Determinants of Coffee Market Outlet Choices in Gimbo District, Kaffa Zone, Southwest Ethiopia.

Tariku Teka Mekuria

Abstract

Coffee is Ethiopia’s most important export crop, contributing significantly to GDP and providing income for around 20% of the population. Despite its potential, farmers face marketing challenges, particularly in selecting appropriate market outlets. This study analyzes the determinants of coffee producers’ market outlet choice decisions in the Gimbo district. A purposive and two-stage random sampling technique was used to collect data from 200.00 coffee producers, 22.00 traders, and 22.00 consumers through structured questionnaires. Descriptive statistics and econometric models, including the two-stage least squares (2SLS) regression for market supply determinants and a multivariate probit model for market outlet choice, were applied. Results show that coffee quantity, market information, credit access, education, and household head’s sex positively influence market supply, while the distance to the nearest market has a negative effect. The probabilities of choosing different market outlets were 31.5% for consumers, 78.5% for retailers, 73.5% for private traders, and 51.5% for cooperatives, with a 6.78% likelihood of using all four outlets. Market concentration analysis indicates a weak oligopoly, with the four largest traders holding a 36% market share. Key determinants of market outlet choice include coffee supply quantity, market distance, extension contacts, and access to market information. Policy recommendations focus on capacity-building training, increasing coffee yield, improving road infrastructure, and enhancing access to agricultural and market information.

Abstract

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