RESEARCH GRANT CONCEPT NOTE

Title: Value Chain and Marketing Pattern of Fruit Crops in North-Western

Highlands of the Upper Blue Nile Basin, Ethiopia

Mengistie Mossie Birhanu

PhD fellow at Addis Ababa University, College of Development Studies, Center for
Rural Development
E-mail: mengistiemossie@gmail.com or hevron2010@gmail.com
Cell phone: +251911581669.

Major Advisor:
Alemseged Gerezgiher (PhD): Addis Ababa University, College of Development
Studies, Center for Rural Development
E-mail:abushalex@yahoo.com
Cell phone: +251911550346.
Co-advisors:

1. Background of the Study

Ethiopia is one of the Sub- Saharan countries located at the horn of Africa in which its
economy is mainly dependent on rain-fed agriculture and this agriculture is the largest
livelihood means and source of employment for an overwhelming majority of population. The
sector contributes to even 50% of the Gross Domestic Product and earns approximately 90%
of the revenues from the export of agricultural goods (Bokelmann and Adamseged, 2016).
Still in Growth and Transformation Plan (GTP) period, agriculture is remaining the main
driver of the rapid and inclusive economic growth and development. In the country, besides
promoting the productivity and quality of staple food crops production, special attention is
given to high value horticultural crops (National Planning Commission, 2016). Horticultural

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crops can be differentiated as fruit (permanent crops) and vegetables (short season crops). The
trees that yield fruits like orange, mangoes, papayas, apples and others are known as fruit
trees (CSA, 2003). According to EHDA (2011) Ethiopia’s fruit and vegetable exports have
been increasing over the years. Hence, the government of Ethiopia has highlighted further
commercializing of fruits in its policy. It also uses the production of these crops as a means to
attain food security and economic growth to achieve the continuing goal of reaching “middle-
income” country by 2025. For instances, targets were set to produce 404.6 thousand tons of
fruits and 559.8 thousand tons of vegetables, by the end of the GTP-II period (NPC, 2016).
Likewise, north-western highlands of the Upper Blue Nile Basin where this research sites
found is one of the major horticulture development corridors in Ethiopia suitable for fruits and
vegetables production such as mango, banana, onion, potato, apple, cabbage, pepper, and the
like (EHDA, 2011).

Accordingly, Mango and Apple will be selected as the most important fruit crops to be
considered for the purpose of this study due to the fact that they are high-value commodities
and are mainly produced in three study watersheds: the Guder, Aba Gerima and Dibatie
watersheds.

2. Problem Statement

Today the largest part of agricultural production in developing countries does not reach
consumers directly from the production but is marketed via multilevel marketing systems
(FAO, 2007). Wholesalers are making the highest net margin as they have short channels
between producers and consumers, and as they relatively charge a higher price using their
market power. The net margin for the smallholder farmers is highest only when fruits are sold
to individual consumers through unions via consumer cooperatives thereby reducing the
numbers of middlemen across the market chain (Getachew et al., 2014). Likewise, often
farmers do not get the benefits of increased production and marketing of agricultural products.

Besides, the development and upgrading of the value chains is an important agenda for the
government, non-governmental organizations, companies and other institutions. Despite its
high potential for pro-poor development, value chain development has many constraints.

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Among others, the following are the major ones: Processing and other value-addition
activities are found to be poorly developed in the chains (Weinberger and Pichop, 2009), Food
losses are estimated to reach up to 50 % (Parfitt et al., 2010) caused by a lack of cold-storage
facilities and poor post-harvest handling techniques, Inadequate infrastructure (Ranganathan
and Foster, 2011) and poorly organized markets (Singh, 2011) which leads to high transaction
costs, Lack of market access is one of the other impediments to value chain development for
farmers in developing countries. Market access depends on farmer's access to and utilization
of technologies, availability of infrastructure, bargaining power and the market knowledge
and orientation (Trienekens, 2011). However, in developing countries including Ethiopia such
infrastructures are poorly organized, and the knowledge and skills of the producers are low.

Moreover, poor infrastructure set up and inefficient market systems characterize the study
area districts. The implication here is that there is a need to undertake research and generate
information to identify alternative mechanisms in which the fruit producers and other actors
can overcome the trade barriers, improve and add value to their products, and become
stronger negotiators in local, regional, and international markets, thereby improving their
income. Even though there are some related studies conducted in different places of the
country, further studies on value chain and marketing system analysis should be conducted in
all fruit growing areas of the country so that a well organized regional and national fruit
production and marketing can be implemented.

Therefore, this study aimed to bridge the above-mentioned information and knowledge gaps
by focusing on value chain and marketing pattern of fruit crops (mango and apple) primarily
focusing on the following research objectives.

3. Objectives of the Study

The general objective of this study is to analyze marketing pattern and value chain of mango
and apple fruit crops in Guder, Aba Gerima and Dibatie watersheds, north-western highlands
of the Upper Blue Nile Basin, Ethiopia.

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Specific objectives are:

 To describe value chain and actors involved (mapping) in the chain;

 To analyze the market structure-conduct-performance of fruit markets;

 To investigate factors influencing farmers’ participation decision and marketed supply

in fruit marketing;

 To determine factors influencing fruit value addition at different stages of the value
chain; and

 To explore the major sources of risks and farmers’ management strategies in mango
and apple fruit crops production.

4. Main Research Questions

1. Who are the major actors and what are their respective roles along fruit value chain?

2. Does structure-conduct-performance of fruit market look like in the study area?

3. What are the determinants of quantity of mango and apple supply to the market?

4. What are the factors affecting fruits value addition in fruit marketing value chains?

5. What factors influencing farmers’ participation decision and marketed supply in fruit
marketing? and

6. What are the major sources of risks and farmers’ management strategies in mango and
apple fruit crops production?

5. Study Hypotheses

To achieve the above objectives, the study tests the following assumptions:

1) Fruits marketing will be influenced significantly by the extent of integration of

different actors participate in the chain.

2) There will be some integration among different actors that participate in the market.

3) There will be different factors influence in fruit market that determines supplier
farmer’s decision and market demand.

4) Fruits producers will have more knowledge in risk management associated with fruits’
production.

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6. Significance of the Study

The result of the study will be helpful for the fruit growers and traders in the study area in
planning and for development planners and policy makers in drafting policies for fruit and
fruits production and marketing. Additionally, the study will be generated important
information for research and development organizations, extension service providers,
government and nongovernmental organizations to formulate fruit marketing development
programs and guidelines for interventions that would improve efficiency of the fruit
marketing system. The other benefit that could be anticipated will be its significance as a
source for further studies.

7. Research Methodology

7.1. This study’s research paradigm

In this study both qualitative and quantitative data will be required, and should supplement
each other, for a richer understanding and assessment of the dimensions of value chain and
marketing pattern of fruit crops. Accordingly, a pragmatic paradigm will be provided the
foundations for this study. It adopts mixed research methods to generate both quantitative and
qualitative data, as advocated by Saunders et al. (2009).

7.2. Sources of Data and Method of Collection

Both primary and secondary data sources will be important for this study. Secondary data
sources will be include the District Bureaus of Agriculture, District Trade and Market
Development Office, reports, bulletins, and websites. Primary data sources will be farmers,
wholesalers, collectors, retailers and consumers. Primary data will be collected using informal
and formal surveys and key informants interviews. For informal survey Rapid Market
Appraisal (RMA) techniques like focus group discussion and key informant interview will be
used with checklists. The formal survey will be undertaken through formal interviews with
randomly selected farmers and purposively selected traders and consumers using a pre-tested
structured questionnaire.

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7.3. Sample Size and Sampling Procedure
The sample for this study will be drawn from all actors involved along apple and mango value
chain such as producers, rural collectors, wholesalers, retailers and consumers. Two stage
sampling procedure will be used for the selection of sample household heads. In the first
stage, the district will be selected purposively based on its’ fruit production potentials and to
represent higher, medium, and lower elevation watersheds within the highlands of the basin.
In the second stage, with the consultation district experts, 205 (90 for apple 115 for mango)
farmers who produce fruits will be selected randomly based on proportion to number of fruit
producing farmers.
Data from traders and consumers will also be collected. The sites for the trader surveys will
market towns in which a good sample of fruits traders existed. On the basis of flow of fruits,
three markets (Enjibara, Gilgel Beles and Bahir Dar) will be selected as the main fruit
marketing sites for the study areas. Here sampling will be the very difficult task due to
absence of recorded list of population of traders and the opportunistic behavior of the traders.
Therefore, a purposive sampling method will be used to select wholesalers, rural collectors
and retailers from specified markets. As a result, 55 apple and mango traders will be selected
for the purpose of the study. Furthermore, 30 consumers will be interviewed, which will be
selected a purposively to obtain information related to consumers.

7.4. Methods of Data Analysis

Four types of data analysis, namely descriptive statistics, value chain analysis, marketing cost
and margin, and econometric analysis will be used for analyzing the data from producers,
traders and consumers.
Descriptive statistics analysis: In this method of data analysis, ratios, percentages, means,
variances and standard deviations will be used to examine the relevant variables under
consideration.

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Econometric analysis: The Heckman two stage estimation procedures will be employed in
this study to examine fruit market participation decision and to identify factors affect
the amount of fruits supplied to the market. On the other hand, Probit model will be
used to determine the factors affecting the decision to engage in value addition of fruit.
The decision to use probit will be based on the fact that the decision to add value is
discrete and dichotomous (one either adds value or not), discrete decisions will be
analyzed using qualitative response models one of which is probit. This study will
also be used Likert scale (responses on a 1-5 scale) to rank risks. A Likert scale is a
psychometric scale commonly used in questionnaires, and is the most widely used
scale in survey research. When responding to a Likert questionnaire item, respondents
specify their level of agreement to a statement. To have a rank of the different sources
of risks, the mean of the five Likert scales will be used (1=no/negligible risk, 2=low,
3=medium, 4=high and 5=very high risk).
Value chain analysis: Value chain analysis is the process of breaking a chain into its
constituent parts in order to better understand its structure and functioning. The analysis
consists of identifying chain actors at each stage and discerning their functions and
relationships; determining the chain governance, or leadership, to facilitate chain formation
and strengthening; and identifying value adding activities in the chain and assigning costs and
added value to each of those activities (UNIDO, 2009).
Marketing cost and margin: The cost and price information used to construct marketing cost
and margin will be gathered from fruits value chain actors such as, producers, collectors,
retailers, wholesalers and consumers.

8. Research Areas

The study will be undertaken in three watersheds within the Upper Blue Nile Basin, Ethiopia:
the Guder watershed from the Fagita Lekoma District (population 161,002, Amhara region);
the Aba Gerima watershed from the Bahir Dar Zuria District (population 222,304, Amhara
region); and the Dibatie watershed from the Dibatie District (population 90,577, Benishangul
Gumuz region). Livelihoods of the three watershed communities are dominated by mixed
farming systems. These watersheds will be selected because of their ability to capture a

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variety of bio-physical and socio-economic characteristics and to represent higher, medium,
and lower elevation watersheds within the highlands of the basin and the watersheds are also
supported by JICA development partner. Poor infrastructure set up and inefficient market
system characterizes the sites. Any improvement in the agricultural marketing system is a
means of stimulating agricultural and economic development in the study districts and at
national level.
9. Research time frame
The research project will be completed within two years.
Table1. Time required for major research activities
No List of activities Time required Remark
1 Preparing research project proposal 5 months
2 Training and pre-test 2 months
3 Formal survey 8 months
4 Write up and publishing 6 months
Total 22months

10. Budget
Total of $10,100 USD will be required finishing the research at prescribed time frame.
Table2. Research budget breakdown
No Purpose Budget required ($USD) Remark
1 Training data collectors 500.00
3 Data collectors per-diem 5,000.00
4 Researchers per-diem 3,500.00
5 Transport expenses 500.00
8 Honorarium 475.00
Total 10,100.00
Budget justification: As it is described in research methodology part, 205 respondents from
two different regions and three dispersed watersheds with almost no transport facilities are
planned to be surveyed. It requires long hour walk and staying for days in these watersheds
which necessitates having complete stuff.

11. References

Central Statistical Agency (2003). Statistical Report on Area and Production of Crops. Part II
A. Addis Ababa, Ethiopia.

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EHDA (Ethiopian Horticulture Development Agency) (2011). Exporting Fruit and
Fruits from Ethiopia: Assessment of development potentials and investment
options in the export-oriented fruit and vegetable sector.
FAO (Food and Agricultural Organization) (2007). Governance, coordination and distribution
along commodity value chains. Rome, 4 - 5 April 2007. Rome: FAO (FAO
commodities and trade proceedings.

Getachew Legesse, Mohammed Hassana, Retta Gudisa and Tibebu Koji. (2014). Value Chain
Assessment of Selected Vegetable Products in Central Rift Valley of Ethiopia. Paper
presented at the 12th International Conference on the Ethiopian Economy, Ethiopian
Economics Association July 16 -19, 2014.
National Planning Commission (2016). Growth and Transformation Plan II (GTP II)
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Parfitt, J.; Barthel, M.; Macnaughton, S. (2010). Food waste within food supply chains:
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Ranganathan, R.; Foster, V. (2011). East Africa's infrastructure. A continental perspective.
Saunders, M, Lewis, P & Thornhill, A (2009), Research methods for business students,
Pearso Education, Harlow, England.
Singh, K. P. (2011). Agricultural marketing and rural development. New Delhi: DPS Pub.
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Trienekens, H.J. (2011). Agricultural Value Chains in Developing Countries: A Framework
for Analysis. International Food and Agribusiness Management Review Volume 14,
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School of Management Hollandseweg, Wageningen, The Netherlands.
UNIDO (United Nations Industrial Development Organization) (2009). Agro-Value Chain
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Weignberger, K. and A. Lumpkin. (2005). Horticulture for poverty alleviation: The
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Weinberger, K. and Pichop, G. N. (2009). Marketing of African Indigenous Fruits along
Urban and Peri-Urban Supply Chains in Sub-Saharan Africa. In: African indigenous
fruits in urban agriculture / edited by C.M. Shackleton, M. Pasquini and A.W.
Drescher, London: Earthscan 2009.
Wolfgang Bokelmann, Muluken E. Adamseged (2016). Contributing to a better understanding
of the value chain framework in developing countries. The 5th International
Conference of the African Association of Agricultural Economists, September 23-26,
2016, Addis Ababa, Ethiopia