Analysis of market participation of small dairy farmers in gubre town, snnpr, ethiopia

With a descriptive as well as econometric analysis method, this study investigated 140 arbitrarily selected dairy producer households, focusing on analyzing dairy market participation of small dairy farmers in Gubre town south nation nationality and people region of Ethiopia. The purpose of this paper is to provide information regarding the determinants of dairy market participation and rate of participation in Gubre town. Based on the fi ndings, out of a total of 140 dairy producing sample respondents, 65 (46.43%) were they participate in the dairy market, while the rest 75 (53.57%) were nonparticipants. The mean production of milk per day for the sample, participant, and non-participant respondents was 1.94, 2.42 and 1.51 liter respectively. The number of children’s below the age of fi ve year, the volume of milk produced, distance to the closest dairy market and information access considerably affects both the dairy market participation and rate of participation decision of the households. But the size of milking cows kept and credit use only affects the dairy market participation decision of the households. Hence, policies aiming at increasing producer’s provision of modern inputs, increasing the number and productivity of dairy cows and change of smallholder farmer’s attitudes towards dairy production and joining the dairy market were recommended to accelerate the dairy market contribution in the study area of Gubre town. Research Article Analysis of market participation of small dairy farmers in gubre town, snnpr, ethiopia


Introduction
In today's world, food insecurity, poverty and unemployment are the main problems, especially in developing countries. In order to solve these problems and bringing economic growth the role of agricultural sector is greater. Furthermore, it is a means of generating income for many peoples live in third world countries (FAO, 2003). The life of those people's live in third world countries in one and another way depends on agriculture, mainly on livestock. They sustain their lives through agricultural activities (Nguyen, and Cheng, 1997).
Agriculture is contributing about 43% of all the fi nished goods and services produced, 85% of income obtained from foreign countries and 85% of employment opportunities and it is the most important people's livelihood activity in Ethiopia. Hence, development of agriculture is important for addressing food insecurity, to alleviate shortage of food and to get continues domestic economic growth and development and for improving the capacity of the country (Deresa, 2010).
The livestock segment also have an energetic part as a source of diet, earnings and external currency to domestic economy and donates around 12 and 33% of the over-all and agricultural output, respectively (Deresa, 2010) and it contributes 30% of agricultural employment (SNV, 2008).
Ethiopia has a vast capacity for dairy making and supplying due to its ample livestock resource availability for dairy production and high local demand for dairy outputs, so boosting supplying of dairy outputs is believed to be useful for poverty reduction through generating income and creating employment opportunities for the rural poor. Dairy market participation was important for minimizing losses and diversifi cation for dairy farmers.
Over the past few years milk production in Ethiopia is In Ethiopia, dairy products are supplied to the market in different ways (formally or informally). Most of the producer's especially rural producers supply their products by using the informal way they sell directly to consumers or illegitimate traders and they decide the price through negotiation. A small number of producers especially urban producers they use formal ways to supply their products. Producers supply to cooperatives and milk collecting groups. The number of cooperatives and milk collecting groups is few and they have low performance (Woldemichael, 2008). There are many contributions that small scale dairy farming brings to a family, but the most quantifi able is its contribution to the household income (Urassa and Raphael 2002).
Gubre town is found in Gurage zone of south nation nationality people regional state. In Gubre town there is great potential of dairy production because of the ample availability of labour force, water and large number of milking cows, but there is a market participation problem of small dairy farmers.
Many dairy producer households cannot supply their product to the market due to many factors. And those suppliers can only supply a small amount of their total production of dairy. The result shows that dairy household's market participation decision was affected by age of the household head, family size, education level, experience in dairy production, number of crossbreed milking cows owned, and distance from the milk markets center.
Sosina (2016) was conducting research on the objective of assessing the value chain of dairy products in Meta district, Eastern Ethiopia. The empirical fi ndings propose that distance, off-farm income, income obtain from the crop, age of household head, and land size was found to be negatively and signifi cantly affecting milk market participation decision.
Supplementary feed, crossbreed dairy cows and the number of livestock were positively and signifi cantly infl uenced the amount of milk marketed.
However, most of these studies were done on the milk market participation alone that means they exclude other dairy products in their study. And also they are not studies factors that affect the rate of dairy market participation of the dairy households. This study is initiated with the purpose of analyzing dairy market participation of small dairy producers that could be used as points of entrance for research, policy, and development interventions to revive the dairy sector of the study area.
The general Objective of the study was to analyses market participation of small dairy farmers in Gubre town, Ethiopia.
The specifi c objectives of this study are:  To describe the socio-economic characteristics of small dairy farmers in Gubre town  To assess determinants of dairy market participation and rate of participation in Gubre town Signifi cance of the Study: The result of this study would be useful to provide valuable information on market participation of small dairy farmers; it helps policymakers in designing appropriate policies for intervention and for other responsible body's. All peoples that are engaged in the development of this sector would be benefi ted from the fi ndings of this study.
The outcome of this study also believes to be useful for dairy producers to make better decisions. The work also helps as a reference document for other studies. Sampling Procedure: Two stage sampling procedure was used. At the fi rst stage, the study area was selected purposively on the basis of dairy production potential and the existence of a dairy market participation problem. The area selected for this study was Gubre town. Gubre town was selected because of the availability of large number of cattle's and good weather condition for dairy production. And also the availability of dairy market participation problems. Prior to dairy household sampling, initially the total number of dairy farm households (complete listing of all the dairy farms) in the town was obtained. At the second stage, a simple random sampling procedure was used to select sample households from the area.

Methodology
To select sample respondents from the area, fi rst the household heads in the study area were identifi ed (obtained). Then the sample respondents from the area were selected randomly using simple random sampling technique. The farmers in the area were selected randomly from the list of household heads.
After the random sampling was made unfortunately some farmers were found to be that they had no milking cows at the survey time. As a result, there was additional random selection to replace those farmers who had no milking cows. In these way a total of 140 sample households were selected randomly and each was interviewed for the purpose.
This study applies a simplifi ed formula provided by (Yamane, 1967). And 92% confi dence level with 8% level of precision was used in order to reduce sample size because the households in the area had relatively homogeneous characteristics (their socio-economic characters had relatively similar). The formula was given as; Data Analysis Methods: Two types of data analysis methods were used to analyze the data collected from dairy producers, which were a descriptive and econometric analysis. The survey responses summarized into groups and given codes before entering into the computer. The data collected from the study area were entered into SPSS 16 for managing the data and analyzed by using STATA 13.
Descriptive analysis: Refers to the use of percentages, means, frequencies, and standard deviations for comparing socioeconomic and institutional characteristics of dairy producer households in the study area. In this study descriptive statistics was used to explain the different socio-economic characteristics of the sample households. These include mean, percentage, standard deviations and frequency of occurrence for the participant and non-participant dairy producers. The statistical signifi cance of the variables were tested for dummy variables by using chi-square ( 2 ) and for continuous variables by using t-tests.

Econometric analysis
In this thesis Logit model was used to recognize the determinants of market involvement of small dairy farmers; Where Pi: -is the probability of participating in the market for the i th dairy producer and it ranges from 0 to 1.

Zi: -is a function of a number of explanatory variables (x)
which is also expressed as:- Where is an intercept, 1, 2, 3 … … …. n Are parameters (slopes) of the equation in the model and ×1, 2, 3 … … …. ×n are explanatory variables This is the odds ratio: is the ratio of the probability that dairy producer would participate in the market to the ratio he/she would not.
This is the log odds ratio. The logistic regression slope coeffi cient is interpreted as the change in the natural log of the odds ratio associated with a unit change in the independent variable.
Tobit model was used to identify factors affecting the rate of dairy market participation of small dairy farmers. The model derives from an underlying classical normal linear regression and can be represented as: .
Where: f and F are respectively, the density function and cumulative distribution function of Yi*. The change in the rate of dairy market participation with respect to a change in an explanatory variable among the participating households is:  Grain production: is continues variable measured in income obtained from grain production per year. When they have produced more grain they use milk and milk products as an additional food and they do not supply to the market. So, it is expected to have a negative effect on the probability and rate of dairy market participation.

Number of milking cows: This variable is continuous and
is measured in number of milking cows owned. As the number of dairy cows increases, milk production also increases and percentage share of consumption declines and milk sales increases. The probability and rate of dairy market participation of dairy producers were supposed to be positively affected by the number of milking cows owned. The amount of milk produced: is a continuous variable measured in liters. When the amount of dairy products was increased, the surplus amount of dairy in the household also increases. So, the amount of supply also increases. The variable is expected to have a positive relation with the probability and rate of dairy market participation.
Distance to the nearest dairy market: It is distance of the dairy household from the nearest diary market and is measured in kilometer. Dairy market participation should thus be inversely related to distance to the market. When the market is far from dairy producers the higher would be the transportation charges, increase transaction costs, walking time and loss due to damage. This reduces returns to dairy and the motivations to participate in the market and rate of dairy supplied was reduced.

Access to market information:
It is a dummy variable taking a value of zero if the households have not dairy market information access and one if the household have access of dairy market information. It is supposed that dairy market information is positively associated with the probability and rate of dairy market participation of households.
Credit use: credit use is a dummy variable taking a value of one if the household have used credit and zero otherwise. If they use credit this creates opportunities for getting money to perches important materials used in dairy production. Credit use is supposed to affect the probability and rate of dairy market participation of dairy households positively.

Descriptive results
This part deals with the outcome of descriptive statistics and econometric analysis of the study. The analysis was made on the bases of the objectives of the study. For describing the general characteristics of sample dairy farm household's descriptive analysis, such as mean, percentage, frequency and standard deviation were used. The econometric analysis was done to identify factors that affect dairy farm household's market participation in the dairy market. For this study milk, butter and cheese were chosen because they were the three most important produced dairy products in the area. Milk and cheese were used for consumption only, while butter was used for household consumption and cosmetics.

Socioeconomic characteristics of sample respondents (households)
Age of the household head: The average age of the sample household heads was 42.25 years where the minimum is 23 and the maximum is 80. The average household head age of market participant was 42.91 and the corresponding fi gure for nonparticipant was 41.68. From the statistical analysis performed, it is found out that the mean age difference between participant and non-participant is not statistically signifi cant. was 0.59. The maximum and minimum number of children less than fi ve years of age of the sample households was 4 and 0 respectively. The mean number of children below the age of fi ve years for market participant and non-participant dairy households were 0.45 and 0.71 respectively. The mean age of children less than the age of fi ve years was lower for participant households as compared with nonparticipant households. The t-statistic value shows that the number of children less than the age of fi ve years is statistically signifi cant.
Family Size: Total family size of the sample respondent households was 717. The average family size of the sample households was 5.12 where the minimum is 1 and the maximum is 10. From a total of 140 dairy producing sample households, 65 (46.43%) were market participants as they supply dairy products to the market, while the rest 75 (53.57%) did not participate in the dairy market in the study area. The market participating households were lower number of family size than non-participants. Farm households with larger family size, they consume more dairy products which reduce their market participation. But the t-test showed that there is no a signifi cant relationship between family size and dairy market participation decision.

Number of milking cows:
The result revealed that the average number of milking cows owned by the total sample households was 1.64. The average milking cows owned by the dairy market participant and non-participant was 1.86 and 1.44 cows, respectively. The maximum and minimum number of milking cows' kept by the sample households was 3 and 1 respectively. The mean difference between dairy market participants and non-participants in terms of milking cows owning were statistically signifi cant. All sample household's produce milk by using local breed's cattle (only local breeds of cattle kept in the sample households).

Number of livestock holding: Different kinds of livestock
were kept by the sample households (Cattle, Sheep, Goat, Poultry, and Donkey). The mean livestock holding in Tropical Livestock Unit (TLU) for the sample households was 3.72, where the maximum was 8.85 and the minimum was 1.2. The mean livestock holding for participant households was 3.95 TLU and 3.51 TLU for the non-participants. Dairy market participant households have better mean livestock holding than nonparticipant households. The mean difference in the two groups with regard to livestock holding was statistically insignifi cant.
The amount of milk produced: The mean production of milk per day for the sample households was 1.94 liter, and the range varies between 0.5 liter and 7 liter. The average daily production of milk for dairy market participant households was 2.42 liter while the daily average production for nonparticipants was 1.51 liter. The mean comparison between dairy market participants and non-participants in relation to milk production showed that the difference between the two groups was statistically signifi cant.
Distance to the nearest dairy market: The average distance moved by the sample respondents to reach the nearest dairy market was 2.93 Km. The maximum and minimum kilometer moved by the sample respondents to reach the nearest dairy market or milk collection center was 6.6 Km and 0.1 Km respectively. Average distance moved by dairy market participants to reach the nearest dairy market was about 1.94 km, whereas non-participant households on average traveled 3.78 kilometers. Thus, there was a statistically signifi cant difference between dairy market participants and nonparticipants regarding distance to the nearest dairy market.
Total Grain production: The major crops grown in the study area are teff, maize and coffee. The mean annual income obtained from grain production of the sample households was 9991 Birr, though the range varies between 0 Birr and 32841 Birr. The average annual income obtained from grain production for dairy market participants was 8223 Birr while the annual average income obtained from grain production for non-participant was 11523 Birr. The mean comparison between the participants and non-participants showed that the difference between the two groups is statistically signifi cant (Table 1).   (Table 2).

Econometric results
The dependent variable dairy market participation was defi ned as a dichotomous variable taking the value of one (1) for market participants and zero (0) for non-participants.
Dairy Market participation means the supply of any kind of dairy products to the market from small holder dairy farmers own production. The rate of dairy market participation (ratio of the total amount of dairy products supplied to the market to the total amount produced) was the dependent variable. It is censored at zero (lower limit) and one (upper limit), that is, some households did not supply any dairy product to the market the value of zero for the dependent variable and some households supply all of their dairy products to the market the value of one for the dependent variable. Hence, Logit model was used to investigate the factors that determine dairy market participation and Tobit model was used to analyses the determinants of the rate of dairy market participation by small dairy producers. And STATA version 13 was used to analysis the data.
Before running the models independent variables were tested for presence of multicollinearity problem. For continuous variables Variance Infl ation Factor (VIF) and for dummy variables contingency coeffi cients (CC) were work out to recognize the presence of a multicollinearity problem among explanatory variables. There was no multicollinearity problem among the explanatory variables those used in the models.

Conclusion and recommendation
The study was undertaken with the objective of analyzing dairy market participation of small dairy farmers in Gubre town, SNNPR, Ethiopia. In the study both primary and secondary sources of data were used. The primary data was collected from 140 randomly selected dairy producer households. was processed into butter, cheese and other dairy products.
But only butter and cheese were supplied to the market in the town. Dairy used as a source of income for about 46.43% of the dairy producing households in the area. The income obtained from selling of dairy products is used to cover expenditures like students' school material, purchasing grains, health expenses, etc. The main problem in dairy production and marketing in the study area were low volume of production. Low production was the result of shortage of feed; most of dairy cows in the area are indigenous. Health access for animals tends to be defi cient. The major opportunities of dairy production and marketing in the study area where there is an increased demand for dairy products, political stability, good weather condition, low cost of labor and availability of large cattle population.
From the outcomes of the study, the following conclusions and policy suggestions are mentioned for policy makers, researchers and other responsible bodies who are involved in helping the dairy sector.
Based on the outcomes of the study, the amount of milk produced, number of children below the age of fi ve years, distance to the nearest dairy market and access to market information where signifi cantly infl uenced the probability and rate of dairy market participation of households. In addition, use of credit and Number of milking cows owned were signifi cantly affects the probability of dairy market participation Number of Children below the age of fi ve years negatively determines probability and rate of dairy market participation. Most of the time milk is a major food for children and it is important for children health and growth. So, an increase in the number of children in this age category which increases the amount of milk consumption in the house and reduces the amount of milk available for sell. Thus, households with number of children under the age of fi ve years usually reduce the marketed surplus and have decreased the capacity to participate in the dairy market. Therefore, family planning training would be given to the households in order to reduce the number of children below the age of fi ve years in a household.
Number of milking cows owned positively and signifi cantly affected probability of dairy market participation. This suggests that the probability of dairy market participation increase as the number of milking cows' increase, through increasing milk produce per day per household. So governments and other responsible bodies should integrate crossbred cows into smallholder production and upgrading milk production capacity of local cows.
The amount of milk produced also positively determines the probability and rate of dairy market participation of the household. The amount of milk produced can be increased through adoption of crossbred cows, but which is not kept mostly by rural households who are far away from urban centers, as they have low access to markets. The policy implication is that in order to increase the amount of milk produced per day per household producers would adopt crossbred cows. Government and other responsible bodies support those dairy producers by giving training and other services in the area.
The probability and rate of dairy market participation of the household were negatively affected by distance to the nearest dairy market. As distance from the nearest dairy market increases household probability and rate of dairy market participation decreases. The policy implication is that Governments and those responsible bodies requires to improved infrastructure and transportation facilities through repairing roads.   Access to market information affects the probability and rate of dairy market participation of the household positively.
Thus, the dairy producers should try to get access to market information. Distribution of market information can be done through different Medias (i.e. through television, radios, newspapers, magazines etc.).
Use of credit positively affected the probability of dairy market participation. Credit enables the dairy households to purchase additional dairy cows and different inputs like feed and dairying materials, which contribute to increase milk production and dairy market participation. The policy implication is that the government, NGOs and other responsible bodes should create easy ways of getting credit for farmers.
Small-scale dairy farming in Gubre town contributes to the household income; it covers some of their home expenses. But they are not getting appropriate income from dairy, because of low productivity, it needs improvement. Many dairy products are used for household consumption, because many of the households in the study area are not market oriented. The policy implication is that smallholder dairy farmers in the area should adopt market-oriented dairy production system by using crossbred cows and improved dairy technologies.
The government and other responsible bodes should solve the constraints available in the area like shortage of feed, low access of health service etc.