DEBRE TABOR UNIVERSIY

FACULITY OF AGRICULTURE AND ENVIRONMENTAL SCIENCE

DEPARTMENT OF AGRICULTURAL ECONOMICS
Research Proposal Submitted to the Department of Agricultural Economics in
Partial Fulfillment of Bachelor of Science Degree in Agricultural Economics

ON DETERMINANTS OF MARKET PARTICIPATION IN SMALL HOLDER

SORGHUMPRODUCER IN GONDER ZURIA WOREDA, AMAHARA REGIONAL STATE,
ETHIOPIA

SUBMITTED BY: GROUP 1

Group member ID No

1. WOLDIE FIREW………………………………………………………………….455/11
2. YOHANS GEBEYEHU……………………………………………………………453/11
3. TSEGAYE KIBIRET………………………………………………………………..04065/09
4. BELAYNESH…………………………………………………………………………04116/09

ADVISOR: GEDEFAW KINDIE

April 3, 2021

DEBRE TABO, ETHIOPIA

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 ACKNOWLEDGEMENT

First of all, and for most, we would like to thanks the almighty God and his mother saint virgin
marry for being with us in completion of this study. Next, we would like to express the heartfelt
gratitude to our advisor Gedefaw Kindie (MSc) for his support and devoting his golden time for
us from the beginning up to the end of our study. He is our teacher, who guides us and also gave
to our uneven advice to be strong to do our study neatly. We extend also our special thanks to
our families. Then; we would like to say thanks to all who supported us by providing the
required data, and by giving their constructive suggestions and advice in doing this research. At
the last but not least, we would like to say thanks to our family for their support throughout our
education life.

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 Table of Contents

ACKNOWLEDGEMENT...............................................................................................................ii

List of Figure...................................................................................................................................v

List of table.....................................................................................................................................vi

LIST OF ABBREVIATIONSAND ACRONOMY......................................................................vii

ABSTRACT....................................................................................................................................x

1. INTRODUCTION.......................................................................................................................1

1.1. Background...........................................................................................................................1

1.2. Statement of the Problem......................................................................................................2

1.3 Objectives of the study..........................................................................................................3

1.3.1 General Objective...........................................................................................................3

1.3.2 Specific Objectives.........................................................................................................3
1.4 Research questions.................................................................................................................3

1.5 Significance of the study.......................................................................................................4

1.6 Scope and limitations of the study.........................................................................................4

2. LITERATURE REVIEW............................................................................................................5

2.1 Theoretical Literature review................................................................................................5

2.1.1 Market participation........................................................................................................5

2.1.2 Market.............................................................................................................................5
2.1.3 Marketing........................................................................................................................6
2.1.4 Smallholder producers (farmers)....................................................................................6
2.2 Empirical literature review....................................................................................................7

2.2.1 Sorghum Production in Ethiopia....................................................................................7

2.3.2 Smallholder farmers’ marketing problem analysis.........................................................7
2.3.1 Low and unstable grain supplies.....................................................................................8

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 2.3.2 Storage............................................................................................................................8
2.3.3 Farmers’ limited capacity for collective action..............................................................8
2.3.4 High processing costs for small grains...........................................................................8
2.3.5 Unreliable markets..........................................................................................................9
2.3.6 Highly competitive international markets......................................................................9
2.3.7 Lack of finance...............................................................................................................9
2.3.8 High transaction costs (search costs)..............................................................................9
2.3.9 Access to information and marketing of sorghum..........................................................9
2.4 Conceptual framework of variables selected for the study..................................................10

3. RESEARCH METHOD............................................................................................................12

3.1 Description of study area.....................................................................................................12

3.2 Sampling size.......................................................................................................................13

3.3 Sampling techniques............................................................................................................13

3.4 Data type and sources..........................................................................................................13

3.5 Data collection methods and tools.......................................................................................13

3.6 Methods of data analysis.....................................................................................................14

3.6.1 Descriptive Statistics....................................................................................................14

3.6.2 Econometric analysis....................................................................................................14
3.7 Definitions of variables........................................................................................................16

4. WORK PLAN AND BUDGET.................................................................................................21

4.1. Work plan...........................................................................................................................21

4.2. Budget.................................................................................................................................22

REFERANCE................................................................................................................................23

APPENDIX-1................................................................................................................................25

List of Figure
iv
Figure 1: Conceptual frame work..................................................................................................11
Figure 2: Map of the study area.....................................................................................................12

List of tabl

v
Table 1: Description of the selected variables..............................................................................20
Table 2. Work plan of the study....................................................................................................21
Table 3. Budget break down of the study......................................................................................22

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 LIST OF ABBREVIATIONSAND ACRONOMY

% Percent

(+) Positively
AE adult equivalent
BSL below sea level

CSA Central Statistical Agency

DV Dependent variable
FAO Food and Agricultural Organization
FDRE Federal democratic republic of Ethiopia
GDP Gross Domestic Product
ICT Information Communication Technology
MASL meter above sea level
MoFED Ministry of Finance and Economic Development
PPS probability proportional to size
TLU total livestock unit
UNDP United Nations Development Program
VIF Variance Inflation Factor

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viii
 ABSTRACT

Sorghum is not generally traded in international markets or even in local markets in many
countries. Therefore, smallholder farmers seldom have an assured market in the event of
surplus production. So that Small scale farmers across the world frequently consider
marketing of their agricultural produce as being one of their major challenges. Therefore
objectives of this our study will be the determinants of participation, level (intensity) in
sorghum marketing, sorghum market out let choice and identifying the Problems in
production and marketing of Sorghum of smallholders in Gondar zuria woreda. Smallholder
farmers’ marketing wills analysis different determinants. To analysis those determinants a
three stage sampling method will employ to select two Kebeles and 40 farm households out
of 37 Kebele in Gondar zuria. House hold interview schedule will develop for collecting data
for the study from the sample farm households. Both primary and secondary data will be
collect for the purpose of our study. The primary data will be collected at household level
from people involved in production and sorghum marketing. Secondary data will collect
from internet, reports, books, journals, articles, and working papers. For the purpose of our
study, both quantitative and qualitative data we will collect. For the analysis of the collected
data, statistical software known as STATA will apply to compute the data. Descriptive
statistics and Tobit model will apply for analyzing data. The Tobit will result indicates that

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 age, education, amount produced, and access to credit will significantly affects decision to
participation and intensity of sorghum marketing. Different problems will face in production
and marketing of sorghum. So that the government and other bodies should give attention
and tiring to minimizing the problems in the study area. The amount of produce will
influence market participation positively. Hence, policies should improve farmer’s sorghum
production capacity through Introduction of technology to consider the possibility of
selection varieties of improved seed and other subsidies including fertilizers for better
production in kebeles and provision of public infrastructures.
Key words: determinants, markets, participation, Smallholder, Tobit

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 1. INTRODUCTION

1.1. Background

Agriculture has been the mainstay of the Ethiopian economy for several centuries. It is still the
dominant sector being contributing 42% of the total GDP (CSA, 2010). According to (MoFED,
2006), the sector employed more than 83% of the population, and was the source of over 90 % of
export revenues. It also provides raw materials for more than 70% of the country’s industries.
Within the sector, 60% of the agricultural GDP comes from crop production, whereas, 30% and
7% of it is generated from livestock and forestry sectors respectively (World Bank, 2007).

Therefore, it is palpable that countries like Ethiopia, which are comparatively endowed with
unskilled labor and arable land, would find it relatively easier to follow an agricultural
development path. According to (World Bank 2008), escaping poverty traps in many developing
countries such as Ethiopia depends on the growth and development of the agricultural sector.
Ethiopian governments have focused on promoting technology-led initiatives to enhance
productivity, particularly in smallholder agriculture (Gebresilassie, 2006; FDRE, 2010).

Crop production is a subsector on which the country has unfailingly depended on to bring about
a livelihood transformation of the poor. Currently, the government is undertaking a strategy of
improving agricultural productivity primarily through agricultural intensification, involving an
increased use of inputs, including seeds of improved crop varieties (McGuire, 2005; Byerlee et
al., 2007).

Sorghum is also the most widely cultivated and consumed cereals in Ethiopia. According to
(CSA, 2008), it ranks third after maize and tef in total production, after maize in yield per hectare
and after tef and maize in area harvested. The crop is also the most important crop in Amhara
region, being the second crop in terms of area coverage next to tef. In Kobo district, sorghum has
a vital role of achieving food security. The crop is one of the leading traditional food crops in the
area. It is also a multipurpose crop, being utilized in different forms where the grain is used for
making “Injera” (large round pancake made from fermented dough) and“Tella” (local beverage

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drinks). It is also consumed in boiled and roasted forms. Sorghum is also essential source of feed
for livestock where the stalk is used to feed animals in dry season.

.In southern Africa, they are grown with limited water resources by a multitude of rural
smallholder farmers, usually without the application of major inputs like fertilizers (Chisi et
al.1997). Sorghum being drought tolerant has an adaptive advantage and lower risk of failure
than other cereals in such environments. With the exception of a few countries such as Sudan,
these crops are consumed by disadvantaged groups and hence the reason for being referred to as
"poor people's crops".
Sorghum is not generally traded in international markets or even in local markets in many
countries. Therefore, smallholder farmers seldom have an assured market in the event of surplus
production. Small grains have been important staples in the semi-arid tropics of Africa and Asia
for centuries. These crops have traditionally provided food, employment, and income for a
substantial portion of the population, particularly smallholder producers. It will continue to be
major food crops in Africa, particularly in Nigeria and Sudan, which account for about 39
percent of Africa’s sorghum production (Tariq & Sawandi, 2003). Though small grains have
good potential for domestic and industrial uses, they have to compete with maize.

1.2. Statement of the Problem

Since independence, agriculture has been the backbone of Ethiopian’s economy. It is mostly
characterized by rural small scale farmers who take a portion of 90% of total food producers and
despite the important role played by these farmers in feeding the nation, they remain the poorest
section of the Ethiopian society (CSA, 2010). Even if hopes for growth and poverty reduction
through agri-business are huge, they face various factors while marketing of their farm produce
which influence them in different ways.
It should be understood that without good marketing the farmers was not be able to sell or trade
hence they was not reap maximum returns from their produce. This means they was never
improve from their poor living conditions assuming that farming is their only activity. Small
scale farmers across the world frequently consider marketing of their agricultural produce as
being one of their major challenges. Many studies have been conducted on other factors that
influence the marketing of agricultural produce by small scale farmers but less has been done
concerning marketing of sorghum produce among small holder farmers. Even though means of

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Accessing information by farmers’, means of linking farmers to market, getting of extension
services, road infrastructure are critical and important factors in marketing of sorghum produce,
not only these other production and marketing problem and their market out let choice of small
scale sorghum producer was not identifying before and there was less study which has been
conducted in Teda kebele of Gondar zuria district, in relation to these factors.
Therefore this proposal will focus on these factors and the influence they have on small scale
sorghum farmers in marketing of their farm produce in Gondar zuria district bearing in mind that
even though this commodity is of higher demand because of its diverse use, the lives of the
producers who are the farmers in the rural areas of Gondar zuria remain unchanged in some parts
of larger Gondar zuria community Teda location being a case in this research project.

1.3 Objectives of the study

1.3.1 General Objective

 To assess the determinants of market participation among small scale sorghum
producers in Teda Kebeles, in Gondar zuria woreda, central Gondar zone,
Ethiopia.

1.3.2 Specific Objectives

 To determine the factor influencing participation and extent of participation in

marketing of sorghum in Teda Kebeles.
 To identifying the choice of sorghum market out lets in Teda Kebele
 To identifying the Problems in production and marketing of Sorghum

1.4 Research questions

1. How is the current level of participation of smallholders in sorghum marketing?

2. What are the factors that influence the participation of smallholders in sorghum marketing?

3. What is the choice of sorghum market out lets of small holder producer?
4. What are the Problems in production and marketing of Sorghum?

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1.5 Significance of the study
The result of this study would expect to be useful for the government policy makers, donors,
producers and marketing firms for their decisions. The study will try to identify some important
and policy relevant variables in smallholders’ participation and supplies by smallholders in
sorghum marketing.
The government and producers can promote their efforts influencing these variables at the
desired level of proportion, so as to improve the smallholder’s participation in sorghum
marketing and volume crop products supplies in the market. This will contribute to the overall
regional and national efforts aimed at poverty reduction and food security and subsequently
fostering development in the country’s strategy framework of agricultural development led-
industrialization.

1.6 Scope and limitations of the study

This proposal will conduct only in Teda Kebeles in North Gondar of Amahara regional state;
therefore, this proposal will focus on assessment of determinants of market participation in small
holder producers in study area.
The proposal will not generalizing all Kebeles. It is clear that research will not being free from
some limitation. The research is limited by financial resource, transportation, shortage of time
and materials constraints will made. It is impossible to extend the study away from these
Kebeles; on the other hand, same respondents are reluctant to give accurate information about
their back ground and they fear to give correct information on sensitive issues.

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 2. LITERATURE REVIEW

2.1 Theoretical Literature review

2.1.1 Market participation

Various definitions of market participation have been suggested by different authors. Some
Authors consider market participation as any market related activity which promotes the sale of
Produce (Key et al., 2000; Holloway & Ehui, 2002; Lapar et al., 2002). Market participation can
be referred to as commercialization (Latt & Nieuwoudt, 1988). It can also be described as an
Individual’s or household’s economic transactions with others, in cash or kind (Von Braun et al.,
1991). Staal et al. (1997) mentioned that a low proportion of products exchanged in the market
reflect limited market participation. With the three possible states of buying, selling or not
trading, Goetz (1992) defines market participation using household purchases and sales.
Volumes of produce traded are used to determine market participation. In an agricultural market
economy, market participation or commercialization occurs mainly when farmers stop being
mostly subsistence farmers and become profit-oriented. Market participation is in that case
defined as earnings from market activities (Makhura et al., 1997; Makhura, 2001).

The various market participation definitions and measurements do not rule out quantity or
Produce sold or sales volumes. In this study, both the presence of sales and the volume of sales
will use as a measure for market participation. This is because market participation for
Subsistence smallholder farmers is directly related to generation of a marketable surplus; which
In turn depends on productivity levels.

2.1.2 Market
The market can be categorized into local and international market. Local market refers to a set of
Actual and potentials buyers within a given geographical area where the seller is also located.
The Target boundary may be a village, district, town, province, country or specific region. The
international market refers to a set of actual and potential consumers beyond geographic
boundaries and in most cases outside the national borders. Cross-border issues like tariffs,
custom procedures, trade agreements, for example, are taken into account (Kotler, 2003).

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2.1.3 Marketing
Marketing is defined by the American Marketing Association as an organizational function and
set of processes for creating, communicating and delivering value to customers and for managing
Customer relationships in ways that benefit the organization and its stakeholders. The social
definition of marketing is that marketing is a societal 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. The role of marketing is to deliver a higher standard of living.
Managerial definition of marketing describes marketing as the art of selling products (Kotler,
2003).

2.1.4 Smallholder producers (farmers)

The word smallholder farmer embraces a wide spectrum of all small-scale indigenous producers
In Africa (Hungwe, 2006). Smallholder farmer means different things depending on the country
One is looking at. Within a South African context, smallholder farmers are black farmers most of
Who reside in former homelands (Machethe & Mollel, 2000).
Various terms have been used in literature to define smallholder farmers. These include; small
scale farmers, peasant farmers, resource-poor farmers, subsistence farmers, food deficit farmers,
household food security farmers and emerging farmers. The main criteria used by various writers
to classify farmers as smallholder farmers include land size, purpose of production (i.e. whether
for home consumption or market), income level (i.e. whether poor or rich), and in South Africa
racial group (i.e. whether one is white or black and thus historically advantaged or
disadvantaged, respectively) (Machethe & Mollel, 2000).
Smallholder farmers are a heterogeneous group whose resources, livelihood patterns and income
Sources are quite diverse (Machethe & Mollel, 2000; FAO & UNDP, 2001; Machethe et al.,
2004; Maltsoglou & Tanyeri-Abur, 2005). Smallholder farmers are the people who make up the
great bulk of the population in most southern African countries. These small holdings are often
found in poorer areas, less favorable for agricultural production (Hungwe, 2006.)

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2.2 Empirical literature review

2.2.1 Sorghum Production in Ethiopia

Sorghum (Sorghum bicolor L. Moench) is the fourth most important cereal crop globally
following wheat, rice and maize. It is a staple food for more than 500 million people in the semi-
arid tropics of Africa and Asia and more than 80% of the world area of production is confined to
these two continents (Masresha et al., 2011). It is primarily a crop of resource-poor small-scale
farmers and is grown predominantly in low-rainfall, arid to semi-arid environments. The crop is
typically produced under adverse conditions such as low input use and marginal lands. In sub-
Saharan Africa, over 100 million people depend on sorghum as staple (Serna-Saldivar and
Rooney, 1995; Smith and Frederiksen, 2000). It is well adapted to a wide range of precipitation
and temperature levels and is produced from sea level to above 2000 m.a.s.l. Due to its drought
tolerance, this crop is grown in eastern Africa where agricultural and environmental conditions
are unfavorable for the production of other crops.
All lines of evidence point to the north-east quadrant of Africa, mainly Ethiopia, as the center of
domestication of sorghum (Tanto and Demissie, 2000; McGuire, 2005). Therefore, the greatest
genetic diversity for both cultivated and wild forms of sorghum are found in Ethiopia and the
surrounding eastern African countries. It is the second most important staple cereal crop after
maize in the region, making a huge contribution to the domestic food supply chain with a total
acreage of 8,199,741 ha. Sorghum is also one of the leading traditional food crops in Ethiopia
comprising 15-20% of the total cereal production in the country (Wortmann et al., 2006).
Sorghum grows in a wide range of agro ecologies most importantly in the moisture stressed parts
where other crops can least survive and food insecurity is rampant (Asfaw, 2007). According to
(CSA, 2008), sorghum ranks third after maize and tef in total production, after maize in yield per
hectare and after tef and maize in area harvested.

2.3.2 Smallholder farmers’ marketing problem analysis

Although there could be alternative marketing channels for smallholder farmers, there are some
Technical, social and economic constraints which need to be addressed before these farmers can
fully benefit from any market channel. For smallholder farmers to be able to participate in the
market, there are a number of policy areas that combine to create an overall policy environment

7
that need to be addressed (Jayne et al., 2007). Historically, there have been constraints to
improving smallholder participation in markets and some of them are as outlined below.

2.3.1 Low and unstable grain supplies

In most developing countries, including Ethiopia, grain supply by smallholder farmers is
unstable. This is mostly because of low population density and low scale of production.

Assembling small quantities of grain from many smallholder farmers raises marketing costs
(Jacobs, 2008).

2.3.2 Storage
Smallholder’s producers are required to store some of their crops like maize in order to benefit
from the present market opportunities. In a liberalized market, prices of commodities are
determined by the prevailing levels of supply and demand on the market. Thus, for agricultural
commodities, prices tend to be very low just after harvesting, which calls for farmers to store
their commodities for later sale (Jacobs, 2008; Omoti et al., 2009). However, storage facilities
for most smallholder farmers are not good and big enough to store commodities for later sale.
There is therefore need for smallholder farmers to improve on their storage structures for them to
benefit from this market opportunity (Masanganise, 2002)

2.3.3 Farmers’ limited capacity for collective action

Farmers in rural areas are often held back by the daily stress of getting essential supplies and
Transporting their produce to markets. Smallholder farmers rarely form part of marketing trusts
(Jacobs, 2008). The fact that they produce small quantities makes transportation expensive for
Individual farmers hence a need for collective action.

2.3.4 High processing costs for small grains

The high processing costs are exacerbated by the need to clean the poor quality grain to
industrial and commercial standard specifications. Grain quality is more variable in sorghum and
millet than in maize. The range of varieties grown and traded is more variable than maize in
terms of color, size, shape, hardness and keeping quality. Mixed grains cause mill extraction
rates to decline. If a consistent type of grain is sought, marketing costs may increase (Rohrbach&
Kiriwaggulu, 2001).

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2.3.5 Unreliable markets
Smallholder farmers are also reluctant to invest in crops whose product prices are not reliable. It
is common to see smallholder farmers in marginal areas dedicating large tracts of land to maize
Cropping yet they hold a huge comparative advantage in small grains (sorghum, millet, etc.)
which are adaptable to their semi-arid agro-ecological conditions (Jayne et al., 2007).

2.3.6 Highly competitive international markets

International agricultural markets are highly competitive, even large scale commercial farmers
are struggling. Smallholder farmers may not be able to survive. International donors try to
convince African governments of the virtues of liberalization and open markets, but then
subsidize their agriculture and affect world prices for African crop exports and imports in the
process (World Bank, 2001).

2.3.7 Lack of finance

Farmers have limited cash resources to purchase enough inputs for cropping especially fertilizer
and seed. Because of this, the demand for inputs by smallholder farmers is very low and
uncertain especially after drought. This makes manufacturers to produce less as they also require
security for their money and cannot predict ex ante whether the cropping season (therefore
demand for inputs) will be good or not (Poulton et al., 2002; Jayne et al., 2007).

2.3.8 High transaction costs (search costs)

Smallholder farmers operate under high transaction costs due to lack of information, which
creates higher risks. The poor are especially hit by such constraints, as they usually are poor in
Information, including the ability to collect and analyze markets and other types of economic
Information (Jayne et al., 2007; Jacobs, 2008).

2.3.9 Access to information and marketing of sorghum

In spite of how important agriculture is to economic development, small-scale farmers continue
to be poor and are not well connected to markets (Aina, 2007). Schemermeier and Light Foot,
(2007) Argue that small-scale farmers are oppressed and do not get a reasonable share of the
final consumer price due to poor access to marketing information. Rural farmers mainly receive
marketing formation from their fellow farmers’ through word of mouth Gordon and Kindness,
(2001) .Poor access to marketing information has left rural farmers exploited by other players in

9
the chain. Rural farmers often are not aware of the prices of what they produce at distant
markets. The poor access to information motivates the traders and middlemen to visit the
Farmers at their homes and local markets and make purchases there. Mainly the farmers
negotiate based on the prices proposed by the traders or middlemen. Traders and middlemen take
advantage of the farmers based on the farmer’s lack of knowledge concerning market prices,
poverty level and weak bargaining power influenced by illiteracy and low social status
(Lightfoot and Scheuermeier, 2007). Intermediaries time and again ignore market rule and their
pricing lacks transparency (Rao, 2007). Marketing information that is disseminated to farmers
may not fulfill its objectives (Robbins and Ferris, 2004). The farmers in Zambia indicated that
information needed for decision-making by small scale farmers included; gross margins for a
particular farm produce, possible markets, stability of the produce in the market, availability and
price of inputs and projected transportation costs for inputs (Mushigwani, et al, 2002).Some
studies revealed that farmers who are benefitting from the price information services would be
interested in other information as well, such as weather forecasts, advice on crop production and
marketing and use of appropriate seeds and fertilizers (Awasthi, 2007).
Terero, (2011) proposed that one way to link farmers to markets is by improving physical
infrastructure such as; information technology that connects smallholders to markets and
reducing transaction costs and minimizing risk. Agricultural Stakeholders including small scale
farmers use different ICT applications and tools at different stages of agricultural value chains,
from pre-production to advisory services, marketing and consumption. The use of mobile phones
for marketing by small scale farmers is substantial. Donovan (2011) reported that mobile phones
help to increase income, improve efficiency of marketing, reduce transaction costs and present a
great opportunity for new interventions.). This finding reflects the evidence that farmers
equipped with information have stronger bargaining power and can access number of markets at
the same time.

2.4 Conceptual framework of variables selected for the study

Market participation of smallholder farmers producers is affected by numerous factors,
including demographic factors, (sex, age, educational level, family size), socioeconomic factors,
(sorghum production experience), farm factors, (farm size ) and institutional factors (credit
accesses, extension, ) are factors affect market participation and marketed surplus of sorghum
smallholder farmers . These factors could have positive or negative effects, which could either
10
improve or cause a decline in the welfare of the farmers. In this study, 15 independent variables
and one dependent variable will be selected to prove the hypotheses set for this study hoping that
they will address the objectives and they are presented as follows in the figure.

Increase level of
participation
Figure 1: Conceptual frame work

Increase households income

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 3. RESEARCH METHOD

3.1 Description of study area

This study will be conducted in Amhara national regional state central Gondar zone in Gondar
zuria district particular, place called Teda Kebele. Teda kebele is one of the pre- urban kebele of
Gondar zuria woreda. It is located about 23km of South of North Gondar zone. The main
economic activities of Gondar zuria districts are mainly crop production and livestock rearing,
the major crops that produce or cultivated this area include teff, maize, barley, sorghum, nigger,
pea, chick pea and others. The livestock husbandry of this area is cattle, sheep goat, mule,
donkey and others. This area categorized under “weinedega” agro climatic zone and the altitude
of the area 2500 M.A.S.L and 1500m B.S.L The soil type of the area is red, black and brown.
The annual temperature of the area is 25-30 degree Celsius and the annual rain fall is about
1800-2000mm.

Study area

12 development Office
Source regional bureau of agriculture and rural
Figure 2: Map of the study area
3.2 Sampling size
The size of sample depends up on precisions desires and there are no single rules that can be
used to determine sample size, but the large sample is much more likely to represent active of the
population. For this study 40 household, will be used, in the study area.

3.3 Sampling techniques

When selecting sample respondents at Gondar zuria District, three stage sampling technique will
employ. In the first stage, out of 37 sorghum producer rural kebeles, 10 kebeles that are the
major sorghum producers will be selected purposively since they produce beneficiary or
dominantly. In the second stage, from 10 kebeles 2 kebeles will be selected randomly that are
comfortable for information access about them participation. In the third stage, based on a
complete list of the name of all sorghum producer farmers obtain from Development Agent
during 2018/19 production year, households will be selected from lay Teda and tach Teda, using
probability proportional to size (PPS) purposively sampling technique.

3.4 Data type and sources

Both primary and secondary data will be collected for the purpose of this study. We will collect
the primary data at household level from people involved in sorghum marketing. Primary data
will be collected from the sampled respondents on different issues such as household
characteristics, household resource, transaction costs, and distance to market and all other
variables hypothesized as they influence small holders’participation in sorghum marketing in
Teda, amahara region, and. Secondary data will be collected from internet, reports, books,
journals, articles, and working papers.

3.5 Data collection methods and tools

For the purpose of this study, both quantitative and qualitative data will be collected. To generate
data on social, institutional, and economic house hold interview schedule will employ. The house
hold interview schedule will administer with the help of enumerators. The enumerator will train
on methods of data collection and interview techniques. To generate qualitative data, interview
with male and female headed households will be conducted.

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3.6 Methods of data analysis

3.6.1 Descriptive Statistics

The main descriptive indicators that are t-test and Chi square to investigate the relative difference
between market participants and non-market participants of sorghum marketing. This method of
data analysis refers to the use of, percentages, means, and standard deviations in the process of
examining and describing marketing facilities, and household characteristics.

3.6.2 Econometric analysis

Econometric analysis will be used for processing the data obtain from the survey. The
appropriate econometric models that can help to identify the factors affecting the amount of
sorghum sold to the market (intensity) and the market participation is Tobit.

Yi=β i x i +ε i… … … … … … …(1)
Where εi ~ N
i=1,2,…………,n.
Yi = A continuous variable that house hold sold to market
Βј = Parameters to be estimated in the model
Xi= Explanatory variables that can affect amounts of sold
εi =error term and it is normalized
, and normally distributed (with correlation coefficient, ρ)
So to investigate determinants of sorghum market participation and amount of sell Tobit model
will be used. Because of the restrictions put on the values taken by the regressed, this model can
be called limited dependent variable regression model. The data have a censored sample as
dependent variable, that is household didn’t participate (sold) even if they produce of sorghum
from the total samples, the data are censored, and Tobit estimation is relevant. If zero values of
dependent variables are the result of rational choice of farmers, a Tobit model will be more
appropriate (Abrar, 2004). Thus, maximum likelihood Tobit estimation (Tobin, 1958) will be
used in the analysis of participation. One can concern with the model; recall that in a Tobit with
left-censoring at zero.
m
yi∗¿ βo +∑ βixi+ μi i=1, 2 ............ m
i=1

Where y=y* if y*>0, y=0 if y*≤0 and y=max(y*, 0)

14
Where
Y*i = market participation of sorghum or amount of sold (dependent variable)
ß 0 = an intercept
ß i = coefficients of ith independent variable
Xi = independent variable, and 'i' is 1, 2, 3…., m
Ui = unobserved disturbance term
The model parameters are estimated by maximizing the Tobit likelihood function of following
form;
1 Yi− βXi −βiXi
L=∏ y∗¿0
δ
f (δ )
∏ y∗≤ 0 F (
δ )
Where f and F are respectively, the density function and cumulative distribution function of Yi*
∏ yi*>0 means the product over those i for which yi*>0, and ∏yi*≤0 means the product over
those i for which yi* ≤0.
As cited in Maddala (1997), Johnston and Dinardo (1997), proposed the following techniques to
decompose the effects of explanatory variables into probability and intensity effects.
Thus, a change in X (explanatory variables) has two effects. It affects the conditional mean of
Yi* in the positive part of the distribution, and it affects the probability that the observation will
fall in that part of the distribution. Similar approach is used in this study.
1. The marginal effect of an explanatory variable on the expected value of the dependent variable

∂ E (Yi)
is: =F( z) βi
∂(xi)
βixi
Where ,is denoted by z, following Maddala, (1997)
σ
2. The change in the probability of market participation as independent variable Xi changes:
∂F (z) β
=f ( Z)
∂ xi δ
3. The change in intensity with respect to a change in an explanatory
Variable among sellers:
( yi/ y∗¿ 0)
∂E =βi ¿)2]
∂ xi

15
Where, F (z) is the Cumulative Normal Distribution of z, f (z) is the value of the derivative of the
normal curve at a given point (i.e., unit normal density), z is the Z score for the area under
normal curve, βi is a vector of Tobit Maximum Likelihood estimates and σ is the standard error.
The parameter estimates of the above model may not be Best Linear Unbiased Estimator (BLUE)
when some of the assumptions of the Classical Linear Regression (CLR) models are violated,
thus, it is important to check the presence Multicolinearity among the variables that affect
sorghum participation in the area. 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 (CC) for dummy variables.
To detect Multicolinearity problem for continuous variables, variance inflation factor (VIF)
define.
1
VIF=
1−Rj 2
As a rule of thumb, Gujarati (2004) states that if the VIF value of a variable exceeds 10, which
will happened if Rj2 (explained variation) exceeds 0.90, then, that variable is said to be highly
collinear. Therefore, for this study, variance inflation factor (VIF) is used to detect
Multicolinearity problem for continuous variables. On the other hand, contingency coefficient is
used to check Multicolinearity of discrete (dummy) variables. It measures the relationship
between the raw and column variables of a cross tabulation. The formula for contingency

χ2
coefficient is as follows
CC= 2
√
χ +N
Where, CC is contingency coefficient,
χ 2 is chi-square value and
N is total sample size.
The decision criterion with the contingency coefficient is that if the value of CC is greater than
0.75, the variables are said to be collinear (CC > 0.75).

3.7 Definitions of variables

The variables will be used in the analysis will operational zed as follows
Dependent Variable:

16
Amount sorghum sold in marketing (AMTSOLD): Is a continuous variable that represents the
level of market participants of the household in the sorghum market that will be regressed in
the Tobit model estimation procedure.
Participation (decision to participation) in sorghum market indicates that the house hold
whether participates or not. So that variable takes the value of one where they participate and it
takes the value of zero for the household who did not participate in sorghum market.
Independent variables:

The following independent variables are hypothesized to influence the participation in sorghum
marketing of smallholders.
Age of the household head (AGEHH): Age is a continuous independent variable
operationalised as the number of years the respondent was interview. Age may have important
role in the participation, production process and plan alternative source of income for the family.
Household head has the capacity to decide all rights against his property; therefore, age will
hypothesizing to positively influence the sorghum marketing participation. Different works also
hypothesized age similarly Mathenge et al. (2010)

Sex of the household head (SEXHH): sex is dichotomous variable of being either male or
female. In mixed farming system, both men and women take part in livestock management.
Culturally women are responsible to drive income from processing and marketing of crops,
therefore, it was be postulate to have a positive effect on sorghum marketing participation.

Family size (FAMSYZ): Family size is a continuous independent variable to the number of
members in the family including children, adults and dependent. Measured in terms of adult
equivalent (Stock, 1991) will be included in the model as a variable explaining variation in
market participation. Families with more household members tend to have more labour.
Production in general and marketable surplus in particular is a function of labour. Thus, family
size will be expected to have positive impact on market participation but larger family size
requires larger amounts for consumption, reducing marketable surplus.

Education of the household head (EDUHH). The educational level of the individual is dummy
which is one of the important factors preparing the individual to receive and utilize new
information to be more productive. It is assumed that the levels of education of the household

17
head will positively affecting the participation in sorghum marketing. Different works also
hypothesized education status similar (yallew, 2016).

Livestock ownership (TLU): Livestock are permanent and a semi-permanent asset for farmers
in the study area which is continues. Their purpose is multi-dimensional ranging from being as
factor of production to a symbol of prestige. The study will be hypothesized that livestock
amount would have a positive relationship with the participation and intensity as those livestock
owner farmers could have enough to produce sorghum and can participate. A tropical livestock
unit is used to measure the ownership of livestock by sample households. The unit is composite
measure of livestock amount will be composed from each type of livestock species to ease the
analysis of the subject for readers. Based on strocket al. (1991) the livestock population number
will be converted into tropical livestock unit (TLU).

Distance to market (DISMKT) is the distance from the home of the respondents to the nearest
market in kilo meter. The closer the market ,the lesser would be the transportation charges,
reduced transaction costs, reduced trekking time, and reduced other marketing costs, better
access to market information and facilities. This improves return to labor and capital and
increase farm gate price and the incentives to participate in economic transaction. For this
research it was expected to have positively effect.

Distance to main road (DISMROAD): is the distance in kilo meter from home of the
respondents up to asphalt road. Most of sorghum production is found in rural areas while the
demand and profitable market is found in the urban.

Access to marketing information (MKTIFO): is dummy variable refers getting the required
and useful information about the price and other conditions related to sorghum marketing.
Information is the driving force of marketing activities. Schemermeier and Light Foot,(2007)
Argue that small-scale farmers are oppressed and do not get a reasonable share of the final
consumer price due to poor access to marketing information. Therefore, well informing about
sorghum marketing ahead of time was expected to have its own impact on participation in
sorghum marketing..

18
Cultivated farm size (FARMSYZ) it is continuous which indicates the amount of land operated
in the survey year measured in hectare. From literature, the effect of farm size on participation.
Some of the literatures argue that farm size affect participation positively.

Credit use (ACSSCREDIT) the accessibility of credit from appropriate sources helps farmers to
increase their participation in market. Hence, credit is hypothesized to influence participation of
use of improved sorghum varieties positively. Different works also hypothesized Access to credit
similarly (Pender and Dawit, 2007) this variable is dummy which takes 1 if the farmer obtained
credit and, 0 otherwise.
Experience in sorghum (EXP.PRODS) this variable is measured in terms of the number of
years of experience in sorghum of the household head which is continues; it is expected to have a
positive effect on marketing participation and sales amount.

Proportion of sorghum area (LANDFORSO) it is the share of sorghum area in the survey year
from the total cultivated farm land. The more the share of the sorghum area, the more attention
the farmers give to the crop and the more likely they participate in higher extent.

Off farm (OFFINCOM) activities are forms of remittances obtained by household head, spouse
and other household members. Through improving liquidity, this income makes the household
more able to expand production and/or purchase from market. It also strengthens the household
position in coping with different forms of risks and e economic transactions.

Training: Farmers’ participation in research activities was also hypothesized to positively

explain sorghum participation and intensity as it determines their knowledge and information
level sorghum market and production. On-farm training and field visit are usually major
strategies used as a means of increase production and dissemination by extension system and
agricultural research centers. Therefore, for the interest of this study, farmers who either
participate in on-farm trials or field visit are considered as research participants.

Amount produce: it is continuous variable which indicates the amounts of production of

sorghum in small holder farmers. Assembling small quantities of grain from many smallholder
farmers raises marketing costs (Jacobs, 2008).The more they produces they freely participate in
market. So it hypothesized that have positive effect on participation of sorghum marketing.

19
Table 1: Description of the selected variables

Expected effect on(DV)

Participation Market
supply(amount of
Variable Measurement
sold)

Age of the household Continuous (+) (+)

head (year)

Sex of the household Dummy ( 1 if (+) (+)

head male 0 female)
Family size (AE) Continuous(AE) (+) (+)
Education of Dummy(1if (+) (+)
household head literate 0
illiterate )

(+)
amount to produced Continuous(quint (+)
al)
distance to main road Continuous(KM) (+) (+)
Distance to market Continuous (+) (+)
Access to marketing Dummy(1 yes 0 (+) (+)
information no)
Cultivated farm sizes Continuous(hecto (+) (+)
r)
Credit use Dummy(1 yes 0 (+) (+)
no)
Proportion of sorghum Continuous (+) (+)
area (hector)

20
experience of sorghum Continuous(year) (+) (+)
production
off farm income Dummy(1 yes 0 (+) (+)
no)
Livestock Continuous(TLU) (+) (_)
training Dummy(1 yes 0 (+) (+)
no)

4. WORK PLAN AND BUDGET

4.1. Work plan

The research will be conducted during 2021 within four months from January to June.
Table 2. Work plan of the study

duration year 2021

Activities April May June July
Literature review 
Draft proposal 
writing
Submission of 
proposal
Questionnaire 
preparation

Data coding and 

editing
Data collection 
Data analysis 
Writing the report 
Submission of first 
draft
Submission of 
research

4.2. Budget
This shows the budget estimated for the accomplishment of the research

21
Table 3. Budget break down of the study
Source: own source
Per unit cost Remark

Birr Birr B i r r
No. M a t e r i a l Q u a n ti t y
1 Paper pack 1 1 5 0 1* 1 5 0 =1 5 0 1 5 0
2 P e n 5 5 5 * 5 = 2 5 2 5
3 P e n c i l 1 2 1 * 2 = 2 2
4 W r i ti n g p a d 1 1 5 1*15=15 1 5
5 P r i n ti n g p a p e r 2 2*115=90 2 3 0
6 Telephone call - 2 5 2*25=50 5 0
7 Transportati on 2 2 7 0 2* 2 7 0 =5 4 0 5 4 0
8 Researcher 1 researcher 6 0 1*60=60 6 0
9 Data collector 2 4 0 2*40=80 8 0
labourer
Total 1 1 5 2

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Berhanu Adinew, 2006. Effective aid for small farmers in Sub-Saharan Africa: Ethiopia case
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Rukuni M., Liebenberg F. and Keswani C. L. (ed). Impact of science on African
agriculture and food security. CAB International. International Livestock Research
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CSA (Central Statistical Authority), 2007. Summary and statistical report of the population and
housing census. National Results. Volume I, Part I, Addis Ababa, Ethiopia

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CSA. (Central Statistical Authority),2008.Agricultural sample survey, 2008/2009, 2001 E.C
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http://www.agritrade.org/Publications/DW%20Book/PDFs/hungwe.pdf Accessed on 11 August
2009
Jacobs P. 2008. Market development and smallholder farmers-A selective literature survey
Background paper for the second economy project. HSRC-CPEG.
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Agriculture in Sub-Saharan Africa. The Department of Agricultural Economics,
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University of the Western Cape. P264-303.

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Makhura M. T., Goode M. F. and Coetzee G. K. 1997. Indexing participation in the market
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APPENDIX-1
FACULITY OF AGRICULTURE AND ENVIRONMENTAL SCIENCE
DEPARTMENT OF AGRICULTURAL ECONOMICS

QUESTIONNAIRE ON DETERMINANTS OF PARTICIPATION ON SORGHUM

MARKETING
Household interview schedule
1. Name of Kebele Administration ____________________
2. Distance of the house to the nearest market Centre ___ Km
3. Distance of the house to the nearest development agents’ office? _____Km
4. Distance of the house to the asphalt road (to access car transport)? _____Km
5. Sex of household head ______0=Female, 1 =Male
6. Age of household ____________Years

24
7. Educational status (√) 0. [illiterate ] Cannon read and write 1. [literate ] Just can read and
write
8. How many of children are in school__________

9. Family size(in adult equivalent)

Age in years <10 10-13 14-16 17-60 >60

Number of Male
Number of Female

10. How long have you practiced production of sorghum products?_______________ years
11. Total crop land 2018 production season: ______timad _____ ha. (Note: 1 ha = 4 timad or 1
timad = 0.25 ha)
12. livestock Number: Oxen/bulls [______ ], Cows/heifers [_____ ], Calves [ ________], Goats [
_______], Sheep[____ ], Donkeys [_______ ], Horses [____ ], Camels [_____ ], Mules
[ ______], Chickens [______ ], Bee hives [____ ] , Others______
13. Did you sell sorghum in 2018? ______0=No, 1=Yes,
14. If yes, what were the amounts produced and sold in 2018. To whom did you sell your
production?

Typ Area(ha Amount amount Amount Price(Birr/qt To whom

e ) produce consum sold(qt)201 ) you
d e 8 commonl
2018(qt) y sell?
1

Code for whom you sell: 0). Farmers 1).Wholesalers 2) Rural consumers 3).Urban consumers
4).Retailers 5) self-consumption
15. Have you ever participated in cereal production system training in the last three years? (√) 1.
[ ] Yes 2. [ ] No
16. Do you have marketing information in last year? (√) 1. [ ] Yes 0.[ ] No
17. Did you get extension service on sorghum production practices before? (√) 1. [ ] Yes 0. [ ]
No; if yes how much per year……………………………

25
18. Did you obtain credit in 2018? ________0=No, 1= Yes; If yes, how much did you obtain?
______________Birr

19. Do you have off/non-farm income source 1. Yes 2. No

20. What are the main bottlenecks in production and marketing of Sorghum?

Problems in production and marketing of Sorghum

No Main Problems 1. Yes 0. no

1 Low fertility of the soil
2 Poor soil conservation activities
3 Shortage of rain
4 Seed shortage
5 Shortage of land
6 Shortage of labor High weed infestation
7 Price fluctuation
8 Lack of transport
9 Lack of market information
10 Lack of infrastructure (road, communication
device)
11 Low demand

26