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ABSTRACT
This research attempted to analyze the market chain of wheat in Debre Elias woreda. Specifically aims to assess the production and marketing support service, analyze the market structure-conduct-performance of wheat market, analyze profitability of wheat production and identify factors affecting wheat supply to the market. To collect primary data, 154 wheat producers and 31 traders were selected using simple random sampling method and purposively respectively. To address the objectives of the study, descriptive statistics and econometric models were employed. Multiple linear regression models were employed to analyze determinants of wheat market supply. The result indicated that Debre Elias wheat market was inefficient, characterized by oligopolistic market structure. The major barrier to enter into the market was shortage of capital. Licensing and years of trading experience did not hinder entry into wheat trading activities. Moreover, the markets were overwhelmed by information asymmetry with low degree of market transparency. Although trading of wheat is profitable across all sample farmers and traders, problems like oligopolistic market structure and information asymmetry made the trading business uncompetitive and inefficient. Among the different variables hypothesized to determine the supply of wheat, six variables had statistically significant effect to predict wheat supply. These are: access to market information, lag price, extension contact, access to credit service, quantity produced of wheat and size of land allocated for wheat production. The study recommends the agricultural sector should improve wheat production capacity by providing new technologies and create stable market system for farmer’s surplus production. Additionally, the sector should strength the existing extension system through training in a way to serve producers at grassroots level. Moreover, financial institutions should design a mechanism to address the challenges of financial access to smallholder farmers and traders.
Keywords: Market; wheat; structure; conduct; performance; multiple regression and oligopoly; |
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