Factors Affecting Coffee Market Supply of Smallholder Farm Household: The Case of Gimbo District Kaffa Zone, Southwest Ethiopia.

Tariku Teka Mekuria; Kumilachew Alamerie; Million Sileshi

Abstract

Abstract This study analyzes the factors influencing the market supply of coffee in selected districts of Gimbo District, Kaffa Zone, and Southwest Ethiopia. Coffee is Ethiopia’s most significant export crop, contributing substantially to the country’s GDP and exhibiting broad genetic diversity. Despite the high production potential of the district, the marketing system remains predominantly conventional, forcing producers to sell through traditional transaction routes that do not offer premium prices, thereby reducing market margins. The study employed both primary and secondary data sources. Descriptive statistics, including percentages, frequencies, means, and standard deviations, were used for analysis. Additionally, an econometric approach, specifically the Two-Stage Least Squares (2SLS) regression model, was applied to examine the factors affecting coffee market supply. The econometric analysis revealed that four key variables, namely, the education level of the household head, membership in coffee cooperatives, transport ownership, and the quantity of coffee produced, positively and significantly influenced the market supply. However, distance to the nearest market had a negative and significant impact on market supply. Based on these findings, policy recommendations include strengthening farmers' coffee cooperatives and enhancing their financial capacity through the establishment of functional collection centers, improving access to transportation services and infrastructure, expanding adult education programs to enhance farmers' knowledge, and promoting experience-sharing initiatives among coffee producers. Furthermore, increasing productivity through strengthened extension service support is crucial for improving coffee market supply efficiency.

Abstract

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