Determinants of Market Outlet Choices by Smallholder Wheat Farmers in Farta District, South Gondar Zone, Amhara National Regional State, Ethiopia: A Multivariate Probit Approach

Abstract

In Ethiopia, wheat is an important cereal crop, particularly in farta district. It is a source of food and provides cash income for majority of smallholder farmers. To commercialize wheat producers, selecting an appropriate market channel is not an easy task because there are different factors that influence market outlet choices. Therefore, this study aimed to describe the socio-economic characteristics of wheat farmers & to identify factors that influence wheat farmers market outlet choices. A two-stage random sampling procedure was used and a total of 154 smallholder farmers were randomly and proportionally selected to collect primary data. Multivariate probit model was employed to identify factors affecting wheat market outlet choices. The result of the study shows that the probability of wheat producers to choose consumer outlet is relatively high (56.9%) as compared to the probability choosing wholesaler outlet (54.2%), retailer outlet (49.4%) and cooperatives outlet (37.6%). This shows that consumer was the most likely chosen market outlet while cooperative was the less likely chosen market outlet. The likelihood of sample wheat producer farmers to jointly choose the four outlets was 6.4% which is nearly similar compared to their failure to jointly choose them (6.6 %). The result of multivariate probit model revealed that family size (AE), Members of cooperative, Other crops price, Lagged wheat price, Oxen number, Sex of household heads, Time of sale, Age of household heads, Distance to the nearest urban market, Formal education were found to be statistically and significantly affecting the market outlet choice behavior of wheat producers. Therefore, the study suggested that improving the existing production system, giving better price for farmers and being membership for any cooperative are important strategies to select the appropriate market outlet.