Abstract:
Coffee is the major income generating cash crop for smallholder farmers in Gololcha District. However there were no information on market actors, determinants of coffee market supply, market margin and outlet choice. Therefore, objectives of the study were to identify structure-conduct-performance of coffee market, factors affecting market supply of coffee by smallholder farmers and determinants of coffee producer market outlet choice. The primary data were collected through personal interviews from a total of 213 respondents (154 producers, 22 traders, 11 processors and 26 consumers) using structured and semi-structured questionnaires. Focus group discussion was formed and interviewed prior to household survey to generate qualitative data. Both descriptive and econometric model were used to analyze. The study revealed that the main coffee market chain actors were producers, cooperatives, wholesalers, agent middlemen, rural collectors, processors, retailers and consumers. Producers’ gross marketing margin is highest in channel III where coffee sold directly to cooperatives and lowest in channel VII and VIII where coffee is sold to boilers and retailers. Barriers to entry (capital and license), price agreement by traders, cheat on weight and higher margins for traders implied that coffee market in Golocha district was inefficient. The result of two stage least squares showed that amount of coffee produced, sex of the household heads, educational level, family size, land allocated to coffee production and access to market information had positively and significantly influenced amount of coffee supplied to the market. The result from MVP showed that sex of the household head, level of education, means of transport ownership and access to information had positively influenced choice of wholesaler and negatively influenced choice of agent middle-men. Level of education was significantly and negatively related with agent middle-men, and significantly and positively influenced cooperatives and wholesalers channel choice. The study recommends that emphasis should be given on controlling illegal traders and enhancing market infrastructure, promotion of farmers cooperatives, increasing level of coffee production (through extension of improved varieties, fertilizer application, irrigation, pruning and other agronomic management) and expansion of education facilities