DAIRY PRODUCTS MARKETING CHAINNEL ANALYSIS: THE CASE OF ADA’A BERGA DISTRICT, WEST SHEWA ZONE, OROMIA NATIONAL REGIONAL STATE, ETHIOPIA

Medium and large scale dairy processing firms operate at less than full capacity due to lack of market or non-market coordination along dairy marketing channel. The objective of this study was analysis dairy products marketing channel in Ada’a Berga District West Shewa Zone Oromia National Regional State, Ethiopia. The study used cross sectional data collected in 2018 from a sample of 123 smallholder farmers selected through three stage sampling technique and 48 traders selected from three markets. Descriptive statistics and Heckman two stage models were used to analyse data collected. Marketing channel analysis identified seven major milk marketing channels and five butter marketing channels. The dairy product marketing channel participants identified were producers, collectors, cooperatives, retailers, wholesalers, processors and consumers. The concentration ratio of buyer results showed that top four milk traders controlled 78.8% and 89.54% of the total volume of milk sold in Enchini and Holeta and 61.29% and 63.46% butter sold in Enchini and Holeta respectively. The highest TGMM for milk was 59.3% in a channel producer to rural collector and lowest 36.84% in channel producer to District retailer. The highest GMMP for milk was 63.15% in channel producer to District retailer and lowest 40.7% in channel producer to rural collector. The highest and lowest TGMM for butter market was 53% in channel producer to rural collectors to District retailer. The maximum GMMp for butter market was 54% in channel producer to District retailer and lowest was 47% in channel producer to rural collectors. From the Heckman first stage model factors that affecting farmers’ participation decision includes, breed type, income from dairy sources, distance from the nearest market, membership of dairy cooperative, volume of milk produced and number milking cows affected farmers milk market participation. Whereas, distance from nearest market centre, number milking cows, access to market information, non-dairy income have explained the probability of butter market participation. According to the result of second stage Heckman model showed education level of households, number milking cows,volume of milk produced, access to credit and membership of dairy cooperative affected producer’ level of milk sold. Whereas, level of butter marketed affected by number milking cows, acces to credit, quantity of butter produced, income from dairy sources and volume of milk produce. Policy implication drawn from the study strengthening cooperative, extension contact,formal education, credit, breeding system and improve infrastructure and market information.