MAKDELA AMBA UNIVERSTY
COLLEGE OF AGRICALTURAL AND NATURULA RESOURCE
DEPARTMENT OF AGRIBUSSINESS AND VALUE CHAIN MANAGEMENT
MARKET CHAIN ANALYSIS OF POTATO: IN CASE OF LEGAMBO DISTINICT, SOUTH WOLLO ZONE, AMHARA
REGION, ETHIOPIA
A Senior Research Summited In Partial Fulfillment of the Requirement for B.SC Degree in Agribusiness and Value Chain
Management
NAME ID No
Sennayit Adefris............................MAUR/1201106
Tarikua Shiferaw …………………MAUR/1301599
Zewdu Tilaye ………………..........MAUR/1301806
Advisor :Yonas A
DEC: 2024
Tulu Awulia,Ethiopia
Advisor :Yonas A DEC: 2024
Introduction
Potato is the world's most significant root and tuber
product. It is grown in over 125 countries and
consumed almost daily by more than a billion people.
Potato is crucial to the survival of millions of people
in developing countries.(Gedefaw et al., 2022).
Wider production of high-value vegetables can
provide a viable mechanism to generate additional
household income and supplement nutritional intake
(USAID, 2000).
Importance of Potatoes in Ethiopia
Short Growth Cycle: Quick to harvest and integrate
High Productivity: Maximizes yield per area cultivated
Versatile Use: Consumed or sold as cash crop
Top Crop: Ranks first among root and tubers
Income Generation: Key for many households'
livelihoods
Food Security: Essential in high and mid-altitudes
Economic Significance: Vital for rural development in
Ethiopia
1.2. Statements of the Problem
In the study area, production system, low production, lack
credit access, and lack of marketing information .
Cost Issues: High production costs impacted profitability
Information Access: Limited access to market information
Low Production: Farmers faced challenges in yield levels
Credit Barriers: Limited access to credit hindered growth
Awareness Gaps: Farmers lacked awareness and skills
Market Participation: Producers face barriers affecting
market access.
Ineffective System: Marketing fails to address price
fluctuations and information gaps.
Objectives of the Study
The major objective of the study is to assess potato
market chain in the study area
Specific objectives
To identify the major potato value chain actors
Assess the marketing margin and cost structure of
potato value chain actors
Identify factors affecting participation in and intensity
of potato market supply by smallholder producers
Research Questions
• From the above specific objectives, the following research
questions are addressed
1) What are the major potato value chain actors?
2) What is the marketing margin and cost structure of
potato value chain actors?
3) What are factors affecting participation in and intensity
of potato market supply by smallholder producers?
3 . Background of the study area
Study Area: Legambo District, Ethiopia
Location: Legambo is in South Wollo Zone, Amhara.
Borders:South: Legahida and Kelala ,Southwest: Wegde,
West: DebreSina, Northwest: Sayint, North: Tenta,
Northeast: Dessie Zuria, Southeast: Were Ilu
Key towns include Aqesta and Embacheber.
Target population
Study Area: Included two kebeles: 026 and 023.
Target Groups:
I. Producers
II. Wholesalers
III. Retailers
IV. Consumers
Total Population: 396 individuals from the selected
kebeles.
3.2. Data type, source and method of data collection
• Data Types: Both qualitative and quantitative data were
collected.
• Sources: Data was gathered from primary and secondary
• sources.
• Primary Data: Comprehensive information on the marketing
system from producers to consumers.
• Secondary Data: Reviewed documents from Legambo
administrative officials.
3.2.1 Method of sampling and sample size
Sampling Methodology in Legambo District
Population: Legambo district has a total population of
84,562 across 41 kebeles.
Sampling Techniques: Utilized both probability and non-
probability sampling methods.
Selected Kebeles: Dembesh (026) and Segno Gebeya (023)
kebeles were chosen.
n= sample size for the research
N= total number of potato producers in study area)
Z: Z-score, which corresponds to the desired confidence
level (1.645)
P: Estimated proportion of the population (0.5)
e= margin of errors at 10%simple random sampling (0.1).
• Sampling Methods:Simple random sampling
and Purposive sampling
• Sample Composition:
• 9 producers
• 2 wholesalers
• 8 retailers
• 38 consumers
• Total Respondents: 57 individuals participated
in the study.
3.2.2. Methods of data analysis
• Effect Measurement: Assesses magnitude and
direction of changes in independent variables on the
dependent variable.
Analysis Methods:
• Descriptive statistics (variance analysis, percentages,
frequency)
• Data visualization (pie charts, tables)
• Tools Used: SPSS and Excel for data analysis.
Model choice and specification
• Econometric Analysis Overview
• Models Used: Econometric model and simple correlation
model.
• Analysis Type: Multiple linear regression analysis.
• Variables:Dependent Variable: Quantity of potato supply to
the market (continuous variable).
• Independent Variables: Various factors influencing supply.
• 1) To address specific objective of (To identify factors
affecting quantity supplied to the market
• PMV=βo+β1SEX+β3NFM+βn Xn+Ui
• 2) To address specific objective 1 (To examine the
costs and profit margins of market actors in the
chain.) By using this formula
4.Result and discussion
• In this section, we present the results and discussion
stemming from the analysis of the potato market
chain in the study area, grounded in data collected
through questionnaires and interviews with surveyed
respondents.
• The data were analyzed using descriptive statistics to
describe the socio economic and demographic and
econometric model (ols) to determined independent
variable.
4.4 Marketing chain and channel of potato in the
study area
Market Channels
Channel-I: producer →consumers
Channel-II: producer → retailer →consumers
Channel-III: producer→ wholesaler → retailers→
consumers
Marketing actors
The major market players include producers,
wholesalers, retailers, and consumers involve in study
area.
• Producers are most farmers or producers
perform one or more marketing functions.
They sell the surplus in the market.
• Retailers are the last link in chain of
intermediary, who sells directly to consumer.
He takes title to goods, sells and sets up
business usually amidst the consumer’s groups.
He buys his requirement usually from the
wholesalers or farmer.
• Consumers: they are the last agent for potato
market chain. Consumers for this particular
study mean those households who directly
buy, process and consume potato at their home
and those who consume from processors
Wholesalers who do not reside in either Kebele
underscore the importance of a well-functioning
distribution network in the market. Their role in
connecting distant producers with local retailers
is crucial for ensuring product availability,
stimulating competition, and enhancing market
resilience.
Determinants of potato quantity supplied to
the market
• Access to market information is positively
significant at the 5% level, indicating that increased
access boosts potato market supply. A positive
coefficient suggests that enhanced information
access leads to greater production and supply
responsiveness.
• Access to credit significantly boosts the quantity of
potatoes supplied, highlighting its importance for
producers, traders, and consumers.
• Access to extension services shows a significant positive
relationship with potato supply, confirming the hypothesis.
• These services equip farmers with vital information and
training, enhancing productivity and increasing supply.
Variable coefficient Std. Error t-value p-
value
Market distance .049*
-.133 .051 2.591 *
Total amount of
produced potato
quantities .96 .254 3.785 .013*
1
• Market distance:
Proximity to the market is vital for producers, as shorter
distances lower transportation costs and time.This facilitates
quicker access to buyers and can lead to better pricing
opportunities.
Total amount of produced potato quantities
Increased production leads to a rise in the quantity supplied to
the market, emphasizing the link between output and supply.
This reflects the economic principle that higher output
generally enhances market availability.
Conclusion
• Agricultural Growth: Crucial for Ethiopia's economic development,
transforming subsistence farming into market-oriented production.
• Challenges: Underdeveloped infrastructure, inefficiencies, and socio-
economic disparities hinder agricultural marketing. particularly in
potato market chains.
• Potato Market Chain: Issues with credit access, extension services, and
market information affect farmers in Kebeles 026 and 023
• Profitable Channel: Direct sales to consumers are more
profitable than sales through retailers and wholesalers.
Recommendations
• Strengthen Extension Services: Improve crop yields,
farming practices, and market access.
• Improve Market Accessibility: Invest in better roads
and transportation networks. •
• Promote Market Information Systems: Establish robust
systems for market information dissemination. Develop
• Wholesale Market Centers: Lobby for and develop
centers with necessary infrastructure.
• Facilitate Warehouse Receipt Systems: Encourage local
wholesalers, retailers, and producers to participate.
The End
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