Market supply and value chain analysis of wheat: the case of tiyo and hetosa districts in arsi, ethiopia

The study was aimed at market supply and value chain analyses of wheat in Hetosa and Tiyo districts of Oromia region with specific objectives of mapping wheat value chain actors and their value addition, analyzing performance of wheat market and, estimating the intensity and determinants' of marketed surplus of wheat by small holders in the study area. The primary data for this study were collected from 150 households, 85 traders; 5 cooperatives, 18 processors and 20 consumers based on three stage random sampling method. Value chains tools were used to map wheat value chain, S-C-P model to analyzing performance of wheat market, and Tobit model to analyze factors affecting marketed surplus of wheat in the study areas. The study result showed Constraints hindering the development of production and marketing of wheat were shortage of improved wheat variety, diseases, theft on the field and at market level price setting problem, theft and others. Value chain analyses revealed that the major actors in wheat value chain were input suppliers, farmers, traders, brokers, processors, retailers, and consumers. Each of these actors adds value in the process of changing product title. Based on the market concentration ratio we conclude that both Eteya (26.5%) and Asela (37.7 %) markets are classified as monopolistic competition forms of market structure. Lack of capital is found to be the major trade barriers in the study area. Wheat producers added 34% of the total value, collectors, wholesalers, retailers and processors are responsible for value addition of 4%, 2%, 4% and 56%, respectively. The result of Tobit model indicated that value adding activities, livestock holding, access to credit, family size, to non-farm income, type of seed used and cultivated land for wheat influenced the amount of wheat marketed surplus significantly. Therefore, policy aiming at increasing farmers’ access to modern inputs, developing and improving infrastructure, cooperative development and improving extension and marketing system are recommended to accelerate the chain’s development.