American Journal of Plant Biology

2020; 5(3): 50-59

http://www.sciencepublishinggroup.com/j/ajpb
doi: 10.11648/j.ajpb.20200503.14
ISSN: 2578-8329 (Print); ISSN: 2578-8337 (Online)

Market Chain Analysis of Peanut in Bambasi District;

Benishangul Gumuz Region, Western Ethiopia
Amente Negussa Bayata1, Tewodros Adane Nega2
1
Department of Agricultural Economics, Assosa University, Assosa, Ethiopia
2
Department of Agricultural Economics, Debark University, Gonder, Ethiopia

Email address:

To cite this article:

Amente Negussa Bayata, Tewodros Adane Nega. Market Chain Analysis of Peanut in Bambasi District; Benishangul Gumuz Region,
Western Ethiopia. American Journal of Plant Biology. Vol. 5, No. 3, 2020, pp. 50-59. doi: 10.11648/j.ajpb.20200503.14

Received: August 21, 2020; Accepted: September 5, 2020; Published: November 23, 2020

Abstract: Peanut is one of the important agricultural food crops of the world. It is an important source of edible oil and
source of vegetable protein. It is also significant source of cash in developing countries that contribute significantly to food
security and alleviate poverty. Peanuts have a strong nutritional profile. They are an excellent source of plant-based protein,
fiber, and many key vitamins and minerals. Peanuts come in many forms, including roasted, salted, chocolate-coated, and as
peanut butter. Different types have different nutritional profiles and various health benefits. This study was initiated to Market
Analysis of Peanut in Bambasi District; Benishangul Gumuz Region, Western Ethiopia. The focus of the study was to analyze
the peanut market channel in the study area. Different variables were hypothesized to determine quantity of peanut supply to
the market. The data was supplemented by primary and secondary sources. The multiple linear regression models were applied
to estimate the effects of explanatory variables on quantity of peanut supplied to the market. The results obtained from this
analysis indicate extension services, volume of peanut produced, distance to the market, and average price of peanut were
found to be the most important significant variables influencing peanut marketing in the district. Therefore, providing
extension services, improving volume of peanut produced, improving transportation facilities to strengthen the vertical and
horizontal linkages among the marketing agents are recommended to develop and strengthen information on peanut product
marketing in the study area.

Keywords: Peanut, Market Chain, Analysis, Multiple Linear Regression Model, Bambasi District

food security and alleviate poverty. Developing countries

1. Introduction account for 97% of the world’s peanut area and 94%of the
1.1. Background of the Study total production [3].
Peanut is an edible seeds of a legume plant that grow to
Agriculture is the mainstay of the Ethiopian economy and maturity under the ground. Peanut is produced in areas with
contributes 41.4% of the country’s gross domestic product 40 mm or more annual rainfall and there should be at least 20
(GDP), 83.9% of the total exports, and 80% of all mm rainfall in the growing season. The most suitable soils
employment in the country. The growth of Ethiopia and food are well-drained loose, friable, sandy loams, rich in calcium
security is driven by agriculture which is the foundation of and moderate amounts of organic matter [4].
the country’s economy and contributes 15 to 17 percent of According to [5] FAO, the demand for edible oil increases
the government expenditures. It employs 80 percent of the faster than for the other agricultural products increases. This
total population, 43 percent of gross domestic product (GDP), is result in attractive prices. This renders especial benefits for
and over 70 percent of export value [1]. oilseed growing potential countries. The role of markets in
Peanut is one of the important agricultural food crops of reducing poverty and achieving food security in rural areas
the world. It is the world’s important source of edible oil and has been getting increasing attention from development
source of vegetable protein [2]. It is also significant source of scholars and institutions. Strong links to markets for poor
cash in developing countries that contribute significantly to rural producers are essential in increasing agricultural
51 Amente Negussa Bayata and Tewodros Adane Nega: Market Chain Analysis of Peanut in Bambasi District;
Benishangul Gumuz Region, Western Ethiopia

production like oilseeds, generating economic growth and through market chain to make an intervention in the sectors
reducing hunger and poverty. Improving market links creates and to generate reasonable benefit for all the stakeholders
a virtuous circle by boosting productivity, increasing incomes involved in production and marketing of the product.
and strengthening food security. Better access by small
producers to domestic can reliably sell more products at 1.3. Objective of the Study
higher [6]. 1.3.1. General Objective
The lowland areas of Ethiopia have considerable potential The general objective of this study is to analyze the peanut
for increased oil crop production including Peanut. Peanut is market channel in Bambasi distinct.
mainly grown in Oromia (East and West Harerghe, Wollega,
Kelem Wollega, Ilubabor), Amhara, Benishanul Gumuz 1.3.2. Specifics Objectives
(Metekel, Asosa, Kemashi, Mao Komo), Southern (Omo), 1) To identify the existing peanut marketing channel in
Gambela (Agnuwak) states and Dire Dawa [7]. According to study area.
[8] report on area and production of crops, Peanut was 2) To analyze factors affecting market supply of peanuts in
produced on 75,255.73 hectares of land in the 2015/16 the study area.
cropping season leading to a total production of well over 3) To identify S-C-P of peanut marketing in the study area.
115,180 tones. The top three peanut producer regional states
in Ethiopia are Oromia (682,939.31 qt), Benishangul Gumuz 2. Research Methodology
(307,097.97 qt) and Somale (55,585 qt) [9].
2.1. Description of the Study Area
1.2. Statement of the Problem
The study was undertaken in Banbasi District, Benishangul
One features of agricultural and food marketing in Gumuz Regional State, Ethiopia. The District is located in
economies is determined by economic, demographic, social 663km far from Addis Ababa (the capital of Ethiopia), 43km
and climatic factors as well as the characteristics of the raw from Assosa city (the capital of Benishangul Gumuz
materials and consumer products. The crucial role of market Regional state). Bordered by the Mao-Komo special district
chain oriented agricultural marketing system is apparent from on south-west, Assosa on the northwest, Oda-buldigilu on
the pivotal role that agricultural growth must play in driving northeastern by the Oromia regional state the southeast. The
overall economic growth of Ethiopia [10]. agro-ecology of the district is low land agro climatic zone
Market chain analysis is useful studies because it helps us with plain topography, which is geographically located at
determine whether the market system through which 9.75°N latitude and 34.73°E longitude with altitude ranges of
households sell their surplus products or services, and 1460 meter above sea level.
through which they access basic staples and production The district receives minimum 0.0 mm and maximum
inputs is efficient and reliable (i.e. competitive). It helps to 330.4 mm rainfall annually on a bimodal distribution. The
construct framework at the point when we wish to understand area experiences two rainy seasons; min or rain-fall in
marketing constraints and opportunities for household either January to March and more extensive rainfall in April to
for items sold or items they need to purchase [11]. October with long dry season periods in between the
Lack of capital, competition and low quality of peanut, minimum and maximum annual temperature ranges from
low or irregular quantity of peanut supply, poor road minimum 9.2°C-20.6°C and maximum 26.4°C-34.7°C in
infrastructure, low profit margin, government restriction or centigrade for the years of 2017 [14]. The natural forest in
high taxes and lack of transportation are challenging Peanut Bambasi district can be described as tropical mountain
producers in Ethiopia. Inefficient marketing, improper rainforest, which is characterized by bamboo, rubber trees
cleaning and sometimes poor contract discipline led and eucalyptus forest.
opportunities for oilseed export not fully exploited [12]. The demographic status of the study area indicates as the
Producers in the study area revealed that, the increases of 2018 national census reported a total population for Bambasi
the price of peanut steadily make peanut production district of 66,906 of whom 33,587 were men and 33,319
profitable nevertheless; producers do not directly deal with were women. From this estimated total population of the
buyers about the price because of the interference of district about 73.98% live in rural set-ups while the
middlemen. The establishment of big peanut factories for remaining 26.01% were urban dwellers. In the rural 67% of
paste production in Addis Ababa is an opportunity for peanut those own their income source depending on farm and in the
producers to sell their products at reasonable prices and they urban 22% of those are depending on non-farm. In both
may get raining in managing peanut production, post-harvest urban and rural dawdler 11% are depending on their income
handling and other supports as planned by Food Processing source on farm and non-farm.
Factory [13]. These shows without well-organized marketing
chain, Producers can not enjoy the opportunity of getting fair 2.2. Sampling Techniques and Sample Size
price and this will affect the desire to produce more at
household level. Adequate information on structure, conduct Multi stage sampling techniques were used to collect raw
and performance of peanut market is not well identified in data from sample respondents. At the first stage, ten potential
Bambasi. This study was therefore, attempted to fill the gap growing peanut kebeles were selected purposively. In the
 American Journal of Plant Biology 2020; 5(3): 50-59 52

second stage, using the population list of peanut grower variable and value close to 1 indicating a high degree of
Producers from the district, the capable peanut producer association between variables. A popular measure of
sample size is determined using probability proportional to multicollinearity associated with the CC is defined as:
size sampling technique. The sampling keeping the
proportion to each kebeles will select by using [15] Yamane CC= (5)
! "#
formula is calculated as:
, Where CC=is contingency coefficient, $ # =is chi-square
= = = 200 (1)
, ( . ) test and N=is total sample size.
If the value of CC is greater than 0.75, the variables are
Where: n –Sample size, N - Total peanut grower Producers,
said to be collinear. Conversely, test for heteroscedasticity
e- Level of precision (range in which the true value of the
undertaken for this study.
population is estimated to be and it is expressed in percentage
points) 2.4. Types and Source of Data
2.3. Method of Data Analysis Both primary and secondary source of cross-sectional data
were used for this particular study. In this aspect the primary
2.3.1. Descriptive Analysis
source of data was collect through structured questionnaire,
The first and second objective of this study was analyzed
interview and observation. The secondary data was collected
by descriptive statistics using mean, standard deviation, chi-
from published and unpublished documents.
square (x2), t-test, frequency table percentile, and maps.
2.3.2. Econometric Analysis 3. Result Discussion and Analysis
Following green (2003) the multiple linear regression
models is specified as 3.1. Descriptive Analyses

Yi=F ( ) +Ui, (2) 3.1.1. Demographic Characteristic

In an agrarian society, household members are the major
Where Y=quantity of peanut produced for consumption source of labor for agricultural activities. The household
and market, − , Ui: error term. characteristics differ from one household to the others. For
Econometric model specification of supply function in this study out of the 200 sample respondents, 85% were
matrix notation is the following males and the rest 15% were female’s household head. The
study revealed that, female become the head of the household
Y=ßX+Ui (3)
when she is divorced, her husband has health problem which
Where: yi=peanut supplied to the market, ß=a vector of prevent him to be the head of the family, or if she lost. With
estimated coefficient of the explanatory variables, X=a vector regard to marital status from the total sample respondents
of explanatory variable, Ui=disturbance term 90%, 3% and 9% were married, divorced and widow
Before fitting important variable into the regression respectively her husband.
models for analysis, multicollinearity problem among About 48% of the sample respondents were illiterate, 27%
continuous variable and associations among discrete can read and write through informal schooling like religious
variables, which seriously affects the parameter estimates school and 25% of the sample respondents were those who
were checked. The two measures that are often suggested to attended formal schooling. The average age of sample
test the existence of multicollinearity are variance of inflation respondent was 37 years with a standard deviation of 11.4
factor (VIF) and contingency coefficients (CC). Thus, VIF (Table 1).
was used to check multicollinearity among continuous
Table 1. Description of demographic characteristics for peanut producer.
variables. As a rule of thumb, if the VIF is greater than 10
(which will happen if R2 is greater than 0.90), the variable is Variables N=200 Frequency Percent
said to be highly collinear [16]. A measure of Male 170 85
Sex
multicollinearity associated with the variance inflation Female 30 15
factors is computed as: Illiterate 96 48
Education Read &write 54 27
VIF (Xi)=(1-Ri2)-1 (4) Formal education 50 25
Married 180 90
Where, Ri2 is the multiple correlation coefficients between Marital status Divorced 6 3
explanatory variable, the larger the value of Ri2 is, the higher Widows 14 7
the value of VIF (Xi) causing higher collinearity in the
variable (Xi) Source: Survey result, 2018.
Contingency coefficient is used to check multicollinearity
The majority (36%) of the respondents had about 9-15 years
or association between discrete variables. The value ranges
of peanut production experience. The average years of
between 0and1, with 0 indicating no association between the
experience for the entire sample households was about 15
53 Amente Negussa Bayata and Tewodros Adane Nega: Market Chain Analysis of Peanut in Bambasi District;
Benishangul Gumuz Region, Western Ethiopia

years, the minimum and maximum years of experience was 2 3.1.2. Socio-economic Characteristics
and 40 years, respectively. This may show that peanut Input Utilization: Peanut producing Producers are using
production started in the area about many years ago (Table 2). traditional varieties of seeds retained from their own previous
production and/or by purchasing it from other Producers with
Table 2. Distribution of respondent by peanut production experience. in there, or/and in their surrounding kebeles. The study
Frequency Percent affirmed that all sample respondents in the District use of
2-8 years 50 25 local seed. There are two types of local seeds (locally known
Peanut 9-15 years 72 36 as sartu and oldele). From the two, Producers prefer sartu
experience 16-25 years 46 23 than oldele in terms of its demand in market and its simple
25-40 years 32 16 uprooting nature.
Mean 31 About 22% of sample respondents don’t apply any
Source: Survey result, 2018.
chemical fertilizers in the production and they assumed as
applying chemical fertilizer is not recommended since
The survey result indicates that, about 50% and 23.3% of ground nut fixes nitrogen by itself. However, 78% of the
the sample traders were within the level of primary and sample respondent uses chemical fertilizer due to very poor
secondary school education, respectively, and only 10% of the fertility of their land (Table 4).
traders have some kind of degree certificate. The result also
Table 4. Fertilizer used for peanut production.
indicates that peanut traders had 4.40 years of experience on
the average with standard deviation of 1.52 (Table 3). Variable Response Frequency Percent
Fertilizer used for Yes 159 78
Table 3. Demographic characteristics of sample trader.
peanut No 44 22
Variable Values Frequency Percent Total 200 100
Male 133 66.7
Sex Source: Survey result 2018.
Female 67 33.3
Primary 100 50
Secondary 47 23.3
Location: In the study area, peanut producing Producers
Education travel a maximum of 26kmsand a minimum of 15kms to
High school 33 16.7
Degree 20 10.0 reach the nearest market center (Bambasi market; three times
Single 47 23.3 a week) with average distance of 19.96kms. The mean
Widow 13 6.7 distance required to travel to the extension office was about
Marital status
Married 107 53.3 3.19Kmswith standard deviation of 2.1269 (Table 5).
Divorced 10 16.7

Source: Survey result, 2018.

Table 5. Distance to development center and nearby market.

Variable N Min Max Mean SD

Market distance 100 15 25 19.96 4.57
Extension office distance 100 1 6 3.19 2.12

Source: Survey result, 2018.

Credit Service: About 83% of the sample respondents do availability of relevant market information to farmers, about
not take credit and described that they don’t want to take loan demand, supply and price of the crops. The survey result
from the institution due to its inappropriate terms of credit indicates that all respondents not having any market price
which did not recognize there is kin agriculture and lack of information access to faraway market places. About 62% of
new work plan by producers to effectively utilize the credit the producers had nearby market price information before
taken. they sale their produce, the rest 38% do not have any access
to price information. Among those who have price
Table 6. Credit taken for peanut production. information some of them obtained information from trader,
Variable Response Sample (n) Percent and the other from other producers; or through
Credit taken
Yes 34 17 telecommunication services.
No 166 83 From the survey result, about 56.6% of the producers had
Total 200 100
nearby market price information through traders, the rest
Source: Survey result, 2018 from other producers (27%) and traders (16.4). Most of the
marketing agents in the study area obtain their information
Market information and Extension service from telecommunication services.
The distribution of market information refers to the
 American Journal of Plant Biology 2020; 5(3): 50-59 54

Table 7. Source information on price, supply and demand.

Price information Source of information

Var. information
Yes No producers traders telecommunications
Producers 62 38 27 16.4 56.6
Vendors 46 54 31 18.1 50.9
Wholesalers 70 30 11 14.2 74.8
Retailers 3 97 15 2 85

Source: Survey result, 2018.

Information source of supply, about 11% of the sampled Producers sell peanut straight from the field to who leasers
households obtained peanut from other farmer and 27% of and brokers at Bambasi town. But sometimes Producers sell
peanut farmer revealed that trader and other farmer being peanut at the farm gate to other better off Producers to meet
their major source of information about the demand of peanut. their immediate financial need of holly days and other basic
The above table indicated inadequate and unorganized flow needs. They sell at the farm gate at a time of shortage of
of information about peanut market to the farmer. supply and/or at a time when they are in a problem of cash.
Extension service: The average number of contacts Village assemblers: village assemblers are Producers or
Producers have with extension officers is about two times per part time traders who collect peanut from Producers at farm
month. The study shows that 30% of respondents had a gate for the purpose of reselling to wholesalers, retailer and
monthly contact with extension agents, 3% had contact consumers. There are few village Vendors who compete with
weekly, 4% of farmer respondents can contact an extension wholesalers. When it is imposable to them to meet quantities
agent any time they want, 20% had contact twice in a month of their demand, they employ brokers to collect peanut by
and 43% of them have no contact at all. About 44.5% of the paying a commission.
sampled respondents get advice on cultivation practice, 40.6% Wholesalers: are those who have sufficient funds to
of sample farmer received information about crop choice, purchase hundreds of quintals of peanut. They are major
fertilizer and chemical application. market participants of the marketing system in the study area
who usually buy peanut of larger volume than any other
3.2. Peanut Market Participants, Their Roles and Linkages actors in the marketing system. They are seven in number
Peanut of the study are a pass-through different channel. who are licensed to perform who leasing activity in Bambasi
The channels are generally vertical chain of enterprises that District.
transforms peanut into different products and delivers them Retailers: a person that sells commodity to end users’
to consumers as finished goods or intermediate goods for end consumers. They reside in the terminal market and mostly
buyers. In this study, different stakeholders were involved in buy peanut from whole sellers and sell to urban consumers.
bringing peanut from the point of production (farm gate) to Sometimes they could also directly buy from the producers.
the final destination (consumers). According to the data Consumers usually purchase the product from retailers as
obtained, peanut marketing participants in the study area they offer according to the requirement and purchasing
includes producers/ Producers, village Vendors/assemblers, power of buyers. Beside buying and selling peanut they often
urban assembler, brokers, wholesalers, retailers, Vendors, provide processing service by changing shelled peanut to
processors and final consumers of the product. unshelled one.
Vendors: Most Vendors hold roasted peanut. Now a day
Table 8. The percentage of peanut market agent. roasted peanut renders significant livelihood source form any
Agents Frequency Percent
poor throughout the country in general and Bambasi District
Wholesaler 15 50 in particular. They usually purchase between 8 and 16kg,
Village Vendors 10 33.3 which they finish selling in 3 to 4 days and most of the time
Retailer 5 16.7 they buy peanut from wholesalers, or assemblers, or other
Total 30 100 retailers. The cost of roasting peanut is 10 birr for two patra
Source: Survey result, 2018. with carrying capacity of around 8.5kgs. Some of the traders
in this market sell roasted peanut mixing with salt. In some
Producers/Producers: These are the starting point for the shops, it is packed for better price but peanut which sold
chain and act as marketing agents who participate both in without packing dominates in most markets.
production as well as marketing of surplus commodities they Consumers: They are the last link for peanut market chain.
produce. At the same time, they transport peanut to the From the consumers’ point of view, the shorter the marketing
nearest markets by themselves, either using back animals, or chain, the more likely is there tail price going to be
animal driven carts, or else medium-size bajaj, over an affordable. Consumers for this particular study mean those
average distance of 19.6 kms. They had several options to households who directly bought and consume peanut. They
sell their product, selling directly or selling through broker to are individual households; bought the commodity for their
village Vendors/assemblers, urban Vendors, brokers, whole own consumption only.
sellers or retailers. As the finding of the study revealed, most Financial capital of sample peanut traders: the average
55 Amente Negussa Bayata and Tewodros Adane Nega: Market Chain Analysis of Peanut in Bambasi District;
Benishangul Gumuz Region, Western Ethiopia

initial and current working capital traders during the survey working capital of peanut traders was about 8.7 times greater
period were estimated to be Birr 2833.33 and Birr25567.80, than their initial working capital. This shows that peanut
respectively. Moreover, as it was indicated, the current business being very attractive business for traders.
Table 9. Financial capital of sample peanut trader.

Financial capital (in birr) N Minimum Maximum Mean Std. Deviation

Initial financial capital 30 200 7000 2833.33 2289.34
Current financial capital 30 1000 125000 25567.80 37353.106

Source: Survey result, 2018.

8. Farmer → Retailers → Vendors → Consumers (10%)

3.3. Peanut Market Channel 9. Farmer → Assemblers (urban) → Vendors →
Different lines of market channels were identified in the Consumers (13%)
study area. Besides, the percentage of quantity supplied that
passed through each channel was compared and based on the
result, the channel that went out of District with 31.52% held
the largest, followed by channels that stretched from Farmer
→ Assemblers (rural) → Wholesaler → Vendors →
Consumers and Farmer → Assembler (rural) → Vendors →
Consumers hosted 16% and 13% respectively.
1. Farmer → Wholesalers → Retailer → Vendors →
Consumers (10%)
2. Farmer → Wholesalers → Vendors → Consumers
(10%)
3. Farmer → Wholesalers → Retailer → Consumers (10%)
4. Farmer → Assemblers (rural) → Wholesalers →
Retailers → Consumers (10%)
5. Farmer → Assemblers (rural) → Wholesalers →
Vendors → Consumers (16%)
6. Farmer → Assemblers (rural) → Retailers → Vendors
→ Consumers (10%)
7. Farmer → Retailers → Consumers (10%) Figure 1. Marketing channel in the study area.

Table 10. Entry barrier in peanut marketing.

Source of barrier to entry frequency percent

Lack of capital 5 16.7
Information collusion 2 6.7
Administrative problem 6 20.0
Stiff competition with unlicensed 4 13.3
No barrier 13 43.3
Total 30 100

Source: Survey result, 2018.

specially in whole selling business due to administrative

3.4. Structure- Conduct - Performance of the Peanut problems, due to shortage of capital, information collusion
Market and stiff competition with unlicensed trader (Table 10).
3.4.1. Structure of the Peanut Market Administration problems: There is also problem that
Barriers to entry into the peanut market: The barriers to forced the traders to pay to police officers at road block or
entry into the market reflect the competitive relationships check point without any official permission receipts. There is
between existing traders and potential entrants. If the barriers also administrative problem of trade and marketing office of
to entry are low, new traders can easily enter into peanut the District in regulating and punishing unlicensed traders
markets and compete with established traders. However, with and traders with renewed license.
the presence of very high barriers to entry, established firms Shortage of capital: The survey result indicated that among
are difficult to stay longer in business. various barriers to entry in to the peanut business, shortage of
Among the total trader respondents 43.3% of them respond capital being the second. To enter in the market more capital
that there is no entry barrier to the market where as 56.7% of is needed because the traders have to purchase more peanut
them explained that there is entry barrier in peanut marketing while Producers regular customers are coming during
harvesting (peak purchase) time. Traders should buy
 American Journal of Plant Biology 2020; 5(3): 50-59 56

Producers available amount of peanut that they brought to costs and purchase prices of the main channel actors, margin
them, if not they will lose their customer in short period of at Producers, village assemblers, and Vendors and retailers
time. level was conducted.
Stiff competition: Illegal traders were also observed while Cost and Profitability analysis of peanut traders
acting as licensed wholesalers. Since licensed wholesalers Analysis of cost and profitability of the different traders of
spend additional cost for license renewal and income tax then peanut namely rural assemblers, roadside trader, wholesaler,
illegal traders are favored relatively than legal trader. These retailers were analyzed across the markets. During analysis
situations weaken the competitive nature of peanut marketing. of cost and profitability, the average purchased price of a
quintal of the peanut and the different average transaction
3.4.2. Conduct of Peanut Market costs associated with the marketing process of a single
Market conduct refers to the patterns of behavior that firms quintal until it reached the next actor was assessed.
follow in adopting or adjusting to the markets in which they Based on the result, average transaction costs incurred
sell or buy. It focuses on traders’ behavior with respect to across different peanut actors varies. Accordingly, the total
various aspects of trading strategies such as buying, selling, costs incurred by village assemblers, wholesalers, retailers,
transport, storage, information and financial strategy. and roadside traders of peanut were birr 9, 95.25, 74.83 and
Purchasing and pricing strategy: From the survey result 184.3 respectively. For village Vendors buying and selling of
53% of traders attract their supplier by providing fair the peanut had taken place on their village market and they
weighing. About 30 percent of trader by giving better price were not exposed to different costs associated with marketing
and 16% of peanut trader visit suppliers in order to purchase process. As a result, village Vendors exercised lowest
better quality and quantity of peanut. Most volume of the average transaction costs per quintal than any other traders.
product was sold at Wednesday and Saturday (Bambasi On the other hand, the data indicated that the amount of
market) and most traders visit these days to purchase peanut. transaction costs per quintal of peanut incurred by vendors
However, Producers also use Monday and Amusit market was birr184.3whichwasthehighestcostofalltraders. This could
(Thursday) at Bambasi to sell their peanut product. be due to higher costs related to processing raw peanut in to
Table 11. Trader’s attraction method of suppliers.
roasted one. Vendors usually purchase between 8 and 16 kg,
which they finish selling in 3-4 days. The cost of roasting
Attractive method Frequency Percent peanut is10 birr for two patra with carrying capacity of
Giving better price 9 30
around 8.5 kg, which is around 117.65 per quintal.
By visiting 5 16
Fair scaling 16 53 With respect to the profitability of peanut, the overall
Total 30 100 average profitability indifferent traders indicate that at every
stage of transaction, peanut trading business was profitable.
Source: Survey result, 2018.
Table 11 revealed that roadside traders obtained the highest
3.4.3. Performance of Peanut Market net profit per quintal that was due to the value addition on
Market performance of peanut markets was analyzed by peanut that change it from raw peanut to roasted one. Village
analyzing the marketing margin, by taking into consideration assemblers obtained least net profit per quintal due to less
associated marketing costs for key market participants. value addition in the marketing process.
Hence, on the consideration of 2017/18 production year,
Table 12. Analysis of costs and profitability of peanut for traders.

Item V. Assembler Wholesaler Retailer Vendors

Purchase price 1037 1400 1385 1675
Cost of loading -unloading - 3 5 4
Cost of transportation - 18 20 10
Collecting cost 6 - - -
Processing - 30 30 167.65
Income tax - 2.50 2 -
Other cost 3 12.25 4.33 2.66
Total cost/quintal 1046 1463.5 1444.33 1859.25
Selling price 1155 2350 2450 2800
Gross profit 118 950 1065 1125

Source: Own computation, 2019.

Marketing Margins: Marketing margin is a measure of the price differences between other points in the marketing chain,
percentage of price paid by the consumer that is maintained for example, between producer and wholesale, or wholesale
by each agent in the marketing chain. These include the total and retail, prices. Therefore, for this section of the study
gross marketing margin, producer’s gross marketing margin, marketing margin was analyzed by considering the average
and net marketing margin. However, it may also describe sales prices of different participants in the peanut market
57 Amente Negussa Bayata and Tewodros Adane Nega: Market Chain Analysis of Peanut in Bambasi District;
Benishangul Gumuz Region, Western Ethiopia

channel and considering Margin and cost calculation for top five key peanut marketing channels.
Table 13. Market margin for different market agent per qt.

Market channel participants Price (Birr/qt) Marketing cost Gross profit (Birr/qt) Gross marketing margin
Producers 1037 23 154.03 36.87
Village assembler 1155 9 118 4.21
Vendors 2800 184.3 1125 12.5
Wholesaler 2350 95.25 950 42.67
Retailer 2450 74.83 1065 3.57

Source: Own computation, 2019.

TGMM (complete distribution channel)=63.13%.
GMMp (Producer participation)=36.87%.

Results of analysis of marketing costs and margins were resident from market increases by 1 unit, then the probability
used to determine whether there were excess profits and of producers selling at farm gate increases by 3.2%, ceteris
serious inefficiencies or whether wide margins are due to paribus. Because producers want to reduce transportation
technical constraints (such as transportation bottleneck). cost and save time. The closer to the market the lesser would
be the transportation cost and opportunity time spent.
3.5. Econometric Results Therefore, the closer market channel to the producers is
Factors affecting the choice of peanut market chain preferred by the producer.
The effects of Xi on Yi were measured by OLS through the Average price in 2018/19: shows if the price of peanut
multiple linear regression models. Estimated values of the increases by 1 unit, the probability of producers selling to
coefficients and results of the multiple linear regression local Vendors increases by 4.1%, ceteris paribus. Because of
models are presented in table 14. the increase in price, producers prefer to sell their peanut
The effect of significant variables on peanut marketing product at farm gate to reduce transportation cost, save time,
Volume of peanut produced: if the volume of peanut and gain higher profits.
increased in the market, demand of the product decreases Market information: implies producer is achieved with due
with proportion to population size. Therefore, the result attention to new market information and how market trends
indicates as volume of peanut increases by 1 unit, then the influence buying. The result from this study showed,
probability of producers selling at farm gate decreases by Producers who have more market information sell their
1.6%, ceteris paribus. peanut commodity earning maximum profit compared to
Distance from the market: if the distance of household’s those Producers with insufficient market information.
Table 14. OLS estimation of determinant of peanut market supply.

Yi Coef Std. err t P >|&|

Volume -0.65*** 0.20 -3.32 0.013
Age -0.87 0.179 -4.88 0.309
Market distance -1.36** 0.624 -2.19 0.032
Average price 0.166** 0.083 2.01 0.041
Sex 5.01 2.956 1.70 0.201
Family size 9.49 1.878 0.86 0.23
Market information 27.1* 2.423 0.04 0.071
Access to credits 11.84 3.04 3.89 0.260
Education 11.11 2.51 4.42 0.862
Access to extension 7.33 2.40 3.05 0.403
-cons 39.44 11.82 3.34 0.301

n=200, R-squared=0.76, Adj R-Squared=0.74, *, **, *** indicates level of significance at 10%, 5% and 1% respectively.

actors, lack of capital, lack of credit services were the main

3.6. Peanut Production and Marketing Constraints problems of peanut marketing identified by the producers in
The most productivity impediments in the area are low the study area.
yielding varieties, drought, absence of cooperatives, shortage Peanut traders state the following problems as the main
of land, disease, absence of unshelling machine, lack of constraints against the efficient marketing of peanut. These
effective insecticide and herbicide, and shortage of oxen are corruption, adulteration, competition from illegal traders,
were the main problems of peanut production identified by and lack of marketing information and capital were the most
the respondents in the study area. important problems. The findings of this peanut production
Lack of fair weight, lack of marketing information and and marketing constraints and opportunities are therefore
price fluctuations, lack of direct contact with main market summarized in the table below using the data collected
through sample respondent’s response, key informant
 American Journal of Plant Biology 2020; 5(3): 50-59 58

interview.
Table 15. Peanut production and marketing constraint and opportunity.

Opportunities Constraints
1. The presence of suitable soil and agro-ecology for peanut 1. Producing of peanut using local seeds
production 2. Disease and pest are the major problem of the famers in the study area.
2. Experience of producers in peanut production & marketing 3. The prevalence of peanut weeds called striga and ‘haremedesa’ meaning the one
3. Willingness of producers to use new peanut production & that cause you to loss everything which attack the root of peanut.
marketing technology 4. Unavailability of coordination among research institutes, relevant government &
4. Availability of market demand throughout the year private organizations and producers in seed supply, production & marketing
5. Presence of established peanut value chain functions of peanut
6. Willingness of actors to make linkage 5. Lack of affordable financial service delivering financial institutions or poor access
7. Availability of supportive to credit services
8. Government policies and government offices organized to 6. Absence of cooperatives organized in peanut production & marketing
implement the policies (e.g. District agriculture &cooperative 7. Dynamic marketing price and lack of up to date market information for producers
promotion offices 8. Poor market access roads

Source: Survey result, 2018.

sell peanut product by market price Producers wish.

4. Conclusions and Recommendations
Acronyms and Abbreviations
4.1. Conclusions
FAO Food and Agricultural Organization
Producers of Bambasi district have long last experience Kg kilograms
and huge potential of peanut producing and the indigenous qt Quintals
practices of peanut market chaining. However, Producers still S-C-P Structure Conduct and Performance
use traditional system of peanut production and informal way
of marketing system. Peanut marketing participants were
producers/Producers, peanut Vendors, retailers, processors
and final consumers of the product. The factors volume of
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