Fish Marketing Chains Analysis in some Water Bodies of Oromia National Regional State, Ethiopia
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1 Advanced Journal of Agricultural Research Vol. 3(00), pp , October, 2015 ISSN: Advanced Journals Full Length Research Paper Fish Marketing Chains Analysis in some Water Bodies of Oromia National Regional State, Ethiopia Assefa Mitike Janko Zeway Fisheries Resources Research Center. P. O. Box 229, Zeway, Ethiopia. Submitted 11th September, 2015; Revised 2nd October, 2015; Accepted 7th October, 2015 The study was conducted in Oromia national regional state due to the potential of fishery is not completely developed because of bottlenecks related to fish marketing. The general objective of the study was to analyze the fishery marketing chain in some water bodies of Oromia with the specific objectives of: to describe market relationship between fishermen and buyers, to assess the determinants of marketed supply of fish in Oromia region and to study the market structure-conduct-performance of fish in the study area. Multi-stage sampling technique was followed to select households for the study purpose. During the first stage all districts where fishery production is taken place were identified purposively and at the next stage about 200 fishermen and marketing actors were selected randomly. Structured questionnaire was used for primary data collection. According to the survey, average age of respondents was years, mean family size 3.67, mean educational level 6.24 years, monthly income from fish birr, price of fish per kg birr and about 86.5% was male and the remaining 13.5% was female. The fish marketing channels had six complicated routs. The main receivers of fish product from the producers were wholesalers (40.3%), Consumers (21.6), retailers (19.4%), restaurants (10.7%) and rural assemblers (8%). Total gross marketing margin in fish trading is highest in channels VI; it accounts a TGMM of 66.67%. Urban retailers enjoy the highest net marketing margin that is 18 birr in channel IV and 12 birr in channel V. Producers share from the price paid by consumers is highest in channel II and III which accounts 75% of the price paid by consumers. The lowest net marketing margin is associated with central wholesalers in channel IV of fish marketing chain. Out of eleven explanatory variables only five variables were found to be significantly affecting the household marketable supply of fish. Government intervention should be needed to control illegal production and marketing of fish. Key words: Oromia, marketing actors, demand and supply, chain and margin. INTRODUCTION The term market has got a variety of meanings. Abbott and Makeham (1981), defined market as an area in which exchange can take place. Mendoza (1995) also defined marketing as a system because marketing usually comprises several interrelated structures along the production, distribution and consumption units underpinning the economic process. Marketing encompasses all of the business activities performed in directing the flow of goods and services from the producer to the consumer or final user. These activities are
2 098 Adv. J. Agric. Res. usually classified into six stages. These are: production, assembly, processing, wholesaling, retailing and consumption. According to Kotler (2003), marketing is a social process by which individuals and groups obtain what they need and want through creating, offering, and freely exchanging products and services of value with others. Agricultural marketing is the main driving force of economic development and has a guiding and simulating impact on production and distribution of agricultural production. The agricultural marketing system takes on increasing importance as a traditional agrarian society is transformed in to modern industrial society. Direct consumption of fish for food provides a vital source of protein and a variety of essential fatty acids and micronutrients, such as iron, zinc, vitamin A and others. Fish are an especially important source of food and nutrients due to the fact their seasonal availability is often different from crops, meaning that fish can help to reduce seasonal vulnerability, particularly in rural communities (Kawarazuka, 2010). Artisanal freshwater fishery is one of the most important economic activities in Ethiopia, especially in Oromia state (FAO, 2012). Nevertheless, the potential of fishery is not completely developed because of bottlenecks related of marketing fish (Yohannes, 2003). The main objective is to analyze the fishery marketing chain in some water bodies of Oromia with the specific objectives of: to describe market relationship between fishermen and buyers, to assess the determinants of marketed supply of fish in Oromia region and to study the market structure-conduct- performance of fish in the study area. MATERIALS AND METHODS In this chapter, description of the study area, sampling methods and method of data collection are presented. Description of the study area The study was conducted in seven major water bodies of Oromia regional state and adjacent town to the water bodies including Addis Ababa. The water bodies were, Lake Zeway, Lake Langano, Melka wakena reservoir, Lake Beseka, Koka reservoir, Gilgel gibe reservoir and Fincha reservoir. Method of data collection Both primary and secondary data on a wide variety of variables was gathered to meet the objectives of the study. Structured questionnaire was used to generate primary data from fishermen s, consumers and marketing actors. Secondary data was collected from past reports and studies conducted by researchers, institutions, and marketing actors. Sampling procedure Multi-stage sampling technique was followed to select households for the study purpose. During the first stage all districts where fishery production is taken place were identified purposively. During the next stage about 200 households and marketing actors were selected randomly. Econometric Following Greene (2003), the multiple linear regression model is specified as Y=f(price,, access to market information, access to extension services, education level, experience in fishing, sex, access to credit, age, etc ). The econometric model specification of supply function in matrix notation is estimated by Y =βx+u Where Yi = fish supplied to the market β = a vector of estimated coefficient of the explanatory variables X= a vector of explanatory variables Ui = disturbance term RESULTS AND DICUSSION This chapter presents the results of descriptive and econometric analysis of the study. The descriptive analysis employed to describe the general characteristics of sampled fishermen s and fish traders. The econometric analysis employed to identify factors that affect respondent s quantity of fish supplied to the market. Socio-demographic characteristics of fish producers and traders According to the survey result, the a verage educational
3 Janko 099 Table 1. Socio-demographic characteristic of the respondents for continuous variables. Variables Mean Standard deviation Education Family size Age Income from fish Price/kg Quantity supply/month/kg Table 2. Socio-demographic characteristic of the respondents for dummy variables. Variable Frequency Percent Sex Male Female (fishermen s) to reach ultimate users (consumers). From the Figure 1 depicted, one can understand that the main receivers of fish product from the producers were wholesalers (40.3%), Consumers (21.6), retailers (19.4%), restaurants (10.7%) and rural assemblers (8%). Based on the volume of fish products flown, the marketing channels were compared with each other. Accordingly, the producer-central wholesaler-urban retailersrestaurants-consumer channel, (channel 5) carries the larger volume of fish products transacted followed by producer-consumer channel, (channel 1). The major identified channels of fish during the survey were explained as follows in Figure 2. Structure-conduct-performance of the fish market Information access Alternative income Local market access Credit access Extension service access Yes No Yes No Yes No Yes No Yes No Fish market structure The structure of the fish marketing system should be evaluated in terms of the degree of market concentration, barrier to entry (licensing procedure, lack of capital and know how, and policy barriers), and the degree of transparency (Pender et al., 2004). In this study the structure of the fish market is characterized using the following indicators: market concentration, the degree of transparency (market information) and entry conditions (licensing procedure, lack of capital and know how). level of the respondents 6.24 years, the family size 3.67, age of the respondents years, monthly income from fish was birr per month, the average price per kg was and quantity of fish supply to the market was kg per month (Table 1). Table 2 shows the percentage of respondents for the dummy variables during the survey. Out of the total respondents 86.5% male and 13.5% female and about 85.5% of the respondents has access information easily and the remaining 13.5% cannot access information. Out of the total respondents about 88% has no access to credit and 12% of the remaining has access to credit. Fish marketing chains The marketing channels of fish identified below shows how commodity fish passes through six complicated routs of intermediaries on the way from point of origin Market concentration According to Kohls and Uhl (1985) Market concentration, the portion of the industry sales made by the largest firms, is another source of imperfect competition. Successful competitors frequently eliminate their rivals or discourage new firms entry, contributing to more concentrated markets. In general, the higher the level of market concentration, the less perfectly competitive the market is. The concentration ratio is expressed in terms of CRx, which stands for the percentage of the market sector controlled by the biggest X firms. Four firms (CR4) concentration ratio is the most typical concentration ratio for judging the market structure. A CR4 of over 50% is generally considered as strong oligopoly; CR4 between 33% and 50% is generally considered a weak oligopoly and a CR4 of less than 33% is unconcentrated market. According to this study, the market concentration ratio was 17.98%. This indicates that a low degree of
4 100 Adv. J. Agric. Res. Producers/Fishermen (312,090 kg/month) 8% 19.4% 40.3% Rural assemblers 10.7% 21.6% 75% Retailers 45% Central Wholesalers 25% Restaurant s 25% 30% 100% Consumers Figure 1. Fish marketing chain in oromia. Channel I Producer consumer Channel II Producer urban retailer consumers Channel III Producer central wholesaler consumers Channel IV Producer central wholesaler urban retailer consumers Channel V Producer central wholesaler urban retailer restaurants consumers Channel VI Producer assemblers central wholesaler urban retailer consumers Figure 2. Major identified channels of fish during the survey. concentration and thus more competition. Market information It is widely accepted that, accurate and timely market information enhances market performance by improving the knowledge of buyers and sellers concerning supply and demand. According to the survey result, about 86.5% of the respondents had enough information about fish marketing and the remaining 13.5% has no information regarding fish marketing strategy.
5 Janko 101 Entry barriers The barriers to entry into the market reflect the competitive relationships between existing traders and potential entrants. If the barriers to entry are low, new traders can easily enter into fish markets and compete with established traders. However, with the presence of very high barriers to entry, established firms are difficult to stay longer in business. According to this study, the entry barrier is very low especially on the producer s side. Since there is no licensing procedure anybody can harvest fish from the water body. Fish market conduct Market conduct refers to the exchange practice and pricing behavior of the marketing firms that make up the industry to examine the influence of the existing market structure on the market conduct and the bargaining power of marketing actors in the marketing system. Here in this analysis the market conduct of firms in the subsector have been analyzed using information like selling and buying behaviors and price setting strategy of sample traders have been analyzed. According to the result obtained from the market survey about 83.33% of the respondent replied that the purchasing price of fish is set by buyers in the sample market. Almost 100% of the sample traders agreed that the purchasing price of fish is entirely dependent on demand and supply of fish in the market day. All sample traders also confirm that the purchasing price of fish cannot be clearly identified until the final transaction took place. Fish market performance Marketing performance of fish market was analyzed by estimating the marketing margin, by taking into consideration associated marketing costs for key marketing channels. The marketing margin refers to the difference between prices at different levels in the marketing system. The total marketing margin is the difference between what the consumers pays and what the producer/fishermen receives for his fish, in other words it is the difference between retail price and farm price. A wide margin means usually high prices to consumers and low prices to producers (Mendoza, 1995). Table 3 summarizes marketing margins maintained by each actor in various fish marketing channels. Total gross marketing margin in fish trading is highest in channels VI; it accounts a TGMM of Urban retailers enjoy the highest net marketing margin that is 18 birr in channel IV and 12 birr in channel V. Producers share from the price paid by consumers is highest in channel II and III which accounts 75% of the price paid by consumers. The lowest net marketing margin is associated with central wholesalers in channel IV of fish marketing chain. Determinants of Fish Supply to Market Out of eleven explanatory variables only five variables were found to be significantly affecting the household marketable supply of fish (Table 4). Monthly income from fish, price of fish in 2014, alternative income, family size and education level of the household head influenced the marketable supply of fish. The remaining six variables (sex, age, information access, local market access, credit access and extension access) were found to have no significant effect on fish market supply. Educational level of the respondents Has a positive effect on the quantity of fish supply to the market. It is statistically significant at 1% level. The model output varies that one additional formal year education level leads to the respondents to increase monthly fish production by 7.37 kg. Family size The variable has negatively and significantly affects the quantity of fish supply to the market at 1% probability level. The result from the model indicates that as the family size increase by one person the quantity of fish supply to the market decreases by 0.15 kg. This might be due to the households use fish products for home consumption rather than for market. Monthly income from fish The variable has positively influence the quantity of fish
6 102 Adv. J. Agric. Res. Table 3. Marketing margins maintained by marketing actors in fish marketing chain. Marketing actors Fish Marketing Channels I II III IV V VI TGMM NMMa NMMws NMMrt NMMrs GMMp Table 4. OLS results for determinants of fish market supply. Explanatory variables Coefficients Standard errors t-value Education *** Sex Family size *** Age Income from fish ** Information access Alternative income *** Price *** Local market access Credit access Extension service access Constant Dependent variable=quantity supplied, N=200, R-Squared=0.93, Adjusted R squared=0.95 *** and ** statistically significant at 1% and 5% respectively. supply to the market. It is statistically significant at 5% level. It indicates that, as monthly income from fish increases by one birr the fish supply to the market increases by kg. 1% level. The model shows that, as the price of fish per kg increases by one birr the respondent s increases the quantity of fish supply to the market by 1.94 kg per month. Alternative income Has a positive effect on the quantity of fish supply to the market. It is statistically significant at 1% level. Results from the model revealed that, respondents who has alternative income supply 12.9 kg fish to the market than respondents who has no alternative income. This might be due to a respondent who has an alternative income guaranteed for their home consumption. Price The variable has also positively influence the quantity of fish supply to the market. It is statistically significant at RECOMMENDATIONS The study was conducted with the objective of understanding the marketing system of fish in Oromia regional state. To fill the gap of the marketing problem faced in the region the following recommendation were recommended. Few market actors were profitable but most of them harmed including producers because of price were set by whole sellers and retailers and marketing chain was very long, this is harmed consumers. If the fishermen try to set the price by themselves the wholesalers ignore to purchase from them and the producers destroy it at the shore of the lake/reservoir. Therefore, to reduce the problem government intervention should be needed and
7 Janko 103 small shop and refrigerators should be facilitated for the producers; then they react easily to the price setters. Some landing site was far from main road. Unlicensed whole sellers and producers almost control the business and production area; therefore the government/stakeholders should manage the unlicensed traders and producers. Monthly income from fish is positively affects the fish quantity supplied to the market. Therefore the fishermen s should have to encourage producing much fish for the demand and supplying balance. And education of the respondents also has positive impact on quantity supply. Formal and informal education should be promoted in the community of producers. Since family size affects quantity of fish supply negatively and significantly awareness creation about family planning should be enhanced to manage easily family food self-sufficiency. ACKNOWLEDGEMENT I would like to express my sincere gratitude to Oromia Agricultural Research Institute for funding the research work and all staff of Zeway Fisheries Resources Research Center (finance team) for the facilitating the fund for the research activity. Finally, I appreciate the fishermen s, all market actors and consumers for their cooperation and patience during the survey. Kawarazuka (2010). The contribution of fish intake, aquaculture, and small-scale fisheries to improving nutrition: A literature review. The WorldFish Center Working Paper No The WorldFish Center, Penang, Malaysia. 44 p. Kohl RL, Uhl JN (1985). Marketing of Agricultural Product, 5th Edition, Collier Macmillan, USA. 624p. Kotler P (2003). Marketing management. Eleven Editions. Pearson Education, Inc. USA. Mendoza G (1995). A Primer on Marketing Channels and Margins, pp In: Scott Gregory. J (eds.). Price Products and People. International Potato Center. Lima, Peru. Pender J, Ruben R, Jabbar M, Eleni G, Policies for improved land management, agricultural land management and agricultural market development in the Ethiopian highlands. Summary of Papers and Proceedings of a Workshop Held at the Ghion Hotel, Addis Ababa, Ethiopia. February 19-20, 2004, IFPRI. Yohannes F (2003). Management of Lake Ziway fisheries in Ethiopia. Thesis of Master of Science in International Fisheries Management. Department of Economics, Norwegian College of Fishery Science, University of Tromsø. REFERENCES Abbott JC, Makeham JP (1981). Agricultural Economics and Marketing in the tropics.p. 58 FAO (2012). Fishery and Aquaculture Country Profiles Ethiopia. Fisheries and Aquaculture Department. Greene WH (2003). Econometric Analysis. Fifth Edition, Pretice Hall International, Inc. New York. 350pp
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