ARBAMINCH UNIVERSITY

COLLEGE OF AGRICULTURAL SCIENCE

DEPARTMENT OF RURAL DEVELOPMENT AND AGRICULTURAL
EXTENSION
PROGRAM: AGRIBUSINESS AND VALUE CHAIN MANAGEMENT
VALUE CHIAN ANALYSIS OF MILK IN CASE OF GARASE WOREDA
GAMO ZONE,SOUTHERN,ETHIOPIA

SENIOR RESEARCH PROJECT

BY

DEBELA ABDISA ID No: NSR/747/13

ADVISOR: BIZUAYEHU.A ([Link].)

MAY, 2024

ARBAMINCH, ETHIOPIA

I
ACKNOWLEDGEMENT

II
LIST OF ACRONOMY AND ABRIVATION

BARP------------------------Bargaining Power of Supplier

CHACHO-------------------Channel Choice for milk marketing

CSA---------------------------Central Statistical Agency

ETB-------------------------- Ethiopian Birr

FAO---------------------------Food and Agricultural Organization

GDP---------------------------Gross Domestic Product

IFNA--------------------------Income From Non- Farm Activity

IFRI- -------------------------International Food Research Institute

ILRI---------------------------International Livestock Research Institute

SNNPRMSA---------------------Southern Nation And Nationality People Region Methodology

Statistics Agency

VMS---------------------------Volume of Milk Supplied

UNICEF----------------------United Nations Children Fund

USAID- -----------------------United States Agency for International Development

III
Table of Contents
ACKNOWLEDGEMENT..................................................................................................................II
LIST OF ACRONOMY AND ABRIVATION..................................................................................III
List of Figure.....................................................................................................................................VI
ABSTRACT...........................................................................................................................................VI
1. INTRODUCTION...........................................................................................................................1
[Link] of the Study..............................................................................................................1
1.1. Statement of the problem.............................................................................................................2
1.2. Objectives of the Study................................................................................................................3
1.2.1. General Objective................................................................................................................3
1.2.2. Specific objectives...............................................................................................................3
1.3. Research Questions......................................................................................................................4
1.4. Significance of the Study.............................................................................................................4
1.5. Scope of the study........................................................................................................................4
2. LITERATURE REVIEW............................................................................................................5
2.1. Theoretical Literature Review.....................................................................................................5
2.2. Concept of Value Chain Analysis................................................................................................5
2.3. Value Chain.................................................................................................................................5
2.4. Terms in Milk Value Chain.........................................................................................................5
2.4.1. Major concepts guiding value chain analysis.......................................................................7
2.4.2. Milk marketing systems.......................................................................................................9
2.4.3. Review of Empirical Evidences.........................................................................................10
2.5. Conceptual framework...............................................................................................................10
[Link] OF THE STUDY.........................................................................................12
[Link] of the study area...........................................................................................................12
[Link] Technique........................................................................................................................13
[Link] Size Determination......................................................................................................13
[Link] sources and methods of data collection...................................................................................15
[Link] of data analysis.................................................................................................................15

IV
 [Link] Statistics.................................................................................................................15
3.5.2. Econometric model..................................................................................................................16
3.6. Definitions of Variables and Working Hypothesis.........................................................................17
3.6.1. Dependent variable..................................................................................................................17
3.6.2. Independent variable................................................................................................................17
[Link] AND DISCUSSION......................................................................................................20
[Link] Analysis........................................................................................................................20
[Link] yield and marketing days of dairy cows..................................................................................20
4.3. Socio demographic Characteristic of Respondents (households)...............................................20
4.3.1. Age of Sampled Household Head........................................................................................20
4.3.2. Family size............................................................................................................................20
4.3.3. Education Level of Sampled Household Head.........................................................................20
4.3.4. Sex of the sampled household......................................................................................................21
4.4. Institutional characteristics of respondents................................................................................21
4.4.1. Extension Contact................................................................................................................21
4.4.2. Access to credit.....................................................................................................................22
4.4.3. Distance from the Nearest Market Places (km)....................................................................22
4.5. Economic characteristics of Respondents...................................................................................22
4.5.1. Current milk market price in birr............................................................................................22
4.5.2. Non- farm income of the household..........................................................................................22
4.6. Constraints of Milk Value Chain in the Study area....................................................................23
4.7. Opportunities for Milk Value Chain Analysis.............................................................................24
4.8. Actors and their Roles in Milk Marketing Chain........................................................................25
4.9. Marketing margin...........................................................................................................................26
4.10. Factors affecting volume of milk supplied....................................................................................27
4.10.1. Econometric Analysis............................................................................................................27
5. CONCLUSION AND RECOMMENDATION.........................................................................................30
5.1 . Conclusion...............................................................................................................................30
5.2. Recommendation............................................................................................................................31

V
6. REFERENCES.............................................................................................................................33
7. APPENDIX...................................................................................................................................37

List of tables

Table 1: - Definition of Model variables..................................................................................19

Table 2: - Demographic characteristics of samples..................................................................21
Table 3: - Institutional characteristics of samples....................................................................22
Table 4: - Economic characteristics of samples........................................................................23
Table 5. Description of major constraint of milk value chain..................................................24
Table 6. description of major opportunity................................................................................24
Table 7. Milk marketing costs and benefit shares of actors of per litter.................................26
Table [Link] analysis of multiple regression models...................................................28

List of Figure
Figure 1: -Conceptual framework.............................................................................................11
Figure 2. milk marketing channel in the study area..................................................................26

VI
 ABSTRACT
This study was to analysis milk value chain the case of Gerese woreda SNNP state. The focus of
the study were to identify the milk actors and their relationships, profit share of milk marketing
and factor affecting milk market chains in the study area . For the purpose of this study primary
data were collected from randomly selected 52 producers, 1 wholeseller, 2 broker and 5
retailers and 33 consumers in two kebele of Gerese woreda. A multistage sampling technique
was used to select the sample households. Sample size was determined by using Yamane
formula, and structured interview schedule was developed, and used for collecting quantitative
data for the study from sampled producers. Data analysis was done using descriptive statistics
tools including mean, percentage, and standard deviation statistics. The multiple linear
regression models was used to identify factors influences of milk markets participation and
market supply. The milk marketing costs were also measured using marketing margins
complemented with assessment of costs and gross profits generated by different marketing
channel actors. The finding indicates that main milk marketing chain channels in the study area
during the survey period were producers, collectors, and retailers and highest market margin in
the milk value chain were retailers who more profitable in the chain. In this regard, a total of 9
independent variables were included in the model, of which 5 were significant. These variables
include age of household head, education level, current selling price, family size and income of
non-farm activities. The results of this study suggest that development interventions, polices and
supportive services should be designed to suit the felt needs and circumstances of producers.

Keyword: value chain, profit share, value chain analysis ,actor

VII
1. INTRODUCTION

[Link] of the Study

Agriculture remains the leading sector of the Ethiopian economy accounting for about 52% of
GDP recently. During the period 2004-2008, GDP grew by an annual average of more than 10%
and the registered growth in GDP has been contributed by all sectors( Aryeetey, E., & Fenny, A.
P. ,2017). The smallholder sector is the main source of employment, agricultural GDP, export
earnings, and food and raw materials supplies to urban areas and food industries. Livestock
According to (Tegegne, A., & Feye, G. (2020) , livestock in Ethiopia contributes about 30-35%
of agricultural gross domestic product (GDP) and more than 85% of farm cash income. The
livestock sub sector also contributes about 13-16 % of total GDP.

Cattle, camel and goats are the major sources of milk and milk products in Ethiopia (Balemi et al
2021). According to the same source, cattle produce 83% of the total milk and 97% of cow milk
comes from indigenous breeds. In addition, the country is endowed with diverse topographic and
climatic conditions favorable for dairy production. These condition support use of improved,
high milk yielding breeds, and offer relatively disease free environment for dairy production.
Given the high potential for dairy production, the ongoing policy reforms and technological
interventions, success similar to the neighboring Kenya under a very similar production
environment is expected. Production shares the highest contribution to the national GDP next to
crop production.
Dairy products in Ethiopia are channeled to consumers through formal and informal marketing
systems (Bekuma, et al 2018). The formal marketing system appeared to be expanding during the
last decade with private farms entering the dairy processing. The informal market directly
delivers dairy products by producers to consumer (immediate neighborhood or sales to itinerant
traders or individuals in nearby towns). In Ethiopia, the share of milk sold in formal market is
less than 2% compared to 15% in Kenya and 5% in Uganda (Mat, B. et al 2021).

1
As an option, dairy farmers processed 93% of milk produced into milk products. Generally, the
low marketability of milk and milk products pose limitations on possibilities of exploring distant
but rewarding markets. Therefore, improving position of dairy farmers to actively engage in
markets and improve traditional processing techniques are important dairy value chain
challenges of the country (MackenWalsh, Á. et al 2022)
In Ethiopia, most consumers prefer unprocessed fluid milk due to its natural flavor (high fat
content), availability, taste and lower price (Duguma, B. 2022). The national average annual
consumption of milk is 19kg as compared to 26kg for other African countries and 100kg to the
world (Xhoxhi, O., & Szücs, T. 2024). However, Ethiopians regularly consume milk products
such as butter, cottage cheese and fermented milk. Out of the milk produced per year in rural
Ethiopia, 6.55% was sold in the market, 48.48% was home consumed, 0.41% was used for
wages in kind and 44.56% was processed into butter and cottage cheese. Out of the total butter
production in rural Ethiopia per year, 58.97% was used for household consumption and 36.58%
was sold. Out of the total cottage cheese produced in rural Ethiopia per year, 81.85% was used
for household consumption, 14.35% was sold and 3.8% was used for wage in kind and other
purposes (Tekea, M. E. ,2021).Based on national problem this study took place in the Gerese
Woreda of SNNP Region. Hence, this study attempts to fill such gaps by conducting study that
focuses on milk value chain.

1.1. Statement of the problem

Ethiopia suffers from weak market linkages on both the input and output side. Farmers either
cannot afford improved inputs or lack the knowledge to use them. Weak systems connect
agricultural outputs to processors and numerous barriers exist that prevent quality products from
reaching end users, such as insufficient packaging and storing, inability of Ethiopian products to
meet international market standards, and restrictive trade regulations (Fanta, A., & Tesafa,
F. ,2018).
A number of factors such as use of traditional technologies, limited supply of inputs (feed,
breeding stock, artificial insemination and water), inadequate extension service, poor marketing
infrastructure, lack of marketing support services and market information, limited credit services,

2
absence of producers’ organizations, and natural resources degradation (& Hailu, A. [Link] al
2021) have contributed to un-exploitation of dairy potential. In addition, policy decision on
assurance of quality and standards, product marketing, among others is taken in the absence of
vital information on how they affect the entire value chain.

Income generating capacity of dairy value chain actors through collaborative work has not been
exploited. Reason among others seems to be poor collaboration among and between value chain
actors, inefficient dairy and dairy products marketing characterized by high margins and poor
marketing facilities and services. The lack of market access that many farmers face is considered
to be a major constraint to combating poverty (Johnson, T. G. ,et al ,2016 ).

Constraints faced by dairy value chain is increasingly seen by agricultural research as important
component of any strategy for reaching the millennium goals ( Sarkar,et al 2022). Therefore,
ensuring the resilience of dairy farmers to rapidly changing markets is a key policy issue. Given
the zonal potential for dairy production, processing, marketing and consumption, there is scanty
information about the zonal dairy value chain. Investigating market accesses and value chain for
dairy products and availing pertinent information is believed to help policy makers, So, this
study try to identify and map milk value chain actors, their roles, their relationship and volume of
marketed in the study areas so as to reduce the information gap on the subject and to contribute
to better understanding and possible improvement strategies to upgrade milk value chain for the
benefit of smallholder farmers, industries, traders, and other value chain actors.

1.2. Objectives of the Study

1.2.1. General Objective

The objective of this study is to analyzes milk value chain in the study area.

1.2.2. Specific objectives

 To identify milk value chain actors, and their roles in the study area.
 To assess factors affecting of milk market by the farmers in the study area.
 To analysis the profit shares of actors.

3
1.3. Research Questions
In order to address the above issue, the study would attempt to address at least the following
questions listed below;
 Who are the actors in milk value chain?
 What are the major determinants of volume marketed of milk in the study area?
 Who has the highest market margin in the milk value chain actors in the study area?

1.4. Significance of the Study

The study is generated valuable information on value chain analysis of dairy that can assist
policy makers at various levels to make relevant decisions to intervene in the development of
dairy milk production, marketing, processing and designing of appropriate policies and
strategies. The finding of the study can also be useful to input suppliers, producers, traders,
consumers, and marketing agents in the study area to make their respective decisions.

1.5. Scope of the study

The study was focused on identifying and mapping dairy milk value chain actors and their
relationships, estimating dairy marketing costs, margins and value share of the value chain actors
and identify factors affecting volume of dairy milk marketed by the farmers in the study area.

4
2. LITERATURE REVIEW

2.1. Theoretical Literature Review

2.2. Concept of Value Chain Analysis.

The value chain concept is a systems approach that evolved over time drawing from different
disciplines (Naim, M. M., & Gosling, J. 2023). However, the concept was used to describe the
flow of physical input and services in the production of a final product and in terms of its
concern with quantitative technical relationships. The framework paid special attention to how
local production systems are linked to processing industry, trade, export and final consumption
(Dhehibi, B et al 2018).
A marketing chain is defining the flow of commodities from producers to consumers that brings
into place economic agents who perform complementary functions with the aim of satisfying
both producers and consumers (Gunasekaran et al, 2008). A marketing chain may link both
formal and informal market agents. A marketing chain may connect one or more milk or dairy
sheds.

2.3. Value Chain

The concept of a commodity chain is the base for the further developed global commodity chain
by Gereffi and others. It seeks to explain the dynamics of the distribution of value chain
activities in a capitalist world economy. The main driver is the international division of labor
between different regions due to varying labor-intensities of production and manufacturing
activities within a chain (Combemale, C. et al,2024). The origin of value chain analysis is
discussed from two distinct traditions: the French ‘filière concept’ and Wallerstein’s concept of a
commodity chain (Pietrzak et al., 2020).

2.4. Terms in Milk Value Chain

Marketable and marketed surplus: Marketable surplus is the quantity of produce left out after
meeting farmer’s consumption and utilization requirements for kind payments and other
obligations (gifts, donation, charity, etc.). Marketed surplus shows quantity actually sold after
accounting for losses and retention by farmers, if any and adding previous stock left out for sales.

5
Thus, marketed surplus may be equal to marketable surplus, it may be less if the entire
marketable surplus is not sold out and farmers retain some stock and if losses are incurred at the
farm or during transit (Karna, S. K. 2019). The importance of marketed and marketable surplus
has greatly increased owing to recent changes in agricultural technology as well as social pattern.
In order to maintain balance between demand for and supply of agricultural commodities with
rapid increase in demand, accurate knowledge on marketed/marketable surplus is essential in the
process of proper planning for procurement, distribution, export and import of agricultural
products (Karna, S. K. 2019).
Market access: Some studies might view market access as a walking time in minutes or a
walking distance in kilometers which farmers spend or travel to sell their products. But in this
study market access is outlets for dairy farmers to sell their milk and milk products. The outlets
can be processors, cooperatives, hotels, restaurants, consumers and traders. It also help to know
the proportions of the products sold to each outlet and reasons individual farmer characteristics
and attributes of each market alternative for selling.
Value addition: Is simply the act of adding value to a product, whether you have grown the initial
product or not. It involves taking any product from one level to the next (Getachew, T. 2019). It
refers to increasing the customer value offered by a product or service. It is an innovation that
enhances or improves in the opinion of the consumer an existing product or introduces new
products or new product uses. Adding value does not necessarily involve altering a product; it
can be the adoption of new production or handling methods that increase a farmer’s capacity and
reliability in meeting market demand. For farmers, value addition has a particular importance in
that it offers a strategy for transforming an unprofitable enterprise into a profitable one. The
farmer is not only involved in production of a raw commodity but also takes part in value
addition and distribution. This allows the farmer to create new markets or differentiate a product
from others and thus gain advantage over competitors (Berti, G., & Mulligan, C. 2016). Value
addition activities are essentially meant to add such utilities as form utility, time utility, place
utility, information utility, among others.

6
Value chain: Is the sequence of activities required to make a product or provide a service
(Simatupang, T. [Link] al., 2017). In this study value chain includes input suppliers, producers,
traders (wholesaler and retailers), processors and consumers.
Value chain analysis: examines the full range of activities required to bring a product or service
from its conception to its end use, actors that perform those activities in a vertical chain and final
consumers for the product or service. It is used to identify how poor people, small enterprises or
other target groups can play a larger and more active role in a particular value chain and how a
value chain's structure or characteristics can be changed to enable it to grow in pro poor ways. It
is increasingly used to help develop a competitive strategy for dairy production. It enables the
poor to engage more productively in markets, the thinking goes and poverty be reduced through
market engagement. „Making markets work for the poor emphasizes the need to unblock access
to profitable market opportunities. It is an original methodological tool that enables design teams
in the product definition phase to comprehensively identify pertinent actors, their relationships
with each other and their role in the product’s life cycle (Kuhlenkötter et al, 2017).
Value chain actors: Are those involved in supplying inputs, producing, processing, marketing,
and consuming agricultural products (Maestre et al, 2017). They can be those that directly
involved in the value chain (rural and urban farmers, cooperatives, processors, traders, retailers,
cafes and consumers) or indirect actors who provide financial or non-financial support services,
such as credit agencies, business service and government, researchers and extension agents.
Marketing margin: Is percentage of final weighted average selling price taken by each stage of
marketing chain. Total marketing margin is the difference between what a consumer pays and
what a producer receives for the product. In other words it is the difference between retail price
and farm gate price (Rajapaksha, R. M. P., & Wickramasinghe, Y. M. 2018). Marketing margin
in an imperfect market is likely to be higher than that in a competitive market because of the
expected abnormal profit. But marketing margins can also be high, even in competitive market
due to high real marketing costs.

7
2.4.1. Major concepts guiding value chain analysis
There are four major key concepts guiding agricultural value chain analysis (Devaux et al, 2018).
These are effective demand, production, value chain governance, and upgrading:
Effective demand: Agricultural value chain analysis views effective demand as the force that
pulls goods and services through the vertical system. Hence, value chain analysis need to
understand the dynamics of how demand is changing at both domestic and international markets,
and the implications for value chain organization and performance. Value chain analysis also
needs to examine barriers to the transmission of information in the changing nature of demand
and incentives back to producers at various levels of the value chain (Mangla et al, 2022).
Production: In agricultural value chain analysis, a stage of production can be referred to as any
operating stage capable of producing a saleable product serving as an input to the next stage in
the chain or for final consumption or use. Typical value chain linkages include input supply,
production, assembly, transport, storage, processing, wholesaling, retailing, and utilization, with
exportation included as a major stage for products destined for international markets. A stage of
production in a value chain performs a function that makes significant contribution to the
effective operation of the value chain and in the process adds value (Wisner et al 2021).
Value chain governance: Governance refers to the role of coordination and associated roles of
identifying dynamic profitable opportunities and apportioning roles to key players (Havice, E. et
al 2017). Value chains imply repetitiveness of linkage interactions. Governance ensures that
interactions between actors along a value chain reflect organization, rather than randomness. The
governance of value chains emanates from the requirement to set product, process, and logistic
standards, which then influence upstream or downstream chain actors and results in activities,
roles and functions. Governance is about defining the terms of chain membership,
incorporating/excluding other actors accordingly and allocating to them value-adding activities
that lead agents do not wish to perform.
Value chains can be classified into two based on the governance structures: buyer-driven value
chains, and producer-driven value chains (Dubey et al, 2020). Buyer-driven chains are usually
labor intensive industries, and so more important in international development and agriculture. In
such industries, buyers undertake the lead coordination activities and influence product

8
specifications. In producer-driven value chains which are more capital intensive, key producers
in the chain, usually controlling key technologies, influence product specifications and play the
lead role in coordinating the various links. Some chains may involve both producer and buyer
driven governance. Yet in further work (Alexander, R. 2020 ) it is argued that governance, in the
sense of a clear dominance structure, is not necessary a constitutive element of value chains.
Value chain upgrading: Upgrading refers to the acquisition of technological capabilities and
market linkages that enable firms to improve their competitiveness and move into higher-value
activities (Oliveira et al, 2021).
Upgrading in firms can take place in the form of:-Process upgrading: increasing the
efficiency of internal processes such that these are significantly better than those of rivals, both
within individual links in the chain, and between the links in the chain.
 Product upgrading: introducing new products or improving old products faster than
rivals. This involves changing new product development processes both within
individual links in the value chain and in the relationship between different chain
links.
 Functional upgrading: -increasing value added by changing the mix of activities
conducted within the firm or moving the locus of activities to different links in the
value chain.
 Chain upgrading: moving to a new value chain. For example, Taiwanese firms moved
from the manufacture of transistor radios to calculators, to TVs, to computer monitors,
to laptops and to WAP phones (Kaplinsky and Morris, 2012).

2.4.2. Milk marketing systems

Milk is channeled to consumers through formal and informal marketing systems. Until 1991,
formal market of cold chain and pasteurized milk exclusively dominated by dairy development
enterprise which supplied 12% of total fresh milk in Addis Ababa (Kassa, F et al,2020 ). Even
then, proportion of total production being marketed through formal markets remains small
(Pinto-Correia et al, 2021). The informal market involves direct delivery of milk by farmers to
individual consumers in immediate neighborhood and sales to itinerant traders or individuals in

9
nearby towns. In informal market, milk may pass from producers to consumers directly or it may
pass through two or more market agents. It is characterized by no licensing requirement to
operate, low cost of operations, high farmer price and no regulation of operations. In some parts
of the country, creation of new market accesses through milk marketing cooperative brought
major improvement in production, marketing and consumption behavior of dairy households.
The new market accesses may promote involvement in more intensive dairy production (Pulina
et al., 2018).

2.4.3. Review of Empirical Evidences

Different scholars conducted research on agricultural commodities marketing using market
concentration ratios, marketing costs and margins and profit analysis. The result indicates that
margin and profit received by marketing actors and level of market efficiency varied with respect
to location and size of marketing channel. (Demisse, G. 2016) using marketing cost and margin
analyzed performance of cattle marketing system In Borena and found that butchers at Addis.
(Girmay ,et al 2020) on dairy marketing also captured some variables that influence dairy supply.
The variables were household demographic characteristics like sex and household size,
transaction cost, physical and financial wealth, education level, and extension visits. Household
size, spouse education, extension contact, and transaction cost affects positively while household
education affects negatively.
There are a number of empirical studies on factors affecting the marketable supply of agricultural
commodities. For instance, (Lemi, G. D. 2020) identified factors affecting the marketable surplus
of sesame by using OLS regressions. He found that sesame marketable supply was affected by;
time of sale, use of improved production inputs, membership in local organization, extension
contact and distance to market. (Hegena, B., & Teshome, A. 2022). applied Heckman two-stage
model to analyze the determinants of vegetable market supply.

2.5. Conceptual framework

On the basis of above theoretical and empirical framework, the study conceptualizes the
independent variable (factors affecting volume of milk supplied) as demographic, economic, and

10
institutional factors. Therefore, impact of all these independent variables were directed to
dependent variable (volume of milk supplied) through one way arrow from different direction.
Therefore, researchers analyzed the influence of independent variable on dependent variables on
below mentioned conceptual framework.

Demographic factor
Economic factor
 Age
 Sex  Current milk market price
 Family size  Income from nonfarm
 Education level activity

Volume of milk supplied

Institutional factor

 Distance from the nearest

market
 Credit access
 Extension contact

Figure 1: -Conceptual framework

Source: -Author construct by reviewing related literature (2024)

11
[Link] OF THE STUDY
[Link] of the study area
3. The study were conducted in Gerese Woreda (one of the SNNP special woreda surrounding
Arbaminch town and administrated by the Gamo zone). This place is situated in North Omo,
Southern, Ethiopia, its geographical coordinates are 5° 55' 0" North, 37° 18' 0" East and with
an area of 859 Km^[Link] Woreda is 55Km distance from Arbaminch town. In Gerese
Woreda, the altitudes can range from approximately 1,500 meters above sea level in the
lower-lying areas to over 3,000 meters above sea level in the higher elevations(CSA,2019).
This variation in altitude contributes to the diverse climate and ecological conditions within
the woreda. The area has bimodal rainfall pattern. One is a belg rainfall season (usually from
December to April) and the other is a summer season (meher) which covers months from
June to September accounting more than 80% of the annual rainfall. The average, maximum
and minimum annual temperature of the area is 24, 27, and0.1°C, respectively. Crop-
livestock mixed farming is a typical agriculture practice in the area. Livestock production
consists of cattle, sheep, goats, equines and poultry. Cattle are kept for dairy and meat. Dairy
farm is carried out in the area both in large-scale dairy production system for commercial
purpose and in smallholder farming system. Most of the smallholder dairy farms keep
indigenous breeds although some farmers use crossbreds of Boran-Friesian cows, while
commercial dairy farms use exotic and crossbred dairy cows.

12
 Total population

The total population of Gerese Woreda in the Southern Nations, Nationalities, and Peoples’
Region (SNNP) of Ethiopia is approximately 78,000 people. This figure is based on the most
recent available data and may be subject to change due to population growth and other
demographic factors.

The target population is 548 households who participate in milk production, processing,
consuming and diary breeding activities.

[Link] Technique
A multi-stage sampling technique was used to identify the district, kebeles, sample respondents,
and other participants of dairy products. At the first stage Gerese woreda was purposively
selected because of production potential of milk producs. At the second stage two kebeles
namely Zazea and Zala Fisheto kebele in Gerese woreda was selected random because of
availability of the required data to access milk marketing chains and determinants of milk
households. Finally, the household’s lists in those kebeles were identified. Sample size in each
kebele was determined based on proportion to size of the households. Accordingly, from Zazea
and Zala Fisheto kebele a total of 40 and 53 sample respondents would be selected respectively.
Primary survey was conducted in selected kebeles to obtain the total number of households that
have milk animals in the two kebeles that have potential for marketing milk production.

[Link] Size Determination

Sampling technique is the systematic way to select the sample from the given area and Gerese
Woreda in Gamo Zone was selected purposively. This is by considering the distance availability
of the area and shortage of time and budget.

Producer………………………………………480

Wholesaler……………………………………..8

Retailer…………………………………………50

13
 Broker..................................................................10

To Determine the number of consumers is difficult because almost all are who lives in the study
area with the major classification of community, college students and restaurants in some
amount, so I would like to use random of 33 consumers.

Consumer………………………………………20

So, by using sloven's formula sample size was obtained as follows

N
n
1  N (e 2 )

Where:

n=total number of sample size

N=total number of population

e=marginal error (0.1)

For producer =480/1+480(0.1)2=83

For Wholesaler =8/1+8(0.1)2 =7

For Retailer =50/1+50(0.1)2 =33

For Broker=10/1+10(0.1)2 =9

Therefore the total respondent about 548 was needed for interview. But due to the limitation of
time and budget, the sample respondent from each stratum to consists of 60 sample size. To
select sample size from the stratum,

Producer N1=480 Retailer N3=50

Wholesaler N2= 8 Broker N4 =10

Total population of 548 =N.

Stratified sampling formula = n (N1/N)

14
 For producer N1=60(480/548) =52

For wholesaler N2=60(8/548) =1

For retailer N3=60(50/548) =5

For broker N4=60(10/548) =2

Then the total respondent of the interview was 52p+1w+5r+2b+33c=93 sample respondent for
the study area.

[Link] sources and methods of data collection

The data was collected using both primary and secondary source of data. Primary data’s were
collected through encompassed data includes detained with input suppler, farmer, traders,
consumers , agricultural expertise and survey, an interview to the dairy cow milk producer
households to identify factors affecting milk market supply and dairy household milk market
participation, while the secondary source would include different types of reference books,
materials like strategic plan document of Gerese woreda agricultural administrative office and
office reports sample done by other professionals which deals about this issue and other written
materials through opening internet service. The study was employed both qualitative and
quantitative data.

[Link] of data analysis

Both descriptive statistics and econometric analysis was employed to know the actors and factors
influences of milk markets participation and market supply in the market chain. The
methodology used in this study was adopted more of quantitative. The data collected from
sampled respondent (household) was analyzed and interpreted by using statistical tools based on
frequency, and percentage using tabulation. The data from key informants also were incorporated
in the data presentation and discussion part accordingly.

15
[Link] Statistics
The study was employed descriptive statistics such as mean, percentages, standard deviation,
table of frequency, minimum and maximum to describe the demographic and socio-economic
situation of the respondents.
Data analysis employed descriptive statistics such as percentage, and comparison. Because
precise costs are frequently difficult to determine in many agricultural marketing chains for the
reasons that costs are often cash and imputed, the Total Gross Marketing Margin (TGMM) was
calculated (Scott, 1995). It is expressed as a percentage of the difference between end buyer and
first seller prices,
End Buyer price - Farmer' s Price
100
TGMM= End Buyer Price ………… (1
It is useful to introduce the idea of farmer’s participation”, farmers portion, or farmer’s Gross
Marketing Margin (GMMP) which is the portion of the price paid by the consumer that goes to
the farmer. The farmer’s margin is calculated as
Price paid by End Buyer - Gross Marketing Margin
× 100
GMMP= Price Paid by End Buyer .. (2)

The consumer price share of market intermediaries is calculated as:-

SP  BP
MM  X 100
EBP

Where: MM = Marketing margin (%)

SP = Selling price at each level

BP = Buying price

EBP = End buyer price

In marketing chain with only one trader between producer and consumer, the net marketing
margin (NMM) is the percentage over the final price earned by the intermediary as his net

16
income once his marketing costs are deducted. The percentage of net income that can be
classified as pure profit (i.e., return on capital) depends on the extent to which factors such as the
middleman`s own, often imputed, salary are included in the calculation of marketing costs.

3.5.2. Econometric model

Econometric analysis was used to estimate the fundamental relationship between the dependent
variable and the explanatory variables. It is crucial to understand the effects of different factors
on milk marketable surplus and channel choices of producers. Hence, this subsection provides
model specification for both analyses one after the other.

Multiple linear regressions for market supply of milk:-For identifying the household level
marketable surplus and factors affecting quantity of milk supplied to the market, multiple linear
regression models will be used as:
y i=b o +b i x i+ ui
Where y i= volume of milk supplied to the market in liters in 2018,
b o = Intercept
b i = Coefficient of ith explanatory variables
x i= A vector of explanatory variables
ui= Disturbance term

3.6. Definitions of Variables and Working Hypothesis

3.6.1. Dependent variable

Volume of Milk Supplied (VMS): Volume of milk supplied to the market by the sampled house
hold is a continuous dependent variable measured in liters. It represents the actual volume of
milk supplied to the market farm households.

17
3.6.2. Independent variable
Age of Household Head (AGE): It is a continuous variable and measured in years. Age is a
proxy measure of farming experience of household head. Aged households are believed to be
wise in resource use, on the other hand young household heads have long investment horizon and
it is expected to have either positive or negative sign effect on market participation and volume
of milk supply.
Sex of the Household Head (SEX):This is dummy variable (takes a value of 1 if the household
head is male and 0 female). (Byron et al, 2012) revealed that male-headed households were more
likely to participate and supply to the market as sellers with significantly. However in case of
milk marketing female households have the main role and being male households will expected
to have negative effect on market supply.
Family Size (FAMI): This variable is continuous variable and refers to the total number of
family members and measured in adult equivalents in the households. Economically active
family members within a given farming household affect dairy production activities positively
(Million and Belay, 2004). Thus, in these respect family size will be expected to have positive
impact on sales volume. Based on (Muriuku and Thorpe;2007) large family size requires large
amount of consumption. Therefore, family size can affect the sale volume of milk marketed
negatively.
Education Level of the Household Head (EDUC):It is categorical variable measured
classifying the educational level of the households by classes. Education is hypothesized to have
positive influence on volume marketed. (Holloway etal.1999) observed that education and visits
by an extension agent having significant and positive effect on quantity of milk marketed in
Ethiopia highlands.
Distance the Nearest Market (DIST): It is continuous variable that expres the location of the
milk producing household from the nearest milk market and is measured in kilometer. The closer
the market, the lesser would be the transportation charges, reduce walking time and other
marketing cost, minimize loss due to handling, better access to market information and facilities.
In this study, distance from nearest milk market is hypothesized to be positively.

18
Credit Access (CRED):This is a dummy variable, which indicates credit taken for milk
production. Access to credit has a capacity to enhance the financial capacity of the farmer to
purchase the input. (Ayelech, 2011) found that credit is important to facilitate the introduction of
innovative technologies and for input and output marketing arrangements. Therefore, it is
hypothesized that access to credit will be positive influence on level of production and sales.
Extension Contact (EXTE): this is a dummy variable representing extension service as a source
of information on technology and measured in number of contacts. Extension agents assist
farmers in dissemination of new technologies, thus speeding up the adoption or use of new
technologies and practices (Abraham, 2013). Producers who have had longer extension contact
are expected to have more production and hence more market supply. Extension contact is
expected to have positive effect for market supply through its stimulation of production

Current milk market price (SELLP): This is a continuous variable measured in terms of price
in ETB per litter. It represents the average price of milk that producers receive during the
production year at different months to different channels. Therefore, the market price is expected
to have a positive relationship with milk market supply.
Income from nonfarm Activity (IFNA): this is dummy variable that refers to the source of
income other than milk supply. (Abrahm, 2013) found that as the income from nonfarm activity
increases, the market supplies to sell to the market decreases. Hence it is expected that income
from nonfarm activity would be negatively affect the market supply.
No table of figures entries found.

Table 1: - Definition of Model variables

Independent Description [Link] Measurement Expected

variable variable sign
AGE Age of house hold Continues Year -ve
EDUC Education level of Categorical Year of schooling +ve
house hold
FAMI Family size Continues Adult equivalent -ve

19
EXTE Extension contact Dummy (1=have otherwise 0) +ve
SELLP Current selling price Continues Birr +ve
DIST Distance to the Continues Kms +ve
nearest market
CRED Access to credit Dummy 1=have otherwise 0 +ve
SEX Sex of house hold Dummy 1=male otherwise 0 -ve
head
IFNA Income from nonfarm Continues Birr -ve
activity

[Link] AND DISCUSSION

[Link] Analysis
This section presents the results of descriptive and econometric analysis of the study. The
descriptive statics result on cow milk marketing especially, marketing channel and the role as
well as linkage of marketing agent. It also results of analysis of costs and margin for a key
marketing and identify factors affecting cow milk participation and marketed supply in the area.
Cow milk was chosen for this study because it represents the two important traded dairy products
during survey period. Cow butter was used for household consumption while milk was used as
food and source of income, while econometric analysis was done to identify factors that affect
farm households’ decision to participate in dairy market.

[Link] yield and marketing days of dairy cows

The average milking day or lactation period in the study area was found to be 180 days for local
dairy cow from survey result and average yield per day per cow the study area was estimated to

20
be 2.19 litters from 180 dairy cows. More over this study result revealed that the total milk
production for cow per day the study was calculated to be 394.2 litters.

4.3. Socio demographic Characteristic of Respondents (households)

4.3.1. Age of Sampled Household Head

The Survey result shows that an average age in milk production of household head 48.92 years.
The maximum age in milk production observed was 65 years and the minimum was 30 years
with standard deviation of 10.153 years. The farmer’s age in milk production in reality long year
in milk production has influence on volume of milk supply.
4.3.2. Family size

The average household size of the respondents is 5.32. The minimum household size is 1while
the maximum is 11 respectively.
4.3.3. Education Level of Sampled Household Head
Educational status of the household head is also an important element in smallholder economic
activities. The survey result revealed that 82.8% of the respondents are literate while the rest
17.2% of them are illiterate from the milk production house hold head of the study [Link]
reason for high percentage of educated milk producer household heads was the provision of basic
education.

4.3.4. Sex of the sampled household

During the survey period 60.2% were male headed households and 39.8% were female headed
households in the study areas. Therefore, this survey result indicates many of respondent are
male and some of them are female. Researcher concludes from this unbalanced size of male and
female have its own impact on milk value chain analysis and marketing.
Table 2: - Demographic characteristics of sampled household

Variable Mean SD Max Min

Age 48.92 10.153 65 30
Familysize 5.32 2.916 11 1

21
 Variable Response Frequency Percent
Education level Illiterate 16 17.2
grade 1-4 38 40.9
grade 5-8 21 22.6
grade 9-12 18 19.4
Sex Female 37 39.8
Male 56 60.2

Source: Own Survey, 2024

4.4. Institutional characteristics of respondents

4.4.1. Extension Contact
The survey data indicates that majority of sampled household head get extension services from
development agents. Out of the total respondents 68.8% those were get extension services while
the remaining 31.2% were not get extension services.

4.4.2. Access to credit

The survey result shows that 58.1% of sampled dairy households were in need of credit, although
their experience with credit use is high. The survey result depicts of sampled dairy household in
the milk value had access to dairy production credit.
4.4.3. Distance from the Nearest Market Places (km)
The survey result shows that the average distance travelled by sampled household head to the
nearest market was 21.26 in kilometer. The minimum and maximum distance travelled to the
market by farmers is computed as 18 km and 25 km respectively with standard deviation of
2.418.
Table 3: - Institutional characteristics of sampled household

Variable Mean SD Max Min

22
 Distance to nearest market 21.26 2.418 25 18

Variable Response Frequency Percent

Credit Access No 39 41.9
Yes 54 58.1
Extension No 29 31.2
contact Yes 64 68.8

Source: Own Survey, 2024

4.5. Economic characteristics of Respondents

4.5.1. Current milk market price in birr

The survey result shows that the average milk market price per month of household is computed
1505.05. The minimum and maximum purchase price of household was 270 and 4200 with
Standard deviation of 877.498 respectively.
4.5.2. Non- farm income of the household
Non-farm income refers to the portion of farm household income obtained from the farm
including non-farm wages and salaries, pensions, and interest income earned by farm families.
Then, from the survey result 55.9% of respondents are not participate in nonfarm activities, but
44.1% of respondents are participant in nonfarm activities and to generate additional income.

Table 4: - Economic characteristics of sampled household

Variable Mean SD Max Min

Current milk market price 1505.05 877.498 4200 270

Variable Response Frequency Percent

Income from non- No 39 41.9
Yes 54 58.1

23
 farm activity

Source: Own Survey, 2024

4.6. Constraints of Milk Value Chain in the Study area

According to the survey results show that there are a major problem identified constraint to milk
production in the study area 51.6% of the respondents in the study area reported shortage of feed
cow and 15.1% of them reported lack of man power,12.9% of respondents reported that price
fluctuate of milk and milk products 11.8% of respondents reported that the limitations of
processing material and 8.6% of capital limitations were the major challenges in decreasing milk
production in study area.

Table 5. Description of major constraint of milk value chain.

24
 Cumulative
Respondent Frequency Percent Percent

Feed shortage 48 51.6 51.6

Price fluctuate 12 12.9 64.5

Capital limitation 8 8.6 73.1

Man power scarcity 14 15.1 88.2

Lack of improved technology

11 11.8 100.0

Total 93 100.0

4.7. Opportunities for Milk Value Chain Analysis

According to the survey results show that there are a major opportunities identified to milk
production in the study area. Out of 93 respondents in the study area 36.6%, reported develop
skills and 23.7% good whether condition,21.5% to increases income of the respondent and
18.3% good governance of the study area.
Table 6. Description of major opportunity

Respondent Frequency Percent Cumulative Percent

Enhance the income 20 21.5 21.5

Develop the skills 34 36.6 58.1

Good governance 17 18.3 76.3

Good whether condition 22 23.7 100.0

Total 93 100.0

4.8. Actors and their Roles in Milk Marketing Chain

Though good volume and quality of milk product is produced unless it is sold properly, the
farmers may not be benefited. This section describes different actors of milk marketing channels

25
agents such as producers, collectors, retailers, and consumers and their roles in increasing the
marketing efficiency of milk product.

Producers/farmers: Producers are small scale farmers and they sell their milk products to
different buyers or participants of milk market. As the survey results show farmers sell their
products to final consumers, retailers and collectors. According to the sample respondents, in the
production year 2010, producers sold about 44.1% of their mil products to consumers. The other
purchasers (39.8%, 32.3%) were retailers’ collectors respectively. Collectors buy milk products
from producers at their home with the relatively minimum price. There is slight difference
between prices at home and at market place. This indicates that there are mediators between
farmers and consumers with different market channel choices of producers.

Collectors: Collectors purchase the milk products directly from farmers at their home or in the
small village markets for resell to other market retailers or consumers who come from different
parts of the district at the district market center. They are fragmented participants but they play
significant role in collecting and supplying the product to the market. Even though their role
enables farmers to reduce the cost of transportation and other market related costs, they purchase
mil products from farmers with low price as compared to consumers since they purchase output
from directly to the producer and may give money as a form of credit for producers without
interest before they got the product.

Retailers: Retailers are the participant’s involved in the selling of milk product to final
consumers. There are few retailers who divide large-amount of produce and sell it to consumers
in small units. The majority of retailers found at the district center, having their own retail shops.

Consumers: They are the end users of milk product through purchasing from different
marketing agents. In the study area, milk product consumed in two ways i.e. milk consumption .

Collector 70%

32.3%

26
 39.8 % Retailer Consumer

Producer

44.1%

Figure 2. milk marketing channel in the study area

Source: -Survey result 2024

4.9. Marketing margin

The term market margin is commonly used to the difference between producer price of an
equivalent quantity and quality of a commodity. However, it may also describe price difference
between other points in the marketing chain for example between producer and collector, or
collectors and retailer’s prices.

Table 7. Milk marketing costs and benefit shares of actors ofper litter
Cost type Producer Collector Retailer Horizontal sum
Production cost 12 ----------- -------- 12
Purchase price ------ 14 15.50 29.50
Marketing cost 8.25 8.75 8 25.00
Total cost 20.25 22.75 23.50 66.50
Sale price 25.75 26.90 30.20 82.85
Marketing margin 13.75 12.90 14.70 41.31
%share of 33.25% 31.19% 35.55% 99.99%
marketing margin
Profit margin 5.5 4.15 6.70 16.35
%share of profit 33.64% 25.38% 40.98% 100%
margin
Source2. Own computation 2024

For this section of study by considering the sales price of different participant in the milk market
channel (farmers, milk collectors, retailers and consumers).

27
Retailers are the most profitable form in milk marketing chain. Furthermore, retailers themselves
are profitable more if they sold milk products to end users. Thus, government should play a vital
role by affording access to training and transport facilities for producers if it is required to
maximize their profit share of margin like that of retailers.

4.10. Factors affecting volume of milk supplied

4.10.1. Econometric Analysis
Before running the multinomial logit regression model for hypothesized variables, it is necessary
to test the problem of multicollinearity or association among the potential independent variables.
There are two measures that are often suggested to test the existence of multicolinearity. These
are: Variance Inflation Factor (VIF) for association among the continuous explanatory variables
and contingency coefficients for dummy variables (see Appendix 1 and 2). VIF shows how the
variance of an estimator is inflated by the presence of multicolinearity (Gujarati,2003)

A statistical package known as Stata was employed to compute the VIF Values. Once VIF
Values were obtained the Rj2 Values can be computed using the formula. The larger the value of
VIFj the more collinear the variable X j. As a rule of thumb, if the VIF of a variable exceeds 10,
there is multicolinearity. To avoid serious problems of multicollinearity, it is quite essential to
omit the variable with 10 and more from the logit analysis(Gujarati,2003). Thus, the variance
inflation factor (VIF) was employed to test the degree of multicollinearity among the continuous
variables.

Shown in Appendix 1, the values of VIF for four continuous variable were found to be small(i.e.
value less than 10) indicating the data have no serious problem of multicoliniarity. As a result, all
four continuous explanatory variables were retained and entered into multinomial logistic
regression analysis.

Based on the appendix 2 contingency coefficient result, the computation divulges that there was
no problem of association among dummy variable.

28
Table 8 Econometric analysis of multiple regression models

[95%
VMS Coef. Std. Err. T P>t Interval]
Conf.

IFNA -19.52707 10.68893 -1.83 0.071* -40.78692 1.732778

EXTE 4.132601 4.621945 0.89 0.374 -5.060261 13.32546

CRED -5.435821 10.0605 -0.54 0.590 -25.44576 14.57411

DIST -.2432482 .8834965 -0.28 0.784 -2.000487 1.513991

FAMI -1.850681 .84781 -2.18 0.032** -3.536941 -.1644213

SELLP .055996 .0053122 10.54 0.000*** .0454303 .0665617

EDUC 6.102545 3.08496 1.98 0.051* -.0333166 12.23841

SEX 6.406359 4.604698 1.39 0.168 -2.7522 15.56492

AGE -1.129136 .4675123 -2.42 0.018** -2.058999 -.1992729

_cons 114.5157 38.21015 3.00 0.004 38.51722 190.5141

Source: model output.

Number observation= 93 F (9, 83) = 178.13 R2= 0.9396
Prob > F = 0.0000 Root MSE = 19.359
NB ***, ** and * are significant at 1%, 5% and 10% probability level respectively.

Multiple regression analysis shows that five out of nine independent variables included in the
models significantly determine volume of milk supply in the study area. Hence, five households’
age, family size, current selling price, education and income of nonfarm activities are the
independent variables assumed to explain significantly the dependent variable using the specified
model.

29
As indicated in Table 8, the coefficient of determination (R2) value is 0.9396. It means that
about 93.96% of the variation in the dependent variable is explained by the independent
variables, indicating relatively high explanatory power (goodness of fit) of the model.
The regression analysis result reveals that most of the coefficients of the explanatory variables
included in the model have negative sign. The negative sign of the coefficients indicates that the
explanatory variables influence the dependent variable negatively. However, the level of
significance varies from one independent variable to the other.
Income of non-farm activity: The regression model analysis reveals that income of non-farm
activity in the study area found to have a negative relationship with the volume of milk supplied.
The estimated coefficient of this variable support the proposed hypothesis and it is significance
at 10% level of significance. Other being constant one-unit increase in income of nonfarm
activity, volume of milk supply decreases by 19.25707unit.
Family size: - The regression model analysis reveals that income of family size in the study area
found to have a negative relationship with the volume of milk supplied. The estimated
coefficient of this variable support the proposed hypothesis and it is significance at 5% level of
significance. Other being constant one-unit increase in family size, volume of milk supply
decreases by 1.850681unit.
Current selling prices: - The estimated coefficient of this variable supports the proposed
hypothesis and it is significance at 1% level of significance, other factors being constant. This
implies that a one percent increase in selling price, volume of milk supply increases by
0.055996%.
Education level: -The coefficient of education has positive impact on the volume of milk
supplied and significant at 10% level. It implies that better educated farmers produce milk
efficiently. The result indicates that highly educated farmers are the more supplies of volume of
milk efficiently than low educated ones. May be the highly educated farmers are likely to have
easier access to information and the ability to understand information more easily.

Age of Household: Age also shows significance relation with volume of milk supplies negatively.
It is indicating that the increase in the age of the milk producer affects the volume of milk

30
supply. Age of household was statistically significant at 5%level of significance with negatively
related to the volume of milk supplied.

5. CONCLUSION AND RECOMMENDATION

5.1 . Conclusion
This study was aimed at identifying milk value chain actors, assess the challenges and
opportunities of milk value chain analysis and analysis the profit share of actors in the study
area were the objectives of the study.
The data was generated from both primary and secondary sources. The primary data was
collected through questionnaires, individual interview and organizing group discussion. The
data was focused on the milk value chain analysis. The data from producer farmers was
collected through semi-structured interview questionnaire. Key informant interview was held
with traders, consumers and district office of the agriculture. Moreover, secondary data on
milk marketing chain was gathered from village leaders, and district Agriculture and Rural
Development offices from annual reports.
The study used multi-stage sampling techniques to select the district, kebeles, producer
households and chain actors, respectively. The analysis was made using descriptive statistics
and econometrics model using SPSS and STATA software’s. The respondents of the study
are veiled that the main marketing chain actors are milk producing farmers, collectors,
retailers and consumers. Collectors were engaged in purchasing milk at farm gate and sell at
to own markets to retailers or end users. Retailers purchase dairy products from collectors
and sell to consumers.
To conclude that in the study area has a long tradition and indigenous culture of milking.
However, there is a potential constraint to produce high quality products with maximum
yield rate. There was also disorganized marketing system of dairy products in the study area.
Therefore, taking actions that can solve or minimize the identified and comprehensively
discussed bottle necking factors of the milk production and marketing in the study area, it is
important to improve the well-being of the producers.

31
5.2. Recommendation
Based on the findings of the study, the following recommendations are forwarded.
The study identified that retailers are the most profitable form in milk marketing chain. Furthermore,
retailers themselves are profitable more if they sold milk products to end users. Thus, government
should play a vital role by affording access to training, market information and transport facilities for
producers if it is required to maximize their profit share of margin like that of retailers.
 The study result indicated that shortage of feed, lack of training and absences of extension
service have been the significant determinants of farmers’ profitability of milk market in the
study area. Therefore, the Agriculture and Rural Development Office of the District need to
improve training opportunities and extension service.
 The study shows that income of nonfarm activity with volume of milk supplied affects
negatively. Based on this reality, agricultural development agency should give an extension
advice to the milk producer to improve the milk productivity through using improved breeds
and technology to increase their income other than nonfarm activities by supplying milk to
market.
 Family size has significant and negatively affects of volume of milk supplied to market.
Based on this government and other responsible bodies teach producers about family
planning and it’s better to distribute improved breeds with low cost for producers to increase
production.
 Ages of household affects negatively with the volume of milk supplies, It indicates that with
increasing ages of households’ head, the volume of milk supplied to market decrease.
Therefore, the government should facilitate different infrastructures for aged household heads
to supply milk in nearby market and its better organize unions who buy milk from producer
with fair price from their home.
 Education of the house hold is needed to increase the volume of milk supplied positively.
This indicating that better educated farmers are the more supplies of the volume of milk
efficiently due to this concerned bodies to improve the knowledge producers through formal,

32
 informal and adult education service to enhance their milk market supply to get more
information about the milk production and market structure.
 Current milk price has significant and positively affect of the volume of milk supplied
hence the producers should use the improved breeds rather than local breed in order to
increase productivity of milk and current price.
 Finally based on findings, it is recommended that the research center, university and the
Bureau office of Agriculture should give more attention to the development of milk
production technologies and give technical advices for producers to increase the production
and productivity.

33
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7. APPENDIX
Appendix Table 1. Variable Inflation Factor (VIF) for Continuous explanatory variable

Variable VIF 1(VIF)

Current milk market price 3.76 0.266187
Age 3.70 0.270380
Family size 1.55 0.647095
Distance to nearest market 1.05 0.951070
Mean VIF | 2.51
Source: Own Survey,2024

Appendix Table 2: - Contingency Coefficient for Dummy Variables of Multiple linear

Regression

38
 Sex Education Credit access Extension Income from
level contact nonfarm
Sex 1
Education -0.0153 1
level
Credit -0.0230 0.4891 1
access
Extension 0.1168 -0.0050 -0.0076 1
contact
Income 0.0580 -0.5054 -0.9571 0.0367 1
from
nonfarm
Source: Own survey,2024

Appendix
QUSTIONERY
Dear Respondent: survey questionnaire conducted on Gerese wereda Zazea kebele and Zala
Fisheto kebele who participated in milk production. Mainly the production of milk, the
processing of milks and it’s by products like, cheese, Butter and yoghurt and also the consumer
of this milk channel and routs.
1. Ages
2. Sex 1= Male 0= Female
3. Educational status 0 = illiterate
[Link] 1-4 2. Grade 5-8 3. Grade 9-10 4. Grade 12 and above
4. Who supplies raw milk to you? 1. Producer 2. Rural collector 3. traders 4. others

39
5. Marital status 1 = Married 0 = Single
6. What is the size of your family ___________ Male _________ Female _____? Total =_________
7. Age of Family 1. 0-15 year .2.16-49 year .3 .49-65 year.
8. Do you use value addition activity? 1. yes 0. No
9. If yes, what kind of activity?
10. In the milk processing, which one of the following is your most product?
1. cheese 2. Butter 3. yoghurt
11. How much profit do you get from your value addition activity?
12. Is there any competitor to your milk product? 1. Yes 0. No
13. Who are your major marketing channels today?
1) collector 2) retailer 3) Consumers
14. How is the cost of one litter raw milk?
15. How much litter milk consume in the month?
1. Average amount of milk consumption in a month (in liter)
2. average purchase price per Liter (in birr)
16. Did you get credit service during production years? 1. Yes 0. No
17. In Q16 if your answer is yes, which organization provide you?
1. Development Bank 2. Commercial Bank
3. Agricultural Bureau 4. NGO
5. Local money lender 6. Service cooperatives
18. If you have not used credit so far for livestock, what were the main reasons?
1. Due to high interest rate 2. Shortage of down payment
3. Inaccessibility to credit 4. Unavailability
19. Have you received extension advice on dairy technologies and crossbred cattle Practices during the
last years? [Link] 0. No
20. Have you found the advice given to you very important in improving your Livestock management?
1. Yes 0. No
21. Do you (Your family) under take some additional income generating activities of off farming
activities? 1. Yes 0. No
22. If so amount of income earned during the same year from off-farm activities Source of Income
Amount (birr)…………………………………….?

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23. If you have access to market information at the time of selling and in other condition? 1. Yes
0. No
24. Distance to nearest market-------------------km.

25. Arethere problems in the value chain activities? 1. Yes [ ] [Link] [ ]

26. Ifyour answerto Q.25 is Yes, what are the problems?

No_ Main reasons Rank

1 Price fluctuate 3rd
2 Feed shortage 1st
3 Man power scarcity 2nd
4 Material limitation for processing 4th
5 Capital limitation 5th
27. What about the opportunities?

In your milk production activity what are the opportunity of milk value chain?

No_ Opportunities Rank

1 Good whether condition 2nd
2 Good governance 4th
3 Develop the skills 1st
4 enhance the income 3rd

41