Abstract
Marketing inefficiencies and low coordination of groundnut value chain are the main problems though Digga district is potential in groundnut production. The study was conducted to analyze the profitability and value chain assessment of groundnut in Digga district of Oromia region, Ethiopia. More specifically, the study identified value chain actors, their respective roles, maps the value chain, and assesses the performance of groundnut production in the area. Primary data were collected through a survey using pre-tested semi-structured questionnaire and through key informant interview using checklists and generated from randomly sampled 123 groundnut producers, 28 traders and 25 consumers. The major actors of groundnut value chain were: input suppliers, producers, traders, processors and consumers. Two-stage sampling procedure was employed to draw sample of groundnut producers. Digga districtwas selected purposively based on the potential it has for groundnut production in the zone. In the first stage, from kebeles which produce groundnut, 4 kebeles were randomly selected. In the second stage, 123 samples of household heads were randomly selected from total groundnut producers in the district and the sample households were drawn randomly from each kebele based on probability proportional to size sampling techniques. Producers’ highest gross marketing margin was 86.12% in channel III and highest total gross margin is 19.93% in channel IV while 13.88% is the lowest total gross margin in channel III. Cost incurred in groundnut production was 6588 Birr per Hectare and the gross income obtained from groundnut production was 9,600 Birr per Hectare and net income of the product was 3012 Birr per Hectare which shows groundnut production in Digga district is profitable. Opportunities and constraints of groundnut profitability and value chain were identified at each stage of value chain like input supply, production, processing, marketing and consumption of groundnut. The study recommended that farm machineries, improved seed of groundnut, market facilities and market outlets should be provided for farmers for insuring larger production and selling thereby to enhance profit of groundnut production in the study area.
Highlights
With regard to adding value to agricultural products, Ethiopia has set Growth and Transformation Plan (GTP) and ensured agricultural input supply and strengthens agricultural extension services to increase agricultural productivity and commercialization
The result showed that farmers market profit was the highest when they direct sell to consumers in channel I which is 682 birr/qt, second highest profit when they sell to retailers of channel IV which is 648 birr/qt, they got less profit when they sell to wholesalers which was 626 birr/qt and at the last farmers got the least profit by selling to collectors which was 593 birr/qt
The maximum farmers’ share (GMMp) is highest (86.12%) from channel III and lowest (80.06%) in channel IV
Summary
With regard to adding value to agricultural products, Ethiopia has set Growth and Transformation Plan (GTP) and ensured agricultural input supply and strengthens agricultural extension services to increase agricultural productivity and commercialization. Agriculture continued to be a source of growth and poverty reduction [18]. Agriculture stabilizes farm incomes, revives primary agriculture and rural economy when it becomes value added. Market-drivers are the fundamental cause for moving agriculture to be value added. Value-added activities are born from the necessity to adapt to the wide-ranging changes affecting the agriculture and agri-food industry [1]. Markets are prerequisites for enhancing agriculture-based economic growth and increasing rural income in the medium term for the rural poor households [2]
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