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Quantity Measurement Cost and Reliability of Cereal Commodity Trade: Evidence from Ethiopia

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Quantity Measurement Cost and Reliability of Cereal Commodity Trade: Evidence from Ethiopia sustainability Article Quantity Measurement Cost and Reliability of Cereal Commodity Trade: Evidence from Ethiopia Kidane Assefa Abebe 1 , Deyi Zhou 1,*, Bekele Gebisa Etea 1, Dessalegn Anshiso Sedebo 1, Neway Habtemariam Muktar 2 and Dano Endalu Olana 3 1 College of Economics and Management, Huazhong Agricultural University, No. 1 Shizishan Street, Hongshan District, Wuhan 430070, China; [email protected] (K.A.A.); [email protected] (B.G.E.); [email protected] (D.A.S.) 2 School of Commerce, Addis Ababa University, Addis Ababa P.O. Box 3131, Ethiopia; [email protected] 3 College of Social Sciences and Humanities, Ambo University, Ambo P.O. Box 19, Ethiopia; [email protected] * Correspondence: [email protected]; Tel.: +86-155-2782-6338 Received: 31 January 2019; Accepted: 8 March 2019; Published: 13 March 2019 Abstract: Measurement reliability is an undervalued aspect of local agricultural marketplace organizations. There are also gaps in identifying the extent of cereal commodity trade measurement costs. Therefore, the aim of this paper is to estimate the magnitude of cereals trade quantity measurement cost caused by instrument error and unreliability in the context of the local marketplace in Ethiopia. In this regard, a survey was conducted in six different districts’ marketplaces (n = 602) of Oromia regional state. In addition to administered structured questionnaires, site mass measurement calibration was employed. The survey data were analysed using an independent samples t-test, one sample t-test and analysis of variance. According to the findings, the actual value measurement means of the quantity of most local units of the farmers were greater than small traders. The independent t-test result indicated that the average values of the quantity of the majority of units of measurement between farmers and small traders were varied significantly. Estimated average measurement cost of the farmers and small trader which occurred due to measuring instruments’ error and unreliability were higher for a sack, bowl and glass units compared with other units of measurement. This study demonstrates that homogeneity in measurement, market regulatory policy and institutions that aid cereals trade have an indispensable role to reduce measurement costs thereby ensure equitable exchange. Keywords: local agricultural marketplace; cereal commodity trade; quantity measurement costs; measurement reliability; Ethiopia 1. Introduction Reliable quantity measurement system has a paramount contribution for economic transaction certainly for reducing the costly transfer of wealth. In Ethiopia, the district level agricultural marketplace is known for trading numerous products. Most people are currently relying on the local marketplace sales location for their agricultural output trade [1]. However, the majority of economic agents are exchanging the cereal commodity in local marketplace by employing multiple, non-uniform and incoherent units of measurement. The local units of quantity measurement are ranging from volumetric (glass, various can and cup, jug and bowl) to weight measures (sack) and mechanical weight balance. In addition, the diverse measuring instrument of the same kind, method of measuring and ways of using instruments are widely used to undertake cereals trade [2]. Moreover, Sustainability 2019, 11, 1521; doi:10.3390/su11061521 www.mdpi.com/journal/sustainability Sustainability 2019, 11, 1521 2 of 25 cereal quantity measurement behaviour of trading parties demonstrates the existence of unreliability. The unreliability in measurement behaviours created the cost of transaction, measurement, social capital and two-hand palm cereal gift in contexts of Ethiopia local marketplace [2]. In general, the heterogeneity of the measurement system creates considerable measurement costs, exchange inequity and market disintegration [3–8]. Nevertheless, the extent of measurement costs happening due to diverse units in local marketplaces are not yet investigated. The quantity measurement reliability of cereal transaction between marketplace exchange parties over periodic market days, repeated measurement and amongst districts are not known as well. Furthermore, there has been inadequate perception about who is gaining and who is losing in the process of measurement of cereal commodity trade. Generally, it is not simple to create a clear line of agreement about the impact of complex and conventional measurement system upon the local economy of a given nation. Scholars suggest standardized measures; the extension of Ronald Coase’s arguments of the nature of the firm to the nature of the market to minimize the transaction costs [9–14]. First, since the introduction of metric and imperial measures, the emphasis of many countries was on metrological standardization [15]. But the diffusion of metric and imperial units of measurement to developing countries was not successful for a long period of time [16]. Ethiopia government has been implementing metric units of measurement since 1963 [16]. Nevertheless, the diverse kind of local measures are still widely in use in the rural parts of the country. Furthermore, the positive effect of standardized measures upon local economy and measurement problems management are yet unidentified. In addition, the extension of Coase’s arguments of the nature of the firm to the nature of the market as an organization has an implication for rural trading parties to economize transaction cost. In this regard, the work of Coase is contributing that the economic transaction coordinated through the institution firm can better save marketing costs than the same transaction organized through the invisible hand of the market institution [13]. Indeed, a particular market institution like a firm institution that lessen transaction costs are essential for the marketplace trading system. However, over 80 years, the contribution of Coase’s essay, costs of using the price mechanism, has still not acquired vital academic consideration to solve the real economic growth obstacles such as local marketplace measurement problems. Therefore, as a solution to the aforementioned disputes, the study aimed at estimating the extent of cereals quantity measurement costs caused by error and unreliability of measuring units in local marketplace of Ethiopia. The study also investigate the quantity measurement reliability from consistency, conformity and uniformity perspectives. In general, the study has empirical and practical contribution to new institutional economics theory. First, few studies have attempted to estimate the level of transaction costs due to the difficulty of measuring these costs [17,18]. Add more, many studies conducted so far overlooked the measurement behaviour and related cost in their definition of transaction cost [19,20]. This study is, therefore, pinpointing that the measurement cost need to be considered as part of transaction cost estimation. Second, it assists as way out to manage measurement cost thereby stakeholders of local marketplace maximize cereal trade gains. 2. Literature and Conceptual Framework Literally, sources of measurement problems are viewed from two controversial angles. The causes of the measurement problems at the transactional level are emanating from the measurement error [8]. The premise behind this view is that the measurement cost is occurred due to measuring instrument bias or random errors. Hence, managing of measurement issues has been claimed from the management of error or instrument bias predominantly by targeting a given specific measurement unit. On the other hand, measurement reliability or sameness argue that error approach is a narrower and simplistic method to address the entire sources of measurement problems [21,22]. Thus, the originator of the sameness approach, Velker, suggests reliability dimensions (consistency, conformity and uniformity) in his method for addressing the holistic problems of measurement and to fill the gap Sustainability 2019, 11, 1521x FOR PEER REVIEW 3 of 24 25 to fill the gap of the error method. Indeed, measurement costs are happening both in the case of instrumentof the error bias method. and/or Indeed, the unreliability measurement of measurement costs are happening system. both in the case of instrument bias and/or the unreliability of measurement system. 3. Methods and Materials 3. Methods and Materials 3.1. The Study Site The aggregate cereal production of the Oromia region alone comprised about 44.5 percent of Ethiopia in 2015 [23]. [23]. East East and and West West Shoa zone zoness were chosen among six popular zones in cereal commodity production production in in the the region region [24] [24] (Figure 11).). Three study areas were takentaken from eacheach zone. The selected areas are known in producingproducing cereals.cereals. Based Based on on the the data obtained from the zonal administration, the the total total post-harvest post-harvest cereals cereals production production of of East East and and West West Shoa Zone in 2015 was 7,965,315 and 15,652,419 quintals (1 quintal is equivalent to 100 kg), respectively [[25].25]. Of which, 57.49 and 21.28 percentpercent werewere produced produced in in Adea, Adea, Gimbichu Gimbichu and and Lume Lume (East (East Shoa) Shoa) and and Dendi, Dendi, Bako-Tibe Bako-Tibe and andAdea Adea Berga Berga (West (West Shoa) Shoa) districts, districts, respectively. respectively. Figure 1. Map of the study area. Figure 1. Map of the study area. 3.2. Sampling Methods 3.2. Sampling Methods The study
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