CHAPTER ONE

INTRODUCTION

1.1. Background of the Study

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).

According to Barrios, et al., (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 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.

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 (Mayaki,
2016).

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.

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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 (Barrios 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
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. The sustainable
development and poverty reduction program (SDPRP), plan for accelerated and sustained
development to end poverty (PASDEP) and the recent growth and transformation plan
(GTP) are some of the development strategies of the government.

Ethiopia is probably the country with the greatest state involvement in the agricultural
sector in Africa and through its development state theory; it has the highest level of state
investment (Lefort, 2012).

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
(Emana and Gebremedhin, 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.

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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. 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. With in developing countries context, in
Ethiopia particularly, it concerns about reduction of quantitative losses than qualitative
one (Kidness and Gordon, 2001). 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).

According to the primary data collected from the Bureau of agriculture and rural
development (BoARD) of Ada’a in migra keble above 1000 (thousand ) hectare of land
was covered by vegetable in 2018/19, this is all the planned coverage of the year, and
thousands of people were involved in the irrigation practice or in the vegetable growing
(BoARD, 2019).

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
become a potentially valuable way of securing competitive advantage and improving

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organizational performance since competition is no longer between organizations, but
among supply chains (2006).

’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).

Value chain 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 in agriculture system service system and industry system deduced to under
the study. As the researcher get from primary source agricultural value chains are the
producers – the farmers who grow vegetables. At the other end are the consumers who
eat, and use the final products. And in the middle are many thousands of men and
women, and small and large businesses. Each person and each business performs one
small step in the chain, and each adds value along the way – by growing, buying, selling,
processing, transporting, storing, checking, and packaging.

Other people and other businesses have important roles supporting the chain. Banks
provide loans; governments establish laws and policies, and agricultural research
organizations develop ways for farmers to more successfully participate in value chains.

A value chain is a set of activities that a firm operating in specific industry performs in
order to deliver a valuable product like goods and service for the market. an industry
value chain is the physical representation of the various processes involved in producing
goods and services, starting with raw materials and ending with the delivered
product(also supply chain)

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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 study on this
topic to describe the general supply chain practice of vegetable in the kebele migra, to
identify the uncovered challenges of the supply chain practice, to use as literature review
for those who are interesting by filling the information gab 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
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

In recent years, awareness of the nutritional and health benefits of vegetables in Ethiopia
has been increasing due to public health advocacy on the role of vegetables in human
nutrition and health through its provision of antioxidants such as vitamin A, C and E that

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are important in neutralizing free radicals (oxidants) known to cause cancer, cataracts,
heart disease, hypertension, stroke and diabetes (Demissie, et al., 2009; Tabor and Yesuf,
2012) and partly because of the rising prices of livestock products such as meat, milk and
eggs, which traditionally forms a major component of most Ethiopian diets. As such the
increasing consumption of vegetables helps to fight hidden hunger, malnutrition.
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. micronutrient deficiency), which is related to health problem caused by a 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 marketing,.

The ability of the farmers to access remunerative markets is a critical determinant of their
income and wellbeing (kidness and Gordon, 2001). The constraints of accessing
agricultural markets for small holder farmers are barriers to entry, high transaction costs,
high risk, and asymmetry of information, low bargaining power and lack of human and
social capital (Celia, et al., 2004). The agricultural marketing system in Ethiopia tends to
be informal, unregulated, constrained by weak market linkages and a lack of rural
infrastructures (Alemu, et al., 2011). In addition there is a several lack of institutional
infrastructures that can facilitate farmer’s links to markets and to the overall economy
(Kidness and Gordon, 2001).

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

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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 Ethiopia (Abraham, 2013).

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

of supply chain practice of vegetables in case of bishoftu in migra (deldama), even
though there are related topics conducted in the global, national, zonal and woreda 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, etal., (2010), also conducts 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.

Abrham (2013), researched his thesis on value chain analysis of vegetables in case of
Habro and Kombolcha woredas 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

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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, 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. 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.

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

national, regional, zone and woreda level farmers. Hence, in all level vegetables
production technique and supply chain practice is practicing traditionally. As a result of
this traditional practice it faces with critical problems. When the researcher came to its
specific study area which is migra(deldama) kebela, there is poor supply chain practice
that can be manifested from different reasons as well. So that, the researcher was address
it through its study. As a result of poor supply chain practice producers were not
becoming beneficiaries. Therefore, the researchers attempt was to assess vegetable supply
chain practice that hinders the benefit or profit of the farmers.

1.3 Research Questions

1. How is the status and practices of vegetable supply chain in the study area?

2. What are the factors that hinder the supply chain of vegetable in the study area?

3. What are the contributions of vegetable supply chain for the livelihoods of farmers in
the area?

4. What is the awareness of the household farmers about the supply chain practice in

the study area?

5. What is the relationship between the farmers and the actors?

6. What is the choice of outlet applied in the study area?

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7. What is the mode of transportation mostly they used?

8. What constraints do farmers encounter to supply chain practice of vegetables to the

market?

1.4. Objective of the Study

1.4.1. General Objective

The general objective of this study is to assess the supply chain practice of vegetables, the
case of Ada’a wereda migra kebele(deldama).

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 supply chain practice.

2. To describe the relationship between the farmers and actors.

3. To identify type of outlet they applied for their supply chain practice.

4. To describe the modes of transportation they used to facilitate the supply chain

Practice.

5. To find out the constraints faced during the supply chain practice of vegetables.

6. To describe the status and practices of vegetable supply chain in the study area.

7. To identify the factors that hinders the supply chain of vegetable in the study area.

8. To identify the contributions of vegetable supply chain for the livelihoods of

farmers in the area.

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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 supply chain
practice of vegetables and to find out the major factors hinders the income 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 supply chain practices within the lmited
land acreage. Besides, the study was delimited to conveniently selected study zone and
purposively selected district or kebel: migra (deldama), where cross-sectional survey data
was used from sample respondents selected through random sampling technique. The
study was restricted to vegetable supply chain practice of migra (deldama), with 16
hectares of land which is covered by vegetable. Among the vegetables onion, zickunee,
tomato, cabbage and lettuce were the major focuses of this paper due to their economic
importance to the producer’s income source and abundance. Accordingly, any of the
analysis, findings and conclusion of the study represents migra kebela 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
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.

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 CHAPTER TWO

REVIEW OF RELATED LITERUTURE

2.1. Theoretical literature

2.1.1. Supply Chain

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).

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).

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).

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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.

2.1.2. Value Chain

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.

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.

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.

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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.

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.

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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.)

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

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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 (Simchi-Levi,
et al., 2008).
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.

Figure1. Supply chain form

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 supplier manufacturer distributer retailer consumer
According to Sople (2012), a supply chain management is the combination of art and
science that goes in to improving the way your company finds the raw components it
needs to make a product or service and deliver it to customers. In his work He describes
five basic components of supply chain management.

A. Plan: - this is the strategic portion of supply chain management. A big piece of
planning is developing a set of metrics to monitor the supply chain so that it is efficient,
costs less and delivers high quality and value to customers.

B. Source: - choose the suppliers that will deliver the goods and services you need to
create your products. Develop a set of pricing, delivery and payment processes with
suppliers and create metrics for monitoring and improving the relationships and put
together the processes for managing the inventory of goods and services you receive from
suppliers including receiving shipments, verifying them, transferring them to your
facilities and authorizing supplier payments.

C. Make: - this is the manufacturing step includes scheduling the activities necessary for
production, testing, packaging and preparation for delivery.

D. Deliver: - this is the part that many insiders refer to as logistics. Coordinate the receipt
of orders from customers, develop a network of warehouse and pick carriers to get
product to customers and supporting customers who have problems with delivered
products.

E. Return: - this is the problematic part of supply chain. Create a network for receiving
defective and access products back from customers and supporting customers who have
problems with delivered products

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.

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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).
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 food 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.

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2.5. The Objective of Supply Chain Management
Chopra, et al., (2010) 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.

2.6. Logistics

As Ensermu (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
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).

2.6.1. Purchasing and In-bound Logistics

The purchasing function involves the acquisition of materials from suppliers to meet the
needs of producing the organizational product or service. Purchasing includes duties such
as vendor selection, material selection, outsourcing, negotiation, buying, delivery
scheduling, inventory and materials management, and to some extent, involvement in
design. We shall initially take and over all look at some of the issues relevant to general
green purchasing. Within general purchasing practice, we shall expand the discussion on
vendor selection. The final section will present some of the issues relevant to in-bound
logistic (Speer, 1997).

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One of the issues in delivery and production is the use of just-in-time (JIT) practice. This
practice is meant to reduce inventory, thus eliminating costs and waste. For example, less
storage and warehouse space is needed. This practice reduces the necessary overhead and
resource consumption needed to manage this inventory (Speer, 1997).

2.6.2. Distribution and Out-Bound Logistics

Whereas, purchasing and in-bound logistics focuses on managing the vendor-
organization relationships of the supply chain, the distribution and out-bound logistics
function is meant to address the organization-customer relationship issues.

2.6.3. Customer Relationships

Customer relationships are greatly influenced by green marketing policies. Some studies
have found that ultimate individual consumer interest in the environment and
environmentally sound products is quite substantial, even though there has been a slight
decline (Speer, 1997). This interest along with government regulations, are two external
pressures that flow throughout the supply chain. Studies have shown that many
companies are putting pressure on their suppliers and suppliers are listening to corporate
customers, as well as the end-user (Lamming and Hampson, 1998). Another issue related
to marketing to customers is to understand what their “hierarchy” of criteria for
purchasing. Price, quality, and convenience criteria are still at the top of this hierarchy.
An issue faced by green marketers is how to make environmental criteria more important.

Warehousing and delivery packaging design are two important issues in outbound (and
inbound) logistics and distribution. Wu and Dunne, (1995) argue that warehousing, other
than land use requirements, also generates much of the packaging waste in the supply
chain. Standardized reusable containers, good warehouse layouts, easy information
access all cut storage and retrieval movements and save on operating costs and are
environmentally sounder. Freight consolidation functions and “break bulk” operations
carried out in warehouses also have the potential of utilizing transport capacity more
efficiently, thus minimizing the environmental impact of the out bound transport system.

19
Packaging has been a very sensitive issue among European manufacturers and
consumers.

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).

Figure2. 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 material. Inventory objects could include any
kind of physical asset; merchandise, consumables, fixed assets and circulating toolset
(Hugos, 2006).

‘’inventory as an asset on the balance sheet and as a variable expense on the

income statement has taken on greater importance as organizations attempt to more
effectively manage assets and working capital.’’(Coyle, et al., 2013).

20
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
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).

2.9.1. Transportation Productivity

Ensermu (2015), describes the principal output of transportation is delivered Dollars,

orders, weight and/or cubic volume. The principal resources consumed in transportation
are operating (vehicle and driver) hours, container capacity and fuel. The useful
productivity ratios resulting from these inputs and output relate in the ratio the delivered
Dollars, orders, pounds or cubic volume to available operating hours, cubic capacity,
weight capacity and/or fuel.

2.9.2. Transportation Quality Indicators

The most important quality indicators for our own or for our carrier’s fleet are the on time
arrival percentage, damage percentage, claims free shipment percentage and miles
between accidents (Ensermu, 2015).

21
2.9.3. Mode of Transport

Mode of transport or means of transport is a term used to distinguish substantially

different ways to perform transport. The most dominant mode of transport is aviation,
land transport and ship transport. Other modes also exist, including pipe lines, cable
transport, and space transport. Human powered transport and animal powered transport
are sometimes regarded as their own mode, but these normally also fall in to the other
categories. Each mode of transport has a fundamentally different technological solution,
and some requires a separate environment. Each mode has also its own infrastructure,
vehicle, operations and also has unique regulations. Each mode also has a separate sub
systems. Transport using more than one mode is described as intermodal. Transportation
that carries around many people and can be used by the public is called mass
transportation (Ensermu, 2015).

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
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

22
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. Factors Affecting Agricultural Marketing

According to the spatial model of land use developed by Sieber (1999), land is allocated
to the activity providing the highest rent. Furthermore, vegetables are perishable and
costly to transport compared to grain and therefore farm operators near a city find
vegetables more profitable. In his circular structure of the agricultural land use, also
observed that the intensity of agricultural production decreases with increasing distance
of plots from the market.
Governments of all political ideologies in the world have intervened in agricultural
marketing and pricing since the 1930s (Dunkan and Jones, 1993). Access to reliable
markets provides smallholders with a reasonable price for their produce which leads to
improved income and livelihood (Girma, 2011).
The role of government intervention in agricultural marketing has been to reduce price
uncertainty and to create conducive environments for agricultural production and
investment into secure national supplies of food, raw materials and major export crops. In
addition to improving the farm operators’ production capacity, access to markets is a vital
strategy to meet the objectives of rural development and poverty reduction. In Sub-
Saharan Africa, subsistence agricultural producers face several barriers to gain access to
markets and productive assets (Alene, et al, 2007).
The lack of access and absence of required storage facilities leads to local price reduction
at harvest time because all the poor farmers are obliged to sell their produce at the same
time to generate income (Burney and Naylor, 2011).

23
The farm problem is usually associated with unstable and relatively low farm prices and
incomes. A related set of farmers’ problems can be termed the farm marketing problems,
which have several dimensions (kohls and Uhl, 2002).

First, farmers do not have control over the output of their production activities to the
same degree as the nonfarm firms. Agricultural output come from many small units
operated independently. The production is to great extent dependent on weather and
Biological patterns of production. Farmers may wish to change their out puts and attempt
to do so by planting more or fewer acres or by breeding more of fewer pigs.

However the final output is beyond the farmer’s control, as weather, disease and other
relatively uncontrollable factors will affect yields per acre and the productivity of
animals. This is not possible to quickly shut off or turn on agricultural production. This
means that market agencies and also consumers in the short run must adjust to farm
supplies rather than farmers adjusting to agencies.

Aside from such short run adjustment problems, it takes long periods to change the
production of some commodities. This inability to adjust quickly to changing conditions
creates a high risk element in agriculture. The market for which a long time production
plan is made may change by the time the product is finally marketed. Changes in
consumer tastes may find agricultural resource being devoted to the production of
something that is no longer to greatly desire. High prices resulting from shortage of
production may reduce the consumer market for that product when it finally arrives in
quantity. This relative unpredictability and uncontrollability of output creates many farm
marketing problems. Farmers are adopting new risk management production and
marketing strategies to cope with their increasing volatile markets, such as diversification
(peter and Donnelly, 2004)

A related component of the farm marketing problem is the difficulty farmers’ face in
improving their prices through independent or group activities. Farmers are for the most
part, price takers they cannot, individually, influence the price of their products through
their output decisions. In order to raise price via the control of supplies or advertizing
programs, farmers must act as group. However, the large numbers of farmers and their

24
differing economic circumstances frequently frustrate any attempts to organize and
market jointly (peter and Donnelly, 2004).

The cost price squeeze is another component of the farm marketing problem. The
competitive conditions of agriculture tend to keep farm prices close to the costs of
production. Falling farm prices would not be so critical if they were accompanied by
falling farm costs, or if the farmer adjust input costs as prices fell. However the increased
dependence of farmers on off-farm produced supplies leaves farmers little leeway in
adjusting to falling farm prices. Raising farm prices at other hand attract farmers to more
profitable enterprises and tend to bid up the costs of production especially land (kohls and
Uhl, 2002).

To many, the superior bargaining power of the buyers of farm products as compared with
that of farmers is the most serious farm marketing problem. Food marketing firms are
usually larger and, because of national and international activities, normally have better
market information than the farmers from whom they buy. In addition, through contracts
and other arrangements, food marketing firms are thought to gain some control over farm
decisions and markets. The key farm product and output characteristics that influence the
food marketing process are bulkiness, perish ability, quality differences, output
variations, and the geographic specialization of individual commodities (kohls and Uhl,
2002). In the process of selling the agricultural products, farmers face many challenges.
Some of the challenges are indicated below.

2.11.1. Weak market linkages

Surplus producing is as co-exist with areas of deficit but farmers are unable to take
advantage of the deficit markets because the markets are poorly coordinated (Alene, et
al., 2007). When the market for agricultural inputs and outputs is poorly developed this
creates unfavorable relationships between input and output prices (Aune and Bationo,
2008).
2.11.2. Asymmetry of information
Information asymmetry occurs when transacting parties do not have equal information.
This can lead to opportunistic behaviors (Hobbs, 1996). Specifically, the asymmetry of
information leads to specification opportunism in which the transacting party with better

25
information is able to deceive the other party on aspects of the transaction such as
product quality, weighing scales and other related aspects (Gebremedhin, et al., 2009). In
line with this, Alene, et al., (2007) showed that, because of poor and asymmetric access
to information, farmers in Kenya receive low prices from the traders who purchase grain
from them. Although small farmers may be engaged in specification opportunism, they
are also the main victims (Gebremedhin, et al., 2009). To avoid the challenges of
asymmetry of information, transacting parties attempt to gather information relating to
activities and transactions from different sources. According to Charatsari and Lioutas
(2013), farmers mainly depend on the agronomists, extension agents, other farmers,
family members, friends, printed materials and websites as sources of information.

2.11.3. High Transaction Costs

Transaction costs are the critical challenges preventing smallholders from marketing their
agricultural products (Markelova and Mwangi, 2010). The costs associated with
information, negotiation and monitoring are called fixed transaction costs (Alene, et al.,
2007). The FTCs do not vary with the volume of the inputs and outputs traded as a farmer
may incur the same search cost to sell one ton or ten tons of produce. In marketing
agricultural products, smallholders are faced with the option of either receiving below
market prices or incurring high costs when searching for better prices (Tadess, and
Shively, 2012). On the other hand, proportional transaction costs (PTCs) include the costs
of transferring the products or inputs being traded such as transportation costs and the
time spent delivering the product to the market (Alene, et al., 2007).

One of the objectives of forming cooperatives is to resist any market failure and ensure
economies of scale through joint purchasing of inputs and joint marketing of agricultural
products which is defensive in nature (Cook, 1995; Kidness and Gordon, 2001). In
Ethiopia, marketing cooperatives are promoted in the rural development strategy of the
country as a tool for the commercialization of smallholder agriculture (Bernard, et al.,
2008).

26
Cooperative helps producers to aggregate their products and integrate their efforts to
create better access to different market places, improved price negotiation and economies
of scale (Baden, 2013,). Taylor (1997), have outlined the existence of trade-offs between
economies of scale and group cohesion which is a critical factor for sustained success.
The existence of larger numbers of members is helpful in achieving economies of scale
while increasing the cost of coordination simultaneously. Hence, for successful
performance, members of cooperatives need to have homogeneity of identities (Barham
and Chitemi, 2009). Cooperatives are also helpful because farmers get access to credit
services.

Smallholder farmers are constrained by the lack of assets because they have limited
access to extension as well as to credit services. To address this challenge they willingly
establish cooperatives (Benson and Jafry, 2013). As credit organizations favor group
loans, farmers collectively improve access to finance through pooled resources required
for down payment and can overcome problems of large investments needed in processing
technologies, storage facilities or transport (Kidness and Gordon, 2001). The findings of
Barham and Chitemi (2009) indicated that the agricultural marketing Performance of
cooperatives improves when there is a higher representation of male to female leaders.
The reason they provided was that women have additional domestic responsibilities,
therefore do not have enough time to search for new market opportunities

2.11.4. Lack of Rural Infrastructure

Rural infrastructure is one of the facilities that need to be in place to facilitate marketing
agricultural products. As a result of poor conditions of roads in developing countries,
farmers are forced to carry their products to main roads and then transport them to the
market. This is time consuming and expensive for rural people (Kamruzzaman and
Takeya, 2008).).

27
2.12. EMPERICAL STUDIES

2.12.1. 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 (Saurav and Neeraj, 2015).

Chandra and Hussain (2013) conduct a research on strategic 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
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

28
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
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

29
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.

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

30
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
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

31
(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 Emana 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
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

32
related to perishability 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.

2.12.2. 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

33
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.

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.

34
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
dairy household milk market entry decision using Logit model and marketed milk surplus
using Tobit model in Ada’ha Liben 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.

35
 2.13 Conceptual Framework of the Research Study
This study had conceptual frame work which is based on the process of vegetable supply
chain practice (value chain). The fundamental reason for executing this research lies on
the practice of measuring the employee’s level of productivity in achieving the goals of
productivity within the given area. The conceptual frame work is presented below.

36
 CHAPTER THREE

RESEARCH METHODOLOGY

3.1. Description of the Study Area

Ada’a Woreda lies between longitudes 38°51’ to 39°04’ East and latitudes 8°46’ to 8°59’
North covering a land area of 1750km2 on East of Addis Ababa (Figure 1). Majority of
the land (90%) is plain highland ranging between 1600 to 2000 meters above sea level.
The Woreda is characterized by sub-tropical climate and receives 860 mm rain per
annum. In general the main rainy season occurs between mid-June and September,
followed by a dry season that might be interrupted by the short rainy season in February
and March.
Mean annual temperature range from about 8-28 °C. Black clay, vertisol is the dominant
soil type, with good soil fertility but with water logging problems in those areas where
the land slope is below 8%. Household average farm size varies from 1 to 2.5 ha and the
major farm operation is done by oxen power. Farming system is mixed crops- livestock
production system. Major crops grown are teff, wheat (mainly bread variety) and pulses.
Chickpea is the main pulse vegetables crop grown in the Woreda and used as a crop
rotation to wheat and teff crops. Irrigated horticultural crops are a newly emerging
business in areas where small scale irrigation has been identified as potential venture.

Fig.1 location of Ada’a district

1.Bishoftu,2.Bekojo,3.Gobessary/sirba
,4.Golo,5.Wado Dibayu,6.Kurkura,7.wajitu/dukem,8.Gerbicha,9.Giche,10.Tulu
Dimtu,11.Lugo,12.Akako,13.DireArati,14.DireShoki,15.cheleba

37
silassia,16.Deko,17.Godino,18.GendeGorba,19.Golbo,20.Ude,21.Yatu,22.Yerer
Selassie,23.Kaliti,24.Denkaka,25.Hidi,26.Katela,27.Karfe,28.Koftu
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 the determinants of income to members engaged in the
supply chain practice of vegetable 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 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

Research design provides a logical structure for research data gathering and analysis
(Bryman, 2008). The study adopted a cross-sectional survey research design as its
framework to guide the process of data collection.
According to Bryman (2008), 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. Source and Method of Data Collection

The sources of data for this research was primary sources, refers data obtained firsthand
by the researcher on the variables of interest for the specific purpose regarding the
objective.

38
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, model farmers, 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 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 vegetable and
participated in supply chain practice using consultation with Ada’a woreda’s agricultural
and rural development experts. All the tabias (22) of the woreda has produce and perform
supply chain practice of vegetables. In second stage, out of those tabias only seven (7)
tabias were purposively selected based on their maximum production capacity and the
number of household head participated in the production is 6669 people participated on
2241hectar in this woreda and supply chain practice.

In the second stage, from these identified rural tabias, listed in table 3.1 above, the
elements were selected using sample size determination formula derived by Bartlett, et
al., (2001).

N 1=¿ ¿ , where

N 1=¿ ¿

N1= 384

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.

e = acceptable margin of error

q = 1-p

39
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, 6669*0.05=333. So, the researcher was applied the infinity formula because the
computed proportion of sample size is greater than the given percent of population size
(384>333). Hence, the above formula is invalid, the researcher was used the second
formula.

n1
N2¿
1+ n1 / population

384
N 2=
1+384 /40

N2= 363

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=363/0.95
N3=382

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 (Sekaran, 2006).

40
Both qualitative and quantitative data analyses are 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 was used descriptive statistics such as frequencies in the form of tables.
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) software for analysis. For the quantitative analyses, several methods are
used, such as analyses of difference and relationship, specifically t - test and multiple
regressions. The researcher also analyzes qualitatively.

Therefore, the analysis of this paper designed in to two parts. The first part includes the
descriptive analysis. This analysis relay on the demographic characteristics of the
respondents and other variables description associated with the respondents. The second
analysis includes the analysis of the result of the econometric model. This model was
used to see the relationship between the dependent variables and independent variables
specified in econometric model. These methods are described below.

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 along the
econometric model, to analyze the collected data.
3.6.2. Model specification
Models are often used to test changes in a system without actually having to change the
real system. Models are also used to describe a system or to predict the output of the
system based on certain specified inputs. Determining an appropriate model is
challenging task, but it can be made manageable by applying a model building process
consisting the following three components (Greobner, et al., 2006).

41
Model specification:-specify the model by determining the dependent variable and the
potential independent variables.

Model building:-this is done by computing the correlation coefficients for the dependent
variable and each independent variable and for each independent variable with all
independent variable.

Model diagnosis:-checks on the model to determine how well the specified model fits
the data and how well the model appears to meet the multiple regression assumptions.
3.6.2.1. Correlation and Regression
According to Groebner, et al., (2006) in analyzing the relationship between two variables
there are two basic models that we can use, depending on the conditions under which the
data were collected. The first is referred to regression model, in which the relationship
between x and y assumes that the x variable takes on known values specifically selected
from all the possible values for x. The y variable is a random variable observed at the
different level of x. when the data have been collected at specific levels of the x variables,
our estimates for the y variable will be conditional on the value of x we are using.
The second model is referred to as correlation model and is used in applications in which
both x and y variables are considered to be random variables. In addition to analyzing the
relationship between two variables graphically; we can also measure the strength of the
linear relationship between the two variables using a measure called the correlation
coefficient.
Correlation coefficient is a qualitative measure of the strength of the linear relationship
between two variables. The correlation ranges from -1.0 to 1.0. A correlation of ±1.0
indicates a perfect linear relationship means one in which a given change in the value of
the x variable is accompanied by a specific uniform amount of change in the y variable;
where as a correlation of 0 indicates no linear relationship (Groebner, et al., 2006).

Sample correlation coefficient or the algebraic equivalent

( x−x́ ) ( y− ý ) n ∑ xy−∑ x ∑ y
r= ∑ r= -------------- (1)
√¿¿¿ √ ¿¿ ¿

42
Where: r = sample correlation coefficient
n = sample size
x = value of explanatory variable
y = value of response variable

This sample correlation coefficient computed using equation 1 is called pearson product
moment correlation (r). The sign of the correlation coefficient indicates the direction of
the relationship, but it does not aid in determining the strength.

Significance Test for Correlation

To test whether it is significant or not, a formal hypothesis testing procedure is needed.
The null and alternative hypotheses to be tested are;
H0: ρ = 0 (no correlation)
H1: ρ ≠ 0 (correlation exists)
The test procedure utilizes the t-test statistics
r
t= 1−r 2 df = n-2 ---------------------------------- (2)
√ n−2
Where: t = Number of standard deviations, r is from 0.
r = simple correlation coefficient
n = sample size
df = degree of frequency
The t-test for determining whether the population correlation is significantly different
from 0 requires the following assumptions;
a. The data are interval or ratio-level.
b. The two variables (x and y) are distributed as a bivariate normal distribution.

Multiple Regressions
The multiple Regression model is a straightforward extension of the simple linear
regression model. This is a flexible method of data analysis that may be appropriate

43
whenever a quantitative variable (the dependent or response variable) is to be examined
in relationship to any other factors (expressed as independent, explanatory or predictor
variables). Relationships and independent variables may be nonlinear and quantitative or
qualitative respectively, and one can examine the effects of a single variable or multiple
variables with or without the effects of other variables taken into account (Kelly, 2013).

Thus, in multiple regressions, an equation with several explanatory variables is estimated,

in an attempt to isolate the separate effects of each on the dependent variable. This study
was intended to analyze which and how much the predicators are influenced in the supply
chain practice of vegetable in the study area.

Therefore, multiple regression models is used to see the relationship between total
income from vegetables supply chain and the variables which affect the supply chain
practice of vegetable products. The multiple regression model used in the study was as
follows: In general, the multiple regression models can be written as:

Y = β0+ β1x1 + β2x2+--------------- βk xk+ ε -------------------- (3)

Where:
Y = represents the response variable.
β0 = denotes the intercept of the regression plane which is constant.
βj, j = 1,----- k, are called the regression coefficients to be estimated.

X1, x2 ---------xk, are the k explanatory variables.

ε = is error term, or residual (i.e., the difference between the actual y value and the
value of y predicted by the population mode).

We do not observe all of the factors that influence supply chain practice of vegetables.
Because of these errors and omissions, our predictions would not be perfect and we have
to introduce an error term (ε), to allow for this imperfection.
Measured value = true value + measurement error
Yi= µ + ε
ε = Yi- µ----------------------------------- (4)

44
It is a multiple linear regression model with k repressors. The parameters β j, j= 0, 1---- k,
are called the regression coefficients. This model describes a hyper plane in the k-
dimensional space of the repressor variables xj. The parameter βj represents the expected
change in the response y per unit change in xj when all the remaining explanatory
variables xi (i ≠ j) are held constant. For this reason the parameters β j, j =1, 2----k, are
often called partial regression coefficients (Smith, 1985).

Multiple linear regression models are often used as approximating function. That is, the
true functional relationship between y and x1, x2, ----- xk is unknown, but over certain
ranges of the explanatory variables, the linear regression model is an adequate
approximation.

The random error component, ε, may be positive, zero, or negative, depending on

weather a single value of y for a given x falls above, on, or below the population
regression line.

To analyze the regression model, some basic assumptions needed to be tested. One of the
assumptions that needed to be tested was the normality test. After some of the variables
are transformed to the logarithmic scale using the ladder and gladder commands, the
problem of normality is solved.

In order to test multicollinearity among explanatory variables, the Variance Inflation

Factor (VIF) test was conducted (Jenber, 2011). The Variance Inflation Factor result
indicated that there was no multicollinearity problem among the explanatory variables.
Because the value of VIF for each independent variable is less than 10, this shows that
multicollinearity was not a problem. The model specification test is checked using the
Ramsey RESET test and link test (Gebru, Nega, &Hagos, 2011; Jenber, 2011). The
problem of hetroscedasticity or non-equality of the error variance is tested using the
Cook-Weisberg test for hetroscedasticity (Gebru et al., 2011).

45
The Coefficient of Determinations (R2)
The coefficient of determination, R2, measures the fraction of variation in the dependent
variable that can be explained by the dependent variable’s relationship to a single
independent variable. When there are multiple independent variables in a model, R 2 is
also used to determine the proportion of variation in the dependent variable that is
explained by the dependent variable’s relationship to all independent variable. However,
R2 is now called the multiple coefficient of determination.

R2=
∑ of squares regression = SSR ----------------------- (6)
total ∑ of squares SST

The multiple coefficient of determination represents the percentage of variability in y that

is explained by the estimated regression equation. We have 0 < R 2 < 1 as in the case of
simple regression case. However, a large value of R 2 does not necessarily imply that the
regression model is a good one. Adding a repressor to the model will always increase R 2
regardless of whether or not the additional repressor contributes to the model. Thus it is
possible for models that have large values of R2 to perform poorly in prediction or
estimation (Groebner, et al., 2006).

The positive square root of R2 is the multiple correlation coefficients between y and the
set of explanatory variables x1, x2-----xk. That is, R is a measure of the linear association
between y and x1, x2-----xk.

Test for Regression Model

There is no way to determine whether an independent variable will be a good predicator
variable by analyzing individual variable’s descriptive statistics. Instead, we need to look
at correlation between the dependent and independent variables, measured by correlation
coefficient computed as,

One x variable with y or one x variable with another x

46
 ( x−x́ ) ( y− ý ) n ∑ xy−∑ x ∑ y
r =∑ , r= -------------- (7)
√¿¿¿ √ ¿¿ ¿
Where: r = sample correlation coefficient
n = sample size
x = value of explanatory variable
y = value of response variable

In multiple regression problems certain tests of hypothesis about the model parameter are
useful in measuring model adequacy. The test for significance of regression is a test to
determine if there is a linear relationship between the response y and any of the
independent variables x1, x2-----xk.

T-Test
Separate tests of the null hypothesis that individual coefficients are zero can be computed
using t-test of the multiple linear regression models (Gujarati, 1988).
This test can be used to see the statistical significance of each coefficient. An overall test
of the null hypothesis that all the parameters associated with the explanatory variables in
these models are equal to zero is an F-test based on the OLS estimation procedure. The
Chi-square tests the null hypothesis that the coefficients for all terms in the current model
except the zero. The appropriate hypotheses are:
Ho: β1 = β2= ........βk = 0
H1: βj ≠0 for at least one j----------------------------- (8)
The test procedure utilizes the t-test statistic
r
t= 1−r 2 df = n-2 --------------------------------- (9)
√
n−2

Where: t = Number of standard deviations r is from 0.

r = simple correlation coefficient
n = sample size
df = degree of frequency

47
Rejection of Ho in the above hypothesis implies that at least one of the independent
variables x1, x2---xk contributes significantly to the model.

F-Test
The analysis of variance F-test is a method for testing whether the regression model
explains a significant proportion of the variation in the dependent variable (and whether
the overall model is significant).
F-Test Statistic
SSR
K
F= ------------------------------------------------------------ (10)
SSE
n−k −1

Where: SSR = Sum of squares regression=∑ ¿¿

SSE = Sum of squares error=∑ ¿¿
n = number of data points
k = number of independent variables
Degree of freedom (df) =D1= k, and D2= (n-k-1)

Adjusted R-Squared
This is a measure of the percentage of explained variation in the dependent variable that
takes in to account the relationship between the sample size and the number of
independent variables in the regression model.
n−1
R-sq (adj) = R2A=1-(1- R2)( ¿--------------(11)
n−k−1
Where; n = sample size
k = number of independent variables

Variance Inflation Factor (VIF)

VIF is a measure of how much the variance of an estimated regression coefficient
increase if the independent variables are correlated. A VIF equal to1 for a given

48
independent variable indicates that this independent variable is not correlated with the
remaining independent variables in the model. VIF increases with multi co linearity.

1
VIF = --------------------------------------------------- (12)
1−R2 J

Where: R2j= coefficient of determination when the jth independent variable is regressed
against the remaining k-1 independent variables.

3.7. Description of Variables used in the Model

3.7.1. Explanatory Variables
Different variables in the supply chain practice are expected to determine income from
vegetables in farmers. The explanatory variables used for the analysis of the model
include those factors which influence the supply chain practice of vegetables and income
related to product characteristics and in marketing of vegetable products. The following
were hypothesized variables influencing supply chain practice of vegetable.

Age of the Household Head:-Age of the household is a continuous variable measured in

years included in the model 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. Hence, incomes from farm production increase. 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 included
in the model which influences vegetables supply chain practice and production of the

49
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 supply chain practice
is often intensive and requires more labour for cultivation than in the case cereal
production. The household provides a major source of labor for agricultural activities.
The labor 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.

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 Own Survey 2020 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.

Demand and Price information:-This is a dummy variable used in the model which
influences income of farmers by hindering supply chain practice of vegetables. If a
farmer received price information prior to sell of their vegetable it is assigned 1 if not 0.
Price information is one of the factors to decide how much to produce and how much to

50
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 income 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 in the model and
measured the amount of losses in quintal. The amount of losses in vegetables supply
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 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
supply 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 supply
chain practice plays critical role to make the whole supply chain effective and profitable.
If there is market integration its opportunity to increase income 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.

51
Processing and 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, 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 and Safety 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 practice to
deliver the fresh goods in a timely manner and in a proper quality to the customer. Proper
supply chain practice helps to maintain the shelf life of product and prevent from
deteriorating the quality. Thus, the expected sign is positive.

Price and Quantity 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. Therefore, the expected sign is negative.

Cold Chain issues:-Cold chain is 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

52
Market Demand and Information issues:-Proper information is the basis of efficient
supply chain. Without proper information regarding market demand the supply chain
cannot run successfully. Thus, the expected sign is positive

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.
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

53
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
 Consent and possible deception of participants
 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
 Effects on participants of the way in which data is analyzed and reported
 Behavior and objectivity of the researcher must fit with study area.

54
 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, Onion, Cabbage, Lettuce and zucchini).
Table 4.1.Sex of the respondents
Frequency Percent Valid Percent Average Income
female 53 13.9 13.9 8708.40
Male 329 86.1 86.1 9112.69
Total 382 100.0 100.0
Source; Own Survey, 2020
As described in Table 4.1 above, in the study area, only a few (13.9%) of female headed
households were participated in the production and supply chain practice of vegetable.
This indicates that the majority (86.1%) of the households in agricultural sector headed
by males in the study area.

55
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
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).

A majority of Ethiopian women are poor and vulnerable and are disproportionately
affected by food shortages within the household (Gebreselassie and Haile, 2013).
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. One way analysis of variance (ANOVA) analysis of sex

Sum of Squares Df Mean Square F Sig.
Between Groups 10058391.934 1 10058391.934 .213 .645
Within Groups 17975522834.369 380 47304007.459
Total 17985581226.304 381
Source: Own Survey, 2020
The one way analysis of variance (ANOVA) test conducted for the sex of the household
head was significant. This implies that the participation of male and female households in
the production and supply chain practice of vegetable was different in Ada’a woreda.
This indicates that female headed households have so many constraints to participate in
the most important economic activities like irrigation cooperatives. 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
from vegetables is 8910.54 birr in the production year 2018/19 in the study area. The

56
average income received by the male and female headed households is 9112.69 and
8708.40 respectively.

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. 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.
Table 4.3.Age of respondents
Number of Valid Mean Std. Maximum Minimum
respondents Percent Deviation
age of
42.59 9.926 70 25
respondents
Age group 25-40 278 46.60
Age group 41-55 159 41.62
Age group 56-70 45 11.78
Total 382 100%
Source: Own Survey, 2020
As presented in table 4.3 above, the average age (mean) of the household head was 42.59.
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, 46.6 percent of
the household heads were categorized under the age group of between 25 to 40 years,
similarly next to this 41.62 group percent of the households categorized under the age
category of 41 to 55. The percentage of the households categorized under the age
category of 56 to 70 is 11.78 percent. By nature the age category between 20 – 55 years is
grouped under active and energetic power.

57
From the data most of the respondents were in the age group of 25-55 years. Therefore,
this is good thing to run the supply chain practice effectively and to overcome the
constraints 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)
a
Pearson Chi-Square 9099.574 4305 .000
Likelihood Ratio 2224.794 4305 1.000
Linear-by-Linear Association 60.845 1 .000
N of Valid Cases 382
Source: Own Survey, 2020
The chi- square test conducted on the category of the households in the study area also
significant at less than 5 percent significant level. Implies age was the determinant factors
in terms of experience to increase income 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 income from
vegetable supply chain practice. This result may be due to older households have less
labor for the management of vegetables 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
source of labour for agricultural activities. The labour available for work per household is
directly proportional to the family size (Abraham, 2013)

58
Table 4.5.Marital status of respondents
Frequency Percent Valid Percent Cumulative Percent
Single 37 9.7 9.7 9.7
in relation 20 5.2 5.2 14.9
Married 275 72.0 72.0 86.9
Divorced 21 5.5 5.5 92.4
Widowed 29 7.6 7.6 100.0
Total 382 100.0 100.0
Source: Own Survey, 2020

As displayed in table 4.5 above, 72.0% of the sampled respondents were married. While,
about 9.7 % were single, 5.2% were in-relation, 5.5% were divorced and the remaining
7.6% were widows. As Abraham, (2013) vegetable production is labor intensive activity,
vegetable production in general and market supply of vegetable products in particular is a
function of labor. 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 labor 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 225 58.9 58.9 58.9 6052.64
literate 148 38.7 38.7 97.6 13262.30
certificate 8 2.1 2.1 99.7
diploma 1 .3 .3 100.0
Total 382 100.0 100.0
Source: Own Survey, 2020

59
Education is a crucial factor for skill development and enhancing effective production,
supply chain and marketing decisions of any products. The survey revealed that 58.9
percent of the producers do not have formal education. While, 38.7 percent were literate,
2.1 percent were certified, and about 0.3 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 Supply Chain Practice of vegetables in

Ada’a Woreda migra kebele
From the interview analysis, farmers in migra kebele have very poor knowledge
regarding the use of latest technologies, or techniques, to work effectively and efficiently.
They have very poor knowledge regarding the management of post-harvest produce,
quality of inputs etc. Without proper knowledge and awareness level of the farmer the

60
supply chain practice of vegetable cannot be efficient, because farmers are the main
source of the fresh agricultural products.

As we know supply 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 supply 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
a
1 382 .546 .298 .281 5825.856 .298 17.546 9 372 .000b

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

61
 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

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

62
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
improper storage and handling, spoilage, careless handling by shoppers, and theft.
Doubtless, further losses occur in home storage and preparation of these products.
Product perish ability 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).

63
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
area at 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 area at 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 input come 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.

64
4.3. Major Vegetable Supply Chain Actors and Their Relationship with Producers
in Ada’a Woreda (migra kebele)
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;
Consumer:-Those who live and consume the vegetable product produced in the study
area. Those persons were either from Ada’a woreda, Bishoftu Town, or from the rural
areas.

Producer:-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.

Collectors:-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 Bishoftu,Mojo and Duckem around. 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

65
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 Ada’a woreda.

Retailers:-There are different types of traders, namely retailers, wholesalers, and

exporters. Retailers include supermarkets, grocers, vendors, hotels, restaurants, cafeteria,
etc. which are available in all the markets studied. The retailers purchase vegetables from
producers, assemblers/collectors, and wholesalers. The retailers except street vendors do
have licenses and fixed working place. Some vegetables such as onion,zucchini,tomato,
pepper, lettuce, etc. are needed in the hotels and restaurants. The purchasing capacity of
the hotels depends on the demand they have. In Ada’a woreda around 1.3% of the
product is purchased by the hotels renders service in Bishoftu Town.

Wholesalers:-Wholesalers purchase from other traders, collectors, or producers. Large

buyers sometimes enter in to a contract farming with the farmer producer. But in Ada’a
woreda Migra kebele, 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.

Table; 4.8. Relationships of producers with vegetable supply chain actors

Frequency Percent Valid Percent Cumulative Percent
Rough 8 2.1 2.1 2.1
medium 93 24.3 24.3 26.4
smooth 281 73.6 73.6 100.0
Total 382 100.0 100.0
Source: Own Survey, 2020
From frequency table 4.8 above, the majority of the respondents (73.6 %) has smooth
relationship with the actors of the vegetable supply chain practice. While, 24.3 percent
have medium relationship and only 2.1percent have rough or bad relationship.

Table: 4.9. One sample tests for relationship of producers with vegetable supply
chain actors

66
 Test Value = 2.5
t df Sig. (2- Mean 95% Confidence Interval of
tailed) Difference the Difference
Lower Upper
relationship with
vegetable supply 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 4.9 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.

Table 4.10.Pearson’s correlation of total income and vegetable supply chain actors
Relationship with vegetable total
supply chain actors income
Pearson
Relationship with 1 -.061
Correlation
vegetable supply chain
Sig. (2-tailed) .236
actors
N 382 382
Pearson
.061 1
total income Correlation
Sig. (2-tailed) .236
N 382 382
Source: Own Survey, 2020
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 2017/18.

67
Table; 4.11. Supply chain form to sale vegetable
Frequency Percent Valid Cumulative
Percent Percent
producer-consumer 80 20.9 20.9 39.3
producer-retailer-consumer 47 12.3 12.3 51.6
producer-wholesalers-consumer 20 5.2 5.2 38.4
producer-wholesalers-retailers-consumer 150 39.3 39.3 77.7
producer-collectors-retailers-consumer 73 19.1 19.1 96.9
producer-collectors-wholesalers-retailers-
12 3.1 3.1 100.0
consumer
Total 382 100.0 100.0
Source: Own Survey 2020
As revealed from table 4.12 above, the sample respondents who were asked for this study
responded to 20.9 percent sells directly to consumers. While, 12.3 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.

Table 4.12. One-Sample Test for supply chain outlet type

Test Value = 3

68
 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 supply chain form or outlet choice in the study was
significant at less than 1 percent. This implies that the difference in type of supply chain
have effect on marketing and total income 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.

Table; 4.13. Transportation means you use to your vegetable supply chain
Frequency Percent Valid Percent Cumulative Percent
Truck 1 .3 .3 .3
Bus 117 30.6 30.6 30.9
animal power 186 48.7 48.7 79.6
human power 78 20.4 20.4 100.0
Total 382 100.0 100.0
Source: Own Survey 2017

69
As we have seen from the table 4.13 above, almost half of the respondents use animal
power which was 48.7 percent. While, 30.6 percent uses hired bus on cash payment,
about 20.4 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
transportation 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”.

Table 4.14. One-Sample Test of transportation means you use to your vegetable supply
chain
Test Value = 3
t df Sig. (2- Mean 99% Confidence Interval
tailed) Difference of the Difference
Lower Upper
transportation means
you use to your 24.413 381 .000 .893 .80 .99
vegetable supply chain
Source: Own Survey, 2017

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 kebele. 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 Vegetable Supply Chain Practice

70
The vegetable supply chain practice and marketing system has been influenced by a
number of production, product nature and marketing factors.
Table; 4.15.Regression model result for impact of supply chain practice of vegetable
on income
Model summary
Model R R Adjusted Std. Error of Change Statistics
Square R Square the Estimate R Square F df1 df2 Sig. F
Change Change Change
a
1 .492 .242 .211 6103.595 .242 7.769 15 365 .000b

Coefficients
Model Un standardized Standar t Sig. Co linearity
Coefficients dized Statistics
Coeffici
ents
B Std. Error Beta Tolera VIF
nce
1(Constant) 14140.571 3366.149 4.201 .000
Impact rate of
infrastructure facilities -2032.641 384.820 -.320 -5.282 .000 .567 1.764
to income
post harvest losses to
2408.488 439.786 -.321 -5.476 .000 .603 1.658
income
Integration issue to
975.685 371.955 .174 2.623 .009 .474 2.110
income
Technology
991.381 320.914 .230 3.089 .002 .374 2.671
accessibility to income
Value addition and
1362.601 542.653 .145 2.511 .012 .619 1.615
processing to income
Quality and safety
812.555 373.604 -.124 -2.175 .030 .639 1.567
rendered to income
Quantity and price risk
530.452 275.204 -.118 -1.927 .055 .552 1.815
to income
Insufficient inputs to
-405.160 359.583 -.063 -1.127 .261 .662 1.511
income

71
 Consumption rate to
-17.518 285.680 -.004 -.061 .951 .498 2.009
income
Transportation facilities
529.823 338.242 .089 1.566 .118 .642 1.558
to income
Demand and market
341.802 297.572 .063 1.149 .251 .689 1.452
information to income
Cold chain issue to
-189.815 274.491 -.045 -.692 .490 .494 2.205
income
Fragmented supply
142.559 320.564 .033 .445 .657 .385 2.597
chain to income
Packaging issue to
388.667 374.680 .077 1.037 .300 .376 2.663
income
Financial issues to
130.805 309.149 .025 .423 .672 .597 1.675
income
Source: Own Survey, 2020

As we have seen in regression model table 4.7 above, the same is true for this regression
model. This is statistically significant because adjusted R square is less than R square. So,
the overall regression model is important for descriptive purpose.

The multicollinearity test is also checked using the Variance Inflation Factor (VIF) and
all the values are less than 10. Implies, multicollinearity was not a problem.

Infrastructure issues

Table; 4.16. Impact rate of infrastructure to income from vegetable supply chain
Frequency Percent Valid Percent Cumulative Percent
nothing 1 .3 .3 .3
very low 4 1.0 1.0 1.3
low 32 8.4 8.4 9.7
average 97 25.4 25.4 35.1
high 80 20.9 20.9 56.0
very high 168 44.0 44.0 100.0
Total 382 100.0 100.0
Source; Own Survey 2017.

72
Supply chain infrastructure plays an important role in the vegetable sector. 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 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. From table 4.16 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 affect on their
supply chain practice of vegetable.

The result of regression model in table 4.15 above indicates that infrastructure
accessibility is significant at 1 percent significant level. The result describes if
accessibility and usage of infrastructure increases by 1 percent, the income delivered
from vegetable supply chain practice decreases by 2032.641 birr. Because they are
negatively correlated with Pearson correlation coefficient of -0.219, this value of r is
between -1.0and -0.3. As discussed earlier, infrastructure issue is stretched from small to
sophisticated materials which need cost to use. So, the result might be because of the
incurred cost. 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

73
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.

Table;4.17. Correlation between total income with infrastructure facilities

total impact rate of infrastructure
income facilities to income
Pearson
1 -.219**
total income Correlation
Sig. (2-tailed) .000
N 382 382
income impact rate of Pearson
-.219** 1
infrastructure facilities Correlation
to vegetable supply Sig. (2-tailed) .000

chain N 382 382

**. Correlation is significant at the 0.01 level (2-tailed).
Source; Own Survey 2020
Post-harvest losses issues
Table; 4.18. Impact rate of post harvest losses to income from vegetable supply
chain
Frequency Percent Valid Percent Cumulative Percent
nothing 2 .5 .5 .5
very low 5 1.3 1.3 1.8
Low 22 5.8 5.8 7.6
average 125 32.7 32.7 40.3
High 158 41.4 41.4 81.7
very high 70 18.3 18.3 100.0
Total 382 100.0 100.0
Source: Own Survey, 2020

According to interview analysis, post-harvest losses were the major problem in the
supply chain of Vegetables sector in migra kebele . There are huge amount of losses in
74
the supply chain practice of perishable vegetables in reaching to the main market,
processing units etc. Huge amount of losses incurred during transportation (COVID-19)
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 (Abt, 2019).

Post-harvest losses were high in the study area because poor logistics activities in the
area. In the study area, as of table 4.18 above, majority (41.4%) of the sample
respondents explains that post harvest loss influence on income was high. While, 32.7
percent said average, 18.3 percent said very high, 5.8 percent said low, and 1.3 percent
said very low. About 7.3 percent responded it does not affect their income.

According to the results of the regression from table 4.15 above, post-harvest losses were
the determinant factors to the income from vegetable supply chain practice at 1 percent
significant level. The result indicates that, when the post-harvest losses increases by 1
percent, income of farmers from vegetable increases by 2408.488 birr.

Market Integration issues

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.

Linkage and integration between the various players in the supply chain plays critical role
to make the whole supply chain effective and profitable. But in the supply chain of
vegetable sector in Ada’a woreda migra kebele there was lack of market integration

75
between the farmers and the actors of the vegetable supply chain in the study area as of
interview analysis from government representatives.
Table; 4.19.Impact rate of integration issue to income from vegetable supply chain
Frequency percent Valid Percent Cumulative Percent
nothing 6 1.6 1.6 1.6
low 44 11.5 11.5 13.1
average 75 19.6 19.6 32.7
high 31 8.1 8.1 40.8
very high 226 59.2 59.2 100.0
Total 382 100 100.0
Source: Own Survey, 2020

The data collected for analyzing integration issue in table 4.19 above, indicates that 59.2
% was affected at very high level. While 8.1 percent influences at high level, 19.6 percent
at average, 11.5 percent affects at low. About 1.6 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 Ada’a woreda. This result
was supported by the result of Alemu, et al., (2011), they puts the agricultural marketing
system in Ethiopia tends to be informal, unregulated, constrained by weak market
linkages and a lack of rural infrastructures.

As we have seen from the regression result in table 4.15 above, this issue was
significance at 5 percent significant level. This means absence of integration affects the
total income received from the supply chain practice of vegetables in the study area. So,
when the market integration increases by 5 percent, income of farmers from vegetable
increases by 975.685 birr.

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

76
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
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 labor.
Most of the farm labor comes from the family members and the use of hired labor is very
limited (Abraham, 2013).

Table; 4.20. Impact rate of technology accessibility to vegetable supply chain

Frequency Percent Valid Percent Cumulative Percent
nothing 50 13.1 13.1 13.1
very low 9 2.4 2.4 15.4
low 46 12.0 12.0 27.5
average 59 15.4 15.4 42.9
high 140 36.6 36.6 79.6
very high 78 20.4 20.4 100.0
Total 382 100.0 100.0
Source: Own Survey, 2020

Like risk and post harvest loss the data collected from the respondents shows the major
impacts of technology 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 technology does not affect on their income and supply chain practice of
vegetable.
The result of regression model in table 4.15 above indicates technology was significant at
1 percent significant level. The result describes if accessibility and usage of technology
increases by 1 percent, the income delivered from vegetable supply chain practice
increases by 991.381 birr
Table; 4.21. Correlation between total incomes with technological accessibilities

77
 total impact rate of technology
income accessibility to income
Pearson
1 .154**
total income Correlation
Sig. (2-tailed) .003
N 382 382
income impact rate of Pearson
.154** 1
technology accessibility Correlation
to vegetable supply Sig. (2-tailed) .003

chain N 382 382

**. Correlation is significant at the 0.01 level (2-tailed).
Source: Own Survey, 2020

Processing and 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
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 4.22. Impact rate of value addition and processing to income

Frequency Percent Valid Percent Cumulative Percent
low 2 .5 .5 .5
average 49 12.8 12.8 13.4
high 68 17.8 17.8 31.2
very high 263 68.8 68.8 100.0
Total 382 100.0 100.0
Source: Own Survey 2020

As we have seen in the table 2.22 above, data collected to analyze processing and value
addition indicates that 68.8 % was affected by very high level. While, 17.8 percent

78
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.

As of the result from the regression model presented in table 4.15 above, processing and
value addition issue was a significant factor at 5 percent significant level. The result
indicates that if the processing and value addition practice increases by 5 percent the
income of the farmers increases by 1362.60 birr.

Quality and safety 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
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
Ada’a woreda migra kebele, 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; 4.23. Impact rate of quality and safety rendered to income from vegetable
supply chain
Frequency Percent Valid Percent Cumulative Percent
very low 20 5.2 5.2 5.2
Low 8 2.1 2.1 7.3
Average 134 35.1 35.1 42.4
High 117 30.6 30.6 73.0
very high 103 27.0 27.0 100.0
Total 382 100.0 100.0
Source: Own Survey, 2020

79
As explained in the table 4.23 above, 35.1 percent affects on average , 27 percent affects
at very high level, 30.6 percent at high, 2.1 percent quality affects on their income and
supply chain practice of vegetable on low and 5.2 percent affects at very low.

The result of regression model in table 4.15 above indicates that quality and safety issue
was significant at 5 percent significant level. The result describes if quality and safety
increases by 10 percent, the revenue from vegetable supply chain practice increases by
812.55 birr.

Price and Quantity 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 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.

80
Table; 4.24.Impact rate of price and quantity risk to income in the supply chain
practice of vegetable
Frequency Percent Valid Percent
Nothing 28 7.3 7.3
very low 62 16.2 16.2
Low 63 16.5 16.5
Average 60 15.7 15.7
High 114 29.8 29.8
very high 55 14.4 14.4
Total 382 100.0 100.0
Source: Own Survey, 2020

As explained in the table 4.24 above, price and quantity risk was one factor from the
factors affecting vegetable supply chain practice in the study area. The majority of the
data collected from these sample respondents of the study explains about 114 (29.8%)
respondents respond that the price and quantity risk influence on income was high.
While, 16.5 percent low, 16.2 percent very low, 15.7 percent average, and 14.4 percent
very high. About 7.3 percent responded it does not affect their income. This implies that
price and quantity risk affects the supply 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.

The regression model conducted to analyze in table 4.15 above, indicates price and
quantity risk was the determinant factor to the vegetable supply chain at the 10 percent
significant level. The result indicates that, when the price and quantity risk increases by
10 percent, income of farmers from vegetable decreases by 530.45 birr. 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.

81
There were other important variables insignificant to supply chain practice in Ada’a
woreda, such as demand and market information, cold chain issue, financial issues,
transportation facilities, fragmented supply chain, packaging issues and consumption rate.

4.7. Contributions of vegetable supply chain for the livelihoods of farmers Ada’a
Woreda migra kebele
Source: Own Survey, 2020
 Cold chain issues

There are various issues related to cold chain in the developing countries, such as lack of
cold chain facilities, inadequate capacity of cold chain, lack of cold chain network. Due
to this concern it has become difficult for the farmers and businessmen to do their
business effectively and get proper remuneration for their produce.

 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. The whole
supply chain in the state is dominated by local traders.

 Integration Issues

Linkage and integration between the various players in the supply chain plays a very
important role to make the whole supply chain effective and profitable. But in the
supply chain of vegetable sector in developing countries there is a lack of forward and
backward integration between the farmers and the other partners.

 Infrastructure Issues

Supply chain infrastructure plays an important role in the vegetable sector. Proper and
adequate infrastructure helps farmers and agri-businessman to run their business
successfully and helps to deliver the goods in the right time with right condition.The
infrastructure in the main impediment in the supply chain of agricultural products which
leads to high amount of losses.

 Packaging Issues

Packaging is very important for F&V as they are highly perishable goods and it needs
proper packaging for the handling of these fresh produce. 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.

 Technological Issues

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The 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 agri-businessman to use an appropriate
technologies and techniques to reduce the post-harvest losses and time in operational
activities.

 Quality Issues

Quality is a very important 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
maintains the shelf life of produce and prevent from deteriorating the quality. Quality
has a strong impact on the supply chain, so it leads to efficiency and less rejectio

 Transportation Issues

Transportation plays a very important role in the supply chain. Without proper
transportation the goods can’t be delivered to the customer in right time and in proper
quality. It plays even more important role in perishable food like fruits and vegetables
because of short shelf life, highly perishable nature, and requirement of controlled
temperature. Transportation related challenges are very high in the state because of
unavailability of well transportation mode, high cost of transportation, lack of
temperature controlled vehicle for the movement of goods etc.

 Market Demand and Information issues

Proper information is the basis of efficient supply chain.Without proper information

regarding market demand the supply chain cannot run successfully. In developing
countries farmers have lack of information regarding the prices in the market, demand,
food processing units etc. Poor information leads to poor realization of prices, high
amount of losses, late delivery of goods in the market place etc.

4.8. Factors that hinders the supply chain of vegetable in the study area

Source: Own Survey, 2020

 Vertical coordination among the farmers/growers through farmer cooperatives

or associations’ intermediaries and retail chains by contract farming facilitating
pre harvest practices resulting in quality produce, timely transportation of fresh
produce from the farm to distribution centers and finally the retailers thus
reducing the post-harvest losses and wastage. Through contract farming,
farmers may have access to quality inputs, information, and new technology for
farming thus resulting in an increased income of the farmers.

83
  Developing appropriate infrastructure and cold chain facilities and customized
logistics reduces cost, maintains the quality of the produce of the farmers and
ensures timely delivery of the produce.
 The information systems must be incorporated as a collaborative tool for supply
chain planning in agri-food supply chain to integrate farmers, cooperatives, retail
chains (supermarkets) and target customers by facilitating information flow and
exchange among them.
 The supply chain planning requires a holistic and integrated technologies,
increased revenues, better quality of produce and finally increased customer
satisfaction.

 Supply chain allows farmers to regain control over decisions about what to
produce, and so escape from the vicious circle typical of traditional markets. This
also means that they can avoid the so-called squeeze on agriculture, namely, the
situation where by farmers are pressed on the one side by their suppliers and on
the other by the wholesalers to whom they sell their products, so that they
gradually lose their decision-making autonomy.
 Farmers taking part in Supply chain have enhanced entrepreneurial skills in
aspects such as customer relationships, marketing and business self-confidence.
A further economic advantage is that of immediate financial gain.
 From an environmental point of view, farmers that adopt vegetable Supply Chain
tend to implement more sustainable production methods, which in turn have a
positive impact on biodiversity, the landscape and the natural resources of their
territory.

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
value it had been produced by many rural households. Despite of the constraints, having

84
these higher demands taking as an opportunity, increased participation in vegetable
supply chain practice will benefit the actors.

For the analysis of vegetable supply chain both descriptive statistics and econometric
model were used. In descriptive statistics frequency was used. Also regression and
correlation models were used in econometric model. And primary source of data was
used to procure relevant information 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 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 2017/18.

The research questions of the specific objectives like what is the awareness of the
household farmers about the supply chain practice in the study Area, what is the
relationship between the farmers and the actors, what is the choice of outlet applied in the
study area, what is the mode of transportation mostly they used and what constraints do
farmers encounter to supply chain practice of vegetables to the market, how is the status
and practices of vegetable supply chain in the in the study area, what are the factors that
hinder the supply chain of vegetable in the study area, what are the contributions of
vegetable supply chain for the livelihoods of farmers in the area, 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. The average age of the households was
42.59 years.

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 affects the supply chain practice of
vegetables in the study area.

85
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
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 econometric result for the constraints of vegetable supply chain practice seven of
them were found significant. These were vegetable post harvest loss, quality and safety
issues, processing and value addition, technological issue, infrastructure issue, forward
and backward integration issues and price and quantity risk with unexpected sign.

5.2. CONCLUSION

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 supply
chain practice of vegetables in the study area at a significant level of 1 to 8.This means
knowledge is base to interpret and implement supply chain practice.

86
Consumers, producers, collectors, retailers and wholesalers were the main actors who
facilitate the supply chain practice of vegetables found in the study area. From the total
produced vegetables mostly (68.3%) was purchased by retailers and wholesalers.
About 73.6 percent of the household farmers have smooth relationship with the actors of
the supply chain. From the identified market channels that stretched as producer –
wholesalers- retailers -consumers was the highest channel which is 39.3 percent. In the
supply chain of the vegetables, wholesalers and retailers were found to be the dominant
buyers of vegetables in the study area. The choice of supply 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.

The important factors which were significantly affect(hinder) for vegetable supply chain
practice were vegetable post harvest loss, quality and safety issues, processing and value
addition, technological issue, infrastructure issue, forward and backward integration
issues and price and quantity risk with unexpected sign.

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

development in Ada’a 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.

87
5.3. RECOMMENDATIONS

In view of the above conclusion, the following recommendations about vegetables supply
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 supply chain practice of vegetables, market access

88
 and bargaining system, production and productivity and harvesting and post
harvesting handling. Hence, this awareness gap affects supply chain practice
negatively to its success, 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 supply chain practice
through continuous supervision, farmers training through seminars etc.

 The concerned body (government agencies, such as marketing department)

should increase the relationship as much as possible between the farmers and
supply chain actors by intervening in pricing and reducing the number of
intermediaries.

 To reach the consumers directly to market the products produced by the farmers
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. As we know transportation of vegetables by animal
power affects its quality such as it is exposed to sunlight. So, the government
should create awareness and road and vehicle accessibility in collaboration with
volunteers and cooperatives.

 Price and quantity fluctuation in vegetable products was major problems for
smaller farmers; so, government experts should conduct 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.

89
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Data collection method: Questionnaire

This questionnaire is filled by producers of vegetables

ID No of enumerator ___________________date _____________sig_______________

105
Dear respondents, before all I would like to say thanks for your cooperation on filling this
questionnaire. The aim of this project is to assess the supply chain practice of vegetables
in Ada’a Woreda migra kebele. The information you will give me is very essential for
my study. For everything you have responded on, the confidentiality will be strongly
kept.

1. Woreda ______ 1=Ada’a migra kebele

3. Sex______.1=female 2=Male

4. Age______ years.

5. Marital status___.1=single 2=in relation 3=Married 4=Divorced 5=Widowed

6. Your education level ___.1=Illiterate 2=Literate 3=Certificate 4=Diploma 5=Degree

6=Masters

7. Do you have a knowledge or awareness regarding the following ideas ____?

Yes=1 From whom do you get How do you get it?

No=0 it? 1= Sharing with other
1= Experts farmers
2= Media 2= seminars
3= Your experience 3= from farmers
4= Cooperatives training center
Other_______ 4= listening to media
Production and
productivity
The nature of your
product
Quality and quantity of
your Inputs (seed,
fertilizer, anti
pesticides…)
Land and water

106
 management
Harvesting and Post
harvest handling
Market access and
bargaining system
Risk associated with
disease and loss
Supply chain practice of
vegetables
Advantage of supply
chain practice
Disadvantage of supply
chain
Disadvantage of
Traditional vegetable
marketing system

8. How many months in 2011E.C. production year do you normally grow vegetables?
__________.

9. What type of vegetable do you produce and what amount of income you get in
20011E.C. production year?

Vegetable type Amount in Revenue To whom do you sell?

kilo gram in birr 1=consumers directly
2=local collectors
3=wholesalers
4=retailers
5=others specify___

Tomato
zkuni
Onion
Cabbage

107
 Lettuce
10. How many times did you produce vegetables in 2011E.C. production year?

Produced once Twic Three Because of:-

vegetables e times 1=market demand 5=price of
vegetable
2=lack of capacity 6=labor shortage
3=Water shortage 7=expert problem
4=lack of inputs others (specify)
___.

Tomato
zkuni
Onion
Cabbage
Lettuce
11. How frequently do you normally seen your produced vegetable/1=twice a week

2=once a week 3=every two weeks 4=once a month 5=less than once a month

12. How do you sell your vegetable in 2011E.C. production year? 1=on cash 2= on
Credit _________

13. If the answer for question 12 is on credit how do you agree with them?

 1=by formal written agreement

 2=by non written verbal agreement
 3=by taking something in return
 4=using third neutral person
 5=other (specify)_______________________.

14. Which form of supply chain describes to sale your vegetable product?

 1.producer-consumer
 2.Producer-retailers-consumers

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  3.Producers-wholesalers- consumers
 4.Producers-wholesalers-retailers-consumers
 5.Producers-agents-retailers-consumers
 6.Producers-agents-wholesalers-retailers-consumers_______________________.

15. What affects your choice of outlet?

Factors affecting the choice of outlet

Types of outlet 1= to be secure
2=transportation inaccessibility
3= product nature
4= contractual agreement
5= lack of work place
6= lack of license
7= access of supply
8=others (specify)__

producer-consumer
Producer-retailers-consumers
Producers-wholesalers-consumers
Producers-wholesalers-retailers-consumers
Producers-collectors-retailers-consumers
Producers-collectors-wholesalers-retailers-
consumers

16. Which were the actors of your vegetable supply chain?

 1= collectors
 2=Retailers
 3=Wholesalers
 4=Cooperatives
 5= consumers
 6=others (Specify) ______________________.

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  17. How do you characterize your relationship with those of vegetable supply
chain actors? 1=Rough 2=Medium 3=Smooth______________________.

18. What is the maximum geographical distance of your production center from the
market ____km?

19. Do you face any problem in transporting your vegetable to market?

 1=no problem at all

 2=minor problem
 3=moderate problem
 4=major problem
 5=very major problem _______________________.

20. What type of transportation means do you use?

Type of Owner Type of hire Type of payment Amount of

transportation ship for hired payment in
1=own
means transports on Birr
3=sponsor
cash Credit
2=hire
1 cash,2 credit
4=others_
Bike
Truck
Bus
Animal
power
Human
power
Total=
21. Did you have any constraints that challenge your supply chain practice and income
from sell of vegetables in 2008E.C. production year?

Yes = 1 Rate of the Impacts on

No = 0 challengeness income
1 = Not very 1= Very low
influential 2= Low
110
 2 = influential 3= Average
Constraints Description 3 = Average 4= High
4 = Highly 5 = Very
influential high
5 = Very highly
influential
Insufficient of Oxen
Seed
inputs
Fertilizer
Anti pesticides
Water pump and fuel
Consumption Problem of excessive
rate supply
High product price
Transportatio Unavailability of
n transportation mode
Inefficient and costly
Facilities
Demand and Lack of timely
Market market information
Lack of demand and
information
supply knowledge
Cold chain Lack of cold storage
issue and warehousing
Inadequate cold chain
capacities To serve
the need in hilly areas
Fragmented Greater reliance of
supply chain farmers on
intermediaries
Large number of
intermediaries
Dominance of traders
to supply chain
Integration Lack of backward-
issue forward integration
Poor linkage in

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 marketing channel
Lack of linkage
between farmer and
processing unit
Infrastructure Lack of shortage
Lack of packaging
Facilities
facility
Poor loading capacity
Lack of processing
unit
Packaging Unavailability of
issue packaging material
High cost of
packaging material
Technology Non adoption of
efficient technology
Quality and Lesser control of
safety issues product
Poor level of
productivity
Low quality
Value Low level of value
addition and addition because of
processing processing unit
absence
Financial Lack of credit
Absence of right
issue
price for the product
Post harvest High level of wastage
losses along the supply
chain
Risk Bad weather

22. What are the factors that hinder the supply chain of vegetable in this area?

________________________________________________________________________

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________________________________________________________________________
_______________________________________________________________________.

23. What recommendations do you have for constructing best supply chain practice?

________________________________________________________________________

________________________________________________________________________
_______________________________________________________________________.

Data collection method: Interview

This interview is asked for Retailers

ID No of enumerator ____________________date ______________sig_______________

Dear respondents, before all I would like to say thank you for your cooperation on
responding this interview. The aim of this project is to assess the supply chain practice of
vegetables in Ada’a Woreda. The information you will give me is very essential for my
study. For everything you have responded on, the confidentiality will be strongly kept.

Instructions for Enumerators:

 Make brief introduction before starting any question, introduce yourself to the
farmers, greet them in local ways and make clear the objective of the study.
 Please fill the interview schedule according to the farmers reply (do not put your
own feeling).
 Please ask each question clearly and patiently until the farmer gets your points.
 Please do not use technical terms and do not forget local units.
 During the process write answers on the space provided.
 Prove that all the questions are asked and the interview schedule format is
properly comp
1. Woreda ______ 1=Ada’a (migra kebele)

2. Sex___.1=female 2=Male

3. Age______ years.

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4. Marital status___.1=single 2=in relation 3=Married 4=Divorced

5=Widowed

5. Your education level ___.1=Illiterate 2=Literate 3=Certificate 4=Diploma 5=Degree

6=Masters

6. Do you have full knowledge about profitability? ___. 1. Yes 2.no

7. What kind of vegetables do you buy and sell and what is your daily average profit?

Vegetable type Amount in kilo gram Daily profit in birr

bought Sold
Tomato
Potato
Onion
Cabbage
Lettuce
Carrot

9. What is the maximum geographical distance of your supply center from the market?

____km.

10. What type of transportation means do you use?

Type of Owner Type of hire Type of Amount of

transportation ship 1=individuall payment for payment in
means 1=own y hired Birr
cash Credit
2=sponsor 2=in group transports
3=hire 1= on cash
2= on credit
Bike
Truck
Bus
Animal power
Human power
Total=
11. How do you procure your supplies? 1. Producer-retailers-consumers, 2.Producers-

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 Wholesalers-retailers-consumers 3.Producers-collectors-retailers-consumers

4. Producers-collectors-wholesalers-retailers-consumers

12. Do you have any formal or informal contractual agreement with any agribusiness
Outlet? 1=yes 2=no

13. What affects your decisions of outlet choice? 1= to be secure, 2=transportation

Inaccessibility, 3= product nature,4= contractual agreement, 5= lack of work place,

6= lack of license, 7= access of supply, 8=others (specify)____________________.

14. How do you characterize your relationship with those of vegetable supply chain
Actors? 1= Rough 2=Medium 3= Smooth

15. What are the specific requirements for the product you trade?

Produced Requirements The requirements role in

vegetables 1=quality relationship creation with
4=demand customers
2=variety 1= poor 2= moderate
5=quantity 3=high
3=safety 6=cost
Tomato
zkuni
Onion
Cabbage
Lettuce
16. How high is the risk that the product you supplied to sale is low quality? 1=very low

2=low 3=moderate 4=high 5=very high

17. What recommendations do you have for constructing best supply chain practice and
to enhance the competitiveness of the fresh vegetable sector, especially small farmers?
________________________________________________________________________
______________

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________________________________________________________________________
______________

________________________________________________________________________
________________________________________________________________________
___________________________.

I. Retailers Interview schedules

Instructions for Enumerators:

 Make brief introduction before starting any question, introduce yourself to the
farmers, greet them in local ways and make clear the objective of the study.
 Please fill the interview schedule according to the farmers reply (do not put your
own feeling).
 Please ask each question clearly and patiently until the farmer gets your points.
 Please do not use technical terms and do not forget local units.
 During the process write answers on the space provided.
 Prove that all the questions are asked and the interview schedule format is
properly completed.

1. Woreda ______ 1=Ada’a (migra kebele)

2. Sex___.1=female 2=Male

3. Age______ years.

4. Marital status___.1=single 2=in relation 3=Married 4=Divorced

5=Widowed

5. Your education level ___.1=Illiterate 2=Literate 3=Certificate 4=Diploma 5=Degree

6=Masters

6. Do you have full knowledge about profitability? ___. 1. Yes 2.no

116
7. What kind of vegetables do you buy and sell and what is your daily average profit?

Vegetable type Amount in kilo gram Daily profit in birr

bought Sold
Tomato
zucchini
Onion
Cabbage
Lettuce

8. What is the maximum geographical distance of your supply center from the market
____km?

9. What type of transportation means do you use?

Type of Owner Type of hire Type of Amount of

transportation ship 1=individuall payment for payment in
means 1=own y hired Birr
cash Credit
2=sponsor 2=in group transports
3=hire 1= on cash
2= on credit
Bike
Truck
Bus
Animal power
Human power
Total=
11. How do you procure your supplies?

1. Producer-retailers-consumers, 2.Producers-wholesalers-retailers-consumers

3. Producers-collectors-retailers-consumers 4.Producers-collectors-wholesalers-

Retailers-consumers

12. Do you have any formal or informal contractual agreement with any agribusiness
outlet? 1=yes 2=no

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13. What affects your decisions of outlet choice? 1= to be secure, 2=transportation
inaccessibility, 3= product nature,4= contractual agreement, 5= lack of work place, 6=
lack of license,7= access of supply, 8=others (specify)________________________.

14. How do you characterize your relationship with those of vegetable supply chain
actors? 1= Rough 2=Medium 3= Smooth

15. What are the specific requirements for the product you trade?

Produced Requirements The requirements role in

vegetables 1=quality relationship creation with
4=demand customers
2=variety 1= poor 2= moderate
5=quantity 3=high
3=safety 6=cost
Tomato
zucchini
Onion
Cabbage
Lettuce

16. How high is the risk that the product you supplied to sale is low quality? 1=very low

2=low 3=moderate 4=high 5=very high

17. What are the contributions of vegetable supply chain in your case?

________________________________________________________________________
________________________________________________________________________
________________________________________________________________________
_______________________________________________________________________.

18. What recommendations do you have for constructing best supply chain practice?

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________________________________________________________________________
________________________________________________________________________
________________________________________________________________________
_______________________________________________________________________.

II. Interview asked for Consumers

ID No of enumerator___________________ date ______________sig_______________

1. Woreda ______ 1=Ada’a (migra kebele)

2. Sex___.1=female 2=Male

3. Age______ years.

4. Marital status___.1=single 2=in relation 3=Married 4=Divorced

5=Widowed

5. Your education level ___.1=Illiterate 2=Literate 3=Certificate 4=Diploma 5=Degree

6=Masters

6. What is the maximum geographical distance of your home from the main market?

____km.

7. What kind of vegetables did you mostly consume and what is your weekly average
cost?

Vegetable type Amount in kilo gram per cost in birr per week
week
Tomato
zucchini
Onion
Cabbage
Lettuce
8. How do you procure your vegetable? 1= Producer- consumers 2= Producer-retailers-

Consumers 3=Producers-wholesalers-retailers-consumers 4=Producers-collectors-

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 Retailers-consumers 5=Producers-collectors-wholesalers-retailers-consumers

9. What type of transportation means do you use?

Type of Owner ship Type of hire Type of Amount of

transportation payment for payment in
means 1=individually hired Birr
1=own
2=in group transports
2=sponsor
Cash Credit
3=hire
1= on cash
2= on credit
Bike
Truck
Bus
Animal
power
Human
power
Total=
10. How do you characterize your relationship with those of vegetable supply chain

actors? 1= Rough 2=Medium 3= Smooth

11. How high is the risk that if the product you bought is low quality? 1=very low 2=low

3=moderate 4=high 5=very high

12. Do you have any constraint hinders your consumption?

Demanded 1=Yes Because of:-

vegetables 2=No 1=supply shortage others (specify)
2=low product quality
3=high risk of contamination
4=lack of materials for packing
5=cost of vegetable
6 =storage problem

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 Tomato
zucchini
Onion
Cabbage
Lettuce
13. What are the specific requirements for the product you bought and consumed?

Produced Requirements The requirements role in relationship

vegetables 1=quality creation with retailers
4=supply 1= poor 2= moderate 3= high
2=variety
5=quantity
3=safety 6=cost
Tomato
zucchini
Onion
Cabbage
Lettuce

14. How is the status and practices of vegetable supply chain in your point of view?

________________________________________________________________________
______________

________________________________________________________________________
______________

________________________________________________________________________
________________________________________________________________________
____________________________

15. What recommendations do you have for constructing best supply chain practice and
to enhance the competitiveness of the fresh vegetable sector, especially small farmers?

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________________________________________________________________________
______________

________________________________________________________________________
______________

________________________________________________________________________
________________________________________________________________________
____________________________

III. Interview asked for Government Representatives

ID No of enumerator___________________ date ______________sig_______________

1. Woreda ______ 1=Ada’a (migra kebele)

2. Sex___.1=female 2=Male

3 Age______ years.

4. Your education level ___.1=Certificate 2=Diploma 4=Degree 5=Masters

5. What do you know about fresh vegetable industry in Ethiopia, in oromiya ada’a
woreda in migra kebele

Importance for the economy_____________________________________________

Supply chain of vegetables______________________________________________

Main crops___________________________________________________________

Mainbuyers__________________________________________________________

Main consumers_______________________________________________________

Main suppliers’ _______________________________________________________

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6. In your opinion, how is your relationship with the farmers, and what specific plans do
you have in to support them?
________________________________________________________________________
________________________________________________________________________
____________________________

________________________________________________________________________
________________________________________________________________________
___________________________.

7. Are there any projects or programs your organization doing in the fresh vegetable
sector? Where and how many small farmers are participated?
________________________________________________________________________
________________________________________________________________________
____________________________

________________________________________________________________________
______________

8. What are the advantages and disadvantages of traditional marketing system in fresh
vegetable?
________________________________________________________________________
______________

________________________________________________________________________
______________

________________________________________________________________________
________________________________________________________________________
___________________________.

9. in your opinion, what are the main limitations faced by fresh vegetable sector,
especially by small farmers.
________________________________________________________________________
________________________________________________________________________

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________________________________________________________________________
__________________________________________

10. What recommendations do you have for constructing best supply chain practice and
to enhance the competitiveness of the fresh vegetable sector, especially small farmers?
________________________________________________________________________
______________

________________________________________________________________________
______________

________________________________________________________________________
________________________________________________________________________
____________________________.

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