traders 4 NGO 6 Peasant association 8 other (specify)---------
26. Did you have access to irrigation for haricot bean production? 1= Yes 2= No
27. If yes, area planted? -------timad
VI Marketing aspect
29. Supply of haricot bean to the market and to market agents in 2011?
Time Quantity Where did To whom did Relationshi %age share of Terms of Amoun
of sale sold (qt) you sale you sale agents, p use (code) buyers sale t unsold
Market use use (code) 1= Cash (stock)
code) 2= Credit
3= (both)

Time of sale: Where: To whom Relationship: Advantages:

1 Immediately 1 Village 1 producers consumer) 1 The same 1 Lesser transport cost
after Harvest market religion
2 chelenko 2. Wholesalers (urban) 2 The same thnic 2 Give high price

2 after a month 3 Kulubi 3. Wholesalers (regional) 3The same origin 3 Scaling fair
3 after 2 month 4 DD 4. Retailer (urban) 4 Close relative 4 Reduce transport cost
4 after 3 month 5. Retailer (rural) 5 No elationship 5 other (specify)
5 after 4 months 6 Consume (urban) 6 Meet socially
6 after 5 months 8 Urban assembler
7 6-12 months 8 Service Cooperatives

8 >12 months 10. producer trader village

11 Gov’t Organization
12 You don’t know

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30. How did you sale your produce in 2011?
1 Direct to the purchaser 3 through commission man to the purchaser
2 Through broker 4 Other (specify) -----------------
31. What was /were problem/s created by brokers in 2011?
1 took to limited client 3 charged high brokerage 5 others (specify)---
2 cheating scaling (weighing) 4 wrong price (market) information
32. Did you face difficulty in finding buyers when you wanted to sell? 1= yes 2= No
33. if yes, in Q 33 is it due to:
1 Inaccessibility of market 3 Lack of information
2 low price offer 4 other (specify)-----------
34 What did you do, when the haricot bean you offered to the market was not sold?
1 Took back home 4 Sold at lower price
2 Took to another market on the same day 5 Sold on other market day
3 Took to another market on another day
35. Who set your selling price in 2011?
1 Yourself 3 set by demand and supply 5 other (specify)-----------
2 Buyers 4 negotiations
36. How did you transport haricot bean -----from farm to home?
1 Head/back loading 2 Animal’s cart 3 Pack animal 5 0ther (specify) -------
37. How did you transport haricot bean -----from home to market?
1 Head/back loading 3 Vehicle 5 0ther (specify) -----------
2 Animal’s cart 4 Pack animal
38. Did you know the nearby market price before you sold your haricot bean? 1=Yes 2=no
39. Did you know Addis Ababa market price before you sold your haricot bean? 1=Yes 2=no
40. How did you get information on supply, demand & price of haricot bean in other markets?
Use code Source of information
Supply 1 Other haricot bean traders 4 personal observation 7 TV
Demand 2 Radio 5 Broker 8Others----
Price 3 Telephone 6 News paper
41 How did you qualify your source of information?
1 it was reliable 3 it was timely

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 2 it was adequate 4 other (specify) ------------------
42. Do you have animal production? If yes what type and amount of animal do you have?
No Animal type 1= Yes Amount you
2= No have
1 Cattle
2 Donkey
3 Mule
4 Horse
5 Sheep
6 Goat
7 Camel
8 Chicken
9 Other (specify)

Thank you!!!!

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