MARKET CHAIN ANALYSIS OF COW MILK IN GEMECHIS DISTRICT OF WEST HARARGHE ZONE, OROMIA NATIONAL REGIONAL STATE, ETHIOPIA

Cow milk is a daily produced high value product that plays a significant role for both home consumption and income generating. However, the level of marketable surplus supply and benefits of the different market actors were not attained potential returns. Thus, this study attempted to analyze cow milk market chain of smallholder producers with the objectives of estimating profit margin, identifying factors affecting farmers’ decision to participate in cow milk market and determinants of the level of cow milk marketable surplus supply in Gemechis district. In the selling of raw milk marketed supply, the producers do not attain potential gains. Both primary and secondary sources were used to collect data. Data were collected from a sample of 152 cow milk producers, 30 traders and 25 consumers were analyzed through STATA ver. 15. Profit margin was calculated for the market chain actors. Double hurdle model was applied to identify the factors determining cow milk market participation and level of cow milk marketable surplus supply. Cow milk market chain actors identified in the study area includes producers, rural collectors, retailers, restaurants/cafes, coffee shops, and consumers. The cow milk marketing is governed majorly by retailers. Five market channels were identified for cow milk among Channel V shared 70% of the total milk marketed. The highest total gross margins were 60% in channel V; while the highest gross marketing margin of producers was in channel I. Among the traders coffee shops takes highest market profit of 12.46 birr/liter in the chain. The first-hurdle model estimation result indicated that education level, distance to district market, the proportion of land allocated for forage production, size of milk output per day, access to milk market information, and frequency of extension contact influences farmers’ decision to participate in cow milk market. The second-hurdle model results indicated that children under six years, the proportion of land allocated for forage production, size of milk output per day and access to credit were significantly affects the level of cow milk marketable surplus supply. Therefore, the study recommends that emphasis should be given on encouraging flow of milk market information, intensification of land use, and enabling farmers as they produce more through improving production and productivity of cow.