ASSESSMENT OF VEGETABLE VALUE CHAIN OF FARMERS IN ADI

DAERO DISTRICT: CHARACTERISTICS AND CHALLENGES

College of Business and Economics

Department of management

BY

EFREM ASHENAFI

A THESIS SUBMITTED TO DEPARTMENT OF MANAGEMENT OF AKSUM

UNIVERSITY IN PARTIAL FULFILLMENT OF THE REQUIREMENTS FOR THE
AWARD OF THE DEGREE OF MASTER OF BUSINESS ADMINISTRATION (MBA).

ADVISOR: SIMON ZEKARIAS (PHD)

AXUM, TIGRAY

August, 2024
 AKSUM UNIVERSITY

COLLEGE OF BUSINESS AND ECONOMICS

DEPARTMENT OF MANAGEMENT

ASSESSMENT OF VEGETABLE VALUE CHAIN OF FARMERS IN ADI

DAERO DISTRICT: CHARACTERISTICS AND CHALLENGES

BY

EFREM ASHENAFI

A THESIS SUBMITTED TO DEPARTMENT OF MANAGEMENT OF AKSUM

UNIVERSITY IN PARTIAL FULFILLMENT OF THE REQUIREMENTS FOR THE
AWARD OF THE DEGREE OF MASTER OF BUSINESS ADMINISTRATION (MBA).

ADVISOR: SIMON ZEKARIAS (PHD)

AXUM, TIGRAY

August, 2024

APPROVAL SHEET
 AKSUM UNIVERSITY

COLLEGE OF BUSINESS AND ECONOMICS

DEPERTMENT OF MANAGEMENT

Characteristics and Challenges of Vegetable Value Chain of Farmers in Adidaero District

The thesis entitled “Characteristics and Challenges of Vegetable Value Chain of Farmers in
Adidaero District” by Efrem Ashenafi is approved for the degree of Master of Arts in MBA.

Approved by the board of examiners date signature

_________________________ _______________ ______________________
Chairman person
________________________ _________________________ ______________________
External Examiner
________________________ _________________________ ______________________
Internal Examiner

Aksum University
August, 2024
 DECLARATION
I, EFREM ASHENAFI certify that the work embodied in this Masters. Thesis is my own
bonafide work carried out by me under the supervision of Dr.Simon Zekarias at
Department of Management, Aksum University, Aksum. The matter embodied in this
master’s thesis has not been submitted for the award of any other degree/diploma.
I declare that I have faithfully acknowledged, given credit to and referred to the research
workers wherever their works have been cited in the text and the body of the thesis. I
further certify that I have not willfully lifted up some other’s work, paragraph, text, data,
results, etc. reported in the journals, books, magazines, reports, dissertations, theses, etc.,
or available at web-sites and included them in this thesis. Thesis and cited as my own
work. I also declare that I have adhered to all principles of academic honesty and
integrity and have not misrepresented or fabricated or falsified any idea/data/fact/source
in my submission. I understand that any violation of the above will be cause for
disciplinary action by the University.

Name: EFREM ASHENAFIPlace: Aksum University

Signature: ---------------- Date:22 /12/ 2016 E.C.

CERTIFICATION
4
This is to certify that this thesis entitled “Characteristics and challenges of Vegetable
Value Chain of Farmers in adi daero District: Northern Ethiopia” submitted in partial
fulfillment of the requirement for the award of the Degree of Masters, in College of
Business and Economics, Aksum University, through the Department of Management,
done by Mr. EfremAshenafi, ID.No, AKUE/0911870/09is an authentic work carried out
by him under our guidance. The matter embodied in this thesis has not been submitted
earlier for award of any degree or diploma to the best of our knowledge and believe.

NAME of advisor signature date

SIMON ZELARIAS (PhD)_____________ ___________

ACKNOWLEDGEMENT

5
First of all, I would like to express my sincere thanks to the Almighty God for His love,
benevolence, Forgiveness and generosity.

My greatest debt is owed to Dr. SIMON ZEKARIAS, I sincerely thank them for their
advice and guidance in all areas of this thesis, from reviewing the original proposal,
editing the survey questionnaires, and reading and commenting on the draft submitted
thesis.

I am exceptionally indebted to my family, for their love, patience, endurance and

encouragement for my success. Difficult to choose where to start but, my deepest
gratitude goes to my sister for her financial support.I am sure it would have not been
possible without her unreserved help and encouragement.

There are many individuals who have done related researches and institutions who
contributed towards finalizing my study and writing this thesis. Without their support, it
would not be in this format this time. If I forgot to mention someone, it is not intentional
and I am of course grateful to them.

My heartfelt thanks are also owed to experts of Agricultural and Rural Development of
woreda AdI daero whom helped me in facilitating to collect the household survey data
and providing all the available data which was crucial for this thesis.

My deepest appreciation also goes to my staff members whom helped me in different

aspects to my success.

6
 Table of contents

Title page No

Approval form---------------------------------------------------------------------------------------II

Declaration-----------------------------------------------------------------------------------------III

Certification-----------------------------------------------------------------------------------------IV

Acknowledgement-----------------------------------------------------------------------------------V

Table of contents-----------------------------------------------------------------------------------VI

List of tables-----------------------------------------------------------------------------------------XI

List of figures--------------------------------------------------------------------------------------XII

Abstract--------------------------------------------------------------------------------------------XIII

Acronyms-----------------------------------------------------------------------------------------XIV

Chapter One-----------------------------------------------------------------------------------------1

1.1. Background of the

study------------------------------------------------------------------------1
1.2. Statement of the problem
----------------------------------------------------------------------4
1.3. Research
questions-------------------------------------------------------------------------------8
1.4. Objectives of the
study--------------------------------------------------------------------------8
1.4.1. General objectives ---------------------------------------------------------------------8
1.4.2. Specific objectives----------------------------------------------------------------------8
1.5. Significance of the
study------------------------------------------------------------------------9

7
1.6. Scope of the
study-------------------------------------------------------------------------------9
1.7. Organization of the
study---------------------------------------------------------------------10

Chapter Two---------------------------------------------------------------------------------------11

2. Review of related literature ------------------------------------------------------------------11

2.1. Definitions and
concepts---------------------------------------------------------------------11
2.1.1. Value chain ----------------------------------------------------------------------------11

2.1.1.1. Value Chain Analysis----------------------------------------------------------------12

2.1.2.Supplychain ----------------------------------------------------------------------------12

2.2. Major supply chain issues--------------------------------------------------------------------13

2.2.1. Supply chain networks----------------------------------------------------------------13

2.2.2. Complexity------------------------------------------------------------------------------14

2.2.3. Inventory deployment ----------------------------------------------------------------14

2.2.4. Information------------------------------------------------------------------------------14

2.2.5. Cost value--------------------------------------------------------------------------------14

2.2.6. Organizational relationship -----------------------------------------------------------15

2.2.7. Performance measurement------------------------------------------------------------15

2.2.8. Technology -----------------------------------------------------------------------------15

2.2.9. Transportation management ----------------------------------------------------------16

2.2.10. Supply chain security-----------------------------------------------------------------16

2.3. Supply chain management -------------------------------------------------------------------16

8
2.4. Supply chain management of fruits and vegetables---------------------------------------17

2.5. The objective of supply chain management------------------------------------------------18

2.6. Logistics----------------------------------------------------------------------------------------18
2.7. Super market-----------------------------------------------------------------------------------19

2.7.1. Vegetablesuper market ---------------------------------------------------------------19

2.8. Inventory control and management --------------------------------------------------------19

2.9. Transportation management -----------------------------------------------------------------20

2.10. Coordination in the supply chain----------------------------------------------------------20

2.11. Empirical studies----------------------------------------------------------------------------21

2.11.1. International studies-----------------------------------------------------------------22

2.11.2. National studies----------------------------------------------------------------------27

Chapter Three------------- -----------------------------------------------------------------------30

3. Research methodology------------------------------------------------------------------------30

3.1. Description of study area --------------------------------------------------------------------30

3.2. Methodology ----------------------------------------------------------------------------------32

3.3. Research design -------------------------------------------------------------------------------32

3.4. Source and method of datacollection ------------------------------------------------------32

3.5. Sampling design and sample size determination------------------------------------------32

3.6. Data processing and analysis----------------------------------------------------------------34

3.6.1.Descriptive statistics-------------------------------------------------------------------34

3.7. Description of variables----------------------------------------------------------------------34

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 3.7.1. Dependent variables-------------------------------------------------------------------34

3.7.2. Explanatory variable------------------------------------------------------------------35

3.8. Issues of validity and reliability-------------------------------------------------------------39

3.9. Ethical considerations ------------------------------------------------------------------------39

Chapter Four---------------------------------------------------------------------------------------41

4. Result and discussions--------------------------------------------------------------------------41

4.1. Demographic Characteristic of the Household--------------------------------------------41

4.1.1. Gender of the Household head-------------------------------------------------------41
4.1.2. Age of the Household Head----------------------------------------------------------43
4.1.3. Marital Status of Respondents--------------------------------------------------------45

4.1.4. Education Level of Household Head------------------------------------------------46

4.2. Household Heads Awareness about value Chain of vegetables in Adi-daero

woreda----47
4.3. Major vegetable value chain actors and their relationship with producers in Adi-
daero
woreda--------------------------------------------------------------------------------------------51
4.4. Type of outlet and factors of outlet choice decision--------------------------------------55
4.5. Transportation means-------------------------------------------------------------------------56
4.6. Constraints affecting vegetable value chain practice-------------------------------------58

Chapter Five----------------------------------------------------------------------------------------69
5. Summary, Conclusion and Recommendations-----------------------------------------------69
5.1. Summaryof major findings------------------------------------------------------------------69
5.2. Conclusion--------------------------------------------------------------------------------------71

5.3. Recommendations-----------------------------------------------------------------------------73

6. References----------------------------------------------------------------------------------------74

7. Appendix I.Questionnaire ---------------------------------------------------------------------89

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II. Interview schedule---------------------------------------------------------------99

I. Retailers Interview schedule----------------------------------------------------99

II. Consumers Interview schedule------------------------------------------------103

III. Government Representatives Interview Schedules-----------------------107

List of Tables

Table No Description page No

Table; 4.1.Sex of the respondents----------------------------------------------------------------41

Table; 4.2.Independent sample test of sex------------------------------------------------------42
Table; 4.3.Age of respondents--------------------------------------------------------------------43
Table; 4.4.Chi-Square Test of age---------------------------------------------------------------44
Table; 4.5.Marital status of respondents---------------------------------------------------------45
Table; 4.6.Educational levels of respondents---------------------------------------------------47
Table; 4.7.Regression analysis of household heads awareness about value chain practice
of vegetables-----------------------------------------------------------------------------47
Table; 4.8.Relationships of producers with vegetablesvalue chain actors------------------54
Table; 4.9.One sample tests for relationship of producers with vegetable value chain
actors---------------------------------------------------------------------------------------55
Table; 4.10.Supply chain form to sale vegetable----------------------------------------------56
Table; 4.11.One-Sample Test for value chain outlet type------------------------------------57
Table; 4.12.Transportation means farmers used to your vegetable value chain-----------58
Table 4.13.One-Sample Test of transportation means farmers used to your vegetable
value chain------------------------------------------------------------------------------------------58
Table; 4.14.Impact rate of infrastructure to total sold vegetables---------------------------59

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Table; 4.15.Impact rate of post-harvest losses to total sold vegetables---------------------61
Table; 4.16.Impact rate of integration issue to vegetable value chain----------------------62
Table; 4.17.Impact rate of technology accessibility to vegetable value chain-------------63
Table; 4.18.Correlation between technology and total sold vegetable----------------------64
Table 4.19.Impact rate of value addition to total sold vegetables---------------------------65
Table; 4.20.Impact rate of quality rendered to total sold vegetables-----------------------66
Table; 4.21.Impact rate of price risk to total sold vegetables -------------------------------67

Table; 4.22. Correlation between price risk and total sold vegetable-----------------------68

List of figures

Figure list Description page No

Figure1. Supply chain form of vegetable super market----------------------------------------21

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 Abstract

The study was conducted at assessment of vegetable value chain of farmers in Adi-daero
district: characteristics and challenges, Tigray region. Data was collected from primary
data sources. Data used for analysis in this work was collected using questionnaire and
scheduled interview from 341 households or elements selected using stratified random
sampling technique from vegetables producers, and using in-depth interview from 10
vegetable retailers, 15 consumers and 5 government representatives for triangulation
purpose during 2016/17. The analysis was made by descriptive statistics and econometric
model such as regression and correlation and using SPSS version 20 software. About
73.6 percent of the farmer respondents have smooth relationship with the actors of the
value chain. From the findings the researcher has tried to put recommendations like; to
add the value of their product and sell at a competitive price, the farmers should
cooperate each other and search alternative markets in a cooperative form other than
selling to intermediaries; for proper marketing of agricultural goods adequate and
appropriate transport facilities are necessary, it is known that transportation of
vegetables by animal power affects its quality such as it is exposed to sunlight. So, the
government should create awareness, road and vehicle accessibility in collaboration with
volunteers and cooperatives; and Price fluctuation in vegetable products was major
problem for smaller farmers; so, government experts should conduct pre-assessment or
study controls and manages imbalance between demand and supply

Key words; Vegetables, Supply chain practice, Econometric model, Outlet forms
13
 Acronyms

ADLI Agricultural Development Led Industrialization

BoARD Bureau of Agriculture and Rural Development

CSA Central Statistics Agency

FAO Food and Agricultural Organization

FDRE Federal Democratic Republic of Ethiopia

GDP Gross Domestic Product

GTP Growth and Transformational Plan (I and II)

IJSR International Journal of Science and Research

JIT Just In Time

KG Kilo Gram

Km Kilo Meter

MoFED Ministry of Finance and Economic Development

NAMBoardNational Agricultural Marketing Board

NGO Non-Governmental Organization

ROT Return on Investment

SAERP Sustainable Agricultural Environmental and Rehabilitation Program

SCM- Supply Chain Management

SPSS Statistical Package for Social Science

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TBARD Tigray Bureau of Agriculture and Rural Development

CHAPTER ONE

INTRODUCTION

1.1. Background of the Study

According to International Development Association (IDA, 2015), agricultural

development is one of the most powerful tools to end extreme poverty, boost shared
prosperity and feed 9 billion people by 2050.

Growth in the agriculture sector about 2 to 4 times more effective in raising incomes
among the poorest compared to the other sectors. This is important for about 78% of the
world’s poor who live in rural areas and depend largely on farming to make a living.
Agriculture was also crucial to economic growth, accounts for one third of gross
domestic product (GDP) and three quarters of employment in Sub Saharan Africa (World
Bank, 2016).

In the Middle Ages, both in the Islamic world and in Europe, agriculture was transformed
with improved techniques and the diffusion of crop plants, including the introduction of
sugar, rice, and cotton and fruit trees such as orange to Europe by ways of AL-Andalus.
Irrigation, crop rotation, and fertilizers were introduced soon after the Neolithic
revolution and developed much further in the past starting with British Agricultural
revolution (Alfred, 2013).

According to Aune, J.Barrios, and Bationo A., (2008), agriculture is the main engine of
the economic growth for Sub-Saharan African countries. As of the International Labor
Organization (ILO), (2011), approximately one billon people, for over one third (1/3) of

15
the available work force were employed in the global agricultural sector. Agriculture
constitutes approximately 70 percent of the global employment of children and in many
countries employs the largest percent of women’s of any industry.

As of foresight Africa (2016), cited on Mayaki, (2016), farming is the primary source of
food and income for Africans and provides up to 60 percent of all jobs on the continent.
Food production in Sub-Saharan Africa needs to increase by 60 percent over the next 15
years to feed a growing population. Africa’s food and beverage markets are expected to
greater than $1 Trillion in value by 2030.

Agriculture today accounts for 32 percent of gross domestic product (GDP) in Africa and
is the sector that offers greatest potential for poverty reduction and Job creation
particularly among the vulnerable rural populations and urban dwellers with limited job
opportunities (Ibid). Accordingly, increasing GDP growth will bring both food and job
opportunities to the continent and requires a coordinated effort between the public and
private sectors.

Ethiopia is one of the largest African countries with a population of 103,667,527 people
based on the latest United Nations estimation as of march 27, 2017 (Worldometers,
2017). The country shares boundaries with Eritrea to the north, Kenya to the south,
Somalia and Djibouti to east and Sudan and south Sudan to the west with the land
boundaries total of 5925 kilo meters and 6 border countries(CIA World fact book,2016).

According to the central statistics agency (CSA, 2012), of Ethiopia the majority (83.8%)
of Ethiopian reside in the rural areas. Hence, subsistence and rain feed agriculture is the
economic base and means of livelihood of the majority of these people (Bihon, 2015).

The contribution of agriculture to GDP in Ethiopia is above the average contribution of

Sub-Saharan Africa. The share of the agricultural sector of Sub Saharan Africa is around
40 percent (Aune, et al., 2008). On the other hand, the contribution of the agricultural
sector to GDP in Ethiopia is 41 percent (MoFED, 2012).

Similarly, Diao and Hazell (2010), confirms that an agricultural stimulated growth of 1
percent annual increase in Ethiopia per capital GDP leads to a 1.7 percent reduction in the

16
poverty rate per year. On the other hand, if the same increase in per capital GDP is
caused by non-agriculture, its impact on poverty reduction is only 0.7 percent. Thus, the
government of Ethiopia has tried to improve the performance of agriculture by planning
and implementing different strategies. Agricultural development led Industrialization
(ADLI) is the central pillar of the economic policy of the country.

Firstly, the researcher have witnessed to see the overall contribution of agriculture why
because the supply chain practice of vegetable is the product of agriculture or vegetable
production is a part of agriculture. In Ethiopia, vegetable sub sector has a vital role in
human nutrition, farm income generation, poverty alleviation and foreign currency
earnings through export and foreign direct investment (Ethiopia investment agency,
2013). Processed products such as tomato paste and tomato juice were produced for
export to Somalia, Djibouti and Saudi-Arabia making a significant contribution for the
national economy (EIA, 2013).

Ethiopia’s wide range of agro climatic conditions and soil types makes it suitable for the
production of both warm and cool season vegetables (Bezabh and Hadera, 2007).

As of Hussain and Hanjra (2004) vegetable crops are suitable for production under
intensive systems where some farmers produce 2 or 3 times within a calendar year in
Ethiopia. However, vegetable production in the country is constrained by several
challenges .Among them, post harvest loss of vegetables such as tomato. Post harvest
refers to the losses that occur along the food supply chain, from the farm gate through till
it gets on the table of the final customer.

According to Ian (2007), disease and land degradation are two of the major concerns in
agriculture today. Approximately 40 percent of the world’s agricultural land was
seriously degraded.

As of Kidness and Gordon, (2001), Losses are encountered along the chain in the
handling, storage, transportation and processing, there by resulting in a reduction in the
quality, quantity and market value of agricultural commodities. Within developing
countries context, in Ethiopia particularly, it concerns about reduction of quantitative
losses than qualitative one.

17
In most developing countries such as Ethiopia, roads are not adequate for proper transport
of horticultural crops, while transport vehicles and other modes, especially those suited
for fresh horticultural perishables are in short supply. Moreover, the extent of losses is
significantly influenced by pre harvest conditions and field operations such as cultivator
and soil types, crop management practices, and insect pest control programs, harvesting
as well as packaging and handling practices (Abay, 2007).

Tigray region is the northern most of the nine regions of Ethiopia, like any other states in
the country about 85% of the population is entirely dependent on agriculture. Because of
miss management and unwise use or lack of knowledge the soil is degraded, erratic
rainfall pattern and recurrent drought are manifested in part or in the whole region
repeatedly (Tigray Bureau of Agricultural and Rural Development, 2011). As a result,
horticultural production and value chain is not moderate in the region. So, the researcher
needs to conduct a research on assessment of characteristics and challenges of vegetables
value chain in Adi daero district.

According to the primary data collected from the Bureau of agriculture and rural
development (BoARD) of Adidaeroworeda about 3,908 (three thousand nine hundred
eight) hectare of land was covered by vegetable in 2015/16, this is all the planned
coverage of the year, and about 10,447 (Ten thousand four hundred forty seven) people
were involved in the irrigation practice or in the vegetable growing (BoARD, 2017).

More or less, all the tabias irrigate vegetable but their potential and value of the product
they produced is different with its volume. So, the researcher conducted the research on
this topic to describe the general characteristics of vegetables value chain of vegetable in
the woreda, to identify the uncovered challenges of the value chain, to use as literature
review for those who are interesting by filling the information gap regarding this problem
and study area and to provide some important recommendations.

1.2. Statement of the Problem

The economy of Ethiopia remains highly dependent on agriculture which contributes

about 41 percent of gross domestic product (GDP), 83 percent of employment and 90

18
percent of exports (Ethiopian Economic Association, 2012). However, the agricultural
productivity is low due to use of low level of improved agricultural technologies, risks
associated with weather conditions, diseases and pests, etc. Moreover, due to the ever
increasing population pressure, the landholding per household is declining leading to low
level of production to meet the consumption requirement of the households. As a result,
intensive production is becoming a means of promoting agro-enterprise development in
order to increase the land productivity (Bezabih and Hadera, 2007).

It is the leading sector that contributes to the GDP of the country. However, as farming in
Ethiopia is precarious and usually at the mercy of nature it is invariably an arduous
struggle for the small holders to make ends meet (Central Statistics Agency, 2009). So,
the government has tried to address the major problems of agricultural production and
marketing.

According to Teshome (2006), the focus of the government policy shifted to alternative
livelihood activities when it was reacted that subsistence farm operators were unable to
make a living from agriculture. As a solution, the government introduced livelihood
packages to supplement house hold income. However, the focus of livelihood
diversification was also with in the agricultural sector such as generating additional
income from beekeeping and similar occupations

Vegetables are also used as a source of raw material for the local processing industry.
Processed products such as tomato paste, tomato juice, and oleoresin are produced for
exports making a significant contribution to the national economy (Aklilu, 2000;
BAREDO, 2013). Increased national and growing regional demand for vegetables has
triggered commercial production and boosted private investment in the sector by both
national and international entrepreneurs, increased exports to Djibouti, Somalia, South
Sudan, the Sudan, the Middle East and European markets (Tabor and Yesuf, 2012).

This partially affirms government’s policy of increasing productivity of high value crops
with the aim of increasing household income and improving nutrition. It has been noted
that, increasing consumption of vegetables and fruits contributes to reducing hidden
hunger (i.e. jmicronutrient deficiency), which is related to health problem caused by a

19
lack of essential vitamins and minerals such as vitamin A, zinc, iron, and iodine in the
diet (Adish, 2012). Despite the increasing importance of vegetables in Ethiopia, there is
inadequate knowledge on improved production systems and value chain.

Development need of vegetable is poorly addressed in Ethiopia. But those days efforts
have been stepped up to improve and support the sector with this line, the current growth
and transformation plan (GTP), prioritize intensive production and commercialization of
horticulture as sector for attention (Abraham, 2013). Thus, the development policy
initiates the need to accelerate the transformation of the Sub sector from the subsistence
to business oriented agriculture. But, the existing constraint of production, post harvest
handling and marketing such as: - input utilization, productivity, packing, warehousing,
cold storage and distribution have played their deterring role on production, trade, and
consumption of vegetables in eastern Ethiopia (Abraham, 2013).

As of the researcher’s belief, no previous research has been conducted on assessment of

vegetable value chain of farmers in adi daero district: characteristics and challenges, even
though there are related topics conducted in the global, national, zonal and district level
with a different focus and research interest. For instance, research work by Saurav and
Neeraj (2015), on issues and challenges in the supply chain of fruits and vegetables sector
in India have found that cold chain facilities, fragmented supply chain, linkage and
integration between the partners, taxation issue, infrastructural facilities, farmers
knowledge and skill, quality and safety standards, processing and value addition, supply
chain inefficiency and farmers income are the serious challenges for fruits and vegetable
sector and are affecting the overall growth of the agricultural development of India.

Nalini, A., Mohamed A. F., and Mohamed Z. A., (2010), also conducted research on
supply chain analysis of fresh fruits and vegetables prospect of contract farming and
found that there are five factors that lead farmers to participate in contract farming of
fresh fruits and vegetables. These are market stability, access to marketing information
and technology, transfer of technology to improve farming practices, access to inputs and
indirect benefits.

20
Abrham (2013), researched his thesis on value chain analysis of vegetables in case of
Habro and Kombolchaworedas and identifies marketing supply is significantly affected
by access to marketing information and quantity produced, access to extension service,
distance to the nearest market, and education status of house hold head.

Shimelse (2010), conduct a research on determinants of vegetable income in the supply

chain of perishable agricultural products in case of irrigated cooperative in southern
Tigray and identities the constraints of income from vegetables land size, fertilizer in
terms of its cost, perishable nature of the product, shortage of improved seed, irrigation
water shortage, storage and technical assistance both for production and marketing.

Amsalu A., Stronsnijder L., and Degraaff J., (2015), put on their quarterly journal of
international agriculture, on characterization and assessment of vegetable production and
marketing system in the Humid Tropics of Ethiopia. Major vegetable production and
marketing constraint include lack of access to improved variety seeds, high post harvest
losses, lack of reliable market information system, and low bargaining power of farmers,
low technological knowhow for value chain development and upgrading.

The same is true that, Teklay and Solomon, (2013), also conducts research on
determinants and coping strategies of Household food insecurity in rural areas of Tigray:
The case of rural adidaero Woreda”,and they found that Households food insecurity was
significantly reduced by access to agricultural extension service, off farm income,
number of oxen owned, total land size, lack of market accessibility and safety net
participation in adi daero woreda.

Hence, agriculture in general, vegetable in particular is the major source of income in

national, regional, zone and district level farmers. Hence, in all level vegetables value
chain is practicing traditionally. As a result of this traditional practice it faces with critical
problems. When the researcher came to his specific study area which is Adi daero
woreda, there is poor value chain practice that can be manifested from different reasons
as well. So, the researcher has addressed it through his study. As a result of poor value
chain producers and involved bodies were not becoming beneficiaries. Therefore, the

21
researchers attempt is to assess the characteristics and challenges of vegetable value chain
that hinders the benefit or profit of the farmers.

1.3 Research Questions

1. What is the awareness of the household farmers about the vegetable value chain in
the study area?

2. Who are the actors of vegetable value chain in the study area?

3. What is the relationship between the farmers and the actors of vegetables value

Chain?

4. What is the choice of outlet applied to the vegetables value chain in the study area?

5. What are the challenges do farmers encounters to vegetables value chain in Adi
daero district?

1.4. Objective of the Study

1.4.1. General Objective

The general objective of this study is to assess the characteristics and challenges of
vegetables value chain in Adi daero district.

1.4.2. Specific Objectives

The following specific objectives are forwarded to address the overall objective of this
study.

1. To ascertain the awareness of farmers who involved in the vegetables value chain.
2. To describe the actors of vegetable value chain in the study area.
3. To describe the relationship between the farmers and actors of vegetables value
chain.

22
 4. To identify type of outlet they applied for their value chain practice.

5. To find out the challenges faced during the vegetables value chain practice in the

Study area.

1.5. Significance of the Study

As we know research is the fountain of knowledge, an important source of information

and provides guide lines for solving different business, governmental and social
problems. So, this study enables to fill the information gap concerning the value chain
practice of vegetables and to find out the major challenges hindering the vegetables value
chain of the participators by studying the necessary investigations and have some
contributions for those who will conduct research on the same and related study areas and
problems as source of review literature and to give important suggestions and
recommendations.

1.6. Scope of the Study.

The study basically focused on assessment of vegetables value chain within the limited
land acreage. Besides, the study was delimited to conveniently selected study zone and
purposively selected district or woreda: Adi daero woreda, where cross-sectional survey
data was used from sample respondents selected through stratified and random sampling
technique. The study was restricted to characteristics and challenges of vegetable value
chain of Adi daero woreda, with 2180 hectares of land which is covered by vegetable.
Among the vegetables onion, potato, tomato, cabbage, carrot and lettuce were the major
focuses of this paper due to their economic importance to the producer’s and their
abundance. Accordingly, any of the analysis, findings and conclusion of the study
represents Adi daero woreda alone.

1.7. Organization of the Study

The thesis is organized to five chapters. The first chapter provides background and
justification of the study, which sets the tone for the thesis by providing motivation for
the study, its objectives, and scopes. The second chapter examines and reviews relevant

23
review of related literature. The third chapter starts with research methodology and
description of the study area, explaining the institutional, geographical and administrative
structures, followed by outlining the methodological approaches including data collection
methods and analytical frameworks. The fourth chapter presents findings and discusses of
the results. Chapter five contains summary, conclusion and recommendations.

CHAPTER TWO

REVIEW OF RELATED LITERUTURE

2.1. Definitions and Concepts

Industry chains are classified as either supply or value chains (Dunne, 2001). The
following definitions within the general term industry chain are used.

2.1.1. Value Chain

It is taken to mean a group of companies work together to satisfy market demands. It

involves a chain of activities that are associated with adding value to a product through
the production and distribution processes of each activity (Schmitz, 2005). An
organizations competitive advantage is based on their products value chain. The goal of
the company is to deliver maximum value to the end user for the least possible total cost
to the company, there by maximizing profit (Porter, 1985).

Value chain management is about creating the added value at each link in the chain and a
sustainable competitive advantage for the business in the chain. How value is actually
created is a major concern for most businesses. Porter, (1985) indicates that value can be
created by differentiation along every step of the value chain, through activities resulting
in products and services that lower buyers’ costs or raise buyers’ performance. In much
of the food production and distribution the value chain, the value creation process has
focused on commodities with relatively generic characteristics, creating relatively small
profit margins.

24
It is the full range of activities required to bring a product from conception, through the
different phases of production and transformation. A value chain is made up of a series of
actors (or stakeholders) from input suppliers, producers and processors, to exporters and
buyers engaged in the activities required to bring agricultural product from its conception
to its end use (Kohls, R, L. and J.N. Uhl, 1985)

2.1.1.1. Value Chain Analysis

Value chain analyses encompass issues such as organizational, coordination, power

relationship between actors, linkages, and governance aspects. The value chain approach
has been a very useful analytical tool for taking a more objective look at an organizations
position in a market. It allows for examining the consequence of empowering one group
(the producer) and identifying how to link them to other actor’s and consumers. It enables
analysis of the implication of who does what, at which stage in the chain, and what this
means for risk, capital needed and margins. It can help to identify with whom to form
partnership in the chain (Schmitz, 2005).

2.1.2. Supply Chain Consumers

It is taken to mean the physical flow of goods that are required for raw materials to be
transformed in to finished products. Supply chain management is about making the chain
as efficient as possible through better flow scheduling and resource use, improving
quality throughout the chain, reducing the risk associated with food safety and
contamination and decreasing the agricultural industries response to changes in consumer
demands for food attributes (Dunne, 2001).

Supply chain is the entire process of accepting the customer order through to the delivery
of the product to the inclusive of supply procurement and production of the product. A
supply chain is a collection of interdependent step when thoroughly followed gives rise to
a certain objective as meeting customer requirements. Supply chain is simply the
combination of tasks where any company would like to perform to move services or
product from supplier to customer. Effective supply chain management (SCM) has

25
become a potentially valuable way of securing competitive advantage and improving
organizational performance since competition is no longer between organizations, but
among supply chains (Hugos, 2006).

The results indicate that higher levels of SCM practice can lead to enhanced competitive
advantage and improved organizational performance. Also, competitive advantage can
have a direct, positive impact on organizational performance. Supply chains encompass
the companies and the business activities needed to design, make, deliver and use a
product or service (Hugos, 2006).

‘’A supply chain is the alignment of firms that bring products or services to market’’
(Douglas, and Paul, 1996). ‘’A supply chain consists all stages involved directly or
indirectly in fulfilling a customer request. The supply chain not only includes the
manufacturers and suppliers but also transporters, warehouses, retailers, customer
themselves…’’ (chopra and Meindel, 2003).

Coyle, et al., (2013), describes that supply chain includes all the systems of management
such as purchasing, production, operations, assembly, scheduling, order processing,
inventory management, customer service and warehousing.

‘’A supply chain is a network of facilities and distribution options that performs the
functions of procurement of materials, transformation of these materials in to
intermediate and finished products to customers’’ (Ganeshan, et al., 1995).

Generally, supply chain increases market comparison both at the producer end and at the
consumer ends of the chain. Chains compete primarily through price, differentiated
products and services and differentiated terms of sale. At the producer end of the chain,
supply chains compete with one another primarily for “producer affiliation” and core
vendor commitments.

2.2. Major Supply Chain Issues

According to Coyle, et al., (2013), the challenges to develop and sustain an efficient and
effective supply chain requires organization to address a number of issues.

26
2.2.1. Supply Chain Networks

The network facilities (plant, distribution centers, and terminals etc.) and the supporting
transportation services have long been considered important. However, the network
system in a dynamic global environment is critical. One of the challenges is the rapid
changes that can take place. Companies and other organizations need a network system
that is capable and flexible to respond and change with the dynamics of the market place
whether in the short run or the long run.

2.2.2 Complexity

Globalization and consolidation in supply chain have caused an increase complexity for
organizations in terms of customer or supplier locations, transportation requirements, tax,
trade regulations etc. Companies need to take steps to simplify as much as possible, the
various aspects of their supply chains.

2.2.3. Inventory Deployment

Inventory is often duplicated along the chain and the bullwhip effect rises. Consequently
supply chain provides an opportunity to reduce inventory level. Coordination or
integration can help reduce inventory levels on horizontal (one firm) and or vertical
(multiple firms) levels in the supply chain. Strategies such as compression and
postponement can also have a positive impact. Inventory deployment is very important
issue for supply chains because of the associated cost and related opportunities for
increased efficiency.

2.2.4. Information

The technology and communication systems that are available to organizations today lead
to the collection and storage of vast amounts of data, but interestingly enough
organizations may not taking advantage of the abundant data to develop information
systems to improve decision making. Information can be a power full tool if it is timely,
accurate, managed and shared. It can be a substitute for inventory because it can reduce
uncertainty.

27
2.2.5. Cost/Value

A challenge for supply chains is the prevention of sub optimization. If a competing

supply chain is offering a comparable product at a lower cost and higher value it does not
matter if a company is effective and efficient but in the middle of another supply chain.

2.2.6. Organizational Relationships

Supply chain management emphasizes internal collaboration or cooperation with

marketing, sales, operations or manufacturing and accounting finance as well as
cooperation or collaboration with external organizations.

2.2.7. Performance Measurement

Most organizations have measures of performance or metrics in place to analyze and

evaluate their efficiency and progress over different time periods. It is important to
recognize that lower level metrics in an organization must connect directly to the high
level performance measures of the organization and the supply chain which are usually
net profit return on investment or assets and cash flows.

2.2.8. Technology

Technology can be viewed as a change driver but it is also important as a facilitator of

change that will lead to improved efficiency and effectiveness. The challenge is to
evaluation and successfully implement the technology to make the improvements desired
the approach necessary to analyze and adjust the processes to educate the people involved
and then select and implement the technology to facilitate the changes in the processes.

Agricultural production technologies include biological and chemical technologies.

Specifically, these technologies include chemical fertilizers, selected seeds or high
yielding varieties, irrigation and soil quality enhancing technologies. Farmers use these
technologies in order to enhance the production and productivity of the land. It is also
indicated that, for poor farmers, adoption of technology places new demands on their
limited resource base (Kamruzzaman and Takeya, 2008.)

28
Farmers in the Southern region of Ethiopia have benefitted from the intercropping of
annual and perennial crops. As presented above, the agricultural production technologies
such as chemical fertilizer, improved seeds and irrigation affect the productivity and
income of farm operators. In addition to these factors, the productivity and income of
farmers was influenced by access to credit in rural areas (Kamruzzaman and Takeya,
2008).

2.2.9. Transportation Management

Transportation can be viewed as the glue that makes the supply chain model functional.
The critical outcome of the supply chain is to deliver the right product, at the right time,
in the right quality and quantity at the right cost and to the right destination.
Transportation plays an important role in making these rights happen. The challenge has
been exacerbated by economic changes among transport providers, shortage of drivers,
higher fuel costs, and changes in driver hour regulations have lead to what some
individuals have called a transportation crisis or the ‘’perfect storm.’’

2.2.10. Supply Chain Security

Safe and reliable delivery of products to customers is expected of the supply chain. In the
past this was often accepted as a given but, today it is a concern and potential challenge,
means globalization has obviously increased the risk of interruptions or shutdown of
supply chains.

2.3. Supply Chain Management

Supply chain management can be seen as the process of strategically managing the
procurement, movement, and storage of materials, parts, and finished inventory through
the organization and its marketing channels in such a way that current and future
profitability are maximized through the cost effective fulfillment of orders Kaminsky, P.,
Simchi-Levi, E., and Shankar, R., (2008).

29
Sople (2012) describes supply chain management controls the physical flow of goods
from source to point of use by aligning the capabilities of supply chain partners. Supply
chain management consists of all parties involved, directly or indirectly. The term supply
chain also implies that only one player is involved at each stage. In reality a manufacturer
may receive materials from several suppliers and then supply to several distributers.
Thus, the most supply chains are actually networks.

As Suhaiza and Premkumar, 2005 cited in Ensermu (2015), supply chain management
includes the logistic flows and the customer order management. The production processes
and information flow necessary to monitor all the activities at the supply chain nodes.
The simultaneous integration of customer requirements, internal processes and upstream
supplier performances commonly referred to as supply chain management.

‘’Supply chain management is managing supply and demand, sourcing raw materials and
assembly, warehousing and inventory tracking, order entry and order management
distribution across all channels and delivery to the customer’’ (Ensermu, 2015).

‘’supply chain management is the design and management of seamless, value

added processes across organizational boundaries to meet the real need of the end
user/customers’’ (Ensermu, 2015).

2.4. Supply Chain Management in Fruits and Vegetable

Sector of fruits and vegetables constitutes a major part of the world economy and is the
raw material for many industries. Among the agricultural produce, perishable food
produce like fruits and vegetables have got the least attention. The supply chain
management of perishable food produce constitutes the processes from production to
delivery of the agriculture -fresh produce, i.e. from the farmer to the customer. Supply
chain management of perishable food produce is complex as compared to other SCMs
due to the perishable nature of the produce, high fluctuations in demand and prices,
increasing consumer concerns for food safety and quality (Vorst and Beulens, 2002), and
dependence on climate conditions (Salin, 1998).

30
There are several players involved in fulfilling the needs of the consumer in the supply
chain management of fruits and vegetables like farmers, local traders, transporters,
processors, retailers, wholesalers etc. From a farm gate to a consumer, a horticulture
product passed through six to seven different distribution channels (Viswanadham, 2007).
Perishable foods produced in the farmer‘s field reaches the end consumer through a chain
of intermediaries. These intermediaries carry out various functions, such as transfer of
ownership of commodities, its movement, maintenance and preservation of quantity and
quality, payment to the seller and commodity delivery to the buyer (Halder and Pati,
2011). All the links from farmers to end user of the commodity constitute supply chain of
the agricultural commodities.

2.5. The Objective of Supply Chain Management

Chopra, Sunil and Peter Meindl, (2003), describes the objectives of any supply chain is to
maximize overall value generated. The value a supply chain was generated is the
difference between the final worth of the product to the customer and the effort the
supply chain expands in filling the customer’s request. For most commercially supply
chains, value will be strongly correlated with supply chain profitability, the difference
between revenue generated from the customer and the overall cost across the supply
chain. The higher the supply chain profitability, the most successful is the supply chain.
Supply chain success should be measured in terms of supply chain profitability not in
terms of the profits at an individual stage.

The real measure of supply chain success is how well activities coordinate across the
supply chain to create value for consumers, while increasing the profitability of every
link in the supply chain. In other words, supply chain management is the integrated

process of producing value for the end user or ultimate consumer.

2.6. Logistics

AsEnsermu (2015), Logistics is an integral part of supply chain. Logistics is the process
of planning, realization and control of the efficient, cost effective flow and storage of raw

31
materials and semi-finished goods according to the requirements of the customer. The
most important thing is to satisfy the customers by providing as low prices as possible,
with the highest service and to the best possible quality.

Another way of describing logistics is that the logistic activities serve to deliver goods in
the most efficient way, in the right quantities at the right place, in the right order and at
the right time. This is also known as the 4r of logistics (Gudehus and Kotzab, 2012).

2.7. Super Market

A supper market is a large form of the traditional grocery store and is a self service shop
offering a wide variety of food and house hold products in a proper organized manner. It
is larger in size and has a wider selection than a traditional grocery store, but is smaller
and more limited in the range of merchandise (Anuroop, et al., 2013).

2.7.1. Vegetable Super Market

A vegetable super market is a place which has only fruits and other such eatable products
organized in a proper manner under a single roof. To explain the supply chain of
vegetable supermarket, it is a simple process of successive steps which will be discussed.
That will make the vision clear why supermarkets have a simple chain from supplier to
customer (Anuroop, et al., 2013).

Figure 1. Supply chain form of vegetable super market

farm collection center store

2.8. Inventory Control and Management

Inventory or stock refers to the goods and materials. Inventory objects could include any
kind of physical asset; merchandise, consumables, fixed assets and circulating toolset
(Hugos, 2006).

As Coyle, et al., (2013), described in their work inventory have an impact on return
on investment (ROI) for an organization. Reducing inventory usually has a short term

32
improvement in return on investment (ROI) because it reduces assets and increase
available working capital.

‘’inventory control is the supervision of supply, storage, and accessibility of items in

order to ensure an adequate supply without excessive over supply. It can also refer as
internal control-an accounting procedure or system designed to promote efficiency’’
(Hugos, 2006).

2.9. Transportation Management

Transportation refers to the movement of products from one location to another as it

makes its way from the beginning of the supply chain to the customer. Transportation is
an important supply chain driver because products are rarely produced and consumed in
the same location. Transportation is a significant component of the costs incurred by most
supply chains. Farm products depend on transportation for the creation and preservation
of their value. Food transportation costs –a measure of place utility –usually constitute a
higher share of the retail price than is the case for nonfoods (Kohls and Uhl, 2002).

2.10. Coordination in the Supply Chain

Hugos (2006) researched the bullwhip effect and identified five major factors that cause
the effect. These factors interact with each other in different combinations, in different
supply chains but the net effect is that they generate the wild demand swings that make it
so hard to run an efficient supply chain. These factors must be understood and addressed
in order to coordinate the actions of any supply chain. These are:-

Demand Forecasting:-This is based on orders received instead of end user demand data
will inherently become more and more in accurate as it moves up the supply chain.

Order Batching:-This occurs because companies place orders periodically for amounts
of product that will minimize their order processing and transportation costs.

Product Rationing:-This is the response that manufacturers take when they are faced
with more demand than they can meet. One common rationing approach is for a

33
manufacturer to allocate the available supply of a product based on number of orders
received.

Product Pricing:-Product pricing causes fluctuation on the price of the product,

resulting in distortions of products demand. If special sales are offered and product prices
are lowered it will induce customers to buy more product or to buy sooner, then prices
return to normal level and demand falls off.

Performance Incentives:-These are often different for different companies and

individuals in a supply chain. Each company can see its job as managing its position in
isolation from the rest of the supply chain. Within companies, individuals can also see
their job in isolation from the other companies. Alignment of performance incentives
with supply chain efficiencies is a real challenge.

2.11. EMPERICAL STUDIES

2.11.1. INTERNATIONAL STUDIES

One research has been conducted on issues and challenges in the supply chain of fruits
and vegetables sector in India. The study found that cold chain facilities, fragmented
supply chain, linkages and integration between the partners, taxation issue, infrastructure
facilities, cost of packaging material, technology and techniques, farmer's knowledge and
awareness, quality and safety standards, processing and value addition, supply chain
inefficiency, farmers income, supply chain losses and wastage of fresh produce,
transportation facilities; demand and market information etc. are the factors which
constitutes serious challenges for Fruits and Vegetables sector and are affecting the
overall growth of the agricultural development of India (Sauravand Neeraj, 2015).

Chandra and Hussain (2013) conduct a research onstrategic change in model of fruit and
vegetables supply chain in India. Accordingly, vegetables and fruits play a vital role for
the existence of people and also a very influencing role in the economy of India. The
traditional retailing of vegetables are not much organized, about 97% of the total market

34
is extremely localized and highly fragmented with large number of intermediaries. The
long transport process from the growers to the final consumer creates the wastage of 10-
12% of total in addition to the transportation cost. This increases the cost of fruit and
vegetable for the final customer also hampers the quality. The food supply chain needs
the attention of the academics, the industry and the Government. In the traditional
business model; wholesalers are intermediaries and a predominant link in the retail
vegetable logistical chain. In general, all the retailers are inevitably dependent on the
local wholesales market. The major constraints are poor transport facilities, non
availability of large scale cold storage, no clean policy guidelines from government and
fragmented and small farmers. The inefficiencies discussed in the above study have to be
handles more carefully. The factors which affect the supply chain also have to be
monitored and development to improve the supply chain efficiency has to be carried out
in India. Working with suppliers on different issues not only generates significant
environmental benefits, but also opportunities for cost containment and enhanced quality
of product.

Another research is also conducted in India by G. Karthikeyan (2016), entitled, problems

in the marketing of agricultural goods in India. Agriculture plays a pivotal role in the
economic development of a nation. Agriculture is the backbone of an agriculture country,
like India. India’s prosperity depends upon the agricultural development. Agriculture is
basically different from industry. The marketing of farm products is a complex process.
In our country the farmers produced various and variety types of agricultural
commodities. Agriculture is the largest and the most important sector of the Indian
economy. The agricultural sector in India is the largest sector in the country’s economy.
Agriculture sector contributes nearly 18.5% to India’s Gross Domestic Product, and it
contributes nearly 13% of the country’s total export.

Agricultural marketing involves many activities and processes through which the
nutriment and raw material move from the agriculture land to the final consumers.
Agriculturist supplies goods for consumption and for exports and manufacturing sectors.
The marketing system should be so designed as to give proper reward to the efforts of the

35
agriculturist. But unfortunately, in our country, the middlemen enjoy the benefits at the
cost of disability, illiteracy of the poor Indian agriculturists. A little part of the price paid
by buyers reaches the farmers while the big part is engulfed by the middlemen. Farmers
are suffering mainly in securing reasonable price for their produce. There are lots of
problems in the marketing of agricultural goods. They are:

Lack of Finance: To finance seasonal requirements more finance is necessary in a

particular period. Financial need also varies from year to year depending upon the
quantity of production. Most of the financial needs of the farmers in India are met by
money lenders. An agriculturist in India born in debt lives in debt and finally dies in debt.

Large Number of Middlemen: Concentration process is very important for agricultural

goods. A long channel of distribution is needed and hence there are large numbers of
middle men. The long chain of middlemen takes a large amount of the agriculturist’s
share from the consumers’ rupee. The middlemen sell the agricultural goods to the
consumers at a higher price and give lower returns to the agriculturist.

Transportation and Storage Facilities: There is high demand for transportation and
storage facilities in the harvest seasons, in order to protect the produce from deterioration
in quality. Production of agro products is seasonal. The consumption is regular and the
demand is regular throughout the year. So, special transportation and storage facilities
have to be provided.

Grading and Standardization: Grading and standardization is important for agricultural

products. But it is not easy to grade and standardize the products, as there are many
agricultural goods and one produce has many qualities.

Branding: Agricultural products do not create demand. Advertising is not possible due to
the limited resources of agriculturists. As there are many qualities branding is also not an
easy job.

36
Price Fluctuation: There is price fluctuation in agricultural products due to the
imbalance in supply and demand.

Lack of Market Information: In India most of the farmers are illiterate and ignorant of
the accurate prices ruling in the markets. They depend upon inaccurate information. They
depend on hearsay reports of village merchants who never reveal correct price.
Another research has been conducted by Bongiwe and Masuku, (2012), entitled, Analysis
of the vegetables supply chain in Swaziland. They found that; the agricultural sector is
characterized by a dualistic nature consisting of modern and traditional sectors. About 80
% of the Swazi population lives on Swazi Nation Land (SNL). They derive their
livelihood from subsistence agricultural production (Thompson, 2011).Vegetable
production on SNL is practiced by subsistence farmers and less than 7 percent of all SNL
are planted to rain-fed crops, with maize being the most important crop (FAO/WFP,
2002).
Thus, to improve income and provide gainful employment, diversification from grain
crops to high-value crops like vegetables has emerged as an important strategy for
agricultural growth (Sekhon and Kaur, 2004).

The main vegetables currently grown in Swaziland include cabbage, carrot, onion and
tomato, whilst the major fruits are banana, avocadoes and pineapples national agricultural
marketing Board (NAMBoard, 2009). The production of vegetables is seasonal and
farmers, especially on Swazi Nation Land produce maize in summer and vegetables in
winter (NAMBoard, 2009).

Marketing plays a significant function in the performance of supply chains. Farmers

require relevant and reliable infrastructure, labour, technology and coordinated markets in
order to effectively market their agricultural products. Farmers benefit from markets if
their participation minimizes transaction costs, hence they should focus on production,
which they have a comparative advantage (Porter, 1985). Farmers can choose to sell their
produce through different market outlets ranging from local markets, restaurants to
retailer and wholesalers. The choice of a particular outlet is determined by its location

37
and the ability of the farmer to meet quality, and food safety standards. Improving
vegetable marketing in developing countries such as Swaziland is vital because of the fast
growing demand due to urbanization, opportunities it offers in generating income for
smallholder farmers by exporting high value crops and providing employment
opportunities as a result of its labour intensive production (FAO, 1986).
Vegetable farmers can sell their produce through local traditional markets to local
consumers and vendors and through cooperatives to retail agents and wholesalers. Local
traditional markets, located in most towns, are supplied by local vendors who purchase at
the farm gate and deliver to the markets. However, they prefer to purchase from larger,
more reliable farmers in South Africa due to the scattered nature of local production and
the unreliability of supply at any given time (NAMBoard, 2009). Makhura and Mokoena
(2003) identified infrastructure, distance to the market, lack of assets (for example lack of
own transport) and inadequate market information as the main constraints to marketing.
Lack of bargaining power along with various credit bound relationships with the buyers
has led to farmers being exploited during the transaction where most of the farmers
become price takers. The majority of the farmers in Swaziland are smallholders, hence
they are faced with high production and transaction costs. This results to farmers not
being able to sustain their livelihood (Hettige and Senanayake, 1992). According to
Bezabh and Gebremedhin (2007), factors such as inadequate markets, low prices, a lot of
intermediaries and inadequate marketing institutions and interaction among farmers make
it impossible for small-scale farmers to take part in formal markets.

When compared to vertical coordination in the supply chain, some weaknesses are
associated with spot markets. For instance, prices and conditions of delivery are
negotiated for every transaction carried out on spot markets. This may result in increased
marketing costs for the farmer. Moreover, farm gate sales tend to result in lower revenue
for farmers since the prices are relatively low and variable. However, smallholder farmers
tend to prefer farm gate sales because they receive immediate payments and do not incur
transaction costs such as transportation costs and tax payments (Shiferaw, et al., 2006)

In Swaziland a variety of vegetable crops are grown by smallholder farmers for income
and food. They are grown under various production systems, which vary from cultivating

38
a few plants in the back yard for consumption to commercial production for processing or
exporting.

Gereffi and Tam (1999) indicated that limited access to capital markets, high consumer
spending, and large family size attributable to lower economic efficiency for the
marketed driven production like vegetables. Accordingly the marketing performance of
vegetable shows that poor performance and contract enforcement was mainly due to
mutual trust and broker’s mediation. Furthermore, information access, trader-specific
investments, and farmer’s age, whether the buyer is a trader, dependency on the trader,
relationship duration, transaction frequency, and distance to the trader were found to be
the significant factors affecting contract enforceability through brokers in Ethiopia. Risk
related to perish ability and seasonality of supply, illiteracy, and client-buyer’s type were
found to be the significance factors causing contract breaches by the traders. On top of
this; Gereffi and Tam (1999), further identified that, existence of considerable economic
inefficiency in production, poor contract enforcement, and imperfect completion in the
marketing of vegetables are some of the main problems of vegetable production and
marketing in Ethiopia. Moreover results of his study show that traders share of the
marketing surplus increase with the degree of perishability of the produce. That is, the
more perishable the produce is, the higher is the share that traders’ capture from the
marketing surplus.

Similarly, Martin (2007), in her study of pepper marketing chain analysis identified
variables that affect marketable supply. According to her, access to market, production
level, extension contact, and access to market information were among the variables that
influence supply. According to Smith (1992), 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.
In sum, empirical evidences indicate that marketable supply approach has become an
important framework to analyze economic agents in agricultural sector.

39
2.11.2. National Studies
Adugna (2009), conducted his study entitled Analysis of fruit and vegetable market
chains in Alamata, southern zone of Tigray: the case of onion, tomato and papaya, with
the objectives of analyzing fruit and vegetable marketing chains in Alamata district,
southern zone of Tigray. Specifically the study attempts to assess structure-conduct-
performance of fruit and vegetable marketing, analyze market supply determinants, and
analyze the institutional support services of extension, input supply and credit. The study
also analyzes profitability of fruit and vegetable production and marketing and identifies
problems and opportunities in fruit and vegetable production and marketing. Cobb
Douglas (logarithmic function) econometric estimation procedure was employed to
identify factors that determine onion, tomato and papaya market supply of the farm
households in the area. However, this potential benefit is under challenges of imperfect
marketing. The market conduct is characterized by unethical practices of cheating and
information collusion that led to uncompetitive market behavior even though the
calculated concentration ratio did not indicate oligoposony market behavior. Therefore
some corrective measures are required by the government as well as institutions like
cooperatives. Among the different variables that were hypothesized as determining
factors for volume of marketable supply the econometric result showed that, number of
oxen owned and age of household head for onion while only number of oxen owned for
tomato and quantity produced for papaya were significant. All had the expected sign as
prior expected.

The Alamata Bureau of Agriculture and Rural Development is the main extension
support giving institution. But, 88.57 percent of respondents reported no extension
contact at all. This weak extension support and limited seed supply system largely
hinders production and productivity of the crops under study. On top of this, limited
accessibility of chemicals, fertilizer and credit within the district are other key constraints
of production and marketing of the study crops. Therefore it is essential to take some
improvement measures by the government as well as private sector.

40
Bezabih and Hadera (2007), states low level of improved agricultural technologies, risks
associated with weather conditions, diseases and pests, as the main reasons for low
productivity. Moreover, due to the increasing population pressure the land holding per
household is declining leading to low level of production to meet the consumption
requirement of the household. As a result, intensive production is becoming a means of
promoting agro-enterprise development in order to increase the land productivity.
Horticultural production gives an opportunity for intensive production and increases
small holders’ farmers’ participation in the market. They further identified other
problems they reported also include poor know-how in product sorting, grading, packing,
and traditional transporting affecting quality.

Abay (2007) also studied the market participation of vegetables marketing at Fogera
Zone. According to him, vegetable market chain analysis identified variables that affect
marketable supply. Quantity production and total area owned were significant for onion
supply but the sign for the coefficient for total area of land was negative.

Mamo and Degnet (2012), identified that gender and educational status of the household
head together with household access to free aid, agricultural extension services, market
information, non-farm income, adoption of modern livestock inputs, volume of sales, and
time spent to reach the market have statistically significant effect on whether or not a
farmer participates in the livestock market.

Ayelech, (2011), identified factors affecting the marketable surplus 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.

Adugna (2009) identified major factors that affect marketable supply of papaya in
Alamata District. Adugna’s study revealed that papaya quantity produced influenced
marketable supply positively. Similarly, Gizachew (2005) analyzed factors affecting

41
dairy household milk market entry decision using Logit model and marketed milk surplus
using Tobit model in Ada’haLiben district in Oromiya region by using data from 61
sampled dairy households. His study revealed that education level of the dairy household
head, extension visits and income from non-dairy sources had positive relationship with
household milk market entry decision. Gizachew (2005), also found that dairy cow breed,
loan, income and extension visit, education level of spouse and distance from milk
market were related to marketed surplus positively; however, distance from district and
education level of the household head were related negatively with marketed milk supply.
Similar study on sesame at Metema by Kinde (2007), also pointed out six variables that
affect sesame marketable supply. Yield, oxen number, foreign language spoken, modern
input use, area, time of selling were the variables affecting positively sesame supply and
unit cost of production was found to negatively influence the supply.

42
 CHAPTER THREE
RESEARCH METHODOLOGY

3.1. Description of the Study Area

Adi daero woreda, which is found in North West zone of Tigray regional state, is
bordered on the south by Eritrea, on the west by Tahtay adiabo, on the north by the tahtay
koraro (shire Endaslassi) and on the east by Asgede tsmbla. The woreda has 21 tabias
with the total population of 410,451 people (CSA, 2017).The area of Adi daero woreda is
1888.6 square kilometers (KM)2, with a population density of 52.80 which is less than the
zone average of 56.29 per square kilometer (CSA, 2010). Adi daero is located some
1055Kms away from Addis Ababa via Woldia-Mekelle road, in the extreme northern
Ethiopia. Adi daero is now a rapidly flourishing town with modern hotels up to four
storey buildings like Daero hotel,Rewina hotel, Golaguladyabo hotel, Palas hotel etc.
This development facilitates consumption of produced fresh vegetables and fruits from
adi daero woreda. The town has potable water supply from a reservoir along maykuhli
River known as Deaba Dam, far behind adi daero Mount and to the southern of the town.
The presences gold mine and fino factories have also significant impacts to the socio
economic development of the area in general and the town of Adi daero in particular. The
topographical feature is characterized by mountain chains of high towering peaks,
plateaus, and swarm of hills and geo-tops of various ranges of altitudes. There are so
many high towering mountain peaks among which brkeho ,adi daero mountin and gobo
adizgomena locality. Many of them have altitudes ranging from 1500 meter to over 1800s
meter above sea level. Low lands are found at an altitude of 1800 meters ranging to 2000
meters with down streams of vast intermountain fertile valleys. Where small scale
commercial farm irrigations are extensively conducted (BoARD, 2016).

In terms of agro climatic zone the localities of Adi daer oworeda are generally identified
as bimodal with two short rainy seasons and length of growing period (LGP) of 120-240
days per year. It has altitudinal agro climatic boundaries of dega (high land ranging
between 3000 meter and 2500 meter), weynadega (medium altitude land ranging between

43
2500 meter and 2000 meter) and kolla (low land ranging between 2000 meter and1000
meters) (BoARD, 2016).

In 2015/16 production year about 2108 (two thousand one hundred eight) hectare of land
in Adi daero woreda was covered by vegetable, this is all the planned coverage of the
year, and about 7,447 (seven thousand four hundred forty seven) people were involved in
the vegetable production and supply chain practice (BoARD, 2016).

3.2. Methodology

This chapter provides a description of the methodology and data included in this study.
Data collection and analysis were carefully planned in order to facilitate the achievement
of the objectives set for the research.

Both qualitative and quantitative data were collected. Qualitative data is used for making
a general characterization of vegetables value chain in the study area. This information
provided essential input for designing a survey for collecting quantitative data.
Furthermore, qualitative data becomes very useful for interpreting quantitative results and
complementing them.

While, qualitative data were interpreted and descriptively presented, quantitative data
were analyzed using statistical, correlation and regression data analysis techniques. All
these qualitative and quantitative methods are summarized and discussed in this chapter
according to the research objectives.

3.3. Research Design

The study adopted a cross-sectional survey research design as its framework to guide the
process of data collection. Cross-sectional survey research design is the collection of data
mainly using questionnaires or interviews to capture quantitative or qualitative data at a
single point in time.

3.4. Sources and Methods of Data Collection

44
The sources of data for this research were primary sources. This means data obtained first
hand by the researcher on the variables of interest for the specific purpose regarding the
objective.

Primary data were collected through surveys. The survey was undertaken through
distributing questionnaire and scheduled interview with farmers and formal in-depth
interview with key informants such as government representatives, traders, and
consumers for triangulation purpose.

3.5. Sampling Design and Sample Size Determination

For this study, in order to select a representative sample multi-stage stratified random
sampling techniques were implemented to select sample households. In the first stage, the
researcher has tried to identify the tabias of the woreda which grows vegetables and
participated in value chain using consultation with Adi daero district’s agricultural and
rural development experts. All the tabias (21) of the woreda have produce and perform
value chain practice of vegetables. In second stage, all the tabias were stratified in to
three stratums (close, medium, remote) using their distance to the market. In third stage
out of those stratums the researcher has selected tabias randomly. From the randomly
selected tabias only 2100 peoples were participated in the vegetable value chain. Lastly
the researcher has identified the elements using sample size determination formula
derived by Bartlett, J.E., Kotrlik, J.W., and Higgins, C.C. (2001), cited on Bihon(2015).

N 1=¿ ¿

N 1=¿ ¿

N1= 384 , where

t = value of selected alpha level of 0.05 is to be 1.96

p = expected proportion. According Naing, et al., (2006), if there is doubt about the
value of p, it is best to error towards 50 percent as it would lead to larger sample size.

45
e = acceptable margin of error

q = 1-p

The above sample size determination formula is valid if the calculated sample size is
smaller than or equal to 5 percent of the population size. They further stated that if this
proportion is larger than 5 percent there is a need to use the formula with finite
population correction (Naing, et al., 2006).

To cross check whether N1, is acceptable or not, multiply the target population by 5%.
This is, 2100*0.05=105. So, the researcher has applied the infinity formula because the
computed proportion of sample size is greater than the given percent of population size
(384>105). Hence, the above formula is invalid, the researcher was used the second
n1
formula. N2¿
1+ n1 / population

384
N 2=
1+384 /2100

N2= 324.73

To finalize the correct sample size there is a need to anticipate the return rate of the
questionnaire and the completeness of the information. Response rate is assumed to be
95% and the final sample size (n3) is computed as;

N3=N2/95%

N3=324.73/0.95
N3=341.82

3.6. Data Processing and Analysis

Qualitative research differs from quantitative research in many ways. While quantitative
research focused on measuring and analyzing causal relationships between variables,
qualitative research is focused on interpreting reality as a process. It seeks to know how
social experience is created and given meaning.

46
Both qualitative and quantitative data analyses were complementary each other.
Qualitative data is very useful for accomplishing a particular objective if quantitative data
is unavailable or insufficient. Furthermore, qualitative information is used for interpreting
and discussing statistical results as well as to make relevant suggestions. Upon this, the
researcher has used descriptive statistics such as frequencies in the form of tables and
correlations. Questionnaire results were also supplemented by the key informant’s results.
Thus, the response from the cross sectional surveys were entered in to statistical package
for social science (SPSS) version 20 software for analysis. The researcher also analyzes
qualitatively.

3.6.1. Descriptive Statistics

Descriptive statistics are important to have clear picture of the characteristics of sample
units. By applying descriptive statistics one can compare and contrast different categories
of sample units (farm households) with respect to the desired characteristics. In this
study, descriptive statistics such as frequency of occurrence was used to analyze the
collected data.

3.7. Description of Variables

3.7.1. Dependent variables
Volume of Vegetables Sold: It is continuous dependent variable used in the
analysis. It was measured in quintal (100kg) and represents the actual supply by
vegetable farm household to the market in the survey year in Adi Daero woreda.
3.7.2. Explanatory Variables
Different variables of vegetables value chain are expected to characterize and challenge
farmers in Adi Daero district. The explanatory variables used for the analysis include
those variables which influence the vegetable value chain characteristics and in
marketing of vegetable products. The following were hypothesized variables influencing
vegetables value chain.

47
Age of the Household Head:-Age of the household is a categorical variable
measured in years included as one of the explanatory variables. The expected influence of
age is assumed positive taking the presumption that as farmers’ gets older they could
acquire skills to produce surplus that could supply for the market and also develop skills
to produce a product with high market demand and sold at higher price. According to
Mehammed (2011) hypothesis, aged households are believed to be wise in resource use,
and are expected to have a positive effect on marketable surplus. According to Ali (1995)
and Bravo, et al., (1994), age is one of the factors that affect the efficiency of carrying out
farm activities. According to Ayelech (2011) as an individual stays long, he will have
better knowledge and will decide to allocate more size of land and supplies more. The
expected sing of this variable is positive.

Sex of the Household Head:-Sex of the household is another dummy variable

which influences vegetables value chain practice and production of the household. Both
men and women participate in production and supply chain practice of vegetables. Male
headed households have been observed to have a better tendency than female headed
households in fruit production and supply of fruits due to obstacle such as lack of capital
and access to credit and extension service (Ayelech, 2011). Abrham (2013) sex indicated
negative relationship between sale volume of poultry and male headed household.
However, it was hypothesized to affect positively. It is assigned 2 for male and 1,
otherwise.

Marital Status of the Household Head:-Vegetable production and value chain

practice is often intensive and requires more labour for cultivation than in the case cereal
production. The household provides a major source of labour for agricultural activities.
The labour available for work per household is directly proportional to the family size.
The one who is married have large family size and performs his production and
marketing practice without any labour problem. The expected sing of this variable is also
positive.

48
Education level of the Household Head:- It is a discrete variable and refereed to
the level of education the household head achieved, where 1 represents illiterate, 2
represents literate (read and write), 3 represents Certificate, 4 represents Diploma 5
represents Degree and 6 represents Masters. Randela, et al., (2008), level of education
gives an indication of the household’s ability to understanding and interpretation of
information than others. According to Abrham (2013) education broadens farmers’
intelligence and enables them to perform the farming activities intelligently, accurately
and efficiently. It is believed that those household heads with higher education level have
a better advantage in accessing information in the market and accept new ideas and
innovation to increase their production and supply chain practices. Therefore, it was
hypothesized to affect positively.

Market information:-This is a dummy variable used in the model which challenges

farmers’ vegetables value chain practice. If a farmer receives market information prior to
sell of their vegetable it is assigned 1 if not 0. Market information is one of the factors to
decide how much to produce and how much to sell. If there is a right price producers
usually willing to sell more if not they reduce marketable supplies. Hence, if producer
have this information and knows the demand their value chain will be increased.
Therefore, its expected sign is positive.

Use of improved inputs:-Use of improved inputs is one of a dummy variable used

to explain the dependent variable. If the farmer used sufficiently improved input for
vegetable production it was assigned 1 otherwise 0. The use of improved inputs facilitates
supply chain practice of farmers. So they will have surplus production supplied to market
hence they will have more income from their vegetables. Therefore, the expected sign is
positive.

Vegetables Post-Harvest Loss:-This is a continuous variable used and measured

the amount of losses in quintal. The amount of losses in vegetables value chain practice
during harvest, post harvest and process of marketing are higher than other agricultural
products. Depending on the measures taken by the producer these losses affect income of

49
the producer. If a producer has a good experience in handling post harvest losses, the loss
can be minimized. Hence, the post harvest loss affects vegetables value chain practice of
the household negatively. Hence, the expected sign for this variable is positive.

Integration issues:-Linkage and integration between the various players in the

vegetables value chain practice plays critical role to make the whole value chain effective
and profitable. If there is market integration its opportunity to increase the value chain is
high. So, expected sign for this variable is positive.

Technological issues:-Farmers use a traditional type of agricultural technology

composed of small hand tools and oxen driven farm implements. The use of purchased
capital input such as fertilizer, improved seeds and pesticides is very minimal. The
dominant type of farm input is labour. Most of the farm labour comes from the family
members and the use of hired labour is very limited. Hence, the expected sign for this
variable is negative.

Value Addition Issues:- value addition is a way to increase the shelf life of food
product and reduce the losses. High amount of food processing unit may leads to low
wastage of vegetables. It gives an immense opportunity to export the processed food to
the various destinations. But, in most developing countries like Ethiopia, food processing
is very low as compare to other countries and in the study area there were no processing
units. As a result of this, farmers of the study area generally fail to add value to their
vegetables, due to lack of processing units and no closest proximity of processing units.
Therefore, the expected sign for this variable is positive.

Quality Issues:-Quality is vital factor in food industry/sector, because it directly

relates to the health of the people. It is very important for value chain practice to deliver
the fresh foods in a timely manner and in a proper quality to the customer. Proper value
chain practice helps to maintain the shelf life of product and prevent from deteriorating
the quality. Thus, the expected sign is positive.

50
Price Risk:-Related to perish ability and the biological nature of the production
process is the difficulty of scheduling the supply of vegetables to market demand. These
crops are subject to high price risk with changing consumer demand and production
conditions. Unusual production or harvesting weather or a major crop disease can
seriously disrupt vegetable marketing patterns. Long production period also create price
and marketing problems. Therefore, the expected sign is negative.

Cold Chain issues:-Cold chains very important for supply chain practice to deliver
fresh vegetables in a timely manner and in a proper quality to the customer. But, in
developing countries in general there are various issues related to cold chain, such as lack
of cold chain facilities, inadequate capacity of cold chain, lack of cold chain network etc.
Due to this concern it has become difficult for the farmers and businessman to do their
business effectively and get proper remuneration for their product. So, the expected sign
is negative.

Financial issues:-Income of farmers is very low in the state. They don’t get proper
income for their agricultural produce and maximum amount of share eat up by the
intermediaries. Thus, the expected sign is positive.

Fragmentation issues:-One of the main issues in the supply chain of vegetable

sector is the large number of local trader and intermediaries who eat all the share of
farmer’s income. Therefore, the expected sign is positive.

3.8. Issues of Validity and Reliability

In the research process, the issues of validity and reliability were critically addressed.
Validity is about the appropriateness of the indicator to measure the intended concept
(Bryman, 2008). It considers the relevance of the methods, approaches and techniques
employed to address the issues of interest (Ibid). In order to ensure the validity of the
research findings, the purposes of the research were properly communicated to the
respondents. They were told that it was for academic purposes and their responses should
not be linked to any assistance or direct benefits.

51
The confidentiality assurance is also a means to get valid information from the
respondents without any fear of identification. The test of all assumptions of the models
used and the appropriateness of these models are some of the attempts to ensure the
validity of the results.

On the other hand, reliability is the consistency of a measure of concept and results under
repeated trials (Bryman, 2008). The researcher took time to engage without missing the
essence of the questions in the questionnaire. During the rainy season, farmers are too
busy to spare their time as respondents. Hence, the time for the survey was arranged to be
before June for the convenience of the respondents.

3.9. Ethical Considerations

Collecting data through any of the methods may involve some ethical issues in relation to
the participants and the researchers. A good research problem conforms to moral, ethical
and legal standards of scientific inquiry (Sekaran, 2006). Ethical concerns may emerge in
all stages of the research. Saunders, et al., (2007), summarizes the main issues to
consider, although the ethical issues surrounding these items are not always clear cut. The
researcher was fulfilled these issues,

 The right of privacy of individuals

 Voluntary nature of participation
 Maintenance of the confides Maintenance of the confidentiality of data
provided by individuals or identifiable participants and the anonymity
 Reactions of participants to the ways in which researchers seek to collect data

Behavior and objectivity of the researcher must fit with study area.

52
 CHAPTER FOUR

RESULT AND DISCUSSIONS

4.1. Demographic Characteristic of the Household

The demographic characteristics of sampled household head farmers engaged in the
production and supply chain practice of vegetables are distinct in terms of gender, age,
marital status, and education level of the household head and were presented bellow.

4.1.1. Gender of the Household Head

The gender of the household head is one of the variables considered in the model. This
variable is used to see the relationship with the household income from vegetables supply
chain practice (Tomato, potato, Onion, Cabbage, Lettuce and Carrot).
Table 4.1.Sex of the respondents
Frequency Percent Valid Percent Average Income
female 48 16.38 16.38 8708.40
Male 293 83.62 83.62 9112.69
Total 341 100.0 100.0

Source; Own Survey, 2020

As described in Table 4.1 above, in the study area, only a few (16.38%) of female headed
households were participated in the production and supply chain practice of vegetable.
This indicates that the majority (83.62%) of the households in agricultural sector headed
by males in the study area.

One study on gender differentials suggests there is a productivity gender gap in Ethiopian
agriculture (Aguilar, et al., 2014), while another indicates that despite participating in a
wide variety of farming and marketing activities, women have little to no decision
making ability (Mulugeta and Amsalu, 2014). This was suggested to be the result of a
wide array of factors, such as illiteracy, socio-cultural assumptions and a lack of
experience. Male headed households have been observed to have a better tendency than

53
female headed households in fruit production and supply of fruits due to obstacle such as
lack of capital and access to credit and extension service (Ayelech, 2011).

Another study in Ethiopia also found that the adoption of sustainable agricultural
practices increased the workload for women and suggests policy makers be aware of the
potential gender-specific outcomes (Teklewold, et al., 2013).

Table 4.2.Independent sample test of sex

Group Statistics
sex of respondents N Mean Std. Deviation Std. Error Mean
Male 293 9177.81 6779.498 373.766
Female 48 8708.40 7468.034 1025.813

Independent sample test

Levene's Test for Equality t-test for Equality of Means
of Variances
F Sig. t df Sig. (2- Mean Std.error
tailed) difference difference
Equal variances
.610 .435 .461 380 .645 469.418 1017.993
assumed

Equal variances
.430 66.537 .669 469.418 1091.785
not assumed

Source: Own Survey, 2020

The independent sample test conducted for the sex of the household head was significant.
This implies that the participation of male and female households in the value chain
practice of vegetable was different in Adi-daero woreda. This can affect the female
headed household’s economic performance and further impacts the household’s
economic situation. Therefore, the gender status of the household in this study was
presumed to have impact on income from vegetables supply chain practice. To see the
gender of the household impact particularly on income derived from vegetable the
income of the households between the two groups assessed. The average income received
by the male and female headed households is 9177.81and 8708.40 respectively.

54
4.1.2. Age of the Household Head
Age of the family was presumed as a factor for the supply chain practice of vegetables.
According to Ali (1995) and Bravo et al., (1994), as cited in Juliana, (2007), age is one of
the factors that affect the efficiency of carrying out farm activities. According to
Muhammed (2011) hypothesis, aged households are believed to be wise in resource use,
and are expected to have a positive effect on marketable surplus. Ayelech (2011)
identified factors affecting the marketable surplus of fruits by using OLS regressions.
And she found that as an individual stays long, he will have better knowledge and will
decide to allocate more size of land and supplies more.
Table 4.3.Age of respondents
Number of Valid Std. Max Min
respondents Percent Deviation
age of respondents 9.926 70 25
Age group 25-30 51 13.35
Age group 31-35 51 13.61
Age group 36-40 60 19.63
Age group 41-45 50 15.70
Age group 46-50 45 14.39
Age group 51-55 44 11.51
Age group 56-60 23 7.32
Age group 61-65 14 3.66
Age group 66-70 3 .78
Total 341 100%
Source: Own Survey, 2020
As presented in table 4.3 above, the standard deviation of the household head was 9.926.
The youngest household head was 25 years old, while the eldest is 70 years of age.

When we see the age category of the household heads in the study area, large percent of
the household heads were categorized under the age group of between 25 to 55 years.
The percentage of the households categorized under the age category of 56 to 70 is
55
relatively small in the study area. By nature the age category between 20 – 55 years is
grouped under active and energetic power.

From the data most of the respondents were in the age group of 25-55 years. Therefore,
this is good thing to run the vegetable value chain practice effectively and to overcome
the challenges they were faced because they were energetic and active. The same is true
that they were young enough to accept the new technological innovation and improved
inputs.
Table 4.4.Chi-Square Test of age
Value df Asymp. Sig. (2-
sided)
Pearson Chi-Square 9099.574a 4305 .000
Likelihood Ratio 2224.794 4305 1.000
Linear-by-Linear Association 60.845 1 .000
N of Valid Cases 341
Source: Own Survey, 2020
The chi- square test conducted on the age category of the households in the study area
also significant at less than 5 percent significant level. Implies age was the determinant
factors in vegetables value chain of the households in so many ways, inclusion of
younger group of members can benefit to increase productivity and further benefit the
households since younger group are active and energetic in the process of agricultural
activities. Hence, the age of the household is presumed to have impact on vegetable value
chain. This result may be due to older households have less labor for the management of
vegetables value chain since the most of their adult children’s are married and started
their own family. This result is similar with Belete and Brhanu (2014) who reported that
the person aged from 48 years the adoption for improved technology were decreases.

4.1.3. Marital Status of Respondents

The vegetable production and supply chain system is often intensive and requires more
labour for cultivation than in the case cereal production. The household provides a major

56
source of labour for agricultural activities. The labour available for work per household is
directly proportional to the family size (Abraham, 2013).

Table 4.5.Marital status of respondents

Frequency Percent Valid Percent Cumulative Percent
Single 27 7.9 9.7 9.7
in relation 15 4.4 5.2 14.9
Married 255 74.80 72.0 86.9
Divorced 21 6.2 5.5 92.4
Widowed 20 5.9 7.6 100.0
Total 341 100.0 100.0
Source: Own Survey, 2020
As displayed in table 4.5 above, 74.80% of the sampled respondents were married.
While, about 7.9 % were single, 4.4% were in-relation, 6.2% were divorced and the
remaining 5.9% were widows. As Abraham, (2013) vegetable production is labour
intensive activity, vegetable production in general and market supply of vegetable
products in particular is a function of labour. Therefore, the majorities of the respondents
were married. As we know marriage is the most critical thing to add family size in order
to sustain labour force helpful to overcome the problem faced in their production and
supply chain. On the other hand family size also increases market demand because high
proportion of the product would be consumed because of huge family size.
4.1.4. Education Level of Household Head

Table 4.6.Educational levels of respondents

Frequency Percent Valid Percent Cumulative Average

Percent Income
Illiterate 189 55.4 55.4 58.9 6052.64
Literate 140 41 41 97.6 13262.30
Certificate 5 1.5 1.5 99.7
Diploma 7 2 2 100.0

57
 Total 341 100.0 100.0
Source: Own Survey, 2020
Education is a crucial factor for skill development and enhancing effective production,
supply chain and marketing decisions of any products. The survey revealed that 55.4
percent of the producers do not have formal education. While, 41 percent were literate,
1.5 percent were certified, and about 2 percent attended the college level education
(Diploma). It could be seen from the table 4.6 below, that the largest proportions of the
respondents does not have a formal education. So, the farmers have problem to manage
and control their supply chain practices of vegetables, access new inputs such as
fertilizer, pesticides and improved vegetable seeds, problem of production and bargaining
power during marketing their vegetables. In addition to the result from the questionnaire
analysis, this also supported by the analysis of key informants interview, they said that
the farmers who have formal education level gets fertilizers and improved seeds without
defense and searches alternative market for their products and have efficient bargaining
capacity than those of non formally educated. From this data the researcher conclude that
in the study area there was a problem of knowledge regarding accessibility of demand
and supply information, bargaining power, usage of sophisticated technologies and
improved inputs in general. Findings of different researchers from various countries have
shown positive relationship between education level and agricultural production (Bihon,
2015). As Chowla, et al., 2012, cited in Bihon, (2015) clearly indicated, knowledge and
information obtained through education enables farmers to adopt new technology, access
inputs and properly market their agricultural markets. Abrham (2013), also puts in its
study marketing supply is significantly affected by education status of house hold
head.The differences in levels of education of farmers result in differences in proportion
to total income in the study area. This means the supply chain practice of vegetables
requires knowledge.

4.2. Household Heads Awareness about value Chain of vegetables in Adi

daero Woreda
Without proper knowledge and awareness of farmers, vegetables value chain practice
cannot be efficient; because farmers are the main sources of the fresh agricultural

58
products. In the study area farmers have very poor knowledge regarding the management
of post-harvest products, quality of inputs etc.

Value chain practice of perishable vegetables is not simple task. It needs a well organized
system and knowledge to run the system. This starts from handling, grading, knowing the
demand and supply of the market, seasonality, price information, bargaining skill, the
nature of the product, advantage of the supply chain, and the disadvantage of traditional
market. Hence, this case has greater than two explanatory variables it should be analyzed
using multiple regression models (Welby and Macgregor, 2004).

Table; 4.7.Regression analysis of household heads awareness about value chain

practice of vegetables
Model summary
Model No of R R Adjusted Std. Change Statistics
observ Squar R Square Error of R F df1 df2 Sig.
ations e the Square Change F
Estimate Change Chan
ge
1 341 .546a .298 .281 5825.856 .298 17.546 9 372 .000b

Coefficients
Model Un standardized Standardized t Sig. Collinearity
Coefficients Coefficients Statistics
B Std. Error Beta Tolera VIF
nce
1(Constant) -8617.304 2042.663 -4.219 .000

59
 Awareness of
production and -759.361 1458.704 -.039 -.521 .603 .339 2.952
productivity
Awareness of
4581.191 1410.678 .252 3.248 .001 .312 3.201
product nature
Awareness of
quality and quantity 2146.747 832.617 .142 2.578 .010 .618 1.617
of input
Awareness of land
and water 4449.553 1294.210 .182 3.438 .001 .672 1.488
management
Awareness of
harvesting and post 66.277 1122.189 .004 .059 .953 .494 2.026
harvesting handling
Awareness of
market access and 658.859 1000.333 .038 .659 .511 .580 1.723
bargaining system
Awareness
associated with 3182.088 1185.366 .121 2.684 .008 .931 1.074
disease and loss
Awareness of
supply chain
1293.610 931.103 .075 1.389 .166 .643 1.555
practice of
vegetable
Awareness about
disadvantage of
4717.274 1323.693 .164 3.564 .000 .896 1.116
traditional vegetable
marketing
Source; Own Survey, 2020

60
Table 4.7 above shows the regression of household head farmers’ awareness on vegetable
supply chain practices. The model as a whole indicates by the significant test is
significant at 5 percent significant level. As level of awareness increases supply chain
practice increases as other variables remains constant. We have previously discussed the
multiple coefficient of determination, R2, which is a measure of how much of the
variation in the dependent variable can be explained by the regression model. Because R 2
is a sample static, it can be used to make inferences about whether the overall model is
statistically significant in explaining the variation in the dependent variable (Groebner, et
al., 2006).

Therefore, the above regression model is statistically significant because adjusted R

square is less than R square. So, the overall regression model is important for descriptive
purpose.

According to the regression results shown in Table 4.7 above, awareness of product
nature is the determinant factor to increase total income from vegetables supply chain and
marketing in the study area at less than 1 percent significance level. The result indicates
that, as the awareness of product nature increases by 1 percent, total income from
vegetable increases by 4581.191 birr. Product nature knowledge of vegetables is mostly
associated with Perish ability. Government experts suggest in their interview that
vegetables are perishable and needs great concern in their supply chain practice in nature.
As a result the one who know the perishable nature of vegetable will succeed. A study
made by Moraket (2001) indicated that households participating in the market for
horticultural commodities are considered to be more commercially inclined due to the
nature of the product. Horticulture crops are generally perishable and require immediate
disposal. As such, farmers producing horticulture crops do so with intent to sell.

Vegetables are highly perishable commodities. Their quality begins to deteriorate from
the moment of harvest and continues throughout the marketing process. There is urgency
to processing and marketing these products as quickly and efficiently as possible to
maintain their farm-fresh value. The entire distribution process is geared toward rapid
marketing, and this affects every phase of vegetable marketing. As of the data from
interview analysis, huge number of vegetables lost in the marketing process due to

61
improper storage and handling, spoilage, careless handling by shoppers, and theft.
Doubtless, further losses occur in home storage and preparation of these products.
Product perishability also affects price negotiations. These products cannot be held for
long periods while sellers wait for or attempt to discover a better price. So, as a result a
great deal of trust and informal agreements are involved in marketing fresh vegetables
(Abrham, 2013).

Awareness about disadvantage of traditional vegetable marketing is also the determinant

factor to increase total income from vegetables supply chain and marketing in the study
areaat less than 1 percent significance level. The result indicates that, as the awareness
about disadvantage of traditional vegetable marketing increases by 1 percent, total
income from vegetable supply chain increases by 4717.274 birr. The data procured from
consumers and government representatives’ interview was analyzed and supports the
result means they said that traditional marketing system invites to extra cost via
intermediaries, marketing loss of vegetables and price fluctuation. So, awareness
regarding its disadvantage uses to control these problems faces by practicing traditional
marketing.

Awareness of land and water management was also another significant variable of the
regression model at 1 percent significance level. The result indicates that farmers who
possessed the awareness gain 4449.553 birr more compared to farmers who did not
aware. This is also supported by analysis of secondary data which was got from annual
report.

Awareness associated with disease and loss was also the determinant factor to increase
total income from vegetables supply chain and marketing in the study areaat less than 5
percent significance level. The result indicates that, as the awareness of disease and loss
increases by 5 percent, total income from vegetable increases by 3182.088 birr.

Awareness of quality and quantity of inputcome out to be significant at 5 percent

significance level and have a positive effect on the total income from vegetables supply
chain and marketing in the study area. The result indicates that farmers who have the
awareness gain 2146.747 birr more compared to farmers who did not aware.

62
4.3. Major Vegetable Value Chain Actors and Their Relationship with
Producers in Adi daero Woreda
Agricultural commodities move in the marketing chain through different channels. The
marketing channels are distinguished from each other on the basis of market functionaries
involved in carrying the produce from the farmers to the ultimate consumers. The lengths
of the marketing channel depend on the size of market, nature of the commodity and the
pattern of demand at the consumer level. The marketing channels for agricultural
commodities in general can be divided into four broad groups as in the study area as
follows;

I. PRODUCER: It is the first link in vegetable market chain; the producer harvests
products and supplies to the second agent. Vegetable crops are produced in 18 tabias of
the woreda. Vegetable production by smallholders in the central part of the region is
more popular compared to fruit production. Farmers who produce small quantities of
fruits sell them in the local markets to consumers or retailers. A large number of
producers of vegetables sell their products through brokers. When there is a lager
quantity produces there is no direct transaction or linkage between the producers and
large buyers. The wholesalers have brokers who identify vegetables to be purchased,
negotiate the price, and purchase and deliver the products. These brokers play a decisive
role in the marketing system and determine the benefits reaching the producers. In the
study area there are producers, very limited in number, uses broker agents to facilitate
their supply chain and to sale their vegetable before it loses its value. There are numerous
actors handling the product along the channel between producers and consumers.

II. CONSUMER: It is the last link in the vegetable market chain, the participants and
their respective functions often overlap. The most widespread combinations are the
following: producers to wholesalers that collect commodity and supply it to retailers,
wholesalers to retailers (wholesalers that also sell directly to consumers) and wholesalers
to exporters. Those who live and consume the vegetable product produced in the study
area. Those persons were either from Adi-daero Town, or from the rural areas.

63
III. RURAL ASSEMBLER: Sometimes also known as farmer trader, he/she is the first
link between producer and other middlemen. Are also called local collectors, found in
small local towns performing either on farm or off farm activity other than collecting
vegetables and deliver them to traders in big market centers such as Adi-daero. The
collectors have small capital. They are closely associated with brokers who work at
grassroots level as well as with those coming from bigger marketing centers. In the
markets where the producers sell their products, mainly during the peak supply period,
the collectors fix the prices, which is often very low. As we have seen in the above table
about 9.7 percent is sold to the local collectors of Adi-daero woreda.

IV. MIDDLEMEN/ BROKER: A broker is an individual or party that arranges

transactions between a buyer and seller for a commission when the deal is executed. A
broker also acts as a seller or as a buyer, becomes a principal party to the deal.

V. WHOLESALER: They concentrate on the various intermediate sized loads and put
the product into large uniform units. These activities all contribute to price formation.
Wholesalers purchase from other traders, collectors, or producers. Large buyers
sometimes enter in to a contract farming with the farmer producer. But in Adi-daero
woreda, there is no any agreement or contract farming. Smooth relationship facilitates the
supply chain system, reduces loss, and reduces cost by minimizing the fee for agents.

VI. RETAILERS: Middlemen that include super market and other 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. Retailers include supermarkets, grocers, vendors,
hotels, restaurants, cafeteria, etc. which are available in all the markets studied. The
retailers purchase vegetables and fruits from producers, assemblers/collectors, and
wholesalers. The retailers except street vendors do have licenses and fixed working place.
Some vegetables such as onion, potato, tomato, pepper, lettuce, etc. are needed in the
hotels and restaurants. The purchasing capacity of the hotels depends on the demand they

64
have. In Adi-daero woreda around 1.3% of the product is purchased by the hotels renders
service in Adi-daero Town

VII. SUPPORTING ACTORS: such actors are those who provide supportive services
including training and extension, information, transportation, financial and research
services. According to Martin et al. (2007)21, access to information or knowledge,
technology and finance determines the state of success of value chain actors. Agricultural
office, cooperatives promotion office, micro finance, NGOS, transport service providers
and etc are main supporting actors who play a central role in the provision of such
services.

Input supply Fertilizer Seed Materials Pesticides

Production
Producers

Brokers
Marketing

Retailers Collectors

Consumption Wholesaler

Consumers

Figure 2; Map of vegetables value chain and marketing

Table; 4.8. Relationships of producers with vegetablesvalue chain actors
Frequency Percent Valid Percent Cumulative Percent
Rough 8 2.3 2.3 2.1
medium 93 27.27 27.27 26.4
smooth 281 82.4 82.4 100.0

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 Total 341 100.0 100.0
Source: Own Survey, 2020
From frequency table 4.8 above, the majority of the respondents (82.4 %) has smooth
relationship with the actors of the vegetable supply chain practice. While, 27.27 percent
have medium relationship and only 2.3 percent have rough or bad relationship.
Table: 4.9. One sample tests for relationship of producers with vegetable value chain
actors
Test Value = 2.5
T df Sig. (2- Mean 95% Confidence Interval of
tailed) Difference the Difference
Lower Upper
relationship with
vegetablesvalue 8.451 381 .000 .215 .16 .26
chain actors
Source: Own Survey, 2020
The t-test conducted to test the explanatory variables significance, indicates the variable
is statistically significant. So, we conclude that relationship between farmers and supply
chain actors was determinant factor for income generation from vegetables in the study
area. This is also negatively correlated with total income at Pearson value equal to -
0.061as shown in the table below. As we have seen in table 4.8 above, about 73.6
percent of the households were smoothly related with the actors. This smooth relationship
might be influential in bargaining system or activity to sell the vegetables. So, this might
create negative correlation.

4.4. Type of Outlet and Factors of Outlet Choice Decision

For the purpose of this study households were asked the type of supply chain outlet used
to supply their vegetable produce to the market. Based on the distance from market,
product and market nature the following supply chains outlets used by the producers were
identified in the production year of 2015/16.

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Table; 4.10. Supply chain form to sale vegetable
Frequency Percent Valid Cumulative
Percent Percent
producer-consumer 70 20.5 20.5 39.3
producer-retailer-consumer 46 13.48 13.48 51.6
producer-wholesalers-consumer 20 5.9 5.9 38.4
producer-wholesalers-retailers-consumer 130 38.1 38.1 77.7
producer-collectors-retailers-consumer 63 18.5 18.5 96.9
producer-collectors-wholesalers-retailers-
12 3.5 3.5 100.0
consumer
Total 341 100.0 100.0
Source: Own Survey 2020
As revealed from table 4.10 above, the sample respondents who were asked for this study
responded to 20.5 percent sells directly to consumers. While, 13.48 percent uses
Producers –retailers- consumer outlet form,5.2 percent uses Producers - Wholesalers-
Consumer outlet form, 39.3 percent uses Producers – Wholesalers - Retailers –
Consumers outlet form, 19.1 percent uses Producers - collectors - retailers – Consumer
outlet form, and 3.1 percent uses Producers –collectors - Wholesaler – retailers-
consumer outlet form.

From this analysis most of the household heads (39.3%) sell their vegetable products by
outlet form of producers - wholesalers - retailers - consumers. This implies that the
condition was not suitable for farmers to receive the proper revenue by selling their
product directly to consumers. Constraints such as lack of license; price variation risk
frustration, and lack of market place were the critical things farmers suffer to decide their
outlet choice. The analysis of government representatives’ interview also helps this idea.
They said farmers know their profit when they sold their product directly to consumers
but they fail to overcome their frustration related with their competition with others and
have problem of demand forecasting ability.

67
Table 4.11. One-Sample Test for value chain outlet type
Test Value = 3
t df Sig. (2- Mean 99% Confidence
tailed) Differenc Interval of the
e Difference
Lower Upper
supply chain form to
-4.552 381 .000 -.380 -.60 -.16
sale vegetable
Source: own survey 2020

The t – test conducted for vegetable value chain form or outlet choice in the study was
significant at less than 1 percent. This implies that the difference in type of value chain
outlet has effect on marketing and total sold vegetables on the study area.

4.5. Transportation Means

Transportation plays a very important role in the supply chain practice. Without proper
transportation the goods can’t be delivered to the customer in a right time and in a right
quality. It plays even more important role in Perishable food like vegetables because of
short shelf life, high perishable nature, requires controlled temperature. Transportation
related challenges were very high in the study area because of unavailability of well
transportation mode, high cost of transportation, lack of temperature controlled vehicle or
cold chain vehicle for the movement of vegetables etc. In developing countries such as
Ethiopia there is a problem of appropriate and cold transport facilities for perishable
vegetable products. When we see the transportation means of the study area they used
about four types with different degree either their own, hired or sponsored from others.

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Table; 4.12. Transportation means farmers used to your vegetable value chain
Frequency Percent Valid Percent Cumulative Percent
Truck 1 .3 .3 .3
Bus 102 29.9 29.9 30.9
animal power 165 48.4 48.4 79.6
human power 73 21.5 21.5 100.0
Total 341 100.0 100.0
Source: Own Survey 2020

As we have seen from the table 4.12 above, almost half of the respondents use animal
power which was 48.4 percent. While, 29.9 percent uses hired bus on cash payment,
about 21.5 percent uses human power and one respondent uses a truck which is 0.3
percent, hired on cash payment.

From the data collected, from the sample respondents of the study area 237 (62%)
farmers uses their own animal power transportation means, about 118 (30.9%) uses hired
stransportation means and 27 (7.1%) uses animal power of other persons for
transportation. “Donkey was the most common pack animals owned by about one-third
of households” (SAERP, 1997 cited in Hagos and Holden, 2002).

Table 4.13. One-Sample Test of transportation means farmers used to your vegetable
value chain

Test Value = 3
t df Sig. (2- Mean 99% Confidence Interval
tailed) Difference of the Difference
Lower Upper
transportation means
24.41
you use to your 381 .000 .893 .80 .99
3
vegetable supply chain
Source: Own Survey, 2020

69
The one sample test conducted to crosscheck the significance of the transportation mean
to the supply chain system of vegetables in the study area is significant at 1 percent
significance level. This implies transportation type he or she used to deliver the product
to the consumer have influential value to their income. This implies transportation means
has great influence on supply chain practice. This idea is supported by the analysis of
both secondary data and interview from the woreda. Accordingly, the problem is related
with safety and quality of the vegetable. Those who were used bus provide product at the
right quality, right time and right place than those who were used animal or human
power.

4.6. Constraints Affecting Vegetablesvalue Chain

The vegetable value chain practice andmarketing system has been influenced by a
number of production, product nature and marketing factors.

Infrastructure issues
Table; 4.14. Impact rate of infrastructure to total sold vegetables
Frequency Percent Valid Percent Cumulative Percent
nothing 1 .3 .3 .3
very low 4 1.2 1.2 1.3
low 31 9.1 9.1 9.7
average 87 25.5 25.5 35.1
high 70 20.5 20.5 56.0
very high 148 43.4 43.4 100.0
Total 341 100.0 100.0
Source; Own Survey 2020.

Infrastructure plays an important role in the vegetable value chain in Adi daero district.
Proper and adequate infrastructure helps farmers and agriculture businessman’s to run
their business successfully and helps to deliver the goods in the right time with right

70
condition. Infrastructure inbounds from small plowing materials up to huge storage and
transportation vehicles. Storage is interrelated with other marketing functions, such as
transportation, processing, financing, and risk bearing. In a sense, farm products are
being stored at the time they are in transit or are in the processing operation. The
relationship of storage and transportation is particularly critical at harvest time. Because
of transportation delays, the firm subjects to inventory risks, financing and risk bearing
are considered part of the storage function.

Packaging is also very important issue under infrastructure for vegetables as they are
highly perishable goods and it needs proper packaging for the handling of these fresh
products. Without proper packaging it is very difficult to maintain their shelf life. Cost is
very important factor for this issue. High cost of packaging material makes difficult for
the farmers to do proper packaging of their goods. In Adi-daero woreda infrastructure in
general is critical problem that hinders supply chain of vegetables and leads to high
amount of losses.

From table 4.14 above, the data collected for this issue indicates that around half (44 %)
was affected by very high level. While, 20.9 percent influences at high level, 25.4 percent
at average, 8.1 percent affects at low and 1.0 percent affects at very low. About 0.3
percent does not challenge on their vegetables value chain.

The study by Bihon, (2015), was in line with this result. According to his study distance
of the village from the wereda market is also a determinant variable at a significance
level of 5 per cent. However, it is with the unexpected sign. The hypothesis was the
shorter the distance, the better estimated value of crop production. The assumption was
that farmers who are near to the wereda market can access inputs when they are scarce at
the village and tabia level. The result and the unexpected negative correlation might be
because the farmers frequently visited the town and the time they devoted to their plots
could be minimal.

Post-harvest losses issues

71
Table; 4.15. Impact rate of post-harvest losses to total sold vegetables
Frequency Percent Valid Percent Cumulative Percent
Nothing 2 .6 .6 .5
very low 5 1.5 1.5 1.8
Low 21 6.2 6.2 7.6
Average 115 33.7 33.7 40.3
High 138 40.5 40.5 81.7
very high 60 17.6 17.6 100.0
Total 341 100.0 100.0
Source: Own Survey, 2020

According to interview analysis, post-harvest losses were the major problem in the value
chain of Vegetables sector in Adi-daero woreda. There are huge amount of losses in the
value chain practice of perishable vegetables in reaching to the main market, processing
units etc. Huge amount of losses occurred during transportation and storage of fresh
vegetable products.

At the farm level, vegetable suppliers are faced with challenges such as lack of modern
processing, packaging equipment supply and other predators and pesticide applications
are the main problems on vegetable supply chain practice. On marketing, lack of market
linkage between producers, traders and large processors as well the illegal traders are the
major problems related with the practice (Abrhet, 2015).

Post-harvest losses were high in the study area because poor logistics activities in the
area. In the study area, as of table 4.15 above, majority (40.5%) of the sample household
head respondents explains that post harvest losses influence on vegetables value chain
was high. While, 33.7 percent said average, 17.6 percent said very high, 6.2 percent said
low, and 1.5 percent said very low. About 0.6percent responded it does not affect their
income.

Market Integration issues

72
Market integration is considered an important determinant of food flow, availability,
accessibility and price stability. As Nyange (1999), puts it, the extent to which markets
make food available and accessible, and keep price stable, depends on the degree of
market integration across a region. Goletti and Christina (2000), define integrated
markets as markets in which price of comparable goods do not move independently.
s
Linkage and integration between the various players in the supply chain plays critical role
to make the whole value chain effective and profitable. But in the value chain of
vegetable sector in Adi daero woreda there was lack of market integration between the
farmers and the actors of the vegetable value chain in the study area as of interview
analysis from government representatives.

Table; 4.16.Impact rate of integration issue to vegetable value chain

Frequency percent Valid Percent Cumulative Percent
nothing 6 1.8 1.8 1.6
low 34 10 10 13.1
average 65 19.06 19.06 32.7
high 30 8.8 8.8 40.8
very high 206 60.4 60.4 100.0
Total 341 100.0 100.0
Source: Own Survey, 2020

The data collected for analyzing integration issue in table 4.19 above, indicates that 60.4
% was affected at very high level. While 8.8 percent influences at high level, 19.06
percent at average, 10 percent affects at low. About 1.8 percent does not affect on their
income from their supply chain practice of vegetable. This implies that there is poor
market integration between the supply chain practices of vegetables in Adi-daero woreda.
This result was supported by the result of Alemu, et al., (2011), they puts the agricultural

73
marketing system in Ethiopia tends to be informal, unsregulated, constrained by weak
market linkages and a lack of rural infrastructures.

Technological issues
Technology is surrounded by many technical issues, such as advancement issues,
inefficient technology, obsolete techniques, and old machineries. Due to these concerns it
has become difficult for the farmers and agriculture businessman to use an appropriate
technologies and techniques to reduce the post-harvest losses and time in operational
activities. Amsalu, et al., (2015), put on their quarterly journal of international
agriculture, on characterization and assessment of vegetable production and marketing
system in the Humid Tropics of Ethiopia. And founds major vegetable production and
marketing constraint include lack of access to improved variety seeds, high post harvest
losses, lack of reliable market information system, and low bargaining power of farmers,
low technological knowhow for value chain development and upgrading.

Farmers use a traditional type of agricultural technology composed of small hand tools
sand oxen driven farm implements. The use of purchased capital input such as fertilizer,
improved seeds and pesticides is very minimal. The dominant type of farm input is
labour. Most of the farm labour comes from the family members and the use of hired
labour is very limited (Abraham, 2013).

Table; 4.17. Impact rate of technology accessibility to vegetable value chain

Frequency Percent Valid Percent Cumulative Percent
nothing 40 11.7 11.7 13.1
very low 9 2.6 2.6 15.4
low 45 13.2 13.2 27.5
average 59 17.3 17.3 42.9
high 120 35.2 35.2 79.6
very high 68 20 20 100.0
Total 341 100.0 100.0
Source: Own Survey, 2020

74
Like risk and post harvest loss the data collected from the household head respondents
shows the major impacts of technological accessibility was at high level (36.6%). While,
20.4 percent influences at very high level, 15.4 percent at average, and 2.4 percent affects
at very low. About, 13.1 percent said technological accessibility does not affect on their
vegetables value chain practice of vegetable.

Table; 4.18. Correlation between technologyand total sold vegetable

total sold impact rate of technology to

vegetables vegetables value chain
Pearson
1 .154**
Correlation
total sold vegetables
Sig. (2-tailed) .003
N 341 341
Pearson
impact rate of .154** 1
Correlation
technology to
Sig. (2-tailed) .003
vegetable value chain
N 341 341
**. Correlation is significant at the 0.01 level (2-tailed).
Source: Own Survey, 2017

Value addition issues

Processing and value addition is a way to increase the shelf life of food product and
reduce the losses. High amount of food processing unit may leads to low wastage of
vegetables. It gives an immense opportunity to export the processed food to the various
destinations. But, in most developing countries like Ethiopia, the food processing is very

75
low as compare to other countries. From the analysis of data collected by questionnaire
and interview, in the study area there were no processing units. As a result of this,
farmers of the study area generally fail to add value to their vegetables.

Table 4.19. Impact rate of value addition to total sold vegetables

Frequency Percent Valid Percent Cumulative Percent
Low 2 .5 .5 .5
Average 48 12.8 12.8 13.4
High 58 17.8 17.8 31.2
very high 233 68.8 68.8 100.0
Total 341 100.0 100.0
Source: Own Survey 2020

As we have seen in the table 4.19 above, data collected to analyze processing and value
addition indicates that 68.8 % was affected by very high level. While, 17.8 percent
influences at high level and 12.8 percent at average. About 0.5 percent affects at low
level to their revenue from their supply chain practice of vegetable. Implies processing
and value addition have a great influence to their income for almost all engaged in the
supply chain processes in the study area.

Quality issues
Quality is vital factor in food industry/sector, because it directly relates to the health of
the people. It is very important for supply chain to deliver the fresh goods in a timely
manner and in a proper quality to the customer. Proper supply chain helps to maintain the

76
shelf life of product and prevent from deteriorating the quality. Quality has a strong
impact on the supply chain, so it leads to efficiency and less rejection by the customer. In
Adi-daero woreda, there is a lack of quality standards to meet international quality for
export, Poor hygiene and safety standards, high quality degradation etc. This conclusion
is from the analysis of all data collected from interview, questionnaire and secondary
data’s. This quality problem mostly associated with transportation accessibility

Table; 4.20. Impact rate of quality rendered to total sold vegetables

Frequency Percent Valid Percent Cumulative Percent
very low 20 5.9 5.9 5.2
Low 8 2.4 2.4 7.3
Average 119 34.9 34.9 42.4
High 102 29.9 29.9 73.0
very high 92 27 27 100.0
Total 341 100.0 100.0
Source: Own Survey, 2020
As explained in the table 4.20 above, 34.9 percent affects on average , 27 percent affects
at very high level, 29.9 percent at high, 2.4 percent quality affects on their sold
vegetables and value chain practice of vegetable at low and 5.9 percent affects at very
low.

77
Price Risk

Related to perishability and the biological nature of the production process is the
difficulty of scheduling the supply of vegetables to market demand. These crops are
subject to high price and quantity risk with changing consumer demand and production
conditions. Unusual production or harvesting weather or a major crop disease can
seriously disrupt vegetable marketing patterns. Long production period also create price
and marketing problems. The constraints of accessing agricultural markets for small
holder farmers are barriers to entry, high transaction costs, high price and quantity risk,
asymmetry of information, low bargaining power and lack of human and social capital
(Celia, et al., 2004).

Generally speaking, agricultural risk is associated with negative outcomes stemming

from imperfectly predictable biological, climatic, and price variables. These variables
include natural adversities (for example, pests and diseases), climatic factors not within
the control of agricultural producers, adverse changes in both input and output prices and
financial losses. To determine risk level in vegetable production, the risk sources were
classified into different groups. These sources of risks were categorized into technical,
market, social, institutional and financial risk sources and analyzed to find out their order
of importance in decision making.

Table; 4.21.Impact rate of price risk to total sold vegetables

Frequency Percent Valid Percent
Nothing 28 8.2 8.2
very low 52 15.2 15.2
Low 53 15.6 15.6
Average 54 15.9 15.9

78
 High 104 30.5 30.5
very high 50 14.7 14.7
Total 341 100.0 100.0
Source: Own Survey, 2017

As explained in the table 4.21 above, price was one factor from the factors affecting
vegetable value chain practice in the study area. The majority of the data collected from
these sampled household head respondents of the study explains about 104 (30.5%)
respondents respond that the price risk influence on total sold vegetables was high.
While, 15.6 percent low, 14.7 percent very low, 15.9 percent average, and 14.7 percent
very high. About 8.2 percent responded it does not affect their sold vegetables. This
implies that price affects the value chain practice of vegetables in the study area. In
addition to the analysis result of the data collected by questionnaire, it is also supported
by interview analysis.

This indicates they are strongly negatively correlated with Pearson (r) correlation value of
–0.08. However, this result is in unexpected sign, this might be related with huge amount
of supply, means supply exceeds demand. As a result vegetables become cheaper and
cheaper because of their dominance and perishable.

79
Table; 4.22. Correlation between price risk and total sold vegetable

Correlations
impact rate of total sold
price risk vegetables
Pearson Correlation 1 -.080
Sig. (2-tailed) .117
Sum of Squares and
impact rate of price risk 891.217 -321967.764
Cross-products
Covariance 2.339 -845.060
N 341 341
Pearson Correlation -.080 1
Sig. (2-tailed) .117
Sum of Squares and 17985581226.3
total sold vegetables -321967.764
Cross-products 04
Covariance -845.060 47206249.938
N 341 341
Source: Own Survey, 2020

CHAPTER FIVE
SUMMARY, CONCLUSION AND RECOMMENDATIONS
5.1. SUMMARY of MAJOR FINDINGS
Vegetables have become used for food and source of income in the study area in
accordance with its shorter period of product cycle. Having its nutritional and economic

80
value it had been produced by many rural households. Despite of the constraints, having
these higher demands taking as an opportunity, increased participation in vegetable value
chain practice will benefit the actors.

For the analysis of vegetablesvalue chains both descriptive statistics such as frequency
and econometric model were used. Also correlations were used in econometric model.
And primary source of data was used to procure relevant data according to the objective
of the study.

Data used for analysis in this work was collected using questionnaire and scheduled
interview from 382 households or elements selected using stratified and random sampling
technique from vegetables producers, and using in-depth interview with 10 vegetable
retailers, 15 consumers and 5 government representatives for triangulation purpose
during 2016/17.

The research questions of the specific objectives likewhat is the awareness of the
household farmers about the vegetable value chain in the study area, who are the actors of
vegetable value chain in the study area, what is the relationship between the farmers and
the actors of vegetables value chain, what is the choice of outlet applied in the study area,
what are the challenges do farmers encounters to vegetables value chain in Adi-daero
district were answered from the study.

From the elements sex ratio is 86.1 to 13.9 percent male to female respectively. The
analysis of the collected data showed that most of the households 72 percent were
married and about 58.9 percent were illiterate.
Lack of awareness regarding product nature, disadvantages of traditional vegetable
marketing, land and water management, disadvantage of supply chain practice and
awareness gap regarding quality and quantity of their product affects the supply chain
practice of vegetables in the study area.

About 73.6 percent of the respondents have smooth relationship with the actors of the
supply chain. While, only 2.1percent have rough relationship and the rest have medium

81
relationship with the actors. Most of the household heads (62%) used their own animal
power. While, about 27 household heads (7.1%) used animal powers of other farmers.

The analysis result for the challenges of vegetables value chain were vegetable post
harvest loss, quality issues, value addition, technological issue, infrastructure issue,
integration issues and price risk with unexpected sign.

5.2. CONCLUSION
Lack of awareness regarding product nature, disadvantages of traditional vegetable
marketing, land and water management, disadvantage of supply chain practice and
awareness regarding quality and quantity of their product were found significantly
affecting vegetables value chain in the study area at a significant level of 1 to 5.

Consumers, producers, collectors, retailers and wholesalers were the main actors who
facilitate the value chain practice of vegetables found in the study area. From the total
produced vegetables mostly (68.3%) was purchased by retailers and wholesalers. And
about 73.6 percent of the household farmers have smooth relationship with the actors of
the value chain. From the identified market channels that stretched as producer –
wholesalers- retailers -consumers was the highest channel which is 39.3 percent. In the
vegetables value chain, wholesalers and retailers were found to be the dominant buyers of
vegetables in the study area. The choice of value chain outlet of vegetables in the study
area varies based on the transportation inaccessibility, security, lack of license, market
place and the amount of vegetables produced in the production year (supply).

Transportation is the critical thing to supply the product. Farmers in study area used
different types of transportation means to transport their vegetable. Most of the household
heads (62%) used their own animal power.

82
The important factors which were significantly affect for vegetable supply chain practice
were vegetable post-harvest loss, quality issues, value addition, technological issue,
infrastructure issue, integration issues and price risk with unexpected sign.

Generally, the government representatives in the office of agricultural and rural

development in Adi daero woreda gave to the researcher useful data that was not
accessed by questionnaire from the farmers. The vegetable marketing problem has
several dimensions, including the difficulty of adjusting farm output to rapidly changing
market needs, the price taking status of farmers, the farm cost price squeeze, imbalance
of bargaining power between farmers and marketing firms, and declining pricing
efficiency in agricultural markets.

5.3. RECOMMENDATIONS

In view of the above conclusion, the following recommendations about vegetables value
chain practice in the study areas was given or recommended:

 As we know, knowledge is a key determinant factor for any success including

agricultural success. As we have seen from the analysis in the study area there is
awareness gap regarding of value chain of vegetables, market access and
bargaining system, production and productivity and harvesting and post
harvesting handling. Hence, this awareness gap affects vegetables value chain
negatively to its success.So, the government representatives of the woreda should
take as their primary responsibility and should give the appropriate knowledge to
the farmers and others who were participated in the value chain practice through
continuous supervision, farmers training and seminars etc.

 To add value to their productand sell at a competitive price, the farmers should
becooperating each other and search alternative markets in a cooperative form
other than selling to intermediaries.

 For proper marketing of agricultural goods adequate and appropriate transport

facilities are necessary. It is known that transportation of vegetables by animal

83
 power affects its quality such as it is exposed to sunlight. So, the government
should create awareness, road and vehicle accessibility in collaboration with
volunteers and cooperatives.

 Price fluctuation in vegetable products was major problem for smaller farmers;
so, government experts should conduct pre-assessment or study controls and
manages imbalance between demand and supply.

 To control post-harvest loss the experts and farmers should conduct maturity
assessment before harvest and no mixing of different vegetables with different
maturities in the same storage.

References

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