Food Science and Quality Management www.iiste.org ISSN 2224-6088 (Paper) ISSN 2225-0557 (Online) Vol.95, 2020 Potato Value Chain Analysis in Banja District, Ethiopia Melkamu Bazie Fentie 1 Degye Goshu 2 Bosena Tegegne 2 1.Agricultural Economics Research Department, Ethiopian Institute of Agricultural Research at Fogera National Rice Research and Training Center, Woreta, Ethiopia 2.Department of Agricultural Economics and Agribusiness, Haramaya University, Haramaya, Ethiopia Abstract Potato is important for its contribution to food security and as source of cash income for a large proportion of the rural households. However, enhancing potato farmers to reach markets and actively engage in the potato value chain is a key issue needed in the study area. This paper was aimed to identify Potato value chains and their performance. The data collected from randomly selected 120 farmers and from purposively selected 42 traders and 35 consumers. Descriptive analysis was used for characterizing farmers, describing value chain and examining market performance. Input suppliers, farmers, collectors, wholesalers, retailers and consumers were main value chain actors and governmental offices and NGOs were support service providers.The product passed through different channels and went out to different destination markets. Out of the total costs of production, seed cost accounts 38.43% of the total production cost to farmers and net return of 27.33% selling price. Even though the study area has high potential for potato production, there are constraints from input supply to consumption stages. Product perishability and lack of storage, seed system, and irrigation access and price fluctuation are some of the problems seen in the potato value chain. Therefore, the study underscores seed supply system, expansion of irrigation access, improvement on storage and postharvest processing methods and strengthening of cooperatives for policy implications. Keywords : Potato value chain, performance, constraints DOI: 10.7176/FSQM/95-02 Publication date: March 31 st 2020 1. Introduction Potato is the fourth most important world food crop after wheat, rice, and maize (Joshi and Gurung, 2009). It is the fastest growing food crop in Sub Saharan Africa with the total production in some countries more than doubled during the last 15 years. This is similar to the development in Asia (China and India) where area and yield increased strongly (CIP, 2008). The crop was introduced to Ethiopia in 1859 by a German scientist called Schimper (Pankrust, 1964). Since then it was limited to homestead as a garden crop and gradual rise in production occurred at the end of 20 th century, when there was a long famine in Ethiopia (Gebremedhin et al ., 2008). In Ethiopia, 70% available agricultural land is located at an altitude of 1800-2500 m which is suitable for potato production (FAO, 2008; Endale et al., 2008). The national production of potato reached 932,701 tonnes with area coverage of 67,591 ha in the year 2017 (FAO, 2017). About 1.57 million small farmers were practiced in potato farming (CSA, 2013). It is produced in Oromia, Amhara, SNNPR and Tigray regions, which constitute 46%, 34%, 19% and 1% of the national potato production, respectively (CSA, 2012). Even though potato is grown by more than one million smallholder farmers in the highlands of the country, the national productivity of potato is ranging between 7-13 tons per hectare between the periods 2008 to 2017. This is very low compared to Asian and other countries in the world as a highland country located in the tropics and has very favorable conditions for the production of high quality potato (FAO, 2017). Ethiopian farmer’s main objective of growing potato is to ensure adequate food supply during food shortage months. It is the best staple food crop during this period as well as an important source of cash income (Gebremedhin et al., 2013), because of its ability to provide a high yield of high-quality product per unit of input with a shorter crop cycle than major cereal crops like maize (Adane et al ., 2010). Potato has been considered as a strategic crop by the Ethiopian government aiming at enhancing food security and economic benefits to the country (EIA, 2012). As the population grows rapidly, increased productivity of potatoes can improve the livelihood of smallholder potato producers and is required to meet the growing demand (Gildemacher, 2012). Potato provides an opportunity for domestic value chain development. Potato value chains cover all activities from input supply, production, processing, wholesale and retailing to the final consumer (Haggblade et al ., 2012). Potato provides huge opportunity and there are good prospects for value addition, this opens wider room for commercial investment in key value chains (AGRIBiz, 2015). Potato is traded in local market and export market outlets, which is an essential activity of the farming households where it generates income and has contributed to the development of potato sector (Tekalign, 2010). Potato is becoming among the major vegetable export products the increasing of export of potato to Somaliland and Djibouti is major motive for potato farmers in Eastern Ethiopia (Bezabih and Hadera, 2007). According to FAO (2017), Ethiopia was exported 89193 tonnes of potatoes and valued 23 million US Dollar. 9 Food Science and Quality Management www.iiste.org ISSN 2224-6088 (Paper) ISSN 2225-0557 (Online) Vol.95, 2020 Ethiopia has a comparative advantage in a number of horticultural commodities due to its favorable climate, proximity to European and Middle Eastern markets and availability of labour. However, the production of horticultural crops is much less developed than the production of food grains in the country. Out of the total land area under cultivation in the country, land under fruits and vegetables is insignificant as compared to food crops (EIA, 2012). In the study area, potato is the main crop for farmers which were producing for household food consumption and as source of cash income. However, there are problems related to potato in the country in general and in the study area in particular; starting from Input supply stage through production, marketing to the point of consumption and at value chain enablers (Bezabih and Mengistu, 2011; kassa, 2014; Yazie et al., 2009). Understanding of the existing inputs supply, production, marketing systems and consumption of potato is important for developing/upgrading value chain in the study area. It is important to value chain actors in which strengthen potato value chain has to be improved. So, this study was proposed to analysis potato value chain in Banja district, Awi zone of Amhara region, Ethiopia for the purpose of providing vital information for effective research, planning and better intervention by government and other stockholders. The general objective of the study is to analyze the value chain of potato in the study area. The Objective of the study is to map potato value chain, identify actors, their roles and linkages; and to evaluate market performance in the value chain. 2. RESEARCH METHODOLOGY 2.1. Description of the Study Area This study was conducted in Banja district, is one of the districts’ found in Awi zone of Amhara region, Ethiopia. Banja district is bordered on the south by Ankesha, on the West by Guangua, on the North by FagetaLekoma and in the East by the West Gojam zone Injibara town is the capital of Banja district. It is located about 442 kms North West to Addis Ababa and 116 kms south of Bahir Dar as shown in fig 1. Figure 1. Location of the study area Source: Adopted and manipulated from Ethiopian map 2.2. Data Types, Sources and Methods of Data Collection Both secondary and primary data were used for this study. Primary data was collected using informal and formal surveys. Primary data were collected through interview questionnaire and key informant interview and focus group discussions with different value chain actors and agricultural experts. The formal survey was undertaken through interviews with selected potato producer farmers, traders and consumers using a pre-tested questionnaire for each value chain actor. Key informants interview was conducted with input suppliers, potato traders, district agricultural 10 Food Science and Quality Management www.iiste.org ISSN 2224-6088 (Paper) ISSN 2225-0557 (Online) Vol.95, 2020 experts, marketing experts and end users. For this purpose, different guiding questionnaires were prepared and used. Secondary data was collected from Central Statistical Agency (CSA), Bureau of Agriculture and Rural Development (BoARD), Agricultural Research Centers, Local level Trade Offices, NGOs’, published and unpublished documents, and internet sources. 2.3. Sampling Techniques and Sample Size The study area, Banja district, was selected as a study area since the area has high potential for potato production and marketing. Samples were selected from each segment of the value chain using diverse sampling techniques. For sampling producers, a multi-stage sampling technique was implemented. The district has 25 rural kebeles , 20 of them produce potato. In the first stage, all potato producer kebeles in the district were selected purposively. In the second stage, from these potato producer kebeles , 5 sample kebeles were selected randomly as shown in table 1. In the third stage, the study considered only potato producer households. Thus, from each sampled kebele potato producer farmers were listed out with the help of development agents at kebele level. From these population lists, sample farmers were selected randomly based on probability proportional to size sampling technique. For this study the total sample size for sample household farmers was determined based on the sampling formula provided by (Yamane, 1967). The formula used for sample size determination with 95% confidence level, degree of variability = 0.5 and level of precision 9% (0.09) was: = (1) 1 + () Where: n= Sample size, N= Population size and e= level of precision Based on the above formula a total of 120 households were interviewed.