CCC CCCC CCCC
CCC CCCC CCCC
CCC CCCC CCCC
BURIE, ETHIOPIA
JANUARY, 2020
i
MARKET CHAIN ANALYSIS OF AVOCADO FRUIT THE CASE OF
BURIE DISTIRCT, WEAST GOJJAM ZONE, ETHIOPIA
COLLEGE OF AGRICULTURE
BURIE, ETHIOPIA
JANUARY, 2020
ii
TABLE OF CONTENTS
TABLE OF CONTENTS...................................................................................................................................... ii
ACKNOLEDGEMENT ....................................................................................................................................... iv
ABBREVIATIONS AND ACRONYMS ............................................................................................................. v
LIST OF TABLES ............................................................................................................................................... vi
ABSTRACT ....................................................................................................................................................... vii
1. INTRODUCTION ............................................................................................................................................ 1
1.1Background of the Study ................................................................................................................................. 1
1.2 Statement of the Problem ................................................................................................................................ 2
1.3 Objective of the Study .................................................................................................................................... 2
1.3.1 General Objective ........................................................................................................................................ 2
1.3.2 Specific objectives ....................................................................................................................................... 2
1.4 Research Questions ......................................................................................................................................... 3
1.5 Significance of the Study ............................................................................................................................. 3
1.6 Scope and Limitations of the Study ............................................................................................................. 3
2. LITERATURE REVIEW ................................................................................................................................. 4
2.1 Definition and Concepts ................................................................................................................................. 4
2.1.1 Market chain Actors..................................................................................................................................... 4
2.1.2 Agricultural Marketing ................................................................................................................................ 4
2.1.3 Marketing System ........................................................................................................................................ 5
2.1.4 Marketing Channel ...................................................................................................................................... 5
2.1.5 Market chain analysis .................................................................................................................................. 6
2.1.6 Value Chain vs. Supply and Market Chain .................................................................................................. 6
2.1.6.1 A value chain ....................................................................................................................................................6
2.1.6.2 Market chain ......................................................................................................................................................7
2.1.6.3 Supply chain .......................................................................................................................................................7
2.2 Review of Empirical Study ............................................................................................................................. 8
3. METHODOLOGY ......................................................................................................................................... 11
3.1 Description of the Study Area....................................................................................................................... 11
3.2 Types, Sources and Methods of Data Collection .......................................................................................... 11
3.3 Sampling Design/Technique ......................................................................................................................... 12
3.4 Methods of Data Analysis ............................................................................................................................. 13
4. Work plan and budget break down ................................................................................................................. 14
ii
5. BUDGET PLAN ............................................................................................................................................. 16
6. REFERENCE.................................................................................................................................................. 18
iii
ACKNOLEDGEMENT
First and all most, I would like to thanks almightiness God for directing me with this true spirit
from the beginning to the ending, and also, I would like to thanks Ms ASREBEB (Msc) for his
constructive, detail valuable comments and advice made this work possible.
iv
ABBREVIATIONS AND ACRONYMS
v
LIST OF TABLES
Table 1: Time schedule. ...................................................................................................................................... 14
Table 2: Equipment cost ..................................................................................................................................... 16
Table 3: Travel expense ...................................................................................................................................... 16
Table 4 : Miscellaneous expense ........................................................................................................................ 17
Table 5: Budget summary .................................................................................................................................. 17
vi
ABSTRACT
vii
1. INTRODUCTION
Within this broad marketing type, just about every aspect of the agricultural process is addressed.
Financial services make it possible for farmers to secure and develop property where crops can
be planted, nurtured, and harvested. Equipment financing that makes it possible to obtain the
tools to work the land is also part of this aspect. From there, resources that make it possible to
connect with buyers are also part of the overall agricultural marketing process, and often involve
the use of marketing professionals to identify and make the most efficient use of these types of
business relationships. (Misganaw Tamrat 2012)
Accordingly, Bezabih and Hadera (2007) stated that a production of horticultural product is
seasonal and price is inversely related to supply. During the peak supply period, the prices
decline and vice versa. The situation is characterized by perishable of the products and poor
storage facilities. Along the market channel, 25 percent of the product is spoiled.
The development policy initiates the need to accelerate the transformation of the sub-sector from
the subsistence to business and market-oriented agriculture. But, the existing restraints of post-
harvest and marketing infrastructures such as: packaging, warehousing cold storage, pre-package
and distribution have played their great role on trade and consumption of fruits in Ethiopia (Seifu,
2003).
In Ethiopia, fruit processing is limited mainly to extraction of fresh juice which is sold on the
local market. At present, a range of fruit juices are imported into the country. The demand for
fruit juices on the local market is high as indicated by the volume of imports. This is a strong
indication of the existence of investment opportunities in fruit juice processing for the local
market, (EIA, 2012).
1
1.2 Statement of the Problem
In Ethiopia, the existing income generating capacity of fruits as compared to its immense
potentials at the macro and micro level is not encouraging. Thus, from the total 3.5 million
quintals of fruits produced in Ethiopia, only less than 2% is exported (Joosten, 2007; MoARD,
2005). According to Yilma (2009), the production potential of fruits is not widely and evenly
distributed across the various regions of the country. The cultivation is also seasonal and the
supply is scanty and volatile even in areas where irrigation is possible.
Bezabih and Hadera (2007) stated that a production of horticultural product is seasonal and price
is inversely related to supply. During the peak supply period, the prices decline and vice versa.
The situation is characterized by perishable of the products and poor storage facilities. Along the
market channel, 25 percent of the product is spoiled.
Thus, the development policy initiates the need to accelerate the transformation of the sub-sector
from the subsistence to business and market-oriented agriculture. But, the existing restraints of
post-harvest and marketing infrastructures such as: packaging, warehousing cold storage, pre-
package and distribution have played their great role on trade and consumption of avocado in
Ethiopia (Seifu, 2003).
The Avocado tree is mainly away from its economic importance; its environmental friendliness,
i.e. it gives protection of environment through protecting soil from degradation. The market
chain Analysis of Avocado is not conducted well in the study area. however this study could
contribute through suggesting some solutions for the improvement of Avocado market chain in
the study area and also unable to use modern technology to produces a product is one of crucial
problem in addition to lack of storage and transportation , lack of coordination ,extension service,
lack of research and information.
2
To identify the main Actors involved in the market chain of Avocado fruit in Burie
District.
To identify challenges and opportunities associated with the production and marketing
chain of Avocado fruit in Burie District.
1. What are the main actors involved in the market chain of avocado fruit in the study
area?
2. What are the major avocado market channel existed in the study area?
3. What are the constraints and opportunities of Avocado marketing in the study area?
3
2. LITERATURE REVIEW
Agent or Broker is any intermediary with legal authority to act on behalf of the manufacturer.
Distributor An imprecise term, usually used to describe intermediaries who perform a variety of
distribution functions, including selling, maintaining inventories, extending credit, and so on; a
more common term in industrial markets but may also be used to refer to wholesalers.
4
for agriculture to function are also normally included as part of agricultural marketing.
(Misganaw Tamrat 2012).
Agricultural marketing: The term marketing has been a very debatable concept and defined in so
many different ways by different scholars. This is because marketing, or more specifically
agricultural marketing, projects different impression to different groups of people in a society,
like farmers, traders and consumers (Kohls and Uhl, 1985). Marketing can be described as the
performance of all business activities involved in the flow of food products and services from the
point of initial agricultural production until they are in the hands of consumers (Kohls and Uhl,
1985; Bain and Howells, 1988). According to Kotler and Armstrong (2003), marketing is a
societal process, by which individuals and groups obtain what they need and want through
creating, offering, and freely exchanging products and services and value with others. Marketing
is essentially a process like farming, manufacturing, mining or construction (Backman and
Davidson, 1962) competitiveness definition serves several purposes in identifying the scope of
competition in a market The main goal of market definition is to assess the existence, creation or
strengthening of market power, which is defined as the ability of the firm to keep the price above
the long-run competitive level.
5
Market channel is the sequence of enterprises and markets by which a product is moved from
producer to consumer. The analysis of marketing channel is intended to provide a systematic
knowledge of the flows of goods and services from their origin to final destination.
It is a business structure of interdependent organizations from the point of product origin to the
consumer with the purpose of moving products to their final consumption destination (Kotler and
Armstong, 2003). The analysis of marketing channels is intended to provide a systematic
knowledge of the flow of goods and services from their origin (producer) to their final
destination (consumer). This knowledge is acquired by studying the participants in the process,
i.e. those who perform physical marketing functions in order to obtain economic benefits
(Getachew, 2002). This channel may be short or long depending on the kind and quality of the
product marketed, available marketing services, and prevailing social and physical environment
(Islam et al., 2001).
Market chain is the term used to describe the various links that connect all the actors and
transactions involved in the movement of agricultural goods from the producer to the consumer
(CIAT, 2004).
6
recognize their interdependence and are disposed to work together to define common object,
share risks and benefits, and make the relation work.
It is oriented by demand and not by supply, and thus responds to consumer needs.
Lunndy et al (2004) market chain is used to describe the numerous links that connect all the
actors and transactions involved in the movement of agricultural goods from the farm to the
consumer, Supporting by services that enable the chain to operate.
Market chain is a business structure of interdependent organizations from the point of product
origin to the consumer with the purpose of moving products to their final consumption
destination (Kotler and Armstong, 2003).
(Lunndy et al., 2004) Market chain is the path one good follow from their source of original
production to ultimate destination for final use. Functions conducted in a marketing chain have
three things in common they use up scarce resources, they can be performed better through
specialization, and they can be shifted among channel members.
Market chain is the term used to describe the various links that connect all the actors and
transactions involved in the movement of agricultural goods from the producer to the consumer
(Mazula, 2006).
Dunne (2001) defined supply chain as the physical flow of goods that are required for resource to
be transformed into finished products.
A supply chain is the network of all the individuals, organizations, resources, activities and
technology involved in the creation and sale of a product, from the delivery of source materials
from the supplier to the manufacturer, through to its eventual delivery to the end user. The
supply chain segment involved with getting the finished product from the manufacturer to the
consumer is known as the distribution channel (Margaret Rouse2013).
Supply chain is the oversight of materials, information, and finances as they move in a process
from supplier to manufacturer to wholesaler to retailer to consumer. The three main flows of the
7
supply chain are the product flow, the information flow and the finances flow. Supply chain
involves coordinating and integrating these flows both within and among companies (Margaret
Rouse 2013).
Supply chains focus upstream on integrating supplier and producer processes, improving
efficiency and reducing waste, while value chains focus downstream, on creating value in the
eyes of the customer. This distinction is often lost in the language used in the business and
research literature (Feller et al., 2006).
Supply Chain: It is taken to mean the physical flow of goods that are recorded for raw materials
to be transformed into finished Products. Supply chain management is about making the chain as
efficient as possible through better flow scheduling and recourse use improving Quality control
throughout a chain, reducing the risk associated with food safety and contamination, ( Aswath,
2012).
Ethiopia has a variety of fruit crops grown in different agro ecological Zones by small farmers,
mainly as a source of income as well as food. The production of fruit varies from cultivating a
few plants in the backyards, for home consumption, to large-scale production for the domestic
and home markets. According to CSA (2009) the area under these crops (avocado, bananas,
guava, lemons, mangoes, oranges, papayas and pineapples) were estimated to be 47987 hectares.
Oromia has diverse agro ecology and many areas are suitable for growing temperate, subtropical
or tropical fruits. Substantial areas receive sufficient rainfall and many lakes, rivers and streams
could also be used to support fruit production. Despite this potential, the total land area under
fruits is very small and mainly smallholder based. According to CSA (2009), the area under
fruits is about 18313 hectares.
Avocado: Endowed with wide range of agro-ecological Zones and diversified resources,
Ethiopia is amid of the 10 major Avocado producing countries of the world (FAO, 2004 And
MoARD, 2009). With Global annual production of two to four million metric tons, Avocado is
produced in many countries ranging from Asia and South America to Africa. Owing to these
8
realities, with its shortest introduction to Ethiopia, Avocado is now produced by thousands of
farmers and the mob has extended, these days, to more than 7000 ha of land with annual
production of 80,000 tones (CSA, 2008; FAO, 2004; Joosten, 2007)). The crop is a bright source
of household income and a shade for spice crops (MoARD, 2009).
Mango: It is a perennial tree which can live more than fifty years and it is also the leading fruit
produced in most parts of eastern and south-western Ethiopia both in area coverage and
quantities produced. There are also ample garden Mango trees in different parts of the country at
farmer’s holdings. The livelihood of most of these farmers is highly supplemented by the sale of
Mango fruits. According to FAO (2010) the total cultivated area for Mango in Ethiopia is not
more than 12, 000 hectares.
In the context of increasing the high value production of agricultural commodities, fruit tree and
perennial crops play an important role. This commodity group includes tropical nuts, fruit trees,
Grapes, Bananas, Mango, Pineapple, Papaya, Passion fruits, Apples and others. Except table
Banana, tropical fruit trees like Mango, Avocado and the like were not well known and
considered as diet by most Ethiopians (Yilma, 2009). However, Yilma (2009) indicated that the
expansion of state farms in the past command economy and the prevailing expansion of private
investors in different regions of the country have contributed a lot on the introduction of fruits as
business. Otherwise, areas suitable for growing fruit trees are idle even near riverbanks where
there is ample water supply for growth. Because of the long period establishment cost of fruit
trees before fruit setting, knowledge limitations of food technology and market information,
smallholders are not practicing other fruit trees except Banana. In general, fruit production is still
backward, the business is under developed and the private sector is not much attracted.
Ayelech (2011) using SCP5 approach and multiple linear regressions found that structure of The
market indicates that licensing and years of avocado and mango trade experience did not hinder
entry into avocado and mango trade, but capital, education and market information were barriers
to enter into the trade. Based on regression model for market supply, she has identified quantity
of avocado produced; experience, education and price of avocado in the previous year are factors
that significantly affect quantity of avocado supplied to the market positively while lack of
9
market access affects the supply negatively. Similarly, quantity of mango produced, education
and extension contact are factors that significantly affect quantity of mango supplied to the
market positively.
Fruits production is very limited compared with food crops production like, vegetables.
Attentions given to fruit production are comparatively lower than food crops. Commercial
production of fruits is very limited but, there are state farms /mostly producing citrus/. Majority
of fruits are produced by small scale farmers who have some trees in backyard or in part of
farmland. Nowadays, most fruits are consumed domestically and some amounts of fruits are
exported to neighbor or foreign countries. Fruits are luxury grocery items, not indispensable food
item. Eating of Avocado is observed as a common matter in big cities since quite numbers of
Avocado stands are seen and Avocado juice is popular drink. However, demand for higher
quality fruits i.e. readiness to pay more money for food looking fruits by consumers is uncertain
( Mitiku, 2007).
10
3. METHODOLOGY
Burie is one of Amhara regional state which is around 411km far from Addis Abeba, 149km
from regional city Bahir Dar, and 24km from zone city of Finoteselam . burie zuriya District is
bordered on south Oromia regional state, in north by sekela Woreda, in the west by woberma
Woreda, and east by Jabitenan woreda. The temperature of Burie Woreda is 17c°-26c° and
annual rain fall ranges from 1090mm-1500mm (CSA-2007), According to the population census
of Ethiopian, 2007, the total population of Burie Woreda were 116076 of who 57506 were male
and 56570 were females.
In order to address the objectives of the study, both primary and secondary data will be use. The
primary data will be collect using two types of interview schedule (one for farmers and the other
for traders). The primary data will be collect from farmers focused on factors affecting Avocado
market supply, size of output, market information, credit access, access to market, number of
Avocado trees owned, extension service, and demographic characteristics of the household.
Moreover, the interview schedule for traders includes: types of traders (retailers and local
collectors, etc.), buying and selling strategies, source of market information, demographic
characteristics. Secondary data will be collecting from different sources, such as: government
institutions, the district agricultural office, annual reports, and websites. Published and
unpublished documents were extensively reviewed to secure relevant secondary information.
The select data to conduct the research both quantitative and qualitative data will be use. The
Interview schedule will be prepared to collect data from participants. Questions will be form in a
way that is easy to understand for the respondents using simple words or expressions. Data on
the level and marketing of Avocado at the producers, assemblers and Retailers in Burie district
11
will collect and utilize to prepare this report. Primary data will be collect using semi structured
questionnaires from respondents formally to collect my data.
n=N/1+N (e)2
West gojjam
Where
n=sample size
adalagata wynmamba
e= error term SRSM
ye
54 36
90
12
3.4 Methods of Data Analysis
All the data collect will be analysis by using Descriptive statistical analysis methods, using mean,
and Frequency and Percentage values. Those analysis data will be present through tabulation and
explanation to illustrate numerical data.
13
4. Work plan and budget break down
Table 1:Time schedule.
No
2019 2019 2019 2020 2020 2020 2020 2020 2020 2020
proposal writing X
4 Submission of proposal
5 Questionnery preparation
Data collection
14
6
Data analysis X
interpretation and final
8
research writing
15
5. BUDGET PLAN
1 Pen 4 Pieces 10 40
2 Ruler 1 Pieces 20 20
4 Binder 1 Pieces 20 20
Total 160
16
Table 4 : Miscellaneous expense
1 Telephone 50
2 Internet 30
Total 80
3 Miscellaneous expense 80
Total 360
17
6. REFERENCE
Andargachew Kebede, 1990. Sheep Marketing in the Central Highlands of Ethiopia. An MSc
Thesis Presented to the School of Graduate Studies of Alemaya University. Ethiopia. 117p.
.Ayelech Tadesse. (2011). Market chain analysis of fruits for Gomma Woreda,Jimma Oromia
Regional State.
Backman, T. N. and W. R. Davidson, 1962. Marketing Principle. The Ronal Presses Co., New
York. pp. 3-24.
Practice of Marketing.
Bezabih Emana and HaderaGebremedhin. (2007). Constraints and Opportunities of horticulture
production and marketing in eastern Ethiopia ,DCG report NO.46.
Branson and Norvel (1983): Definition of the Marketing System and Misganaw Tamrat, 2012.
Carlsson, F., Köhlin, Alemu Mekonnen and Mahmud Yesuf. 2005. Are Agricultural Extension
Packages What Ethiopian Farmers Want? A Stated Preference Analysis, Working Papers in
Economics no. 172, october 2012, Department of Economics, Göteborg University.
Central statistical Authority (CSA), 2003. Statistical report on Area and production of crops. Part
ii-Addis Ababa, Ethiopia.
CSA (Central Statistics Authority), 2009. Area and production of major crops . sample
enumerator survey. Addis abeba, Ethiopia.
CSA, 2012. Agricultural Sample Survey report on Area and production of crops (private peasant
holdings, Meher season ). Volume I. CSA Addis Ababa Ethiopia. 128.
18
Dunne, A (2001) Supply Chain Management: Fad, Panacea or Opportunity? Occasional paper
Vol8(2) 1–40, School of Natural and Rural Systems Management, University of
Queensland, Gatton, Queensland, Australia
FAO (Food and Agriculture Organization). (2010). Analysis of the food consumption of
Japanese households. Economic and Social Development.
Getachew Beshargo, 2002. Addressing Marketing and Processing Constraints’ That Inhibited
Agrio-food Exports
Hobbs, J., A. Cooney, M. Fulton (2000) Value Market Chains in The Agri Food Sector: What
Are They? How Do They Work? Are They For Me? Department of Agricultural
Economics, University of Saskatchewan, Canada.
Islam, M.S., T.H. Miah and M. M. Haque, 2001. Marketing System of Marine Fish in
Bangladesh. Bangladesh Agricultural Economics, 24(1 & 2): 127142
Joonsten, F., 2007. Development Strategy for Export Oriented Horticulture in Ethiopia
Kemal Aman and others, 2014, Market chain analysis of Avocado fruit for Mana Woreda, Jimma
zone, Oromia national regional state.
Kohls, R, L. and J.N. Uhl, 1985. Marketing of Agricultural Product. Fifth Edition. McMillan
Publishing Company, New York, USA 624p.
Kolter, P. G., Armstrong, 2003. Principle of Marketing. 10th Edition, Hall of India Pvt. Ltd.,
New Delhi. 5-12p
19
Lunndy, M., M.V. Gottret, W. Cifuentes, C. F. Ostertag, R. Best, D. Peters and S. Ferris.
Mazula, R., 2006. Commodity Chain Approach and Deal Structuring: An Agri- Business
CaseNew Delhi. 5-12p.
Mitiku (2007) the result survey on quality need and buying behavior of fresh fruit in mana.
MoARD (Ministry of Agriculture and Rural Development). 2005. Vegetables and Fruits
Production and Marketing Plan (Amharic Version), Ministry of Agriculture and Rural
Development, Addis Ababa, EthiopiaNo. 46.Of vegetable and fruit in Ethiopia
PJesse, V.E., 1987. Economic Efficiency and Marketing Order. Economic Efficiency in
Agricultural and Food Marketing: pp. 217228.ll
Seifu Gebremariam, 2003. Status of Commercial Fruit Production in Ethiopia, Addis Ababa,
Ethiopia
20