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Analysis of Honey Market Chain: the Case of Chena Woreda, Kaffa Zone, Southern Ethiopia

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Analysis of Honey Market Chain: the Case of Chena Woreda, Kaffa Zone, Southern Ethiopia ANALYSIS OF HONEY MARKET CHAIN: THE CASE OF CHENA WOREDA, KAFFA ZONE, SOUTHERN ETHIOPIA MSc THESIS KASSA TAREKEGN EREKALO APRIL 2017 HARAMAYA UNIVERSITY, HARAMAYA Analysis of Honey Market Chain: The Case of Chena Woreda, Kaffa Zone, Southern Ethiopia A Thesis Submitted to School of Agricultural Economics and Agribusiness, Postgraduate Program Directorate HARAMAYA UNIVERSITY In Partial Fulfillment of the Requirements for the Degree of MASTER OF SCIENCE IN AGRICULTURAL ECONOMICS Kassa Tarekegn April 2017 Haramaya University, Haramaya ii HARAMAYA UNIVERSITY POSTGRADUATE PROGRAM DIRECTORATE We hereby certify that we have read and evaluated this Thesis entitled “Analysis of Honey Market Chain: The Case of Chena Woreda, Kaffa Zone, Southern Ethiopia” prepared under our guidance by Kasssa Tarekegn. We recommend that it be submitted as fulfilling the thesis requirement. Jema Haji (PhD) ______________ ______________ Major Advisor Signature Date Bosena Tegegne (PhD) ____________ ______________ Co-Advisor Signature Date As members of the Board of Examiners of the MSc. Thesis Open Defense Examination, We certify that we have read and evaluated the Thesis prepared by Kassa Tarekegn and examined the candidate. We recommend that the Thesis be accepted as fulfilling the Thesis requirements for the degree of Masters of Science in Agricultural Economics. ______________ _____________ ____________ Chairperson Signature Date ______________ _____________ _____________ Internal examiner Signature Date ______________ ______________ ____________ External examiner Signature Date iii DEDICATION I dedicated the manuscript of this thesis to whole members of my family especially my mother Abebach Ersumo, and my father Tarekegn Erekalo for their encouragement, prayer, support and partnership in the success of my academic career. iv STATEMENT OF THE AUTHOR By my signature below, I declare and affirm that this Thesis is my own work. I have followed all ethical and technical principles of scholarship in the preparation, data collection, data analysis and compilation of this Thesis. Any scholarly matter that is included in the Thesis has been given recognition through citation. This thesis is submitted in partial fulfillment of the requirements for MSc degree at the Haramaya University. The Thesis is deposited in the Haramaya University library and is made available to borrowers under the rules of the Library. I solemnly declare that this Thesis has not been submitted to any other institution anywhere for the award of any academic degree, diploma or certificate. Brief quotations from this Thesis may be made without special permission provided that accurate and complete acknowledgement of the source is made. Requests for permission for extended quotations from or reproduction of this Thesis in whole or in part may be granted by the Head of the School when in his judgment the proposed use of the material is in the interest of scholarship. In all other instances, however, permission must be obtained from the author of the Thesis. Name: Kassa Tarekegn Signature: ___________ Date: _______________ School: Agricultural Economics and Agribusiness v BIOGRAPHICAL SKETCH The author was born from his parents Tarekegn Erekalo and Abebach Ersumo on April 16, 1991 in Elefata kebele, in West Badewacho district of Hadiya zone Southern Ethiopia. He attended his elementary education at Elefata Primary and Junior School. The author attended his secondary and preparatory education in Durame comprehensive high school. The author joined Hawassa University in October 2009 and graduated with Bachelor of Science Degree in Agricultural Resource Economics and Management in July 2011. Soon after his graduation, he was employed by Southern Agricultural Research Institute of Bonga Agricultural Research Center and served as socio-economics researcher until he joined Haramaya University in October 2015 for his MSc study in Agricultural Economics. vi ACKNOWLEDGEMENTS Almighty God deserves all praise for this work. His providence of love, mercy, grace, forgiveness, strength, health and the gift of life provided in me tolerance and endurance throughout the years of study from course work to research. I have always been protected and safely shielded under His Mighty Name. I express my genuine gratitude to my major advisor Dr. Jema Haji, for his consistent guidance, encouragement and critical reviews while developing the proposal, and for giving me constructive and valuable comments and suggestions that shaped this thesis. It is my great pleasure to extend my appreciation and gratefulness to my co-advisor, Dr. Bosene Tegegne, for her positive influence on my thesis research, devoting her precious time, warm welcome at her office, and pertinent comments at each level of the analysis. I owe thanks to Southern Agricultural Research Institute (SARI) for giving me chance to pursue MSc study and financing the research project. It is also a great pleasure to extend my appreciation to staff members of Bonga Agricultural Research Center (BARC) for their facilitation of the study process and encouragement. I am very much indebted to all enumerators who assisted me during my data collection. I also would like to extend my thanks to all staff members of Chena district Livestock and Fishery office that helped me at various levels during my research work. I also feel great to express my thanks to the respondents who participated in the study for sparing their precious time and for responding positively to the lengthy interview schedule. Finally, I am greatly indebted to my parents, my brothers and sisters for their special love and prayer throughout my life. My sincere appreciation and thanks also go to my colleague Kibreab, Mestafe, Zelelam, Engida and Assefa for the remarkable memories and constant moral support during the study period. My God bless you all!! vii ACRONYMS AND ABBREVIATIONS BARC Bonga Agricultural Research Center CIAT Centro International de Agricultural Tropical CR Concentration Ratio CSA Central Statistical Agency CDLFO Chena District Livestock and Fishery Office CDFEDO Chena District Finance and Economic Development Office DA Development Agent EBA Ethiopian Beekeeping Association GDP Gross Domestic Product ILRI International Livestock Research Institute GO Governmental Organization KZLFD Kaffa Zone Livestock and Fishery Department MoA Ministry of Agriculture MVP Multivariate Probit Model NBE National Bank of Ethiopia NGO Non-Governmental Organization OLS Ordinary Least Squares PPS Probability Proportional to Size RMA Rapid Market Appraisal SARI Southern Agricultural Research Institute SCP Structure Conduct Performance SNNPRS Southern Nation, Nationalities and Peoples Region State VIF Variance Inflation Factor viii TABLE OF CONTENTS DEDICATION iv STATEMENT OF THE AUTHOR v BIOGRAPHICAL SKETCH vi ACKNOWLEDGEMENTS vii ACRONYMS AND ABBREVIATIONS viii TABLE OF CONTENTS ix LIST OF TABLES xii LIST OF FIGURES xiii LIST OF TABLES IN THE APPENDIX xiv LIST OF FIGURES IN THE APPENDIX xv ABSTRACT xvi 1. INTRODUCTION 1 1.1. Background of the Study 1 1.2. Statement of the Problem 2 1.3. Research Questions 4 1.4. Objective of the Study 4 1.5. Significance of the Study 4 1.6. Scope and Limitations of the Study 5 1.7. Organization of the Thesis 5 2. LITRATURE REVIEW 6 2.1. Definition of Terms and Basic Concepts of Market Chain Analysis 6 2.2. Honey Production and Marketing in Ethiopia 7 2.3. Approaches to the Study of Agricultural Marketing 9 2.4. Analytical Framework for the Study 11 2.4.1. Structure, conduct and performance (SCP) of market 11 2.4.1.1. Structure of the market 11 2.4.1.2. Conduct of the market 12 2.4.1.3. Performance of the market 13 ix TABLE OF CONTENTS (CONTINUED) 2.4.2. Factors affecting volume of market supply 14 2.4.3. Determinants of market outlet choices 15 2.5. Empirical Evidences 15 2.5.1. Empirical literature on S-C-P 15 2.5.2. Empirical studies on the determinants of market supply 16 2.5.3. Empirical studies on the determinants of market outlets choices 18 2.6. Conceptual Framework of the Study 20 3. RESEARCH METHODOLOGY 20 3.1. Description of the Study Area 22 3.3. Sampling Procedure and Sample Size 24 3.4. Methods of Data Analysis 25 3.4.1. Descriptive analysis 26 3.4.2. Econometric analysis 28 3.4.2.1. Determinants of honey market supply 28 3.4.2.2. Determinants of honey producers’ market outlets choice 28 3.5. Definition of Variables and Hypothesis 30 3.5.1. Dependent variables 30 3.5.2. Independent variables 31 3.5.2.1. Independent variables for volume of honey marketed 31 3.5.2.2. Independent variables for honey market outlets choice 33 3.6. Model Diagnosis 35 4. RESULTS AND DISCUSSION 37 4.1. Descriptive Statistics Results 37 4.1.1. Demographic and socio-economic characteristics of producers 37 4.1.2. Honey production characteristics of the sample households 38 4.1.3. Institutional services 40 4.1.4. Market related issues 41 4.1.5. Demographic and socio-economic characteristics of sampled traders 41 4.1.6. Demographic characteristics of sampled consumers 43 4.2. Honey Market Chain Actors, their Roles and Marketing Channels 44 x TABLE OF CONTENTS (CONTINUED) 4.2.1. Honey market chain actors and their roles 44 4.2.2. Honey marketing channels 45 4.3. Structure, Conduct and Performance of the Honey Market 47 4.3.1. Honey market structure 47 4.3.1.1. Degree of market concentration 47 4.3.1.2. Degree of market transparency and barriers to entry 48 4.3.2. Honey market conduct 50 4.3.2.1. Honey producers conduct 50 4.3.2.2. Conduct of honey traders 51 4.3.3. Marketing performance 52 4.3.3.1. Marketing costs 52 4.3.3.2. Structure of production costs and profitability of honey production 53 4.3.3.3. Marketing margin 54 4.4. Econometric Results 56 4.4.1. Determinants of honey market supply 57 4.4.2. Determinants of honey producers market outlets choices 60 5.
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