MARKET CHAIN ANALYSIS OF POULTRY: THE CASE OF ARBEGONA AND BENSA DISTRICTS, SIDAMA ZONE, SOUTHERN ETHIOPIA
MSc. THESIS
TEKLU GEBRETSADIK
DECEMBER, 2016
WONDO GENET, ETHIOPIA
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MARKET CHAIN ANALYSIS OF POULTRY: THE CASE OF ARBEGONA AND BENSA DISTRICTS, SIDAMA ZONE, SOUTHERN ETHIOPIA
Teklu Gebretsadik
A THESIS SUBMITTED TO SCHOOL OF NATURAL RESOURCE AND ENVIRONMENTAL STUDIES, WONDO GENET COLLEGE OF FORESTRY AND NATURAL RESOURCES, SCHOOL OF GRADUATE STUDIES, HAWASSA UNIVERSITY WONDO GENET, ETHIOPIA
IN PARTIAL FULFILMENT OF THE REQUIREMENTS FOR THE DEGREE OF MASTER OF SCIENCE IN NATURAL RESOURCES ECONOMICS AND POLICY
December, 2016
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APPROVAL SHEET I
This is to certify that the thesis entitled “Market Chain Analysis of Poultry: The case of Arbegona and Bensa districts, Sidama zone, Southern Ethiopia” submitted in partial fulfillment of the requirements for the degree of Master of Science with specialization in Natural Resources Economics and Policy), School of Natural Resource and Environmental Studies, Wondo Genet College of Forestry and Natural Resources, and it is a record of original research carried out by Teklu Gebretsadik ID. No MSc s0021/13, under my supervision, and no part of the thesis has been submitted for any other degree or diploma. The assistance and help received during the course of this investigation have been duly acknowledged. Therefore, I recommend that it be accepted as fulfilling the thesis requirements.
Teshale Woldeamanuel (PhD) ______Name of Major advisor Signature Date
OR Berhanu Gebremedhin (PhD) ______Name of co-advisor Signature Date
______Coordinator, graduate program Signature Date
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APPROVAL SHEET II
We, the undersigned, members of the board of examiners of the final open defense by Teklu
Gebretsadik Wana, have read and evaluated his thesis entitled “Market Chain Analysis of
Poultry: The case of Arbegona and Bensa districts, Sidama zone, Southern Ethiopia” and examined the candidate. This is therefore to certify that the thesis has been accepted in partial fulfillment of the requirements of the degree of Master of Science in natural resource economics and policy.
Yemiru Tesfaye (PhD) ______
Name of the Chairperson Signature Date
Teshale Woldeamanuel (PhD) ______
Name of Major Advisor Signature Date
Yoseph Melka (PhD) ______
Name of Internal Examiner Signature Date
Dugassa Mulugeta (PhD) ______
Name of External Examiner Signature Date
______
SGS Approval Signature Date
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ACKNOWLEDGMENT
First of all and above all, Thanks to God for loving, kindness and bestowing health, strength and protection for the completion of the study. Amen!
My deepest appreciation goes to my major advisor Dr. Teshale Woldeamanuel, who gave me his vitally important comments and his deep insight into the whole thesis and constructive ideas that shaped this study from research topic to thesis completion. My thanks also go to my co-advisor Dr. Berhanu Gebremedhin for his valuable comments, directions and for the reliable budget support for this research. My genuine appreciation also goes to LIVES, South regional coordination staff especially Dr. Yoseph Mekasha, Mr. Tesfaye Shewage and Mrs. Tinsae Woldemichael for their kind encouragement and guidance, and Mr. Yared Fanta for initiating me to this study. I extend my appreciation to Mr. Asrat Tera, Livestock and fishery Resources Bureau, for his cooperation, Mr. Efrem Asefa for the study area map and Mr. Worku Bedeke who helped me in giving professional and moral guidance.
A deep gratitude is extended to International Livestock Research Institution (ILRI), LIVES project for sponsoring the study without which the completion of this study would not have been possible in such a successful way. My appreciation also goes to all ILRI staff and especially Dr. Mamusha Lemma, Mrs. Parmillia Yeshitila and Mrs. Yodit Girma for the financial facilitation they made during the research period.
Special thanks and appreciation also goes to all my colleagues and my families for their help and encouragement throughout my research progress. Finally, but most significantly, I would like to express my deepest thanks to my Love, Hana Gion for her shouldering the whole responsibilities, and she deserves special appreciation for the interest she has in my academic progress. Thank you all!!!
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DEDICATION I dedicate this thesis manuscript to my family’s Gebretsadik Wana and Abebech Gasto, Wolde Gebretsadik, Genet Gebretsadik, Meseret Gebretsadik and Hana Gion for their continuous contribution throughout my life.
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DECLARATION
I, the undersigned, hereby declare that the work which is being presented in this thesis is my original work carried out under the supervision of Dr. Teshale Woldeamanuel and Dr. Berhanu Gebremedhin. And it has not been presented as a thesis in any other university and all sources of material used for this thesis have been duly acknowledged. This thesis is submitted in partial fulfillment of the requirements for MSc. Degree at Hawassa University, Wondo Genet College of Forestry and Natural Resource and to be made available at ILRI (International Livestock Research Institute) and Hawassa University Libraries under the rules of the Library. I confidently declare that this thesis has not been submitted to any other institutions anywhere for the award of any academic degree, diploma, or certificate. Concise quotations from this thesis are allowable in absence of special permission, 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 Department of Natural Resources Economics and Policy and or 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.
Teklu Gebretsadik ______
Name of student Signature Date
Place: Hawassa University, Wondo Genet
Date of Submission: ------
TABLE OF CONTENTS PAGES
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Acknowledgement…………………………………………………………………………….….III Dedication...... ….....IV Declaration ……………………………………………………………………………………..….V List of Tables……………………………………………………………...…..…………………..IX List of figures……………………………………………………………………………………..XI Appendices ……..……………………………………………………………………………...... XII List of Acronyms…………………………………………………………………………….....XIII Abstract……………………………………………………………………………………...... XIV
1. Introduction……………………………………………………………………………...... 1 1.1 Background……………………………………………………………………..….………..1 1.2 Statement of the problem………………………………………………………..…………..3 1.3 Objective of the study……..…………………………………………….……………....…..4 1.4 Research questions ……………………………………………………………………….…4 1.5 Significance of the study……………………………………..…………………..………….5 1.6 Scope and limitation of the study……………………………….………………………..…6 1.7 Organization of the thesis………………………………………………………………...…6 2. LITERATURE REVIEW……………………………………….…………………..………….7
2.1 Basic concepts…………………………………………………………………………………..7
2.1.1 Market and marketing………………………………………………………………………...8
2.1.2 Value chain and market chain………………………………………………………………...8
2.1.3 Marketing system……………………………………………………………………………..9
2.1.4 Market channel……………….…….…………………………………………………...…... 9
2.2 Village poultry production systems in Ethiopia……………………………………………….12
2.3. Empirical studies ………………………………………………………………………...... 13
3. METHODOLOGY………….……………………..……………………………...... 16
3.1 Description of study area…………………………………………………………….………...16
3.2 Sources of data………………………………………………………………………………....17
3.3 Sample size and methods of sampling……..…………………………………………….…….17
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3.4 Methods of data collection……..…………………………….………………………...………18
3.5 Methods of data analysis…………………..………………………………………………..…19
3.5.1. Descriptive analysis……………………………………………………………………..….19
3.5.2. Econometric Analysis …………………………..…………………………………..……..21
4 RESULTS AND DISCUSSIONS...... …...... 32
4.1 Socioeconomic characteristic of poultry producers and traders ……………………………....32
4.1.1 Socioeconomic characteristics of poultry producers ……………………...... 32
4.1.2 Socioeconomic characteristics of poultry traders……………….…………..……….…….36
4.1.3 Source and income level of respondents……………………………………………..…….36
4.1.4 Flock size and breed composition of live birds………………………………….…….…..38
4.1.5 Ownership and decision making role of respondents…………………….…………...…...39
4.1.6 Purpose of village poultry production………………………………….……………….....39
4.2. Farmers access to business support services….…………………………………………..…...41
4.2.1 Farmers access to credit services……………………………….…………………..……...41
4.2.2 Farmers access to extension services………………………………………………….…...43
4.2.3 Farmers access to input supply services……………………………………………….…..44
4.2.4 Farmers access to market and marketing information………………………………..…....46
4.3 Market Structure, conduct and performance of poultry ……………………………………….47
4.3.1 Market Structure of poultry...... ………..47
4.3.1.1 Actors and their roles in poultry marketing chain………….……………………..…..48
4.3.1.2 Live bird and egg marketing channel…………………………...………….………....51
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4.3.1.3 Market concentration Ratio ….……………………………….……….…….……...... 57
4.3.1.4 Condition of entry and exit on poultry production and trading……...…………..…….59
4.3.2 Market conduct of poultry………………………………………………………….…..…..60
4.3.3 Market Performance of poultry ………………………………………………...………….61
4.3.3.1 Cost and profitability of poultry production…………………………….…………...... 61
4.3.3.2 Cost and profitability of poultry marketing………………………………….……..…..63
4.4 Determinants of poultry market supply …………………………………………….….…...... 67
4.5 Constraints and opportunities of poultry production and marketing…………………………..75
4.5.1 Constraints in poultry production and marketing……………………………………..…...75
4.5.2 Opportunities in poultry production and trading…………………………………….……77
5 SUMMARY, CONCLUSION AND RECOMMENDATION……………….....…………….78
5.1 Summary and Conclusions……………………………………………………………..……78
5.2 Recommendations ………………………………………….………………………..………80
References…………………..…………………………………………………………….……… 83
Appendices ………………………………………………………………………………………..90
List of Tables Pages
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1. Distribution of sample households per rural PA’s------17
2. Variables definition and hypothesis------26
3. Socio-economic characteristics of households (continuous variables) ------32
4. Sex distribution of poultry producers based on woreda------33
5. Marital status of poultry producers ------34
6. Distribution of producers with respect to their education level ------34
7. Traders distribution on the basis of age category------35
8. Distribution of traders with respect to level of education ------35
9. Proportion of live bird and egg traders with respect to their experience------36
10. Proportion of sample HHs with respect to livelihood structure ------37
11. Mean monthly income earned from farm and non-farm activities ------37
12. Flock size and breed composition of households------38
13. Productivity of local and cross breeds in study area------40
14. Proportion of poultry producers with respect to credit access in study area------41
15. Evaluation of credit service with selected evaluation criteria------43
16. Farmer’s access to input supply for live bird rearing------44
17. Constraints in extension service and input supply------45
18. Live bird and egg marketing behavior of households ------47
19. Live bird and egg marketing channel------52
20. Live bird traders’ market concentration ratio ------58
21. Egg traders’ market concentration ratio ------59
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22. Cost structure and profitability analysis of HHs------62
23. Marketing cost and profit margin of chicken traders ------64
24. Marketing cost and profit margin of egg traders ------64
25. Cost and profitability analysis of chicken production and trading ------66
26. Cost and profitability analysis of egg trading------67
27. Estimates of poultry market participation and their marginal effects------69
28. OLS estimation of supply functions corrected for selection bias------72
29. Constraints to live bird production and marketing------76
30. Opportunities to live bird and egg trading------77
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List of Figures pages
1. Map of the study area ------16
2. Map of live bird marketing channel ------53
3. Map of egg marketing channel ------56
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LIST OF TABLES IN THE APPENDIX PAGES
1. Multicolliniarity test for continuous and dummy variables……………………………….…….90
2. Contingency coefficient test for dummy variables ……………..………………………………90
ACRONYMS
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BOARD Bureau of Agriculture and Rural development
BOFED Bureau of Finance and Economic Development
CSA Central Statistical Authority
FGD Focus Group Discussion
HHs Households
ILRI International Livestock Research Institute
LIVES Livestock and Irrigation Value chain of Ethiopian Smallholders
NGO’s Non-Government Organizations
NCD Newcastle Disease
OLS Ordinary Least Squares
SCP Structure, Conduct and Performance
SNNPRS Southern Nation Nationalities and Peoples Regional State
SPSS Statistical Package for social sciences
VCA Value Chain Analysis
VIF Variance Inflation Factor
WOA Woreda Office of Agriculture
Market chain analysis of poultry. The case of Arbegona and Bensa districts, Sidama zone, Southern Ethiopia
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Teklu Gebretsadik
Abstract: Despite the important role poultry products play in the livelihoods of greater portion of households in the study area, the benefits from the activities in the production to consumption system of poultry is little known. This study, therefore, was initiated to analyze the market chain of poultry and estimate the determinants of market supply of poultry in Arbegona and Bensa districts, Sidama zone. Data were collected using household and market survey, focus group discussions, key informant interviews and observations. A total of 178 sample producers, 20 collectors, 20 hotels/egg shops, 50 traders and 40 sample consumers were interviewed and the data was analyzed using descriptive statistics and econometric analysis. The market actors in the marketing channels were producers, collectors, whole sellers, retailers, supermarkets, shops, and consumers. The market structure of eggs and live birds is tight and loose oligopolistic structure with 52 and 37% concentration ratios respectively. Farmers are willing to produce poultry and if the marketing and production support services avail nearby, they assure that the business becomes more attractive and profitable than ever. Poultry production was constrained by diseases, predation, and lack of input, volatile price, demand and limited supply of exotic breed. Despite the numerous challenges, the subsector still remains profitable business for the rural poor. Traders were also constrained by lack of permanent market place and existence of diseases transmission. However, it had also opportunities such as high turnover earning; small feed and lower initial cost requirement, and being land a less limiting factor for its production. Results obtained from the Heckman’s two stage model indicated that sex of the household head, purpose of poultry production, number of birds kept, breed available, feed supplementation, credit access, extension access and education status of the household head significantly influenced the supply and market participation decision of poultry producers. Therefore, policies and interventions that aimed to address production and marketing problems, promote access to business support services and poultry cooperative expansions, improve the link between producer and markets, focus on determinants of poultry market participation and supply are recommended for better return and chain development.
Keywords: market structure, concentration ratio, market margin, market efficiency, traders
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1. INTRODUCTION 1.1 Background In different parts of the world, one of the reasons why smallholder farmers cannot improve their living standards is the difficulty in accessing both input and output markets (Gereffi et al., 2005). Marketing systems play a decisive role in economies as mechanisms for both exchange (necessary for specialization and hence leads to higher economic growth) functions and the proper coordination of the exchange (through price signals) which reflect and shape producers and consumers incentives in supply and demand interaction. If small scale domestic producers are to reap the benefit in the production to consumption system, then marketing systems in the supply chains linking producers to consumers must be able to support low cost production and timely delivery of the products (Andrew, 2008).
Agriculture is the back bone of Ethiopian economy, and mainstay of all the smallholder farmers. Notably, village poultry keeping, which is the practice characterized as husbanding poultry by smallholder households using family labor is an omnipresent practice. This practice is also called rural poultry or rural family poultry (Akililu, 2007).
Marketing not only bridges the rural supply/demand with the urban demand/supply, but through this process it also makes an active and positive contribution to economic development. Price information helps producers to make production decisions in efficient and effective ways. A good marketing system is not only limited to stimulation of consumption, but it also generates increased production by seeking out extra supplies. If the pricing system works efficiently, it produces suitable incentives to meet consumers’ needs more accurately in terms of type, quality, and quantity of supply. The increasing proportion of the population living in urban centers and the rising level of income requires more highly organized channels for processing and distributing agricultural products (Wolday, 2005).
Notably, in the case of poultry production the need to organize the marketing channel is pressing. The limited market access conditions in this sector limits farmers not to produce flock of chicken (Holloway and Ehui, 2002). This is because poultry products are highly marketable and poultry rearing as a business has high turnover rates. In sub- Saharan Africa, 85 percent of all households keep poultry (Guèye, 1998). However, the inefficiency in the marketing system is one major bottleneck to increase village chicken contribution to the rural household economy (Kenea, 2003).
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In Ethiopia almost all smallholder farmers are practicing poultry production as the population growth instigated small land holding size as well as the progressively declining soil fertility constrained them not to produce surplus crop for sale and generating income after satisfying the subsistence requirement. The gift of a chicken is often in many parts of Africa a way of welcoming high status visitors in kin. Birds are also frequently sacrificed, and in some cultures the entrails of dead birds are consulted as oracles. For this reason the anthropologist Michael Whyte (2002) notes ‘poultry are not simply birds, they are a human creation, a social and cultural practice’. To relax the financial constraints they also practice livestock production system, and among this poultry production can be mentioned. Nevertheless, in many parts of the country smallholder farmers have traditional poultry production knowledge and they are still practicing it. The majority are not attracted by new technology even when it appears to be better than their current practices (Akililu, 2007).
The sector represents an important part of the national economy in general and the rural economy in particular. The total poultry population in Ethiopia is estimated at 38 million of which 97.8% of the total poultry population comprises indigenous birds while 2.2% are exotic breeds. However, the performance of the poultry sector has been poor over the past decades (Holloway and Ehui, 2002). In 2006, the total poultry meat and egg production were estimated at 53,493 and 36,624 tones. In Ethiopia, many rural households keep poultry in their farmyard (Alemu and Tadele, 1997).
In this regard, the current income generating capacity of poultry as compared to their magnificent potential in the country is not encouraging. The possible increment in output resulting from the introduction of improved production technology, therefore, could not be exploited in the absence of convenient marketing conditions (Berhanu et al, 2007). This calls for studying the production to consumption system of poultry taking the value chain approach. This involves addressing major constraints and capitalizing on opportunities faced by input suppliers, producers, processors, traders and other businesses at multiple levels and points along a given value chain. This will inevitably include a wide range of activities such as improving access to necessary inputs, developing the capacity and skills of human resources, improving working conditions and productivity, strengthening the delivery of business and financial services, enabling the flow of information, facilitating improved market access, or increasing access to higher-value markets or value-added products. Value chain analysis identifies opportunities and constraints of a particular local/regional
- 2 - sector and analysis its market integration (Timor-Leste, 2011). Market systems do not, however, provide the only mechanisms for ‘coordinated exchange’. In advanced market economies hierarchical relations in organizations (government agencies, firms, and civil society organizations) play a major role both as channels for exchange and in providing institutional services necessary for markets to work (Fafchamps, 2004).
1.2 Statement of the problem.
Poultry production as part of livestock production is one of the alternative income generating mechanism for rural households. As a result, Ethiopia is one of the countries where village poultry plays a dominant role in total poultry production. Poultry production in Ethiopia is characterized by two major issues. On one hand, there is a growing demand for chicken meat and egg in urban areas due to substantial increase in price of beef and mutton. As a result, chicken production is likely to play increasing role in supplying animal protein for human consumption in the country. This is an important dimension that promotes the production and supply of poultry and poultry products as chicken meat is relatively cheap and affordable source of animal protein (Alemu and Tadele, 1997). On the other hand, the demand for traditionally processed, informal, and raw products continues to predominate in most developing countries in general and in Ethiopia in particular although demand for higher quality increases at the higher market end. Processed poultry products, including chilled or frozen poultry, as well as further processed items, currently account for a small share of urban household consumption and a negligible share of rural consumption (Gebremedhin et al., 2007). These demand-side factors are important to induce structural changes in poultry production, processing and distribution. Nevertheless, most smallholder producers sell their poultry products to low income consumers via informal markets. Increasing urbanization and incomes, however, are increasing the length and complexity of poultry value chains and marketing, and safety standards demanded in poultry markets make it more difficult for smallholders to compete in these growing markets. These structural changes in poultry value chains typically involve new actors such as private agribusiness firms thus provoking organizational and institutional innovations. Despite the traditional use of poultry and poultry products, the price of both live birds and their products has been skyrocketing since recent years. This is also known to vary from place to place. Pro-active
- 3 - policies and investments can help ensure the inclusion rather than the exclusion of the poor who produce and sell on a small scale (Mendoza G., 1995).
Smallholder farmers in study area, Arbegona and Bensa districts produce chickens and sell them to earn income for supporting their livelihoods. Nevertheless, in the two districts who is benefiting from the activities in the production to consumption system of poultry is little known. In the context of the study area, despite the major direct or indirect roles played by poultry products in the livelihoods of greater portion of HHs in the study area, its marketing and market chain aspects have not yet been investigated. This study, therefore, was intended to analyze the production to consumption system of poultry in Arbegona and Bensa districts of Sidama Zone, SNNPRS.
1.3. Objective of the study
1.3.1. General objective
The general objective of this study is to analyze the market chain of poultry and determine the factors that affect the supply of poultry and poultry products to the market in Arbegona and Bensa districts.
1.3.2. Specific objectives
The following specific objectives were addressed in this study: ➢ To identify the actors and their function in poultry market channel ➢ To investigate the market structure, conduct and performance of poultry ➢ To identify the business supporting factors on poultry production and marketing system ➢ To determine the factors that affect supply of poultry and poultry products to the market ➢ To identify constraints and opportunities in poultry production and marketing.
1.4. Research questions: In this study the following research questions were addressed: 1. What actors exist in the poultry production to consumption system and what roles do they play? 2. How is poultry market chain organized and what alternative market channels exist? 3. Do farmers and other marketing actors get fair market share from consumer price? 4. What factors govern and determine the market supply of poultry? 5. What are the major problems and opportunities in poultry production and marketing?
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1.5 Significance of the study
The findings from this study are worthwhile in providing valuable information on different issues in the production to consumption system of poultry. The potential users of the information/findings from this study are poultry producers, traders, government and non-government organizations (that will have an interest to intervene in poultry production and marketing system), and the scientific community. The findings from this study can be taken as useful inputs for local community as the opportunities and constraints in the whole production to consumption system of poultry are investigated that reveals what the producers follow to increase production and profitability from the sectors. Specifically, it promotes value added utilization of poultry and poultry products that ultimately help the producers to get higher share of the marketing margin. Besides, this study provides useful insights for policy makers in order to formulate sound policy to minimize the constraints in the value chain and market aspects of poultry, and also utilize the opportunities by engaging in value added utilization for increased efficiency and profitability. Also this study provides useful information for the development of the value chain, which could help farmers to have market information, market link, and technology; traders to strengthen marketing chain, policy makers to have future improvement direction on the poultry value chain and others, who need this information for different purposes.
Furthermore, the findings from this study will also be worthwhile as the study has investigated the problem in location and context specific ways. For instance, it reveals in the context and location specific way why in the face of growing demand for value added poultry products the society is still engaged in production and marketing of traditional poultry products than value added products. This context specific information will be worthwhile for future studies either in the same location or elsewhere. This means that the information from this study can make clear that value chain should be analyzed in context and location specific ways. Furthermore, the finding contributes by providing information for researchers who want to carry out further investigation on poultry production and marketing in the districts and elsewhere in the future.
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1.6 Scope and the limitation of the study
This study was conducted in two districts (Arbegona and Bensa) by using data collected from sample households and other actors in the production to consumption system. Hence, the investigation is limited spatially as well as temporally to make the study more representative in terms of wider range of commodity, area and time horizon. The purpose of the study also limits the investigation toward a single commodity and specific geographic location.
In addition to this, the data for this study was a cross-sectional (one time) and not a time series and therefore the analysis was done based on information collected at a specific place and uses a specific time bounded data for most of the variables. So there was a limitation to deal with the issue using long time data that shows the dynamics in the production to consumption system. Lack of past studies related to this area of interest in the study areas were also limitations so as to make comparison of the findings from this study with other studies.
1.7. Organization of the thesis
This thesis is organized into five parts. The first part includes introduction of the study, second part reviews detailed literature on relevant topics on the study of the performance of poultry marketing and empirical studies focused on determinants of market participation and supply, the third part discusses the methodology employed in the study including sample size determination, data collection and data analysis, part four deals with the results and discussion of the study, and finally part five presents summary conclusion, and recommendations based on the findings of the research.
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2. LITERATURE REVIEW In this part of the study the basic concepts of market chain including markets and marketing, market channel, market actors, marketing margin, and market performance are reviewed. Besides, status of poultry production in Ethiopia and empirical studies regarding the topic in Ethiopia and elsewhere are reviewed.
2.1 Basic Concepts: Market chains versus value chains: The terms production chain, supply chain, market chain and value chain are often used interchangeably, but in fact there are some important differences. According to Hobbs et al. (2000), a value chain is differentiated from a production/supply chain because participants in the value chain have a long-term strategic vision, disposed to work together, oriented by demand and not by supply, shared commitment to control product quality and have a high level of confidence in one another that allows greater security in business and facilitates the development of common goals and objectives. Hence, a value chain links the steps a product takes from the farmer to the consumer. Bammann (2007) has identified three important levels of value chain. • Value chain actors: The chain of actors who directly deal with the products, i.e. produce, process, trade and own them. • Value chain supporters: The services provided by various actors who never directly deal with the product, but whose services add value to the product. • Value chain influencers: The regulatory framework, policies and infrastructures
Whereas, production/supply chain is the portion of the value chain that focuses primarily on the physical movement of goods and materials, and supporting flows of information and financial transactions through the supply, production, and distribution processes. Many organizations use the terms value chain and supply chain interchangeably which is obviously not true. Value chain is broader in scope than a supply chain, and encompasses all pre- and post- production services to create and deliver the entire customer benefit package. A value chain views an organization from the customer's perspective, the integration of goods and services to create value while supply chain is more internally focused on the creation of physical goods. The supply chain focus is on understanding the impact of tightly coupling supply chain partners to integrate information, physical
- 7 - material, product flow, and financial activities to increase sales, reduce costs, increase cash flow, and provide the right product at the right time at the right price to customers. 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.
Market chain - 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 one good follow 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).
Market and Marketing. Market can be defined as an area in which one or more sellers of given products/services and their close substitutes exchange with and compete for the patronage of a group of buyers. Originally, the term market stood for the place where buyers and sellers are gathered to exchange their goods, such as village square. A market is a point, or a place or sphere within which price making force operates and in which exchanges of title tend to be accompanied by the actual movement of the goods affected. Now the concept of exchange and relationships lead to the concept of market. It is the set of the actual and potential buyers of a product (Kotler and Armstong, 2003).
Marketing efficiency. Efficiency in marketing is the most used measure of market performance. Improved marketing efficiency is a common goal of farmers, marketing organizations, consumers and society. It is a common place notation that higher efficiency means better performance whereas declining efficiency denotes poor performance. Most of the changes proposed in marketing are justified on the grounds of improved efficiency (Kohls and Uhl, 1985).
Marketing channel. Formally, a marketing channel is a business structure of interdependent organizations that reach from the point of product or origin to the consumer with the purpose of moving products to their final consumption or destination (Kotler, 2003).
Market Supply. Marketed supply refers to the amount actually taken to the markets irrespective of the needs for home consumption and other requirements. Whereas, the marketable surplus is the
- 8 - residual with the producer after meeting the requirement of seed, payment in kind, and consumption by farmer (Wolday, 1994). Marketed surplus is defined as the proportion of output that is marketed (Harris, 1982). Marketed surplus may be equal to marketable surplus, but may be less if the entire marketable surplus is not sold out and the farmers retain some stock and if losses are incurred at the farm or during the transit (Thakur et al., 1997).
Marketing Actors Diversity of marketing actors exists in the production to consumption system of agricultural products value chain. These include producers, assemblers, wholesalers, retailers, hotels and restaurants, consumers and others depending upon the type of commodity.
Producer: It is the first link in the poultry market chain. The producer produces and harvests the products and supplies to the next agent in the value chain. Also he/she decides what to produce, how to grow and for whom to produce
Rural assembler: sometimes also known as transporter or trader, he/she is the first link between producer and other middlemen.
Whole seller: They concentrate the various, intermediate sized loads and put the product into large, uniform units. These activities all contribute to price formation.
Retailers: Middlemen that include supper market another large-scale retailer who divides large shipments of produce and sell it to consumers in small units. The basic function they provide is bulk breaking.
Hotels and restaurants: Hotels and restaurants usually buy products either from producers, brokers, small traders in the market or they have suppliers (small traders) that supply the product on daily, weekly or monthly basis.
Consumer: This is the last link in the market chain. The participants and their respective functions often overlap. The most widespread combinations are the following: Traders-whole sellers that collect the commodity and supply it to retailers, whole sellers-retailers (whole sellers that also sell directly to consumers) and whole sellers-exporters.
Market structure
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Market structure is defined as, those characteristics of the organization of the market that seem to exercise strategic influence on the nature of competition and pricing within the market (Bain, 1968). The characteristics usually stressed are the number and size distribution of firms in relation to the size of the market, the presence or absence of barriers to entry facing new firms, physical or subjective and product differentiation (Kohls and Uhl, 2002).
Market conduct
The structure and conduct of market participants have a direct implication for the nature of production price relationships between different marketing levels. Market conduct refers to 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 (Wolday, 1994).
Market 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 (Cramers and Jensen, 1982). According to Abbott and Makeham (1981), market performance is how successfully the firm’s aims are accomplished, which shows the assessment of how well the process of marketing is carried out. One can imagine a causal relations starting from the structure, which determine the conduct, which together determine the performance (technological progressiveness, growth orientation of marketing firms, efficiency of resource use, and product improvement and maximum market services at the least possible cost) of agricultural marketing system in developing countries (Meijer, 1994).
Marketing costs
Marketing costs are the embodiment of barriers to access to market participation by resource poor smallholders. It refers to those costs, which are incurred to perform various marketing activities in the transportation of goods from producer to consumers. Marketing costs includes handling cost (packing and unpacking, costs of searching for a partner with whom to exchange, screening potential trading partners to ascertain their trustworthiness, bargaining with potential trading partners (and officials) to reach an agreement, transferring the product, monitoring the agreement to see that its conditions are fulfilled, and enforcing the exchange agreement (Holloway, 2002).
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Marketing margins A marketing margin is the percentage of the final weighted average selling price taken by each stage of the marketing chain. The total marketing margin (TMM) is the difference between what the consumer pays and what the producer/farmer receives for his product. In other words, it is the difference between retail price and farm price (Mendoza, 1995).
TMM =End buyer price - first seller price /End buyer price X 100 That is, calculating the total marketing margin is done by the following formula:
TGMM = Consumer price - Farmers price x 100 Consumer price Where TGMM=Total gross marketing margin Net Marketing Margin (NMM) is the percentage over the final price earned by the intermediary as his net income once his marketing costs are deducted. The equation tells us that a higher marketing margin diminishes the producer’s share and vice-versa. It also provides an indication of welfare distribution among production and marketing agents.
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 the profit margins or net returns. The marketing margin in an imperfect market is likely to be higher than that in a competitive market because of the expected abnormal profit (Wolday, 1994).
A marketing margin is the percentage of the final weighted average selling price taken by each stage of the marketing chain. The margin must cover the costs involved in transferring product from one stage to the next and provide a reasonable return to those doing the marketing (Mukasa, 2010).
Marketing efficiency and effectiveness Increased efficiency is in the best interests of farmers, traders, processors, wholesalers, retailers, consumers, brokers, middlemen and society as a whole. The efficiency of a marketing system is measured in terms of the level and/or costs to the system of the inputs, to achieve a given level and/or quality of output. Such inputs are generally in the form of land, feeds, transaction facilitating, tax, vaccine, finance, time, manpower and materials. Typical outputs include the movement of a
- 11 - given amount of product to markets at specific distances, the supply of a particular level of service to target market segments and the supply of products at a target price. Hence resources are the costs and utilities are the benefits that comprise the marketing efficiency ratio. Efficient marketing optimizes the ratio between inputs and outputs.
2.2 Poultry Production System in Ethiopia
Village poultry production systems are characterized mostly as an indigenous integral part of the farming system with short life cycle, quick turn over, low-input production systems and accessible at both inter and intra household levels. In sub- Saharan Africa, 85 percent of all households keep poultry (Guèye, 2002). Ethiopia is representative of countries where village poultry plays a dominant role in total poultry production. The sector represents an important part of the national economy in general and the rural economy in particular. In developing countries, many rural households keep poultry in their farmyard. Poultry keeping practiced by rural households using family labor is referred as village poultry keeping. This practice is also called rural poultry or rural family poultry (Akililu, 2007). Chicken meat is relatively cheap and affordable source of animal protein (Alemu and Tadele, 1997).
According to Alemu and Tadele, (1997), Ethiopian poultry production systems comprise both traditional and modern production systems. With regard to breed, 96.9 percent, 0.54 percent and 2.56 percent of the total poultry were reported to be indigenous, hybrid and exotic, respectively under individual farm household management. The latest figure available indicated that village poultry contributes 98.5% and 99.2% of the national egg and chicken meat production (Tadele, 2002).
Modern poultry production started in Ethiopia about 30 years ago, mainly in colleges and research stations. The activities of these institutions focused on the introduction of exotic breeds and their distribution to farmers, along with appropriate management, feeding, housing and health care packages. There are a few private modern production farms around Addis Ababa city. Some state- run poultry multiplication centers have been established, with the aim of providing improved breeds to farmers through the extension service (Akililu, 2007).
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Tadelle and Alemu (1998) expressed that in Ethiopia, chicken keeping could have a marvelous contribution to meet the animal protein requirement of the people. Chickens rearing have several advantages; it fits quite well to the condition of poor households. Due to their requirement of small feed, space and the low cost of the animal make poultry rearing a suitable activity for the poor. Poultry products are highly marketable and poultry rearing as a business has high turnover rates. However, as reported by Kenea et al. (2003) efficient marketing system is one major component to increase village chicken contribution to the rural household economy. The backyard poultry units, though not the main income generator for rural producers, are called ‘Walking banks’ because their products are sold to meet emergency expenses. Furthermore, they contribute substantially to the familys food and nutrition (Balakrishnan, 2004).
2.3 Empirical studies
Determinants of marketable surplus A number of studies were done to estimate the factors that affect market supply of different agricultural commodities. Abay (2007) conducted a study on vegetable market chain analysis in Fogera woreda. He adopted Heckman two-stage model to estimate the probability of farmer’s participation in a market and market supply level. His study revealed that owned oxen number, family size, and distance from development agent and experience has affected marketable supply of onion and tomato.
Ayelech (2011) identified factors affecting the market supply of fruits by using OLS regressions. She found that fruit marketable supply was affected by education level of household head, quantity of fruit produced, fruit production experience, extension contact, lagged price and distance to market.
Woldemichael (2008) conducted another study on dairy marketing chains analysis in Hawassa- Yergalem milk shed. He used Heckman two-stage model to estimate the probability of participating in milk market and marketed milk volume. Factors affecting market participation and volume of supply can differ from one commodity to the other depending on the nature of the commodity under consideration.
Dawit (2010) identified factors that affect the market chain analysis of poultry in Alamata and Atsbi-Womberta Woredas of Tigray. The Sex of the household head, Education of the household
- 13 - head, Family size and Distance to market are negatively influenced market participation decision of poultry.
Another study by Awol (2010) on the analysis of poultry market chain in Dale and Halaba Special Woredas of SNNPR revealed that the sex of the household head, family size, number of birds kept, average lagged price of bird, purpose of bird keeping, credit taken for poultry production and feed supplementation are significantly influenced farmer’s participation decision and value earned from the sale of their products..
According to Wolday (1994) marketable supply of agricultural product could be affected by different factors including the size of land holding, the output level, family size, market access, price, inputs, formal education, oxen number, accesses to extension and credit services, distance to market, time of selling, access to labor and age.
Determinants of marketing (S-C-P) channel choices
Different scholars conducted research on agricultural commodities marketing using market concentration ratios, marketing costs and margins and profit analysis. The result indicates that margin and profit received by marketing actors and level of market efficiency varied with respect to location and size of marketing channel.
Scott (1995) used marketing margin analysis on potato marketing in Bangladesh and found out that producer’s price and margin were 1.27 and 67% respectively. Rehima (2006) used marketing margin analysis on pepper marketing chains in Alaba and Siltie zones in southern Ethiopia and found that the gross marketing margin was 43.08% of the consumer’s price. Producer’s share by retailers was 50.7% of the consumer’s price.
Solomon (2007) used marketing cost and margin analyzed performance of cattle marketing system in Borena and found that butchers at Addis Ababa (Kera) market received relatively a larger share from total gross marketing margin (69.5%, 63.4% and 61.6%) for cattle supplied from Yabelo, Negelle and Dubluk markets, respectively. Regarding producer’s portion, he found that the highest percentage was found for cattle supplied from Dubluk market (21.9%), followed by Negelle and Yabelo with gross margins of 20.6% and 18.6%, respectively.
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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 farmers.
Woldemichael (2008), conducted a research on market chain analysis of dairy in Shashemane, Hawasa and Dilla districts and reported that milk market in the study area was characterized by strongly oligopolistic market type in Hawassa (62.2%) and Yergalem (53.6%), while it was found to be weakly oligopolistic market type in Shashemane (39.7%) whereas butter market was characterized by competitive market type in Shashemane (31.9%), where as it was weakly oligopolistic market type in Hawassa (37.9%) and Yergalem (44%) applying the criteria of the four firm’s concentration ratio (CR4). A product method of marketing margin analysis was used for different marketing actors of milk and butter market. Dairy producers in Hawassa had the highest producer’s share (62.8% %) followed by Shashemane (59%) dairy producers. Milk retailers in Yergalem obtained the highest profit (2.86 ETB/liter). The average milk producers‟ share was found to be 59.63%. With regard to butter traders, retailers had the highest profit (5.84 ETB/kg).
In sum, empirical evidences indicate that market supply and marketing channel choice (S-C-P) approaches has become an important framework to analyze economic agents in agricultural sector. In this study an attempt was made to identify factors affecting the market supply and marketing and channel choices of poultry industry.
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3. METHODOLOGY
This chapter presents description of the study area and the research methodology used in the study including data types and data sources, sampling techniques, methods of data collection, and analysis.
3.1 Description of the study Area
The study was carried out in two woredas namely Bensa and Arbegona of Sidama zone, Southern Nations Nationalities and Peoples’ Region (SNNPR) located in central part of the region. Geographically Sidama zone is situated between the coordinates of 5045' and 6045' N latitude and 38039' and 38029' E longitude with altitude ranging from 1100 to 3500 meter above sea level (m asl) (SDC, 2000). Sidama zone consists of 19 districts with total area coverage of 10,000 km2. It has a diverse agro ecology classified as highlands (dega), midlands (woinadega) and semi-dry lowlands (kolla) covering 30%, 60% and 10% respectively (SDC, 2000). The farming system of the study area is characterized as mixed crop and livestock farming. The dominant crops in the study districts are maize, wheat, enset, barley, pea and bean (AWAO 2007). The zone endowed with different livestock resources such as cattle, small ruminants, equines, poultry (birds) and honeybee (insects).
Figure 1. Map of the Study area
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3.2 Source of Data
For this study both primary and secondary data sources were used. The primary data were collected from farmers, traders, and other market participants involved in the production and marketing of poultry subsector. The information includes the overall socioeconomic characteristics of farmers and traders involved in this business. The study also employed information from secondary sources such as Central Statistical Authority (CSA), Woreda and zonal Agriculture and rural development office, marketing and cooperative offices regarding poultry production and marketing.
3.3. Sample Size and Method of Sampling
The study has two parts including household survey and market survey. In this study to select a specific poultry producer household, multistage (three stage) sampling technique was employed. In the first stage, from Sidama Zone, Arbegona and Bensa districts were purposively selected as they are one of the intervention areas of LIVES project. In the second stage, four kebeles (namely Cuniche, Gute, Sadaware and Daye 01) among 38 kebeles found in the study districts were selected using random sampling techniques. In the third stage, using random sampling methods respondents were selected from the population list of PAs poultry producers. The required sample size was determined proportionally to the population size of poultry producer (farmers). Simple random sampling is the simplest form of the probability sampling; as a consequence each population element of simple random sampling has a known and equal chance of selection. Hence the sample size selection for this study was based on the rule of thumb N≥50+8m developed by Green (1991), where, N, is sample size and `m` is the number of explanatory variables (Xi) where i=1, 2…16. Based on this rule a total of 178 respondents from the selected PAs (Kebeles) of Arbegona and Bensa districts were selected and interviewed. Table 1. Distribution of sample households per rural PA’s Selected rural kebeles Total number of households Sample households Cuniche 985 45
Gute 790 33
Sadaware 1342 55
Daye 01 1130 45
Total 4147 178
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The market survey was carried out in five sample markets. The sample markets include Hawassa (regional large) market, Bensa and Arbegona (Woreda) markets and one local market (kocci) from Arbegona and Bensa woreda each. The selection of local sample markets was based on the number and availability of local poultry markets in the two districts. The marketing information was collected using purposefully selected 120 market participants (collectors, traders, consumers, hotels/egg shops) in chicken and egg markets, and the choice of them was made based on the number and category of traders, mobility of the traders among the sample markets and also informal discussions with key informants in the marketing system. Discussions were also made with respondents selected from traders, collectors, consumers and hotels/egg shops in the poultry marketing system. The totals of 130 market actors were selected and interviewed using systematic random sampling technique. Data collected from market actors were mainly focus on the characteristics of market structure, conduct and performance of the market.
3.4. Methods of Data Collection In this study, both the primary and secondary data were used. The primary data were collected through a household survey, focus group discussions, key informant interviews and field observations.
a. Household Survey
In this study household survey was one of the main instruments of data collection. This household survey was guided by a structured and semi-structured questionnaire that was developed based on the information obtained from field observation, focus group discussion and key informant interviews. The data upon which this study based was collected through a structured and semi- structured questionnaire administered face to face meetings with the household head. Enumerators who have good experience and well familiar with the study DAs were selected and assigned to each PA for data collection. They also spoke the local language (Sidamigna) and know the local customs and conducts. Before the actual data collection under taken, a pre-testing of the questionnaire was conducted in order to amend and adjust those questionnaires that couldn’t provide the required answers. The role of enumerators was to encourage farmers to voluntarily respond and give actual information during the interview.
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b. Focus Group discussion (FGD) Representatives from the community including women, elders and youth used for focus group discussion. The FGD was made with separate groups of elders, women and youth. In this discussion specific issues related to the purpose of the study were raised and discussed. The discussion was facilitated by the researcher together with the WOA expert. This discussion was guided by checklists prepared on major issues. c. Key Informant interviews
Key informants are individuals / local people who had lived in the community for a long time and have well knowledge about the existing situation of poultry production and marketing in the area. As these peoples have well knowledge about poultry production in study area and the purpose of this key informant interview was to obtain their views, opinions and suggestions about marketing channels. For this purpose key informants were selected from each PAs with the help of kebele leaders and enumerators and a one-to-one interview was conducted with the selected key informants. Besides, experts at district and Kebele levels were included in the key informant survey; and a total of four key informants were addressed. For this interview guides/checklists were prepared and used.
3.5 Methods of Data Analysis
To analyze the data, both descriptive statistics and econometric analysis were employed. For both analysis the statistical software packages of SPSS version 20 was used.
3.5.1. Descriptive analysis The descriptive analysis was carried out by employing diagrams, charts, ratios, percentages, means, variances and standard deviations in examining the poultry marketing system as well as producers and traders demographic and socio-economic characteristics. The conduct and characteristics of the different marketing agents, market efficiency parameters, and the role and organization of market institutions and functions in the market chain were also analyzed using descriptive statistics. Moreover, to compare and test the mean difference of selected characteristics, test statistics such as t- test and x2 (chi-square) test were employed.
The SCP approach evaluates the marketing system at the business level for a specific commodity. That is the application of SCP approach to poultry value chain analysis in the market (sub sector
- 19 - approach) was applied in this study to examine the poultry marketing system in the study area. In this approach the major issues investigated were; consumption pattern, supply situation, price relationship, and seasonality, marketing institutions and infrastructures. Moreover the structure, conduct and performance of the entire production were analyzed.
Variables relevant in appraising firm’s behavior can be put into three general categories: Structure, Conduct, and Performance related variables (Holloway and Ehui, 2002).
All the three parameters do not have unidirectional movement but rather have an interdependent relationship. Hence, market structure does not only influence market performance but also has an impact on market conduct. Furthermore, performance also affects the development of market structure and market conduct. The latter limits a similar effect on the structure of the marketing system.
Market concentration: this refers to the number and size, distribution of sellers and buyers in the market. The greater the degree of concentration the greater will be the possibility of non-competitive behavior, such as collusion existing in the market.
The concentration ratio is given as: CR = , r= 1, 2, 3, 4….r Where, CR= concentration ratio Si= the percentage market share of the ith firm r= the number of relatively larger firms for which the ratio is going to be calculated.
Kohls and Uhl (2002) bring into play as a rule of thumb, four largest enterprises’ concentration ratio of 50% or more (an indication of a strongly oligopolistic industry), 33-50 % (a weak oligopoly) and less than that (competitive industry). The problem associated with this index is the arbitrary selection of r (the number of firms that are taken to compare the ratio).
Marketing margin: Cost and price information is used to construct marketing cost and margin. 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).
The total marketing margin (TMM) is the difference between what the consumer pays and what the producer/farmer receives for his product. In other words, it is the difference between retail price and farm price (Cramers and Jensen, 1992).
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TMM =End buyer price - first seller price /End buyer price X 100
That is, calculating the total marketing margin is done by the following formula:
TGMM = Consumer price - Farmers price x 100 Consumer price Where TGMM=Total gross marketing margin Net Marketing Margin (NMM) is the percentage over the final price earned by the intermediary net income from marketing costs is deducted. The equation tells us that a higher marketing margin diminishes the producer’s share and vice-versa. It also provides an indication of welfare distribution among production and marketing agents. NMM = Gross margin - Market costs x 100 End buyers price
Where- NMM is the net marketing margin
Higher NMM or profit of the marketing intermediaries reflects reduced downward and unfair income distribution, which depresses market participation of smallholders.
3.5.2 Econometric analysis Econometric analysis was used to identify the factors that affect farmers’ participation decision in the supply of poultry to the market in one hand and determinants of the volume of poultry supplied to the market in the other hand. Estimation of the whole system of the supply function would give more efficient estimates, but excluding inconsistencies or biases. Recently the commonly used technique is the well-known Heckman’s sample selection model (Heckman’s two step model). The disadvantage of the Tobit model is the assumption that both the decision to participate and the amount of product marketed given participation is determined by the same variables, and that a variable that increases the probability of participation also increases the amount of product marketed. This problem can be overcome using the Heckman’s sample selection model where a probit model for the participation equation is estimated and a regression model, which is corrected for selectivity bias, is specified to account the factors affecting participation decision and its impact on the level of produce marketed.
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Probit model The qualitative response regression models that are used to estimate the parameters of the qualitative or limited dependent variables are numerous such as LPM, Logit, Probit and switching regression. What they have in common is that the dependent variable is a discrete outcome, such as 'yes' or 'no' decisions (Maddala, 1997). The most widely used qualitative response models are probit and logit models, i.e., in these models, the probabilities are bound between 0 and 1 and they fit well to the non-linear relationship between the probabilities and the explanatory variables. However, Gujarati (2003) has noted that in most applications, the cumulative normal function (probit) and the logistic function (logit) are quite similar, the main difference being that the logistic function has slightly fatter tails. The conditional probability (ρi) approaches zero or one at a slower rate in logit than in probit. Therefore, there is no compelling reason to choose one over the other that depends on personal preference, experience and availability of software. In some applications in the explanation of the behavior of a dichotomous dependent variable, the probit model has been found useful (Gujarati, 2003). Using a binary decision model, a random variable Y (dependent variable) takes the value of 1, if the smallholder farmers decided to participate in poultry market and 0, otherwise. The probability of smallholder farmer’s decision to participate in poultry market depends on a vector of independent variable and a vector of unknown parameters. The vector represents households demographic, socio-economic and institutional factors assuming that for each household i, which is a function of those characteristics. Thus the probit model used to examine smallholder farmers decision to participate in poultry marketing.
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 Inverse Mill’s Ratio (IMR) which is obtained from the probit model in the first step of the Heckman two step procedures. Then the parameters that determine smallholder farmer’s sales
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from poultry product marketing can consistently be estimated by OLS over n observations reporting values for Yi by including an estimate of the inverse Mills ratio, denoting as additional regressor.
Specification of the Heckman two-step procedure to calculate Poultry Market Participation (PMP), and Volume Poultry Sales (VPS), is
The participation equation/binary probit model
Yi = X1 β 1 +U1, where, U ~ N (0, 1) PMP = 1if Y > 0 PMP = 0 if Y ≤ 0
Where: Yi is the latent dependent variable, which is not observed
X1 is vectors assumed to affect the probability of sampled household market participation
β 1 is a vector of unknown parameter in participation equation
U1 are residuals independently and normally distributed with zero mean and constant variance
The observation equation/the supply equation 2 Value of poultry sales (VPS) = Y1 =X β 2 +U2, U 2 ~N (0, ∞ )
Y1 is observed if and only if PMP = 1. The variance of U1 is normalized to one because only PMP, not Y is observed. The error terms, U1 and U2, are assumed to be bivariat and normally distributed.
β 1 and β 2 are the parameter vectors.
Y1 is regressed on the explanatory variables, X2i, and the vector of inverse Mills ratios (λi) from the selection equation by ordinary least squares.
Where: Y1 is the observed dependent variable
X2 is factors assumed to affect value of poultry sales
B2 is vector of unknown parameter in the value of poultry sales equation
U2 is residuals in the supply equation that are independently and normally distributed with zero mean and constant variance.
λi= f (Xβ ) 1− F (Xβ) f (Xβ ) is density function and 1-F ( Xβ ) is distribution function
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3.5.3. Data Diagnosis Before performing analysis using econometric model, it is mandatory to check multicolliniarity problem among the continuous variables and testing the associations among dummy variables as it strongly affects the parameters to be biased. Multicolliniarity is a situation where it becomes impossible to know the effect of explanatory variables independently among them on the dependent variable when they have strong relationships among them (Gujarat, 2003).
To detect multicolliniarity problem for continuous variables, Variance inflation factor (VIF) =1/1-Rj2, for each coefficient in a regression as a diagnostic statistics is used. Here, Rj2- represents a coefficient of determination the subsidiary or auxiliary regression of each independent continuous variable X. As a rule of thumb, Gujarati (2003) stated that if the VIF value of a variable exceeds 10, which will happen if Rj2 exceeds 0.90, then, that variable is said to be highly collinear. Therefore, for this study, Variance inflation factor (VIF) was used to detect multi-collinearity problem for continuous variables.
2 Where; Rj = the coefficient of determination when the variable Xj is regressed on the other explanatory variables.
VIF (X) = Variance Inflation factor of the ith variable
On the other hand, Contingency coefficient (CC) was used to check multicollinearity or association between dummy variables. It measures the relation between the row and column variables of a cross tabulation. The value ranges between 0 and 1, with 0 indicating no association between the variables and value close to 1 indicating a high degree of association between variables.
Test for heteroscedasticity: The presence of heteroscedasticity in this study was checked by using the Breusch-Pagan (BP) test. However, according to Gujarati (2003) there is no ground to say that one test statistics of heteroscedasticity is better than the other test statistics. Due to its simplicity, Breusch-Pagan-Godfrey test of heteroscedasticity was employed in this study. The tests indicate the existence of heteroscedasticity among the variables and hence were corrected by running robust ordinary least square.
The goodness of fit of the model: The overall goodness of fit of the regression model is measured by the coefficient of determination (R2). It tells what proportion of the variation in the dependent
- 24 - variable is explained by the explanatory variable. Since R2 lies between 0 and 1, the closer it is to 1, the better is fitted the model. In this study, the estimated coefficients of multiple determinations (R2) of the two models included in live birds and eggs with type-1, type-2, type-3 and type-4 models, and the rest determined by error terms.
3.6. Variables Definition
This section of the study hypothesizes the relationship that exists between the dependent and independent variables regarding the level of poultry supplied to the market. Therefore, potential variables, which are supposed to influence poultry market participation and intensity of volume of poultry, were explained. Thus the list of variables expected to influence on both the farmers’ participation decision and volume/ quantity of poultry supplied to markets was defined.
3.6.1. Dependent variables
Market Participation Decision (MPD): is the dummy variable that represents the market participation of the household in the market that is regressed in the first stage of two stages estimation procedure. For the respondents who participate in market take the value of one where as it takes the value of zero for the respondent who did not participate in market.
Value of Poultry Sales (VPS): It is continuous dependent variable in the second step of the Heckman selection equation. It is measured in value of poultry and egg and represents the actual sales of poultry by producer households, which is selected for regression analysis, which takes positive value.
3.6.2. Independent variables
Farmers’ decision to participate in village bird and egg supply to the market and the underlying intensity of the value obtained from the supply is determined by the following hypothesized variable.
Age of household head (AOHHH): It is a continuous variable and measured in years. Age is a proxy measure of farming experience of household head. Aged households are believed to be wise in resource use, on the other hand young household heads have long investment horizon and it is expected to have either positive or negative sign effect on market participation, value of poultry sales and access to poultry service.
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Table 2. Variables definition
Variable Description Type Value Expected Effect MPD market participation decision Dummy 0-no 1-yes - VPS Value of egg and bird sold Continuous Value of bird and egg in birr - AOHHH Age of the household head Continuous Number of years +ve ELHH Education level of the house hold Continuous Grade attended +ve SOHH Sex of the house hold head Dummy 1-Men 0-female -ve FSHH Family size over 18 years old Continuous Total family members in the household +ve FSF Farm size of the family Continuous Hectare -ve YOFARME Years of farming experience Continuous Number of years -ve IFF Income from farming Continuous Monthly income in birr -ve IFP Income from poultry Continuous Monthly income in birr -ve NPOW Number of poultry owned Continuous Number of bird kept +ve MI Market information access Dummy 0-no 1-yes +ve DWPM Distance to woreda market Continuous Measured in KMs or time taken -ve FEDS Feed supplement Dummy 0-no 1-yes -ve BRAV Breed availability Dummy 0-no 1-yes +ve CRET Credit taken Dummy 0-no 1-yes +ve EXTSERV Extension service Dummy 0-no 1-yes +ve POBKT Purpose of birds kept Dummy 0-consumption 1-sell +ve
Farm size of the family (FSF): This variable is a continuous variable in the model of heckman’s selection and measured in hectare. If the producer has small land size the probability of market participation in poultry and the amount of marketable surplus is expected to be high. Land is a major asset and wealth proxy in rural Ethiopia. Household with large land holding has little attention to poultry production. Therefore, this variable is expected to influence market participation, value of poultry sales and access to poultry service negatively
According to study conducted by Pilirani (2009) the production factors, land was found to play a major role where more than 50% of the food consumed originates from own land food production. The wide farm size and production owned, the less could be the sustainable poultry business, so the probability of market participation and supply of poultry decreases.
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Number of poultry Owned /NPOW/: It is a continuous variable and measured by the number of birds kept by members of the family during the survey period. This variable is expected to influence market participation, value of poultry sales and access to poultry service positively. The number of poultry kept is expected to have positive relation to market participation and marketable surplus. As the poultry owned increases, the probability to participate in market and sales will increase. The result is similar with the study of Awol (2010) found that the number of poultry herd positively and significantly affect the probability of the producers decision to participate in the supply of birds and egg to the market.
Distance to woreda poultry market (DWPM): It is a continuous variable and is the distance of the poultry producer households from the woreda poultry market and it is measured in kilometers. The closer the market, the lesser would be the transportation charges, reduced walking time, and reduced other marketing costs, better access to market information and facilities. Therefore, in this study distance to woreda poultry market is hypothesized to affect market participation decision, value of poultry sales and access to poultry service negatively. If the farmer is located in a village or distant from the market, he is poorly accessible to the market.
A study conducted by Holloway et al (1999) milk-market development in the Ethiopian highlands indicates that distance-to market causes market supply to decline. In Ethiopia, it was reported that smallholder households who were away from market centers had lower market participation (Gebremedhin and Jaleta, 2012).
Education status of the Household Head (ELHH): This is a continuous variable measured in number of years attended by households. Literate poultry producers are expected to be early adopters. Therefore, it is positively hypothesized that households who have educated can adopt the new technologies and practice early than those of non-educated. They also produce more and supply more volume of poultry to the market than their counterparts. This could be due to education plays an important role in the adoption of innovations/new technologies. Holloway et al. (2000) found that education had a significant and positive effect on the quantity of milk marketed in Ethiopian highlands. Astewel (2010) who found that if paddy producer gets educated, the amount of paddy supplied to the market increases, which suggests that education improves level of sales that affects the marketable surplus.
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Sex of the household head (SOHH): This is dummy variable (takes a value of 1 if the household head is male and 0 otherwise). Therefore, in this specific study, it is negatively assumed that male- headed households will supply higher poultry than female headed. This is because currently a number of youth’s producing and participating on poultry business as job creation and in Ethiopia females are the ones who participate in the managing and collection of live bird and egg products. However, obstacles, such as lack of capital and access to institutional credit, competing use of time, and access to extension service, may affect women’s participation and efficiency in beef cattle production (Tanga et al., 2000).
Family size (FSHH): This variable is a continuous explanatory variable and refers to the total number of family in the household. It is assumed that household with larger family size consume more of what is produced in the house and little will remain to be marketed. However, in this study, family size is expected to affect market participation decision, and value of poultry sales positively. Because of any family member might decide to participate in poultry Production and marketing.
Woreda dummy (Woreda): This variable is a dummy taking the value zero if the Woreda is Arbegona and one if the Woreda is Bensa, which consists of a number of characteristics of the Woredas. This is related to the difference between Woredas in access to information, access to market, production potential and etc. This variable influences quantity of poultry sales either positively or negatively and is hypothesized to have relationship with outlet choice decision of poultry producers.
Market information (MI): It is a dummy variable that takes a value 1 for those households who have access to market information and 0 otherwise. This variable is an important variable as farmers marketing decisions are based on market price information. Therefore, for the purpose of this study it is positively hypothesized that households who have access to market information can participate more than those households who do not have access to market information. They also supply more volume of poultry to the market than their counterparts. This could be due to the better information farmers have the more likely they supply live bird and egg to the market. The general idea is that maintaining a competitive advantage requires a sound business plan. Again, business decisions are based on dynamic information such as consumer needs and market trends. This requires due attention to new market opportunities, changing needs of the consumer and how market trends influence buying (CIAT, 2004). In his study of household food marketing behavior, Goetz (1992)
- 28 - found that better information, significantly raised the probability of market participation for potential selling households. In Nigeria, Gani and Adeoti (2011) found that access to market information positively and significantly influenced farmer’s market participation decision.
Credit taken (CRTKN): This is a dummy variable and measured with 1 for those farmers who take credit for the production and marketing of poultry and 0, otherwise. Access to credit would enhance the financial capacity of the farmers to purchase the necessary inputs for the production and marketing of poultry. Therefore, it is positively hypothesized that households who have better access to credit can participate more than those households who do not have access to credit. They also supply more volume of poultry to the market than their counterparts. This could be due to household who has an access to credit can be able to buy either farm implements and other inputs which can foster choice and level of crop and/or livestock to be grown or reared and, linking with the use of modern farm technology. Agricultural service, in our case credit, is believed to enhance the ability of farm households to withstand input supply constraints, ease of liquidity and there by enhance crop/livestock choice and productivity similarly to Negassa (2009) in that credit to have a positive relation with likelihood of selling raw milk in Ethiopia, indicating access to credit increased milk market participation.
Extension service (EXTSRV): A dummy variable measured in contact with extension workers for poultry production and marketing assuming extension service as a source of information on the production and marketing of the product under consideration and assigned with 1 and 0, otherwise. Therefore, it is positively hypothesized that households who get access to extension service can produce more and then participate more than those households who do not have access to extension service. They also supply more volume of poultry to the market than their counterparts. This could be due to farmers who have contact with extension workers are more likely to know the advantage of production of poultry and the availability, quality, and price of inputs than those do not have any extension access. Obviously, if households get access to extension service their market participation and the probability of supplying beef cattle will be high, Akililu (2010). Farmers who have contact with extension agents are more likely to have knowledge about production, quality, and price of inputs and information on markets and output prices of poultry (Awol, 2010).
Years of experience in farming (YexpF): It is a continuous variable measured in the number of years that the household head spend in farming business. Hence, this variable is expected to have
- 29 - adverse impact on the participation on and volume of chickens and egg supplied to the market. As producers stays long and get more experience in poultry production, the more their market participation and supply will be. It was expected to influence market participation and supply of live bird and egg positively. Abay (2007) discussed that as farmer’s experience increases the tomato supplied to market will increase in Fogera, South Gonder zone.
Income from farming (INCFRMG): It is a continuous variable and measured by the annual income earned (birr) by the households from farming activity within their land holding. Poultry production and marketing is not considered as an independent business activity by most rural farm families and hence higher farming income is expected to adversely affect the farmer’s participation in poultry marketing and level of supply. However, getting income from off-farm activities might be used to purchase inputs for poultry business. Thus, this variable is assumed to have direct or inverse relationship with market participation and volume of supply. This has been suggested in the study conducted in Southern Malawi by Andrew (2008). Producers who have adequate income to purchase inputs can easily participate in markets supply more beef cattle than those not having the money. Hence, it was hypothesized to affect the market participation and supply of the beef cattle positively.
Income from poultry (IFP): It is a continuous variable that shows the amount of income obtained from yearly poultry rearing activities undertaken by the household members. The more they get income from poultry business, the more they participate in poultry market and strengthen their poultry supply. Thus, this variable is assumed to have direct or inverse relationship with market participation and volume of supply.
Feed supplement (FSP): It is a dummy variable and assigned 1 for those farm households who supplement feed for their chicken and 0, otherwise. Food supplementation for scavenging local chickens would significantly improve the productivity of local breeds. Thus, it is negatively hypothesized that households who have access to different feed sources can participate more than those households who do not have access to different feed sources. They also supply more volume of poultry to the market than their counterparts. This could be due to the more they feed different supplementary feeds, the more they grow fast and marketed. Awol (2010) suggested that feed supplementation have a positive and significant effect on the probability of the producers supply of birds and egg to the market
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Purpose of poultry kept (POPK): This variable is a dummy variable and refers to whether the household keeps chicken to sell birds and egg (for business purpose) or just for home consumption purpose. For those households keeping chickens for selling purpose assigned with 1 and 0 for home consumption. The purpose of keeping chickens is expected to have positive relationship with market participation and the volume of poultry supply. Therefore, it is hypothesized positively that households whose purpose is for sale and income can participate more than those households whose purpose is for home consumption. They also supply more volume of poultry to the market than their counterparts.
Breed availability (BRAV): This variable is a dummy variable indicating the breed type of the birds that the household owned (exotic or local and/or any combination of the two breed types). The former type is more productive in terms of both egg and meat yield. But due to feed requirement and disease vulnerability farmers may prefer the local breed type. The households owning exotic breed assumes 1 and 0, otherwise. Therefore, it is hypothesized that households who have exotic and cross breed can participate more than those households who have pure local. They also supply more volume of poultry to the market than their counterparts. This could be due to the exotic and their cross birds are productive and grow faster than the local indigenous breeds. Woldemichael (2008) suggests that marketable milk surplus of the household in the study areas are more responsive to number of cross breed milk cow. Furthermore, this result elaborates that marketable milk surplus per day increases in response to the increase in milking cross breed cow number. Holloway et.al. (2002) found that household with larger dairy cows was positively associated with value of sale of dairy products.
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4. RESULTS AND DISCUSSION
This chapter presents the results of both the descriptive statistics and econometric analysis. The chapter is comprised of 4 main sections. Section one presents the socio-economic characteristics of poultry producers and traders, and their access to business support services. In section two the structure, conduct, and performance of chicken market is presented and discussed. Section three deals with the factors that affect the market supply of poultry with Heckman’s two stage model. Finally in section four the constraints and opportunities in poultry production and marketing are presented and discussed.
4.1. Socio-economic characteristics of poultry producers and traders
In this section the socioeconomic characteristics of poultry producers and traders is presented and discussed. First the socioeconomic characteristics of poultry producers are presented and this is followed by the sub section that presents the socioeconomic characteristics of poultry traders.
4.1.1. Socio-economic characteristics of poultry producers The result in table 2 shows the socioeconomic characteristics of the households with respect to continuous variables. With respect to age of the respondents the result shows that the average age of the households is 29 and 32 years for Arbegona and Bensa districts respectively. This means that the households in the two districts are in working age category and also there is no statistically significant difference in age of the households between the two districts. Table 3: Socio-economic characteristics of poultry producers (continuous variables) Variables District Minimum Maximum Mean St. Dev. X2 Age Arbegona 18 60 29.00 1.80 1.36 Bensa 15 55 32.00 1.48 Family size Arbegona 3 13 6.20 1.34 5.70** Bensa 2 10 3.46 1.01
**P<0.01 across the rows
The family size of the households ranges between 3 to 13 for Arbegona district with average family size of 6. However, it ranges between 2 and 10 with average family size of 3 individuals for
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Bensa. Those households with very large family size are characterized by polygamous family. The small family size households were young couples. Family size showed variation between the districts at 0.01 percent significance level. This variation is due to the fact that at Bensa, there are new comers to the area for trading since the area has cross border road and access to get goods with minimal costs and sell to other areas with high price, and more families are business oriented traders so that more males migrate to Bensa and other towns than Arbegona and also more polygamous nature in Arbegona.
Table 4: Sex distribution of poultry producers based on woreda
Variable Variable Arbegona (N= 89) Bensa (N=89) Total
Category No. % No. % No. %
Sex Male 63 71 68 76 131 73 Female 21 24 26 29 47 27 N= Total number of sample respondents, *P<0.05, across rows
The result in table 3 shows that 73 % of sample respondents were male headed households and 27 % were female headed. Although the majority of the respondents were male headed, the focus group discussion and majority of male headed households respondents agree that the responsibility of rearing and feeding relies on females. The sex distribution has significant difference at 0.05 percent significance level between Bensa and Arbegona woreda. This variation could be due to comparatively higher live bird and egg consumption habit in Bensa area, more families in Bensa area are Business oriented and have know-how on profitability of poultry so that they have more focus on poultry production business than Arbegona.
The result is in line with Halima (2007) that stated rural women in North-West Ethiopia are more responsible for chicken rearing in both male and female headed households, while men are responsible for crop cultivation and other off-farm activities.
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Table 5. Marital status of poultry producers Woredas Variable Arbegona Bensa Total Marital status Single 17 21 38 Married 54 48 102 Divorced 14 12 26 Widowed 4 8 12
Regarding marital status more respondents in Arbegona are married (81%) than Bensa woreda (78%), but there is no statistical difference between woredas.
Table 6: Distribution of producers with respect to their educational level
Variables Category Arbegona Bensa Total N=89 N=89 N=178 X2- test No % No % No % Education Not attended formal education 16 18 19 21 35 39 2.51* Level Primary school (1-4) 31 38 36 41 67 79 Secondary school (5-8) 23 26 21 25 44 51 High school (9-10) 13 14 19 22 32 36 *P<0.05, across rows
The result in table 5 shows that there is variation in education level between the woredas. About eighteen percent of the respondents in Arbegona woreda did not attend formal education and is 20% in Bensa. The result shows that more than 40% attended formal education in Bensa. This could be because of there are more new comers to Bensa woreda than Arbegona so that they educated before coming the area and now more focus on trade/business than education. But there was no difference in flock size between households with educated and not attended formal education household heads. This result agrees with the study that concluded, traditional village poultry production is a low- input, low output activity, which does not require high levels of skill and education (Alemu, 2008). Both the educated and less educated households can practice traditional poultry production. But the result is in contrary to the result by Tanga et al, (2000) in Kenya, which shows that the education level of male heads of households significantly decreased flock mortality as treatment and disease prevention was the responsibility of men.
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4.1.2 Socio-economic characteristics of poultry traders Bird and egg traders in the sample markets were interviewed to gather information about their distribution based on different socioeconomic characteristics. Markets participants in Bensa and Arbegona woredas are considered as one market participants each because almost all participants engaged in all markets within the woreda except when there exists more than one market in a day. Sex of the majority of sample traders in sample markets is male with limited number of female traders. Out of the 40 market traders interviewed, 80% of traders in Arbegona and 69% of traders in Bensa are males. The remaining 20 and 31 percent traders were female. It is observed that almost all females were involved in egg trading at retailing stage in the market chain.
Table 7. Traders’ distribution on the basis of age category
Variables Category Arbegona Bensa
Average age Mean 29 30 Sex Male 16 (80%) 14 (69%) Female 4 (20%) 6 (31%) Source: survey, 2015
Most bird and egg traders in the sample market are part time traders. This implies that bird and egg trading in the two woredas are integrated with other farming and non-farming activities and most traders do not consider it as an independent business
Table 8: Distribution of traders with respect to level of education
Category of education level Frequency Percentage Cumulative not attended formal education 21 21 21 primary school (1-4) 29 29 50 secondary education (5-8) 37 37 87 high school (9-10) 13 13 100
As shown in table 7, twenty one percent of the live bird and egg traders did not attend formal education, 29 per cent had attended primary school (grades 1–4), 37 per cent junior school (grades 5–8) and 13 per cent high school (grades 9–10) and the remaining has completed 10th grade and have
- 35 - certificate. This implies that bird and egg trading considered as job creation and livelihood activity in the two woredas and integrated with other farming and non-farming activities. The result agrees with Awol (2010) in that most of the traders in the sample markets particularly in Primary markets are very young and are living with their parents. They are school aged and Perform marketing activities mostly in market days that take place at weekend.
Table 9: Proportion of live bird and egg traders with respect to their trading experience
Number of years trading Frequency % Cumulative 2-5 48 48 48 6-9 22 22 70 10-13 16 16 86 14-17 14 14 100 Source: survey data
The result in table 8 shows that from sample traders interviewed on their trading experience show that with a mean trading experience of 3 years. Also about 48 per cent of the traders have only two to five years’ experience. This is because the traders shift their live bird and egg trading business to other large trade investment with base and initial capital from the poultry trading profit income.
4.1.3 Source and income level of farmers Most farmers in the study area earn their entire income from agriculture with crop dominant practice. According to the result presented in Table 9, 72 and 58 percent of the sample households from Arbegona and Bensa earn their total annual livelihood from agricultural activities with crop dominance. There is a statistical difference between livelihood activities across woredas. This could be due to more farmers in Bensa woreda integrate trading and other economic activities with their agriculture than farmers in Arbegona woreda. The annual revenue from poultry production cannot be undermined. Most farmers replied that they do not have clearly stated purpose regarding the intention of poultry keeping. But the figures presented in Table 9 can prove the contribution of the subsector for the betterment of the livelihood of the rural poor relative to the low financial and labor investment.
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Table 10. Proportion of Sample household’s with respect to livelihood strategies
woredas variables Item Arbegona Bensa Total Main livelihood activities Crop farming 72 58 130 Animal husbandry 5 9 14 Off-farm 6 12 18 Non-farm 4 10 14 *P<0.05 across rows
The monthly average income of farmers in Bensa woreda is about 1375 birr that is much larger than farmers in Arbegona woreda which is 1100 birr. This variation might be due to the high population density, Bensa woreda is more business oriented, and the better involvement in non- agricultural activities than Arbegona. Table 11: Mean monthly income earned from farm and non-farm activities Woredas Variables Item Arbegona Bensa X2-test Mean monthly Income from Farming 1100 1375 0.719 Poultry 150 225 3.860* Off-farm 410 145 2.765** Non-farm 400 570 1.07 *P<0.05, **P<0.01 across rows
The annual income of most of the households engaged in rural poultry farming is less than the amount they obtained monthly from farming, which is 225 ETB, while few farmers also get more income from poultry business, on which they lead their basic needs of living.
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4.1.4. Flock size and breed composition of bird Flock size and breed composition of birds in rural and urban small scale farmers highly depend on the accessibility of input, housing, disease incident and purpose of keeping among others.
Table 12. Flock size and breed composition of households
Breed type woreda N mean Std. deviation t-test local Arbegona 89 4.176 3.577 1.98 Bensa 82 2.905 3.755 Cross Arbegona 40 32.100 14.249 7.88* Bensa 63 2.600 4.900 Pure exotic Arbegona 2 -1.392 1.041 -4.14 Bensa 3 0.866 1.744 Total number of bird kept Arbegona 88 8.560 32.67 4.06** Bensa 116 13.45 10.66 N: number of sample respondents, *P<0.05, **P<0.01 across column
Breed type for cross and total number of bird owned shows strong variation between the two woredas. The average flock size per family in Bensa woreda is about 13.45 and that of Arbegona woreda is about 8.56 for both local and exotic breeds. The independent sample t-test showed that these two means show significance difference at 0.05 percent significance level. This is because in Bensa area farmers have an access to produce, trade poultry and they more use bird and egg as income source than Arbegona.
Generally, the average number of birds was approximately 17 with minimum of zero to a maximum 110 chickens/household. Of all the households that kept poultry, 47% had five or less number of birds. About a 30% of these households kept 6-14 birds. Only 23% had beyond 17 and above birds. In terms of breeds, majority (64%) of households kept local poultry followed by 30% of the households who had cross breeds which they get from different organizations. Whereas 6% of them kept only improved breeds. The result of the study revealed that the average flock size per household varied between seasons mainly due to availability of feed and the occurrence of diseases and predators. This result is comparable to the mean flock size of 8.8, 9.2 and 7.37 chickens/ household reported by Assefa (2007) from Hawassa Zuria of southern Ethiopia, and by Mekonnen (2007) from Dale Woreda of southern Ethiopia, respectively.
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4.1.5. Ownership and decision making role Ownership and decision making ability in the production and marketing of birds and eggs within the household in the study area is diverse and independent. All household members including male, female and children are owners and decision makers in the production and marketing of birds and eggs. From the household survey the respondents replied that owners and decision makers in bird production and marketing include the household head, wives and children. This implies that almost all family members participated in local chicken management and provided labor for chicken husbandry but majority of routine works such as cleaning, feeding, collection of egg were usually practiced by female, whereas male were generally involved in construction/maintenance of shelter, controlling and scavenging activities. In many cases children participated in various activities like provision of supplementary feed and water. The results were in agreement with earlier reports on involvement of females as major workforce in village chicken management responsibility (Mtileni et al 2012). According to Gueye (2003), the management of rural chicken in Africa is a family affair. Construction of chicken house and major decisions on sale of chicken and eggs and consumption of chicken products is under the control of men, while looking after chicken, controlling and utilizing the earnings from the sale of eggs and chicken belongs to women. Similarly, Tadelle and Ogle (2001) indicated that management of chicken is fully in the domain of women in Ethiopia, while decision on control and access to resources varies considerably. Kitalyi and Andre (1998) also reported that there is gender equal responsibility in decision-making in village chicken production in the Gambia.
4.1.6. Productivity of village poultry keeping
Poultry production system is traditionally characterized by low input-output ratio with birds left to scavenge what they find elsewhere and given minimal or nothing to supplement on their daily feed. This in turn reduced the expected productivity of the sector. The farmers revealed that this low productivity is a factor of high mortality rate, low hatchability, and long broodiness time of local breeds (table 12). The finding of Tadele (2002) decomposes the major uses and benefits of poultry and egg in rural Ethiopia into egg for hatching (51.8%), sale (22.6%), home consumption (20.2%) and birds produced for sale (26.6%), sacrifice for ceremonies (25%), stock replacement (20.3%) and home consumption (19.5%). As shown in table 12 below, hatchability of local and cross birds is 74
- 39 - and 57.11 percent per annum. About 50 percent of the loss in the eggs incubated by local chicken is due to the low hatchability rate and low survivability rate of local hatcheries. The Survivality rate of local laid eggs (55%) is higher than the cross laid eggs (45%) because of the same reason as hatchability. The result of the current study was also in line with the findings of Sonaiya et al. (2004), who stated that sale of live birds for income generation was the primary goal of keeping family chicken in developing countries. The mean egg production of local birds under smallholders’ management system is 101.2 eggs per annum per bird in the study area. This figure is very low when compared to the production potential of exotic breeds which is 250 eggs per annum per bird.
Table -13. Productivity of local and cross breeds under smallholder keeping system in the area.
Item N Minimum maximum Mean Std. deviation Average egg laid from local bird per 175 30 150 101.2 14.1 annum (local breed) Average egg laid from cross 174 50 180 146 16.3 bird/annum (cross breed) Hatchability of local bird/annum 90 45 85 74 7.5 Hatchability of cross bird/annum 70 30 75 57.11 8.8 Survivality of local laid eggs 95 75 95 55 5.5 Survivality of cross laid eggs 65 50 75 45 8.8 Total number of eggs owned (local) 170 10 75 25 7.8 Total number of eggs owned (cross) 160 10 70 11.4 8.1 Total number of Chickens died from 176 23 45 12.34 4.5 2006-2007 N: refers to the total number of sample respondents
The major causes for the death problem was perceived by the community and in their order of importance were disease (63%), predation (8%), lack of feed (25 %) and lack of information (4%). The finding is in line with the previous research findings of (Alemu and Tadelle, 1998; Moreki, 2010), the major cause of poultry losses in village chicken production was mortality due to disease, predator and nutritional stress.
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4.2 Farmers’ Access to Business Support Services
Access to business support services for all actors in the marketing chain is crucial to make the chain actors and the market chain as a system competitive so that producers, intermediaries and end users of goods and services can make the best use of it. In this section support services of extension, credit, input supply and marketing in poultry sub-sector have been assessed and evaluated by farmers.
4.2.1. Farmers access to credit Competitive financial market is fundamental in undertaking each and every economic activity in order to get the maximum benefit out of the activity undertaken. Formal financial market in most developing countries is not competitive and even nonexistent in the rural areas. Farmers in rural areas of Ethiopia get most of their financial requirements from informal money lenders and relatives at higher interest rate.
Table 14. Proportion of Poultry producers with respect to credit access in study area.
woredas
variables Response Arbegona Bensa Total X2 Did you borrow money to start Yes 26 27 53 42.023 poultry production? No 54 53 107 Is the criterion acceptable? Yes 50 29 79 1.007 No 31 61 92 Is the credit enough to start the Yes 27 23 50 4.667 business? No 53 57 110 What are the sources of credit NGO 27 28 55 143.61 since 2006? GO 51 50 101 Relatives 22 22 54 How much did you take/borrow? Mean 1003.4 571 - 4.888 Did you get agricultural Yes 68 71 149 24.61 extension service as you need? No 32 29 61
What are the major problems in Afraid of credit services? credit taking 20 17 37 31.45** Inconsistent 51 44 96 No collateral 23 16 39 No formal 36 33 69 institution
*P<0.05, **P<0.01 across the row.
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Some Farmers in Arbegona woreda reply that they received credit in the year 2006/7 E.C. In this regard, about 60 and 39% of the respondents in Arbegona and Bensa agree that credit access criteria are not economical. But the repayment duration was fixed and they were asked to repay the entire amount at a time. Some Farmers from Arbegona woreda replied that the credits they take were relevant and they benefit out of it even if they were asked to repay within a short period of time so that they are able to adopt the technology.
Farmers also pointed out that major problem in credit service include absence of formal credit access, limited supply, and farmers afraid taking credit are the most frequently mentioned problems among others. The problems show significance difference between farmers of two woreda at (p<0.01) significance level. The difference might be because of the lack of awareness on credit facilitation between woredas and farmers attention on credit need, and due to better business attention in Bensa woreda.
Farmers were also asked to evaluate their credit access for the production and marketing of poultry. The evaluation criteria include availability of credit access, timeliness of credit, repayment duration and relevance of the credit.
Regarding the availability of credit access about 68% in Arbegona and 70% in Bensa of the respondents strongly agree that availability of credit service has a limitation. Those farmers who take credit were also asked to evaluate the service in relation to its timeliness and most of them agreed that the credit taken was not timely and also less amount of money. They also evaluate the service in terms of the repayment duration and adequacy and most of the service users agreed that it was not satisfactory. There is no significance difference (p<0.01) in farmers credit need between the two woredas. This might be due to the introduction of exotic breed day old chicks in credit in both woreda by government and NGO’s and international organizations particularly, ILRI, LIVES Project. However, currently the farmer’s interest is high for credit service, availability, input supply and extension service.
This study result goes in line with 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 farmers.
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Table 15. Evaluation of the credit service with selected evaluation criterion Woredas Evaluated Variable Response Arbegona Bensa Total X2
Credit availability limited? Agree 47 50 97 3.3344 Disagree 32 20 52 Limited Credit timeliness Agree 46 49 95 1.74496 disagree 34 21 55
Limited Repayment Agree 52 57 109 2.9530 duration disagree 18 13 31 Low Credit relevance Agree 70 58 128 2.6190 disagree 10 22 32 Credit adequacy Agree 35 45 80 4.6 disagree 45 45 90 Limited supply Agree 60 75 135 2.445 disagree 20 5 25
4.2.2 Farmers access to extension service Extension service here is assessed and evaluated based on the frequency of farmers contact with the development agent and how farmers are evaluating and measuring the quality and relevance of the service they get from the experts. Now a day agricultural experts are trained and assigned at the lower administrative level ‘kebele’ to assist farmers to improve productivity and competitiveness so that earn better income and improve their livelihoods. From table 12 above, about 68 and 71 percent of the respondents in Arbegona and Bensa woredas respectively get extension service for poultry production and marketing in the year 2007/8 EC. Extension service access for poultry production and marketing shows statistically no significant difference between the two woredas. The similarity is the result of involvement of LIVES project in the subsector in two woredas along with the woreda bureau of agriculture and rural development (BOARD) prior the survey year. The most frequently mentioned bottleneck in extension service is low follow up, limited demonstration site, limited focus on marketing of village poultry than other crop and livestock and its failure to integrate Vaccine, input supply and credit facilitation in the package. The result is in agreement with a study on green beans by Lusby (2007), which revealed that, lack of crop husbandry skills and limited extension services has constrained the productivity of the sector.
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4.2.3 Farmers access to input supply Farmers were asked to list the input services delivered and efficiency of input supply in the woredas. This input supply system includes all input types used for the production and marketing of both local and exotic chickens. As shown the result in table 15, significantly more families in Bensa woreda have better access for inputs for exotic birds including chicks and pullet for stock establishment along with the credit, feed and veterinary service than farmers in Arbegona. This is due to the fact that the involvement of the nongovernmental organization including (ILRI-LIVES project) is higher and the access to transportation are among others potential possibilities in provision of full package of inputs for exotic bird keeping in selected peri-urban kebele of Bensa woreda of the study year.
Table: 16. Farmer’s access to input supply for live bird rearing
Woreda Variable Response Arbegona Bensa Total X2 N 89 89 178 Do you have exotic Yes 39 70 109 2.421 chickens? No 50 19 69 Source of exotic BOARD 20 33 53 37.566** chickens? NGO 15 40 55 Kebele Markets - - - Woreda market 5 7 12 Source of local chickens woreda market 83 85 168 6.021 kebele market 6 4 10 Mode of purchase for Cash 26 35 61 26.291* exotic Credit base 63 54 117 Mode of purchase for Cash 79 86 167 0.063 local Credit base 10 3 13 Do you feed Yes 57 64 121 5.99* supplementary feeds? No 32 25 57 What are the major feeds Grains 89 89 178 60.024 for chickens Scavenging 84 57 141 Compound feeds 48 32 80 Do you get timely Yes 35 26 61 25.98 veterinary service? No 54 63 117 *P<0.05, **P<0.01 across the row.
With regard to feed supplementation and availability of housing services, farmers in Bensa woreda are better accessing the service due to the same reason mentioned above. Furthermore, farmers in
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Arbegona woreda are in a better position in supplying their birds a combination of grain and compound feed beside the traditional free ranging system. Most farmers in both woredas do not hesitate the input supply system for local bird keeping. This is because of the fact that farmers do not consider village poultry keeping as an independent business and birds are left aside to fulfill their feed requirements. Local birds also have better performance in surviving harsh environmental condition and disease. But regarding exotic birds input supply, most farmers are strongly opposing the service as the breeds require much more inputs than the local ones. The result has in line with Tadele (2002), which indicated that birds are left to scavenge what they find elsewhere and given minimal or virtually nothing to supplement their daily feed requirements and under such management condition village poultry lay 40-60 eggs per hen per year.
Table 17. Constraints to extension service and input supply in study woredas
woredas variable Response Arbegona Bensa Total X2 N 89 89 178 Major problems The service is not consistent 34 29 63 23.6 in extension Inefficient technology transfer 10 8 18 service Limited focus 14 23 37 Low follow up of the subsector 20 16 36 Poor infrastructure 12 2 15 Limited demonstration site 8 11 19 Major problems Absence of exotic breed/inputs 31 23 54 19.6** in input supply Absence of local breed/inputs 11 2 13 High input/feed price 32 24 56 Inconsistency and poor supervision 15 21 26 Limited veterinary service 20 25 45 Source: own computation, **P<0.01 across column
According to the result in table 16, most farmers in both woredas stated that the input supply system for exotic breeds is poorly developed and characterized by high price and inconsistent availability. The input supply system for local breeds is also poor and inconsistent in availing inputs like compound feed and veterinary services that cannot be found in local market places. Even if it existed, characterized by high price and found in long distance from the farmers resident. This poorly developed input supply system can have adverse effect in the productivity and profitability of the subsector. There is no statistical significant difference between woredas problems on extension services delivery but there is significance difference between study woredas input supply. This
- 45 - might be because of prior road and infrastructure availability, high price poultry in Bensa, and more NGO’s select Bensa woreda than Arbegona for their intervention. The findings are consistent with Ekunwe and Soniregun (2007) who identified the major constraints faced by poultry producers in Nigeria in the order of inadequate finance, high cost of feed, low egg price and high cost of medicine and vaccine. Amos (2006) also identified high cost of feeding and veterinary drugs as the main factors affecting poultry production in Ondo State in Nigeria.
4.2.4 Farmers access to market and market information
Market places in rural areas are often characterized by long distance and considerably long time interval between two market days. These characteristics of rural marketing system obviously adversely affect the transaction of goods and services by rural households. This in turn affects the farmers’ production and marketing decision of goods and services.
The result in Table 17 shows that the market access and farmers behavior of bird and egg marketing system in the study area. Many past works in the production and marketing of poultry stated that the activities undertaken in this subsector involve the active participation of women and children with equal ratio. These groups of the society are believed to participate in other activities like production and reproduction of poultry so that understanding of the situation of the poultry marketing system in the study area is crucial in analyzing the production and marketing behavior of owners and decision makers of village bird keepers.
About 80% of the total sample respondents engaged in the marketing of their own bird and egg in the survey year (Table 17). In order to arrive the nearest poultry market, peri-urban producers must walk average of about 4.5Km distance and trade their birds and egg at a market which function once or twice a week mostly. Almost all sample markets were starting at the afternoon that imposes tension on the market participants as they walk long distance back to home.
The result shows that most poultry owners are price takers and price is set by agreement of the parties that lead to increase the bargaining power of the buyers depending on the time of sale. Above all most sellers do not have price information of another market before they transact their product.
- 46 -
Table 18: Live bird and egg marketing behaviors of households in the two woreda
Variables Response Woreda Total X2 Woreda Total X2 Arbegona Bensa - - Arbegona Bensa Egg marketing bird marketing Did you sell Yes 82 74 156 2.3 69 79 158 2.6 egg/live bird in No 7 15 22 20 10 30 63 2006 1 Non marketed Sold at lower 84 79 163 3.1 80 69 149 3.5 egg/bird in price Took 55 market day another market 5 10 15 30 20 50 Who set the price Sellers 34 31 65 14. 56 70 126 3.8 of egg/bird? Buyers 49 40 89 8** 44 47 91 0* Brokers 7 9 16 20 3 23 Both buyers 47 47 94 31 26 57 and sellers Did you now the Yes 66 60 126 4.1 70 66 13646 3.2 local market price No 54 60 114 2 40 44 3 before selling Did you now the Yes 50 47 97 4.7* 20 93 113 3.8 Hawassa price No 70 63 133 90 17 107 93 before selling 8 Source: own computation, *P<0.05, **P<0.01 across the row.
Lack of market access and absence and/or asymmetric information are the major constraints mentioned in deciding how much to produce and supply to the market. The result of this study goes in line with a research result by Beyene and Phillips (2007) in that, absences of research and market information in Ethiopian honey value chain have wasted the nation’s incalculable benefits. Oladeji (2011) reported a similar trend by revealing that sources used by poultry farmers to access information on poultry practices include poultry association, extension workers, local market and family and friends among others.
4.3 Market Structure, Conduct and Performance of Poultry
4.3.1 Market Structure of poultry Structure of a marketing system refers to the size and market share of firms, relative ease of free entry and exit from the marketing chain, degree of product differentiation and the degree of market transparency among the chain participants within a given subsector. Concentration ratio, potential entry and exit barriers and quality and availability of marketing information have been analyzed to evaluate the market structure of the subsector in sample markets.
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4.3.1.1 Actors and their roles in poultry marketing chain
Direct actors
In the production to consumption system of poultry diverse groups of actors operate. This include direct and primary actors, like producers, traders, collectors, wholesalers, transporters, brokers, retailers, hotels, shops and restaurants, processors, supermarkets, and consumers. These groups of the chain actors perform important marketing functions in facilitating the flows of birds and eggs from producers and village collectors to whole sellers and consumers. Some functions or roles are performed by more than one actor, and some actors perform more than one role.
Producers: Producers are the actors in the first stage of the chain and they produce the poultry and eggs and sell to different actors in the production to consumption system. They also buy birds and eggs for production purpose. In the study area the supply and price of birds and egg is known to depend highly on the availability of holydays. These are Ethiopian new year (September 11), Ethiopian Christmas (January 5), Ethiopian Epiphany (January 19), Ethiopian Easter (April) and the Muslim Arefa. The periods with low live bird sales and consumption coincided with the pre-Easter fasting period which lasts about two months, from February through March. Similarly, sales of egg and consumption followed the same pattern as that of live bird sales and consumption. In the ordinary season’s farmers are the major market outlets for production in local markets and in time of holydays no more farmer buy birds and eggs for this purpose. In ordinary seasons the local markets are full of pullets because the major buyers are producers to keep birds until the time of holydays. The result shows that in poultry subsector, all family members are independently owners and decision makers in the production and marketing of birds and eggs. This is contrary to the case in other agricultural products and commodities in which household heads are the ultimate decision makers in production and marketing of the products (Kitalyi, 1998)
Traders: This group of the chain actors play important role in the chain. On one hand they play important role by buying egg and live bird from local market from the producers and on the other hand they resell it for whole sellers in local and woreda markets and in doing so they get benefit. There are also cases where farmer traders also sell for farmers who want to grow the birds. They have immediate contact with farmers who supply bird and egg to the market and they play a major
- 48 - role in linking the producers to other actors in the value chain of poultry. The result shows that 54 % of the live birds and 46% of eggs is transacted through this group of actors.
Collectors: Collectors are those who know the local language and the potential areas where poultry and egg are produced. These are also important actors in the market chain and they supply their birds and egg for Hotels and restaurants and retailers both in woreda and regional markets. They also buy birds and eggs in nearby local markets by competing with village collectors. The result shows that they all are male and also they are shop/hotel owners in the study area. They have better capital and most of them are full time traders than village collectors. The result shows that 23 % of the live birds and 36% of eggs are transacted through these of actors.
Wholesalers: In both live bird and egg marketing chain, wholesalers are important actors who buy live birds and eggs from urban and village collectors in woreda and regional markets and sell in bulk for shops, Hotels and Restaurants in woreda and regional markets. They are full time traders and travel to different woredas to buy egg. They use baskets to pack their egg and put straw and grass to protect the egg from mechanical injury during transportation. These traders transact almost half volume of birds (23%) and (48 %) eggs from Arbegona and Bensa woreda markets to Hawassa market. They transport the birds by Isuzu to Hawassa and supply for brokers who sell the birds to retailers and Hotels/ egg shops and Restaurants in Hawassa.
Brokers: Brokers or commission agents in the marketing chain of poultry and they play crucial role by coordinating the flow of live birds and eggs from Arbegona and Bensa town to consumers with in Arbegona and Bensa area and in Aleta Wondo and Nearby Oromia region woredas. In the value chain the brokers don’t possess the ownership of the birds they transact. Rather they receive the birds sent by whole sellers in Arbegona and Bensa town and sell them for retailers and hotels and restaurants with in Arbegona, Bensa, Hawassa, Kokosa woreda market in Oromia zone and Aleta Wondo terminal market. They set the price themselves according to the demand and supply of birds from the different parts of the surrounding to Arbegona and Bensa market. In doing so, they transact about 3% of the total volume of birds. For the service they provide for the wholesalers, they deduct 5 birr per bird and send the remainder to the whole sellers. There is neither legally enforceable agreement nor any kin relationship between the brokers and the whole sellers rather they have just business clientele relationship based on mutual trust. But most of the traders were not in favor of the involvement of brokers as they reshuffle the price.
- 49 -
Retailers: Retailers in bird and egg marketing chain are those actors who link consumers with other traders and/or producers. The number of these traders varies according to the demand and supply condition, because in the time of holidays there is high supply and high demand of birds, so that high net profit from the live bird trade. In the time of holydays the number of retailers reaches its peak and drop as the holyday ends and from the total volume, it is known that about 63% of live birds and 5% eggs are transacted in this channel.
Hotels and Restaurants: These groups of actors in market chain of poultry are important. They buy live birds and eggs from retailers and they serve for their customers in terms of food especially Doro Wot and egg Firfir. Here they are engaged in adding value to the birds and eggs even though the cost and benefit of these actors is not included in this economic analysis due to the complexity of the business undertaken by them. In the study area only egg is supplied to consumers and no DORO WOT or no processed meat.
Processors: These are marketing actors engaged in processing of live birds to value added products. That is, they are engaged slaughtering, washing and packing the birds. They sell the processed products for consumers through Super markets. In Hawassa town there are few processors that are engaged in processing of birds though they are still using the traditional processing technology and supply for super markets. In the hotels and restaurants, processed eggs are more practiced than poultry meat in the study market chain and 6% live bird and 15% eggs transacted. It was also known that processors, Hotels and Restaurants use female birds due to their comparative price advantage than cocks.
Super markets and egg shops: Although the proportion of supermarkets in live birds is minimal and worth to be mentioned, egg shops share large proportion of chain volume of eggs and their contribution in the egg market chain is high. Some supermarkets in Hawassa either buy processed birds from processors or process the birds themselves and store in refrigerator until sell. They pack the different parts of the bird in plastics according to Ethiopian traditional “doro wot” dish preparation procedure and sell for consumers. This not practiced by the producers and other actors in study area towns but it is carried out by the actors who are in regional supermarkets, Hawassa. Egg shops also get the eggs from collectors and or producers and sell to consumers with some price
- 50 - increment. Most of urban egg consumers get from shops nearby and that is the case for large volume of eggs transacted via this channel (65%).
Consumers: Consumers are the final stage actors in the production to consumption system of poultry. Consumers for this particular study mean those households who buy and consume live bird and eggs. They are individual households, who buy the poultry and egg for their own consumption.
Supporting actors These actors are those who provide supportive services for the functioning of the value chain and market chain, including training and extension, information, financial and research services. In this regard, Woredas agricultural departments, woreda cooperatives departments, micro finance, NGO’s, ILRI through LIVES project and Hawassa University are main supporting actors who play a central role in the provision of such services in the study area. The key informant interviews and the focus group discussion show that in the past recent years the contribution of these actors for the improvement of the chain has been magnificent. These include provision of inputs, extension services, provision of exposure visit, training integration and linking of actors, markets and etc. In this regard, Martin et al. (2007) underlined that access to information, knowledge, technology and finance determines the state of success of market chain actors. Simultaneously, Cormick and Schmitz (2001) indicated even though firms in a system are formally independent of one another, an increasing network through personal relations and repeated transactions has assisted to inspect and alleviate the chain’s core problems by developing their capacity and reducing the cost of the actors.
4.3.1.2 Live bird and Egg marketing channels
Marketing channel analysis is useful tool to examine the series of intermediaries and their systematic linkage in performing marketing functions and information flow in the market chain to facilitate the flow of goods and services from the point of production to end users (Kotler et al., 2003). In the study area the marketing channels of poultry is identified for both live birds and eggs. In the following section the most important channels employed in the transfer of live birds and eggs in the study area are discussed below.
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(a) Live bird marketing channels
The analysis of the live bird marketing channel shows that there are diverse channels through which live birds are transacted. In this study five major marketing channels of live birds and seven egg channels are identified. The finding of this study indicated that chicken and egg markets follow almost similar channels only with very few differences. However, this study tried to show the major chicken and egg channels independently as depicted below.
Table 19: Live bird and egg marketing channels
Live bird marketing channels Egg marketing channels Chan intermediaries’ Chan Intermediaries nel nel I Producer – Consumer… (31%) I Producer –Consumers... (6%) II Producer -retailer – Consumer… (39%) II Producer–collectors–Consumer... (17%) III Producer – collectors – brokers – retailer – III Producer –collector- wholesaler -Retailer- Consumer… (10%) Consumer... (5%) IV Producer – collectors - whole sellers - Retailer IV Producer –Collectors-egg shops-consumer... trader – Consumer… (14%) (30%) V Producer – collectors – processor- V Producers- collectors - wholesalers-hotels & supermarkets – Consumer… (6%) restaurants-consumers... (15%) VI Producer-mini-shops- consumer... (20%) VII Producer-hotel – consumer….... (7%)
The channels show that the transaction of poultry between smallholder farmers as producers and consumer customers is carried out via different channels involving no intermediary, one intermediary, and more than one intermediary.
In this study, the live birds marketing channels for both woredas are of similar nature in that the flow of product to consumer with similar channel with some brokers included but the volume of birds transacted is not equal between the two woredas (see figure 2).
As shown above, five marketing channels were identified for live bird and here comparison was made among Channel based on the volume of the birds that passed through each channel. As indicated in figure 3, the buyers who buy the live birds from the producers were retailers, consumers, local collectors to (wholesalers, processors and supermarket), and share an estimated percentage of 39, 31 and (39) of the live birds respectively.
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Producers (148434 live birds)
11% 31% Collectors’
6% 3% Brokers Whole sellers 20% 8% 3% 6% Retailers 5% Hotels & restaurants 11% 0%
Super-markets 100%
Consumers (100)
Figure 2. Live bird market channel in study districts
As retailers buy from producers immediately after their entry or in nearby road without knowing the market price, the Producer-retailer-consumer market channel shared the largest volume of live bird which is 39% of the total volume followed by producer-consumer channel which shared about 31% of the total volume. Whereas the producer local collector-consumer channel through broker, retailor and supermarket has the least share with respect to the above channels in live bird which accounts about 30% of total live bird transacted in the channel.
Producer-consumer channel: This is a channel where the producers sell the live bird directly to final users (consumers). The channel accounted for about 31% of the total birds marketed during the survey period. This channel was identified as the second important live bird marketing channel in terms of volume of birds transacted in the study area due to distance as many consumers who buy live birds are away from producers as they are in towns. For live bird channel producer to consumer channel has high producer share, however, the channel is identified for lower volumes of the birds to
- 53 - be transacted with high producer share. For instance, study by Ayelech (2010) stated the producer- consumer channel of mango as fifth important marketing channel in the study area.
Producer-retailer-consumer channel: In this channel producers sell the live birds to retailers and the retailers in turn sell the live birds to consumers. It is a channel that accounted for about 39% of the total birds marketed and thus, first most important channel. This is because retailers buy from producers immediately after their entry or in nearby road without knowing the market price, the Producer-retailer-consumer market channel shared the largest volume of live bird, with low producer share. This is in line with Adugna (2009) who explained the producer–retailer consumer channel represents the large volume of fruits in terms of transaction.
Producer-collector-broker- retailer-consumer channel: In this channel the consumers purchase the live birds from retailers via local collectors. This channel accounts for about 10% of the total birds marketed during the survey period. This channel accounts low volume of both live bird and eggs. This might be because in the study area local collectors are part time traders, small number of brokers and retailers may not buy as much as birds from brokers as collectors. That is, retailors need to buy from collectors and or directly from producers than brokers. The involvement of broker in poultry market is worth to be mentioned.
Producer – collectors - whole sellers - Retailer - Consumer channel: In this channel the consumers buy the birds from producers via local collectors and through retailer and whole seller and the channel accounts for about 14% of the total volume of birds transacted during the survey period. This is a least share of the channel from the total volume of the birds second to with processors included channel, and this might be because local collectors sell more of the birds to retailers rather than selling to whole sellers and consumers based up on prior agreement made between them. In this channel it is observed that if the wholesalers let the bulk volume of birds with relatively low price, retailors set their own consumers price based on the initial cost. The result coincides with the findings of Adugna (2009), who stated that producer– local collector–consumer channel represented relatively less share in terms of the volume of the fruits which passed through the channel.
Producer-collector-processors-supermarkets-consumer channel: In this channel, the consumers buy the processed meat from supermarkets. The birds were originally collected by the
- 54 - collectors from producers. The processors process the birds and this channel accounts for 6% of the total birds transacted during the survey period. In comparison with the least of the channels, this channel share the least volume of the live birds transacted. This is due to the limited practice of processing the live birds that are sold via supermarkets and also the limited tradition of buying processed meat by the consumers. Rather the birds from both woredas are processed and supplied in Hawassa (regional) town supermarkets with a limited amount. Some of the birds (8%) that are collected by collectors and sold to supermarkets, restaurants, and hotels directly, so called producer- collectors-hotel/supermarket channel, but this channel is not practical and functional, rather it is seasonal with festivals. In general the linkages are very loose, often spontaneous without any formal or contract agreement being made. Some of the markets are opportunistic markets, targeting a certain market season or occasion like in major festivals. The result coincides with the result of Ayelech (2010), who stated the producer-collector-processors-consumer channel found to be the least important in terms of volume and the longest in terms of intermediaries in avocado marketing channel in the study area.
b) Egg Marketing Channels in the study districts
Analysis of egg marketing chain shows seven major marketing channels as indicated below. This is a channel characterized by a short channel where producers directly sell the eggs to consumers to the long and complex channel where producers sell the products to local collectors to wholesalers to retailers to consumers. In this study six major marketing channels were identified for egg and here comparison was made among channel based on the volume of the egg that passed through each channel. Accordingly, the producer-collector-shops-consumer market channel shared the largest volume of eggs which is 33% of the total volume, followed by producer-shops-consumer and producer-collector-consumer channels which shared a total of about 20% and 17% of the total volume respectively. Whereas, the producer - local collector-wholesaler-retailor-consumer channel has the least share (5%) of the eggs transacted in the channel. This is because of many consumers buy the eggs from local collectors than from producers and shops. The other channels comprise 25% of volume of eggs.
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In the following section how each of the chain is operated is discussed (see figure 3).
Producers (1043, 840) 5% 5% 6% Collectors 5 Whole saler Hotels & 7 restaura nts Retailers 20 5% 25% 8% Shops
100% Consumer (100%)
Figure 3: Egg marketing channel Map in study area
Producer-consumer channel: This is a channel where the producers sell the eggs directly to final users (consumers). The channel accounted for about 6% of the total egg marketed and fifth important channel during the survey period. In comparison to the live bird marketing chain, the producer - consumer channel represent for relatively low volume of the eggs transacted and similarly, high producer share is observed. This could be due to most of the egg producers sell their eggs to consumers via collectors than directly to consumers and in the town’s most residents buy egg from shops than egg markets. The result of this study agrees with study by Ayelech (2010) which stated that the producer-consumer channel of mango as fifth important marketing channel in the study area.
Producer-collector-shops-consumer channel: In this channel producers sell the eggs to collectors and the collectors in turn sell the eggs to shops and then to consumers. It is a channel that accounted for about 30% of the total eggs marketed. Thus, the channel was identified as the first important egg marketing channel in terms of volume of eggs transacted in the study areas. This is in
- 56 - line with Nega et al (2015) that analyzed the producer–collector-shops- consumer channel with respect to fruits and that show the largest volume of fruits in terms of transaction in the channel.
Producer-collector-consumer channel: This is a channel where the consumers buy the eggs from producers through collectors. The channel accounted for about 17% of the total egg marketed during the survey period and this channel found to be the third most important channel in terms of volume of eggs marketed. This could be due to more of the eggs pass through producer to consumer through collectors with minimum market price.
Producer-collector-wholesaler-retailor-consumer channel: In this channel producers sell the eggs to collectors and the collectors in turn sell the eggs to wholesalers and then retailors buy in bulk from wholesalers and sell for consumers. It is a channel that accounted for about 5% of the total eggs marketed. This is a channel with a least volume of eggs transacted in the study area since it is tedious for retailor traders to count the actual number of eggs. Females play a dominant retailing role in this channel.
Producer-collector-wholesaler-hotels-consumer channel: In this channel producers sell the eggs to collectors and the collectors in turn sell the eggs to wholesalers and then to consumers. It is a channel with third important volume that accounted for about 15% of the total eggs marketed.
Producer- shops- consumer channel: In this channel producers sell the eggs directly to shops and then to consumers. It is a channel that accounted for about 20% of the total eggs marketed. Thus, the channel was identified as the second important egg marketing channel in terms of volume of eggs transacted in the study area. This channel is almost first channel in Bensa and Hawassa case. This could be because of more of the urban and nearby consumers buy from shops which they receive from customer collectors. In this case, collectors act as wholesalers with their agreed shops. Producer-hotel - consumer channel comprises 7% of the total volume of eggs.
4.3.1.3 Market concentration ratio The concentration ratio CRx as expressed by Kohls &Uhl (2002) refers to the percentage of the market sector controlled by the biggest X firms. Four firms (CR4) concentration ratio is the most typical concentration ratio for judging the market structure. Accordingly, a CR4 of over 50% is indication of a tight oligopoly; CR4 between 25% and 50% is generally considered a loose oligopoly and a CR4 of fewer than 25% is no oligopoly at all rather competitive nature of market. The analysis
- 57 - of the degree of market concentration ratio was carried out for all sampled traders in the study area. It was measured by the percentage share of the quantity of poultry purchased by the largest four traders annually. For this study the traders’ market concentration ratio was calculated for the woreda and regional markets.
Table 20: Live bird traders’ Market concentration ratio
Number Cumulative % of Cumulative Quantity Total % Share % of Frequency Traders % of purchased Quantity of Cumulative Trader (B) (C) Trader (in No) Purchased Purchase Purchase (A) (D=B/35) (E) (F=A*E) (G=F/t) 1 1 3 3 13800 13800 9 9 2 3 6 9 15040 30,080 21 30 1 4 3 12 8600 8600 7 37 7 11 20 32 4700 32900 22 51 7 18 20 52 3028 21198 14 70 5 23 14 66 2800 14000 9 82 6 29 17 83 2600 15600 11 93 2 31 6 89 2400 4800 3 96 4 35 11 100 1864 7456 4 100 35 100 148434 100 Source, survey, 2015
As can be seen from Table 19, the four firms’ market concentration ratio for Arbegona and Bensa live bird markets was calculated and it was found to be 37%, which is less than 50% and shows that the market structure of live birds markets in the districts is loose oligopoly. This shows that these marketing systems are fairly concentrated in terms of few firms’ domination. This is to mean the top four traders or 12% traders are controlling 37% of the egg market. These concentration ratios of live bird in the districts market happened mainly because the poultry market transaction involved too many suppliers including large number of producers, traders and collectors directly selling the product to the final consumers
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Table 21: Market concentration ratio of egg traders
Number Cumulativ % of Cumulativ Quantity Total % Share of % of e Trader e % of purchase Quantity Purchase Cumulativ Trader Frequency s (C) Trader d (in No) Purchased (G=F/t) e Purchase (A) (B) (D=B/67) (E) (F=A*E) 3 3 20 20 142000 426000 41 41 1 4 7 27 110000 110000 11 52 1 5 7 34 98000 98000 9 61 1 6 7 41 60,200 60200 6 67 1 7 7 48 48000 48000 5 72 2 9 13 61 28400 56800 5 77 4 13 26 87 18210 72840 7 84 2 15 13 100 86000 172000 16 100 15 100 1043,840 Source: survey, 2015 The result of the four firms’ market concentration ratio for Arbegona and Bensa egg market was calculated and it was 52 % (Table 20). This is to mean the top four or 27% traders are controlling 52% of the egg market. This figure shows tight oligopolistic behavior in egg trading. This is due to the fact that there are egg collectors and wholesalers in the Arbegona and Bensa woreda who collect and transport eggs to Aleta Wondo, Hawassa and other nearby markets, cafeteria, and shops and to consumers without any limit with some price transmission. However, these tight oligopolistic characteristics of egg in terms of volume had nothing to do with egg price setting and on entry to egg market in the market chain due to the fact that, there were large number of producers who were mainly engaged in market oriented egg production and supplying large number of egg to the market and egg traders without any barriers and thus, egg prices were found not to vary noticeably. 4.3.1.4 Condition of entry and exit to live bird and egg trading
The 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 poultry markets and compete with established traders. According to market survey, there are no significant entry and exit barriers.
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4.3.2 Market conduct of the poultry
The live bird and egg markets in the study area were identified to have loose and tight oligopoly market nature respectively. In the major markets in the study area, live bird markets were seasonally being supplied by a significantly large number of producers from the surrounding rural kebeles. On the other hand, egg market at buyer’s level includes large numbers of legal and illegal small scale cafeteria, shop, consumers, and small numbers of restaurants and hotels.
Price setting strategy: The survey result indicated that almost all transactions made on bird and egg marketing took place with direct contact between sellers and buyers. Most of the time wholesalers buy more of birds and eggs from Hawassa, Bensa and Arbegona markets from rural assembler, producers and collectors in a larger proportion. In addition to this, about 39% of the sample traders set purchase price themselves, 21% of them reported that their price is set by market, and 31% of the traders set price by negotiation
The highest bird sales overlapped with the major social and religious celebrity days of the year. These are Ethiopian new year (September), Ethiopian Christmas (January), Ethiopian Epiphany (January), Ethiopian Easter (April) and Muslims Arafa. The purchasing price was showing increment from 2007/08 E.c of the study year. The periods of low bird sales coincided with the pre- Easter fasting period which lasts about two months, from February through March. In that time the purchasing price reduced. On the other hand relatively rise in price of egg and chicken observed from June to August mainly due to shortage of feed. Relatively, live bird transaction is more seasonal than egg market. The market conduct of live birds and eggs marketing is analyzed and presented with respect to the conditions of price setting and terms of payment. The survey has revealed that about 39% of the sample traders sell egg and birds by their own decision themselves and the rest 31% by using employee (hired labor). Traders prefer major zonal, woreda and Hawassa markets to sale their commodity and the purpose of selecting these markets are based on high price (44%), high consumer (46%) and short distance (10%). The egg and live bird traders purchase egg and live bird either directly from producers at the PA market (Kocci) or from collectors but they prefer to sell the commodity in other large markets nearby on the next days or on the coming seasons.
- 60 -
According to the survey results of marketing behavior in table 16, about 44% and 51% and 56% and 70% live bird and egg sample traders and producers from Arbegona and Bensa respectively responded that purchase price was set by agreement with the producers, about 59 and 60% egg and 44% and 47% bird traders and producers reported that purchase price was set by traders. While 10% traders and producers reported that purchase price was set by the suppliers. Coming to the live bird trading, the same trend follows with 75% agreement between traders with suppliers, 50 and 47% by the market and 15% by traders by serving market price of Hawassa and woreda major markets.
Terms of payment mechanism
Both the household survey and key informant interview reveals that the poultry marketing has been undertaken in cash or hand by hand currency as soon as they sold. The proportion of producers who indicated poultry marketing carried out in the form of direct cash payment is 96%. The remaining 4% of the respondents marketed both in credit and hand in hand cash payment. This justified that almost all producers market their poultry inform of direct /spot market/ cash transfer.
4.3.3 Performance of poultry market
The market performance of live birds and eggs was analyzed using the methods of marketing margin. Marketing margins refers to the percentage of the final weighted average selling price taken by each stage of the marketing chain. It is also the difference in price gained by the actors at two market levels in the market channel. Moreover, it refers to the price differences between other points with respect the actors in the marketing chain, for example, between producer and wholesaler, or wholesaler and retailer prices. The detailed analysis of the marketing costs and benefits in marketing system involving Hotels and restaurants, processors, and supermarkets is not included in the analysis of margins and costs due to the difficulty of obtaining data. But as seen from the marketing chain map of the subsector
4.3.3.1 Cost and profitability of poultry production
The village poultry production cost component is mostly related with the production constraints like high mortality rate of chicks, low hatchability of eggs, diseases (particularly NCD), long broodiness time of local birds and the cost of stock replacement.
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Table 22. Cost structure and profitability analysis of household in study area.
Flock Cost/income Unit Total Total Unit Total Total
compositio items in birr cost no. cost (-) price no. revenue
n No. 1 Stock cost 1.20 21 25.2 - - - 2 Feed cost 5.0 5kg 25 - - - 3 Labor cost - - 2 - - - 4 Hatchability 0.5 7 3.5 - - - loss 5 Housing cost 5.0 7 35 - - -
6 Sale(income) - - - 13 21 273
Hatching birds and Hatching cost hatchery Subtotal =a 90.7 - - 273 1 Stock cost 13 26 300 - - -
2 Feed cost 5 10 30 - - - 3 Labor cost ------4 Cost due to 8 12.5 22.5 - - -- death
Sale(income) - - - 40 38 700 Pullets cost Pullets Subtotal=b - 485 - - 700 1 Stock cost 40 20.5 560 - - - 2 Feed cost 8 12 32 - - - 3 Death loss - - 18 - - - 4 Hatchability 5 9 40 - - - loss 5 income from - - - 2.50 720 1750 egg 6 income from - - - 25 10 250
bird
Live bird and egg bird egg and Live production Subtotal=c 1205 - -- 2000 Cost of 30 1 30 - - - vaccine =d Gross total 1710.7 - 2973 of a+b+c+d Net profit 1262.3 Source; survey 2015 computation
The profitability of village poultry keeping here is assessed by studying the cost and revenue for a hypothetical producer who owns the average number of birds kept in the sample households in each flock composition for one round production period.
The result in table 21 shows that the net profit from initial 21 pullet chicken will result in 1262.3 net profits in the round. The profitability analysis from the above table proved that the subsector is still profitable with 1262.6 net income from 90.7 initial investment cost and attractive as it requires
- 62 - less capital and input that are most common constraints in most investment decisions of rural community in particular and the country as a whole. However, the input-output ratio of village poultry keeping is minimal; the production system is still economical under the smallholder management condition with virtually minimal input cost. According to the analysis, the subsector provides about 100 percent net profit of the initial investment cost. The profitability of poultry keeping can also be improved beyond this if the management and input utilization improved because from 90.7 initial investment with 21 chickens, possible to get 1262.3 net income in the given round of production season at a time.
The finding is in line with the finding of Udo (2001) and Tadele and Ogle (1996) in that most cost component of the subsector is attributed to death caused by disease, predation and low productivity of local breeds, and low input base production system. According to Udo (2001) housing, NCD vaccination, feed supplementation and control of broodiness showed greatest increase in flock size. Also Tadele and Ogle (1996), pointed out that it is possible to achieve daily production per hen over 30% using a supplement of 30g/day maize and 30g/day noug cake, to 28% from 30g/day maize.
4.3.3.2 Cost and Profitability Analysis of bird and egg marketing
For this analysis, the major channels were considered. If the market structure in an industry resembles monopoly rather than pure competition, then one expects poor market performance. The performance of poultry market was evaluated by considering associated costs, returns and marketing margins. In Table 22 below, marketing margins of chicken traders as a proportion to final consumer price and total channel marketing margin were calculated.
From the Table 22, it can be seen that, the largest contribution of market costs was for feed representing 20% in channel II, 43% in channel III and 78% in channel IV. From Table 22, the producer’s share of the total consumer price was 100 in channel I, 76% in channel II, and 88% and 65% in channels III and IV respectively. This implies that 20% of the total consumer price in channel II results from marketing activities by traders.
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Table 22. Marketing costs and profit margins of live bird traders (Birr/chicken) Group of market Cost/profit item Channel I Channel Channel Channel players II III IV Collectors Buying price 65 70 70 64.5 Transport 5 10 Feed/waterier 10 5 cost - - store - - Others 21.5 33 Profit margin/bird 85 86 Selling price/bird Traders Buying price 84 87 Transport 5 8 Feed cost 5 5 store 5 5 Others 5 5 Profit margin/bird 12 12.5 Consumers price 65 116 122.5 86 Total marketing 25 46 52.5 21.5 margin Producers share 100 89 84 80 Source: Own computation of a survey result, 2015 Remark: Channel I- Producer selling directly to consumer Channel II - Producer selling to consumers through retailors Channel III - Producer selling to consumer through collectors, a number of brokers and retailors Channel IV - Producer selling to Consumer through collector, whole seller and retailer
About 18% of the total consumer price in channel IV also results from marketing activities by traders while 38% of the total consumer price in channel III constitutes trader margins and marketing costs. The high producers share was in channel I while the share of producer decreased in channel II and IV.
From Table 23 below, it can be observed that egg breakages during transport related cost was the largest marketing costs representing 17% in channel II, 19% in channel III and 21.9% in channel IV. From Table 23, the farmer’s share of the total consumer price was 100% in channel I, 89% in channel II, 84% in channel III and 80% in channel IV. This suggests that 28% of the total consumer price in channel II, 26.7% of the total consumer in channel III and 40% of the total consumer price results from marketing activities by traders.
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Table 24: Marketing costs and profit margins of egg traders (Birr/egg)
Group of market Cost/profit item Channe Channel Channel Channel actors l I II III IV Collectors Buying price 1.90 1.50 Transport 0.20 Tax related 0.10 Others 0.50 Profit margin/egg 0.60 Selling price/egg 2.10
Traders Buying price 1.50 1.55 Transport 0.25 .18 Tax related 0.15 0.29 Others 0.35 0.25 Profit margin/bird 0.50 0.65 Selling price
Consumers price 1.90 2.0 2.70 2.83 Total marketing margin 0.50 1.25 1.37 Producers share 100 84 78 74 Source: Own computation of survey 2015 Remark: Channel I- Producer selling directly to consumer Channel II - Producer selling to consumers through collector and mini shops Channel III - Producer selling to consumer through collectors Channel IV - Producer selling to Consumer through collector, whole seller and retailer
Table 23 shows the marketing margins of egg traders as a proportion of final consumer price and total channel marketing margin. In channel II, the collector’s market margin constituted 45% of the final consumer price and 100% of the total marketing margin. In channel III, the retail trader’s market margin constituted 37% of the final consumer price and 100% of the total marketing margin. In channel IV, the retail traders market margin constituted 38% of the final consumer price while the
- 65 - wholesaler’s market margin represent 20% of the final consumer price. This shows that a large proportion of the total marketing margin (1.37 Birr) generated in channel IV goes to the retail traders (50% versus 20%). However, live bird and egg market margin analyses showed that producers had substantial high share from 74 to 78% of consumer prices distribution with the intermediaries
Table 25. Cost and profitability analysis of live bird production and trading (Birr/chicken) Cost/profit item Channel I Channel II Channel III Channel IV Transport 75 - - - feed 8.50 8 8 8 Housing 5 5 5 5 interest 3.50 3.50 3.50 3.50 others 0.00 0.00 0.00 0.00 Profit margin 65.5 59.3 55.15 50.00 Selling price/head 75 78.5 65 60 Consumer price/head 75 84 86 76.5 Total marketing margin 5.5 21 16.5
As can be seen from Table 24, a cost and return component was considered to calculate poultry production profitability. Costs and return was calculated on channel bases. The average selling price per head was 75 for channel I, 78.5 for channel II, 65 for channel III and 60 for channel IV. From the cost components, feed cost covers the large portion, which is about 53% of the total cost. Congruently, among different actors, Producer selling to consumer through collectors and traders channel obtained remarkably highest NMM of consumer’s price in channel III which accounted to 21% followed by Producer selling to Consumer through collectors channel IV, which accounts 16.5 percent of consumers’ price. In general the result of marketing margin analyses indicated that the consumer’s price distribution efficiently performed between poultry producers and respective intermediaries of the poultry products market channels. The result coincides with Amos (2006), who identified high cost of feeding and veterinary drugs as the main factors affecting egg production in Ondo State in Nigeria.
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Table 26: Cost and profitability analysis of egg trading (Birr/egg) Cost/profit item Channel I Channel II Channel III Channel IV Transport 2.80 Others - Profit margin 2.50 2.80 2.90 2.90 Selling price/head 2.80 2.85 2.90 2.80 Consumer price/head 2.80 2.90 3.00 2.95 Total marketing margin - 0.10 0.10 0.05 Source: own computation of survey data, 2015
From Table 25, it can be indicated that selling price of egg in channels I, II, III and IV was 2.80, 2.90, 3.00 and 2.95 respectively. Total marketing margin is calculated by deducting farmers selling price from consumer price. In the first channel, the consumer purchasing price and producers selling price are equal because this channel connects the producer directly with the consumers. The highest consumer purchase price/egg is observed in channel III, which is 3.00. The highest net marketing margin in egg purchasing price is similar in channel II and III, which is 0.10. The lowest net marketing margin in egg marketing price is observed in channel VI, which accounts 0.05. The marketing margin analysis of the subsector revealed that producers share and net marketing margin maintained by varies chain actors are remarkably varied across the different marketing channels.
4.4. Determinants of poultry Market Supply
In this section the factors that influence the quantity of poultry supplied to the market in the study area are presented and discussed. Various variables were expected to influence the quantity of live bird and chicken supplied to the market. Multiple linear regression models were employed to analyze the relationship. Furthermore, to make the estimation more reliable and efficient, multi- collinearity and heteroscedasticity detection tests were performed prior to the estimation of the parameters. These tests were performed by using variance inflation factors (VIF) and contingency coefficient (CC), and Breusch-Pagan (BP) test respectively.
Test for Multicolliniarity: In order to check the existence of multicolliniarity problems among continuous and dummy explanatory variables, VIF and CC tests were employed respectively. The test shows that the VIF value for all continuous variables in all the models (live bird and eggs
- 67 - models) ranges between 1.208 and 1.702. These implies that there was no serious multicolliniarity problem among continuous independent variables as all the VIF values of continuous explanatory variables in all models were less than 10 ( appendix Table 1) and hence they included in the model.
Likewise, the values of CC test of all dummy variables in all the models (live bird and chicken models) ranges between 0.089 to 0.382 (table 25). As all CC values of dummy variables in all models were less than 0.75, again there was no serious multicolliniarity problem among dummy independent variables in all the models.
Test for heteroscedasticity: The presence of heteroscedasticity in this study was checked by using the Breusch-Pagan (BP) test. Accordingly, the F-calculated for the two models were equal to 0.0045 and 0.540. The F-value for all models from F-distribution (at 5% and df = 16) is 2.85.
The goodness of fit of the model: The overall goodness of fit of the regression model is measured by the coefficient of determination (R2). It tells what proportion of the variation in the dependent variable is explained by the explanatory variable. Since R2 lies between 0 and 1, the closer it is to 1, the better is fitted the model. In this study, the estimated coefficients of multiple determinations (R2) of the two models were 0.781 and 0.756. This means that 78 % and 75 % of the variations in the dependent variables have been explained by the explanatory variables included respectively in live birds and eggs with type-1, type-2, type-3 and type-4 models, and the rest determined by error terms.
Econometric results of heckman’s two stage model
This section shows the estimation result of Heckman two stage models which show that the amount of poultry sold operate conditional on the probability to participate in poultry markets as a seller. Accordingly, this study used market information as selection variable in probit model/participation equation which was found to affect the poultry market participation decision by household, but has no significant impact on level of poultry market participation in order to predict inverse Mill’s ration correctly.
The binary probit participation Equation
The model output reports result of estimation of variables that are expected to determine poultry market participation of an individual household. In the Heckman two stage model, three independent variables namely number of bird kept, breed availability, and purpose of bird keeping has been
- 68 - found to be highly significant (<1%) in the participation decision. There are also three variables namely sex of the households, education level of the household and woreda dummy that affected the participation decision at 5 percent level of significance. The directions of relationship and the effects of the predicted variables in the probit model are discussed as follows:
Table 27. Estimates of poultry market participation and their Marginal Effect (probit). Variable Coefficient St. Err t-ratio Marginal effect CONSTANT 3.3 0.067 0.07*** 0.66 Age 0.0037 0.086 0.043 0.46 Sex 0.654 1.635 0.40** 0.002 Family size 0.074 0.0936 0.079 0.50 Education level 0.013 0.015 0.824** 0.65 Year of farming 0.003 0.01 0.3 0.20 Distance to woreda 0.074 0.74 0.01 0.000 Breed availability 0.004 1.08 0.0037** 0.079 Feed Supplement 0.238 0.021 11.09 0.004 Number of poultry owned 0.432 0.227 1.902** 0.087 Access to credit service 1.340 0.418 0.032 0.451 Access to extension service 1.900 0.193 0.098 0.190 Farm size of a family 1.190 0.09 13.109 0.082 Income earned from farming 1.093 1.024 1.067 0.221 Income earned from poultry 0.023 0.011 1.984 0.28 Purpose of bird kept 0.001 0.008 11.23*** 0.011 Access to market information 0.823 0.49 1.654 0.390 Woreda Dummy -3.90 0.886 0.044** 0.094 Chi-square 23.67 P-value 0.0095 Number of observation 159 *** And ** show the values statistically significant at 0.01% and 0.05% respectively. Dependent variable: market participation Model size: observation = 178 mean = 0.591, parameters = 143 SD= 0.4610 Fit: R-square= 0.781 Adjusted R- square = 0.756 Degr.Fr. = 16 Prob. value = 0.0000, Diagnostic: Log-L = -24.26, Restricted (b=0) Log-L = -74.12
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Breed availability (BRAV) - it is hypothesized that households who have exotic and cross breed can participate more than those households who have pure local and the result (table 25) indicates the breed availability influenced poultry market participation statistically significant at less than 1 percent significance level. This means that households who have improved breeds can supply more to the market than households with local breeds, other factors held constant. This could be because of the fact that, the more the improved poultry breed by the household the more will they participate in poultry market if they are kept high amount poultry with good management. The marginal effect of the variable confirms that a unit increase in cross breed or exotic bird leads the probability of poultry market participation rise by 79 percent.
The result is in line with the study by Woldemichael (2008) and Holloway et al (2002) that suggests that marketable milk surplus of the household in the study areas are more responsive to number of cross breed milk cow and marketable milk surplus per day increases in response to the increase in milking cross breed cow number and households with larger dairy cows was positively associated with value of sale of dairy products.
Number of poultry owned (NPOW) - This variable is expected to influence market participation and value of poultry sales positively. As hypothesized, the regression result shows that quantity produced significantly affected poultry participation decision to the market at 1% significance level. The model output predicts that the quantity produced increases by one unit, the amount of market participation increases 8.7 percent. The result is in line with the study result of (Kinde, 2007) as the beef cattle owned increases, the probability to participate in market and sales will increase.
Purpose of bird kept (PBKT) - it is hypothesized that households whose purpose of keeping poultry is for sale and income can participate more than those households whose purpose is for home consumption. As hypothesized, the probit analysis result shows purpose of keeping chickens has a positive relationship with the poultry market participation decision. Therefore, households whose purpose is for sale and income can participate more than those households whose purpose is for home consumption. They also supply more volume of poultry to the market. The marginal effect of the variable confirms that a unit increase of poultry for sale and income leads the probability of poultry market participation to rise by 11percent.
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Sex of the household (SOHHH): it is assumed that male-headed households will supply less poultry than female headed. The probit analysis result shows sex influenced market participation decision of poultry with statistical significance at 5 percent significance level. This means that as the head of the household become woman, the amount of poultry market participation is reduced by 0.2 percent. Contrary to the expectation sex of the household was found to influence market participation decision and the most probable reason for this result might be now a days, males participate more in live bird markets and a number of females participate in egg markets, they may lack good management practices; this in turn would increases the death rate. As a result, they may not participate in the poultry market. This is also in line with Holloway et al. (1999) and Wolday (1994) in that sex, family size, breed, feed availability and distance to market caused market participation and supply of milk and food grain to decline. And in contrary with Gizachew (2002) found that in Ethiopia female-headed households had a higher tendency to participate in the dairy market than male-headed households.
Education level (ELHH): Hypothesized to have positive effect on poultry produced and marketed and resulted in negative effect with significance level at 5%. On average, if poultry producer get educated, the decision to participate in poultry market increases. The result further indicated that, education has improved the producing household ability to acquire new idea in relation to market information and improved production, which in turn enhanced productivity and thereby increased market participation and marketable supply of live bird and egg. The marginal effect result showed that for each additional grade attended by the respondent, the probability of the decision to participate in poultry production for marketing increase by 6.5 percent. The possible reason could be higher educational level enhance the individuals capacity to participate on different agricultural and businesses to diversify livelihood. This is also in line with Astewel (2010) who illustrate if paddy producer gets educated, the amount of paddy supplied to the market increases, which suggests that education improves level of sales that affects the market participation and marketable surplus.
Woreda dummy (Woreda): As the woreda becomes Arbegona, it influences value of poultry sales significantly and negatively at less than 5 percent significance level. As the woreda become Arbegona, the value of poultry sales decreases by about 3.90 Birr being other variables held constant. This could be because of there is comparatively low inflation rate in Arbegona than Bensa,
- 71 - and could be access to road, access to markets, access to infrastructures and difference in socio- economic characteristics of the two Woredas.
Estimation Results of the supply equation
In the selection equation of the model, five variables are found to be significant determinants of level of poultry market supply. Table below summarizes the result of the ordinary least square estimation corrected for the selection bias (second step in Heckman’s selection model). It incorporates inverse Mills ratio. Inverse Mills ratio (lambda) is found to affect amount of poultry supply to markets significantly.
Table 28: OLS estimates of the supply function corrected for selectivity bias Variables Coeff. St. Err t-ratio p-value AOHHH 1.43 3.265 0.432 0.564 ELHH 2.032 11.980 0.169 0.712 SOHH 21.810 8.329 2.618** 0.068 FSHH 3.343 4.121 0.812 0.154 FSF 50.23 23.321 2.153 0.470 YOFARM 9.082 2.9090 3.122 0.395 IFF -0.001 0.0983 0.0101 0.675 IFP 12.23 2.908 4.2056 0.114 NPOW 7.365 2.321 3.173 0.671 DWPM -0.00789 0.9763 0.0080 0.919 VOBEM 1.342 3.876 0.345 0.098 FEDS 143.232 13.973 10.253** 0.0087 BRAV 2.109 3.093 0.681 1.67E-05 CRET 4.012 12.094 0.331* 3.9309 EXTSERV 10.901 123.109 0.088* 1.6201 POBKT 11.120 43.230 0.257* 2.9E-01 LAMDA 1.609 0.2 9011 -5.4403* 0.802 * And ** show the values statistically significant at 0.01% and 0.05% respectively Dep. var. = VPSTOTAL Mean= 252.321, S.D. = 453.28 Prob. value = .00000 Model size: Observations =172 Parameters = 195, Deg. Fr. = 12 Diagnostic: Log-L =-1212.0955, Fit: R-squared= .86754, Adjusted R-squared = .78430 Restricted (b=0) Log-L = -11230.3434
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In the Heckman second stage model, sixteen variables were hypothesized to influence value of poultry sales. These variables were age of the household head, sex of the household head, education status of the household head, family size, and distance to woreda market, income from poultry farming, poultry owned, purpose of poultry kept, Years of experience in farming, income from farming, breed availability, feed supplement, factors of production, access to extension service, access to credit and Lambda, Among these variables, five of them influence market participation decision with statistical significance. The variables which have significant relationship with the volume of poultry supply were; feed supplementation, Sex of the house hold head, Credit use for poultry keeping, purpose of bird keeping, access to extension service and LAMBDA, selectivity bias correction are found to affect the value (in birr) of the volume of birds and egg supplied to the market positively at higher statistical level of significance.
Sex of household head (SOHHH): Sex of the respondent was hypothesized to have negative impact on farmers’ market supply. Sex of the household head has a significant and positive effect (< 5%) on the farmers market supply. This is to mean that being male headed household positively influences poultry market supply as compared to female headed households. The reason for this is now a days, males dominate supply and participation in live bird markets and there is relatively less participation of females. As a result, females may not participate and supply bird and egg in to the market.
The result is in contrary with Aklilu (2007), reported that it is mostly women who are responsible for poultry production and selling, and spending the income.
Feed supplementation (FEDS): It is a dummy variable expected to influence market participation and supply of live bird and egg positively and the regression analysis shown that feed supplement significantly affects poultry market supply at 5% significant level. When families that do not feed their bird with supplementary feed start and continue supplementing, the value obtained from the supply of bird and egg increases by 143.23 birr. The finding is consistent with Awol (2010), that found feed supplementation have a positive and significant effect on the probability of the producers supply of birds and egg to the market.
Credit taken for poultry production (CRET): it is hypothesized that households who have better access to credit can participate more than those households who do not have access to credit.
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The regression analysis shows that credit use by the sample respondents significantly (<1%) and positively affects the value obtained from the supply of live birds and egg to the market. The value obtained from the sale of chickens and eggs for sample respondents who access credit has shown an increase by about 4.1 birr than those who do not access credit. The study is consistent with Negassa (2009) that found credit to have a positive relation with likelihood of selling raw milk in Ethiopia, indicating access to credit increased milk market participation and supply. The result is in line with the study of Awol (2010) that the access and utilization to credit positively and significantly affect the value earned from the supply of birds and egg to the market
Access to extension service (EXTSERV): it is hypothesized that households who get access to extension service can produce more and supply more than those households who do not have access to extension service. This dummy variable is correlated with the probability of farmers’ supply positive and significantly at 10% probability level. As the OLS result, the respondents who have access to extension service have good perception to increase poultry sales value by 10.9 birr. The result is consistent with the findings of (Awol, 2010, and Holloway et al, 2000) farmers who have contact with extension agents are more likely to have knowledge about production, quality, and price of inputs and information on markets and output prices of poultry and positive effect on quantity of milk marketed in Ethiopia.
Purpose of bird kept (PBKPT): The purpose of keeping chickens is expected to have positive relationship with the volume of poultry supply. Therefore, According to this finding keeping birds for the purpose of business activity highly influences (at 1% level of significance) the supply of poultry products in a positive way. Keeping poultry for sale increases the total sales value of poultry products by about 11.12 birr.
The result is consistent with the findings of Awol (2010), farmers who produce poultry for income and livelihood business are more likely to have market information, supply more poultry to markets and have more market participation.
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4.6 Constraints and Opportunities in Poultry Production and Marketing
In this section the constraints and opportunities with respect to poultry production is presented and discussed.
4.6.1 Constraints in poultry Production and marketing
There were a number of production constraints with respect to poultry production in the study areas. As shown in table 28, majority of poultry production loss, 99% raise from disease outbreak followed by feed shortage (87%) and predators (43%). There is also a need for improved feed ingredients (e.g., balancing of rations) and feed supply (including quality control and standards). Some of the diseases identified in the study area were New Castle Disease (NCD), Salmonella and chicken mites. Accordingly, when the sampled poultry producers were asked to share the measures they took to prevent their chicken from diseases, they have listed some of the measures used to control these diseases. Among these, providing juice of lemon with water, separating from other chicken, painting with benzene, giving shallot every morning and cultural medicines were some of the measures taken by the producers. Concerning the source of the diseases, 60% and 73% of the Bensa and Arbegona respondents respectively reported that it was from neighboring households or by wind spread while 30% and 15% of the Arbegona and Bensa respondents replied that the source of the diseases was from market. Red-pepper and lemon with water are supplied for the chickens in the time of diseases outbreak without consultation with veterinary officers due to the difficulty of getting the service are bottlenecks in the sub-sector. It is obvious that, diseases damages a number of chickens, as a result, the average number of chicken died in the survey year in Arbegona and Bensa were 21 and 10 per household respectively.
As shown in table 28, major marketing constraints were, seasonal price change (26%), seasonal demand (23%) and limited market access (19%). Farmers lack market access and information such as where and when to sell. As a result, transaction costs are often high, particularly for farmers living far away from major road access. These farmers face less bargaining power for the market.
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Table 29. Constraints to live bird production and marketing
Major problems Frequency Percent Major problems in frequency percentage in production marketing N= 182 N= 182 Inconsistent price 13 7 Limited market surplus 17 9 Feed shortage 160 87 Price change 49 26 Disease 181 99 Seasonal demand 42 23 Breed shortage 53 29 Limited market access 33 19 Predators 78 43 Limited market information 21 12 Lack of finance 80 34 Flock mortality 20 11 Source: survey data result, 2015
Farmers are affected by seasonality of markets and demand fluctuation. There are also limited private input dealers, particularly for vaccines and feed. There were also both poultry production and marketing constraints identified by traders were lack separate market place for bird and egg, flock mortality, lack of training on improved trading practice, and marketing management and non-existent of poultry transaction on weight base. Prices are determined with visual observation and approximation weighing with hand. Poultry traders have little skill on how to identify diseased birds and its symptoms.
The result of this study agrees with Million and Belay (2004) that lack of market outlets, storage and processing problems, lack of marketing information, capital constraints, high transportation cost and price variation are some of the important constraints in vegetable production. This result is also in line with the findings of Melkamu (2013) who stated disease and predator; feed shortage, flock mortality and low production as first, second, third and fourth constraints, respectively.
4.6.2 Opportunities in poultry Production and marketing
The newly established private poultry farms in study areas can be taken as opportunities for poultry producers. Also availability of manufactured poultry feed, and supply of exotic chicken by government and NGO’s are opportunities in poultry production.
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Table 30. Opportunities for live bird and egg marketing system Variable Item Frequency Frequency (bird traders) (egg traders) Major opportunities in Less initial capital requirement 150 79 egg and bird Availability of local materials 123 90 production Access to local breed 34 31 Availability of local feeds 79 45 Now a day’s attention to the sub sector 45 37 Opportunities in bird Lack of entry and exit barrier 98 35 and egg trading less initial capital requirement 98 89 High profit margin 65 87 High demand 49 98 Availability of local materials 53 94 Involvement of private multiplication sites 31 96 Government involvement in the subsector 37 41 Source: Survey data, 2015
There are also other opportunities such as high turnover earning, small feed requirement, lower initial cost requirement, and employment opportunities for poor, landless farmers and disadvantaged groups a non-limiting factor for its production. It is equally important to note that farmers have the following opportunities identified and ranked from stakeholders’ discussions: • Ever-growing market demand and population growth, as well as income growth • Establishment of poultry multiplication centers and private poultry cooperative farms in the study districts. • Availability of resources for feed production, e.g., potential maize production and sorghum for major feed ingredients in the districts. • Favorable policy of the government promoting food security and microfinance, and provision of extension services, follow up and free vaccines and improved chickens by the government agents • The industry is environmentally safe and less carbon emission to the atmosphere (environmental concerns). • Involvements of different organizational projects and NGO’s, like LIVES project working on poultry improvements.
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5. SUMMARY, CONCLUSIONS AND RECOMMENDATIONS
5.1. Summary and Conclusions
This study was conducted primarily to analyze the marketing chain of poultry sub sector. Understanding the system of production to consumption and the nature of the market type will help to make the right decision on resource use. The major Market actors in egg marketing channel were producers, collectors, retailers, traders, shops and consumers. While the major actors in live bird markets were producers, retailers, wholesalers, traders and consumers. There is no significant involvement of brokers in both egg and chicken marketing and also limited awareness to consume processed poultry meat in the study area. The bird marketing systems are fairly concentrated in terms of few firms’ domination. However, the tight oligopolistic characteristics of egg market in terms of volume had nothing to do with egg price setting in the chain.
Among different actors in bird trading, Producer selling to consumer through collectors, whole seller and retailors channel obtained remarkably highest NMM of consumer’s price in channel Iv which accounted to 21% followed by Producer selling to Consumer through collectors channel IV, which accounts 16 percent of consumers’ price. The average marketing cost in the flow of live birds from the point of production to the final consumer is 2.83 birr/bird in channel V. The shortest channel observed was producer- consumer’s chain in both egg and bird chain. The dominant and longest marketing channel was producers- collector- wholesaler-retailor-consumers chain for birds and producer-collector-wholesaler-hotels/shops-consumer chain for egg marketing. The result shows that 31% of live bird and 6% of egg in both districts were exchanged via direct selling of the commodities from producer to consumers, and the channel with hotels and processors is least important and longest channel with intermediaries. In both cases, this channel is characterized with relatively higher producers share.
Total gross marketing margin in bird trading is highest in III channels and account for a TGMM of 52.5. The producer share in the total margin for both live bird and egg was 84 percent in this channel. Whereas, for live birds it was 89 and 80 percent for channel II, and IV, respectively. The total marketing margin of egg is 0.50, 1.25 and 1.37 for channel II, III and IV. The producers share here is 84, 78 and74 for channels II, III and IV.
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According to the econometrics analysis, there are variations in the findings of the two methods employed and correction of the selectivity bias is highly significant. From the variables hypothesized that influenced market participation decision were; Sex of the household head at 5%, purpose of poultry production at 1%, breed availability at 1%, number of poultry owned at 1% and education status of the household head at 5% significance level. However, the variables which have significant relationship with poultry supplied were; feed supplementation at 5%, Sex of the house hold head at 5%, Credit use for poultry keeping at 1%, purpose of bird keeping at 1%, access to extension service at 10% were significantly influencing the poultry market supply.
Some of the major problems identified by the sampled households and traders was poultry diseases prevalence, feed shortages, limited supply of exotic chicken and lack of separate permanent market place for Egg and chicken traders in the sample markets
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5.2 Recommendation
Based on the findings of this study, the following recommendations were given:
✓ Among different actors in live bird channel, producer selling to consumer through retailors channel transacts more volume of birds, but has a lower producers share than channel I. The producers share was higher in channel I, and decreased in channel III and IV. Therefore, is recommended that attention should be given on producer to consumer channel by increasing more poultry producers to produce, participate and supply quality products to the market. Besides, in channel I, lower volume of egg transacted but higher producer share is observed. In this regard, it is recommended to improve and strengthen the link between producer and markets so as to enhance producer’s comparative profit.
✓ The traders, hotel and restaurants survey shown that the likelihood of supplying a poultry meat meal is not practicing in the study districts due to the fact that there is nonexistence of marketing actors participating in processing and value adding business of poultry product as per the consumers interest. The development of this sector would have substantial contribution to the increasing demand of livestock products.
✓ The availability of poultry breed has positive and significant influence on small holder farmer participation in poultry marketing to decide on startup or expand poultry production based on their perception on poultry marketing. Therefore, it should be important for governmental and nongovernmental stakeholders, higher education and research institutes to work on promoting access to improved breed type on introducing new technology in the sector such as improved genotypes, feed processing and disease aspects.
✓ Poultry market participation decision was positively and significantly affected by formal education level of the household head. Thus, government and other dairy sector development partners should emphasis on capacity building of the sector smallholders through short and intermediate practical based trainings, adult education, and experience sharing visits were recommended to participate on poultry market with quality products.
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However, regarding the traditional production, education level had nothing to do with a limited number of village poultry production.
✓ Feed supplementation significantly affects poultry market supply at 5% significant level. The implication is that farmers that feed additional supplementary feeds will increase quality poultry production and supply more products to markets. Therefore, it is recommended to use and identify locally available agricultural products and formulate rations, integration with feed processing agro dealers and available capital for feed cost.
✓ Access to credit service has a significant and positive influence on smallholder farmers total sale value in poultry marketing. Hence, micro credit organization suggested expanding their scope of coverage among the rural community should be facilitated and the payment durations and amount delivered should have acceptability by individual producers. Currently, credit service has enhancing and encouraging the promotion of agricultural market linkages and for youth job creation. In this regard, linking of the producer youths with credit access service is needed.
✓ The number of poultry owned has a significant influence on the household decision to participate in poultry marketing. Therefore, it is recommended that smallholder farmers need to be provided with technical and financial support that enable them to have larger number of poultry herd and participate highly in poultry market then to make higher income from it. In this regard research institution, agricultural offices and development agents should have big role on the poultry production, follow up, management, disease control and market aspect.
✓ The descriptive analysis part has shown that when accidental disease outbreak occurs, farmers use red-pepper and lemon with water, painting with benzene and giving shallot for their chickens, are cultural medicines and therefore, organizations conducting research on poultry sector should evaluate, approve or disprove the traditional indigenous practices of farmers with scientific evidence so as to analyze its future impacts on the breed
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✓ The initial study was intended at focusing on Arbegona and Bensa, but due to time constrains and other factors it is not assured that this study fully represents the whole Sidama zone and, therefore, recommended that further research focuses on the whole zone.
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APPENDICES
Appendix 1: Multicolliniarity test for continuous and dummy variables
2)-1 Variables Tolerance VIF (1-R1 Age 0.671 1.208 Family size 0.743 1.180 Poultry owned 0.453 1.098 Distance from market 0.741 1.309 Factor of production 0.405 1.566 Value of poultry marketed 0.779 1.592 Purpose of birds kept 0.620 1.430 Breed availability 0.451 1.650 Feed supplementation 0.124 1.641 Credit available 0.890 1.702 Mean VIF 1.590 Source: own computation
Appendix 2. Contingency coefficient test for dummy variables
Sex Educ-lev Woreda dummy Market info Sex 1 Education level 0.482 1 Woreda dummy 0.227 0.08 1 Market info 0.141 0.089 0.66 1 Source: own computation
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QUESTIONNAIRES
MARKET CHAIN ANALYSIS OF POULTRY: THE CASE OF ARBEGONA AND BENSA DISTRICTS, SIDAMA ZONE, SOUTHERN ETHIOPIA
Instructions to Enumerators ✓ Make brief introduction before starting any question, introduce yourself to the farmers, greet them in local ways and make clear the objective of the study. ✓ Please fill the interview schedule according to the farmers reply (do not put your own feeling). ✓ Please ask each question clearly and patiently until the farmer gets your points. • Please do not use technical terms and do not forget local units. Objectives of the study:
➢ To identify the various actors and their function in poultry market channel ➢ To investigate the market structure, conduct and performance of poultry ➢ To identify the business supporting factors on poultry production and marketing system ➢ To estimate the factors that affect the supply of poultry and poultry products to the market ➢ To identify constraints and opportunities in poultry production and marketing.
Enumerator Name------Date of interview ------Mobile No. ------
Annex 1. Poultry producer’s questionnaire
Part I General information
1. Location Information Zone ------Woreda ------Kebele Name------population no----- Agro ecology------(1=Dega, 2=mid land, 3=lowlands), Altitude ------m/asl, Geographic coordinates: Latitude ------to------N and Longitude: ------to -----E
2. Family information Name of the household: ------code------
Part II. SOCIOECONOMIC AND DEMOGRAPHIC CHARACTERISTICS Characteristics Characteristics 1. Age in years------7. Farming experience in years------yrs 2. Sex (1=Male, 2=Female)------8. Education level in grade------grade 3. Marital status (1=Single, 2=Married, 9. Social position; (Keble Council member, member of 3=Divorced, 4=Widowed, 5=Polygamy)---- peasant association=Religion leader, 4=Model farmer, ---- 5=Other (specify------) 4. Family size • Number of male family members--- 10. Major livelihood activity of the household
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------1=Crop, 2=Livestock, 3=Mixed with crop dominate, • Number of female family members 4=Mixed with livestock dominate 5. Both equal 6. Others-- • Total------5. No. of Active labor force in the household(15 to 64 years) • Male------• Female------6. Distance to market------km/-----minutes 11. Wealth status (1=Poor, 2=Medium, 3=Rich
Part III. Land use 1. Land use pattern of the house hold Land use Total Area in timad Land ownership Owned Rented Sharecropped Total farm size Cultivated area Annual crops Perennial crops Grazing land Others 1.------2, ------*1ha=4 timad 2. Livestock ownership of the respondent (2006/07 E.C) Type Composition No. Cattle type (1. native, 2. Origin Purpose of keeping the owned Cross 3. Both 4. Pure livestock*code exotic) Cattle Cows Oxen Bulls Heifers Calves Sheep Goat Chicken Equine Bee colony * 1. Income earning, 2.reproduction 3. Transport service 4.production (milk, butter, cheese, egg) 5.ploughing service 6. Stock replacement 7. For egg/meat 8.others------
Part IV. POULTRY PRODUCTION 1. Do you produce poultry? 1. Yes 2. No ______2. Where did you first hear about poultry production? 1. Family 2. Gov.t 3. Neighbors 4. Others------3. When you started the production------to ------4. Which species you start to produce initially? 1. Local --- 2. Cross breads --- 3. Both 4. Exotic------5. Which type of poultry you rear? 1. Meat type 2. Egg type 3. Dual purpose 6. Where did you get the live birds for production? 1. Purchase 2. Own production 3. Both 4. Private 7. How many and by how much did you buy? ------,------
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8. Why did you decide to produce this breed------? 1. Awareness and availability of that breed------2. Favorable climatic condition for the breed ------3. Presence of high market demand------4. High preference for household consumption ------5. Feed potential to provide for the breed------6. High productivity of the breed------7. High profitability of the breed------9. What are the challenges you faced in producing of poultry/breed------1. ______2. ______3. ______10. What suggestions do you assume as the solution? ------3. Production Services 3.1 Input Supply 1. Have you ever used poultry production inputs for the production of poultry? 1. Yes -2. No – 2. If yes, which inputs where used and its cost------3. If no, what was the main reason behind for not using the inputs______? 1. lack of Improved feeds 1. Unavailability of the input 2. Shortage of supply, 3. Expensive input cost 5. Others (specify) 4. How did you solve these problems? ------. 5. From where do you get input and output market information? ------6. If you get information, what type of information you get? ------
3.2 Feed and feeding system on poultry 1. Mention some of major crops used for poultry feed in your locality? ------2. Do you use supplement feeds such as concentrates and furshika/wheat bran for poultry? 1. Yes 2. No 3. If yes at which age class of poultry 1. Pullets 2. Day old chicken 3. C layers 4. Others 4. Where do you get the supplement feeds for poultry? 1. Village market place 2.Woreda market place 3.zonal market place 4.Neghbour 5.other------5. Do you give the supplement feed and local feed at the same time? 1. yes 2. no If yes, what is the ratio of its mixture? ------If not, which feed is provided for poultry during the day nearer to chicken and a day close to layer? ------6. What are the local feeds used in poultry farm: 1.grasses----2.browses ---3.tree species--- 4.weeds 7. What are the major constraints of poultry production in your locality? ------3.3 Access to credit
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1. Did you borrow money to start poultry production before? 1. Yes 2.No 2. If yes, how much……from where ------and for what purpose did you collect the credit? ______3. What are the requirements/criteria to get credit from formal institutions? 1. Saving 2. Cooperative formation 3.both 4. Others------4. is the criteria/precondition acceptable? 1. Yes 2. No, If no, explain why------5. What is the interest rate? ------6. Is it an acceptable rate------? If no, why------7. Did you face any problem in accessing credit? 1. Yes 2. No If yes, what where the problem? 1. Limited supply of credit 2. Huge bureaucracy 3. Limited access to transport 4. Others (specify) ______8. How did you solve these problems? ______3.4 Information/knowledge flow 3.4.1Training 1. Have you ever participated in poultry production system training in the last three years? 1. Yes 2. No If no, why? ______If yes, on which aspects, ------By whom------and for how long you have got the training?------3.4.2 Marketing producers 1. Did you sell poultry product as live bird/egg before in your local market? 1. Yes ------2.No ------If no, why you did not sale? ------2. If yes, what poultry products you sell/market? 1. Egg 2. Live bird 3. Both 4. Meat 5. Kusss 6. Others-- # Types of poultry/products Amount produced Amount sold Amount Price/unit For whom consumed did you sell?
3. Why have you preferred the mentioned consumers/ markets to sale your production? ______4. Distance of market center from your home/farm______minutes, ______km 5. Means of transportation /indigenous transportation equipment’s for poultry marketing and knowledge on the equipment used______If you are using indigenous poultry transportation equipment, tell the price, cost and stay of the equipment’s used______6. Are there marketing cooperatives/ farmer’s organization who works on poultry market? 1. Yes 2. No if yes, what services do they provide?______7. Sources of market information ______8. The role of gender participation and poultry marketing? ______9. Have you ever used poultry for household food consumption? 1. Yes 2.No If yes, what type/product do you use? ------How often you use? ------If no, what is the main reason?------
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10. What are the major poultry marketing actors in your vicinity? 1. Farmer 2.broker 3.government Bodies’ 4.traders 5.NGOs, 7. Middlemen 8. Others------11. Which poultry product is marketed in your locality? 1. Egg_____2. meat____3. live bird___ 12. Which poultry category marketed in your village market mostly? 1. Pullets 2. day old chicken 3. Large poultry 4.With plumage color 5. Brooding category 6. Mothering category 7.Others ------13. From where do the major traders come to your poultry marketing place? 1. Addis Ababa 2. Gedio/dilla 3.Debrezeit 4.Hawassa 5.ShaShemane 6.others------14. Would you recommend broker in poultry market? Yes no… If yes why? ------If no, why? ------15. Could you list out some of major determinant factors/constraints in performing poultry production frequency ------16. Is there any other poultry products marketed in your locality other than /hen, egg and meat? 1. Yes 2. No, if yes, What------For what purpose------by how much price------. 17. What are the main challenges you face in marketing poultry? 1. ------2. ------3. ------18. What are the major opportunities of poultry production and marketing in the area/town? ------Annex 2. Traders Questionnaire
Personal information
Name of the market: ------trader name ------code------Enumerator’s Name------Date of interview ------Mobile No. ------
1. SOCIOECONOMIC DATA Characteristics Characteristics Age in years------trading experience in years------yrs Sex (1=Male, 2=Female)------Education level in grade------grade Marital status (1=Single, 2=Married, Social position; (Keble Council member, member of 3=Divorced, 4=Widowed, 5=Polygamy)---- peasant association=Religion leader, 4=Model trader, ---- 5=Other (specify------) Family size • Number of male family members--- Major livelihood activity of the household ------1=Crop, 2=Livestock, 3=trade, 4=Mixed with livestock • Number of female family members dominate------• Total------No. of Active labor force in the Monthly income------household(15 to 64 years) Income earned from poultry trade------• Male------• Female------Distance to market------KM/-----Hrs Wealth status (1=Poor, 2=Medium, 3=Rich
1. Are you engaged in poultry marketing? 1. Yes 2. No 2. What poultry product you produce/trade? 1. egg 2. Live bird 3. meat 4. all 3. From whom do you buy poultry product------4. By how much do you buy?------
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5. For whom do you sell?------6. By how much you sell?------
Types of From Amount Initial Amount Price/unit Income For whom No. products whom bought bought price sold earned did you sell?
7. From where do the major traders/consumers/ come to your marketing place? 1. Bensa------2. Gedio/dilla----- 3. Hawassa------4. A/wondo ------5. Others------8. How you do categorize your major poultry marketing place? 1. Primary market: 2.seocndary market: 3.teritory market: final marketing place where the marketing process put up 4.others------10. When would you suggest the poultry/product marketing is active? ------11. Do you pay tax for your product marketing?-yes------no------if yes, how much per/hen/egg----- 12. Is there the price change across last five years? 1. Yes 2. No 13. If yes, explain why? ------,------No. Major poultry Unit Poultry products marketable price in the last Suspected rema products four year reasons for rk price change 2004 2005 2006 2007
1 Meat Kg 2 Egg No. per birr 3 Live bird Price/head Codes for P change of comodity: 1.human population increase 2.land fragmentation 3.feed scarcity 4.infrustructure improvement 5.introduction of traders 6. Breed scarcity 7 ------Codes for P change in products: 1. Demand rise 2.supply fall 3. Disease 4. ------14. Do you recommend the broker in your marketing? 1. Yes 2. No If no, why------15. What constraints and opportunities do you suggest on your poultry trading? 1. Constraints------2. Opportunities------
Annex 3. Collector’s questionnaire
Personal information
Name of the collector: ------code------Enumerator Name------Date of interview ------Mobile No. ------
1. SOCIOECONOMIC DATA Characteristics Characteristics Age in years------collecting experience in years------yrs Sex (1=Male, 2=Female)------Education level in grade------grade
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Marital status (1=Single, 2=Married, Social position; (Keble Council member, member of 3=Divorced, 4=Widowed, 5=Polygamy)---- peasant association=Religion leader, 4=Model ---- trader/collector, 5=Other (specify------) Family size • Number of male family members--- Major livelihood activity of the household ------1=Crop, 2=Livestock, 3=Mixed with crop dominate, • Number of female family members 4=Mixed with livestock dominate------5. trade------• Total------others------No. of Active labor force in the household(15 to 64 years) From where he/she comes from------• Male------Final marketing place------• Female------Wealth status (1=Poor, 2=Medium, 3=Rich
1. What initiated you to this business? 1. Awareness and availability of that breed 2. Presence of high market demand 3. High preference for household consumption 4. High profitability of the breed/product 2. For whom you collect the poultry product------3. How much is the price of each of the commodity at first hand producer level? 1.live bird------egg------meat------others------4. What is your final selling price for 1.live bird ------2. Egg------meat------others------5. Where did you sell the collected products------6. When you collect the product and why------7. What breed of the poultry is available in your collection location? 1. Local 2. Cross 3. Both4. Pure 8. What challenges you faced on your collection business------1. Limited supply of the product------2. Huge bureaucracy------3. Limited access to transport------4. Death of the poultry/egg------5. Others (specify)------
Annex 4. Questionnaire for Consumer/purchaser of live bird/egg
Personal information
Name of the purchaser: ------code------Enumerator Name------Date of interview ------Mobile No. ------
1. SOCIOECONOMIC DATA Characteristics Characteristics Age in years------Product eating experience in years------yrs Sex (1=Male, 2=Female)------Education level in grade------grade Marital status (1=Single, 2=Married, Social position; (Keble Council member, member of 3=Divorced, 4=Widowed, 5=Polygamy)---- peasant association=Religion leader, 4=Model farmer, ---- 5=Other (specify------)
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Family size • Number of male family members--- Major livelihood activity of the household ------1=Crop, 2=Livestock, 3=Mixed with crop dominate, • Number of female family members 4=Mixed with livestock dominate----- government worker- • Total------NGO ------No. of Active labor force in the household(15 to 64 years) From where he/she comes from------• Male------Final marketing place------• Female------Distance to market------KM/-----Hrs Wealth status (1=Poor, 2=Medium, 3=Rich 1. How frequently do you buy poultry/ processed meat? ____ per month; 2. From where do you buy? 1. Private farms 2.cooperative 3. Super market, 4. Resturrant/hotels, 5. gov’t 6. producers 7. Others------3. From whom you buy? ------4. What kind of poultry you purchase mostly? Male, female, meat type. egg type., dual. 5. What is the price of each type of product? 1. Male ------2. Female ------3. Meat type ------4. egg type 5. dual ------6. When do you buy poultry/egg mostly A. for consumptions at normal days B. for festivals only C. for cultural values only D. Others (specify) If festivals, in which festival and months mostly?? ------7. Did you buy egg whenever you buy poultry? 1. Yes 2. No 8. What factors determine your decision to purchase and consume poultry ? (rank in order of importance) 1. Months 2. gender 3.Age 4.Festivals 5. Price, 6.salary/days (specify),7.coming of newcomers.8.unexpected income/remittance.., RANKED ORDER------9. Was your preference uniform for all purpose you purchase poultry? 1. Yes 2. No if not, would you please mention some of your requirements for each purpose? ______10. Can you find poultry/egg based on your preference? 1. Yes 2. No 11. If not, what problem did you face? ______12. What do you think about the price of poultry compared with other protein sources like beef, mutton and others? 1. Higher 2. Moderate 3. Lower 4. Same 13. How price of poultry/hen/egg is determined? 1. Demand and supply of poultry 2. Fixed price by the sellers. 3. Government set the price 4 middle men and broker set price 5. It set by buyer 14. How do you see the price of poultry/egg in the last five year? Increase/decrease/the same------What was the price of egg per/no in the last five year 2001----2002------2003------2004-----2005------2006------now------
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15. How you see poultry marketing system in the area? 1. Monopoly 2. Perfect competition 3. Cooperative 16. Was there any government intervention on the price of poultry in the last five year? Yes/no; 17. How do you see marketing after and before government intervention? 1. worest/best; 2. better, 3. worser; 4. intermediate ………..Is it 1. Increased or 2. decreased after intervention 18. What would you suggest on the future poultry marketing policy/rules and regulations to be avail? ------. ------Annex 8 Questionnaires for Hotel and Restaurants General information: Name of hotel /owner? ------major foods prepared from cattle meat?______From poultry product…………………………………….
Final Super consumer/ costs Producers Brokers Collectors Small traders markets Selling price
Marketing cost Marketing margin Net margin
Producer's share of final price (%)
Poultry meat/egg traders/supermarkets 1. Where is your business located? ______2. Where do you buy your meat poultry ––––––––––––––––––––––––––––––– Meat Meat How far is it from your From whom at that Cost of meat Remark/ final type buying Business premise (Kms)? market; Options: per Kg revenue point 1. Direct for the producers/supermarkets 2. From brokers, 3; From other traders, 4. Others
Egg Egg How far is it From whom, Options: Cost of egg Remark/ final type buying from your 1. Direct for the per no. revenue point business producers/supermarkets premise 2. From brokers, (Kms)? 3; From other traders, 4. Others
3. What are the main challenges you face in marketing poultry meat? ______
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4. What are the major opportunities of poultry meat marketing in the area/town? ------5. Future Policy directions suggested by all value chain actors i.e (producers, consumers, cooperatives, traders, retailers, hotels/supermarkets, input suppliers ______
Thank you for your time and cooperation!
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