Supply analysis in wheat industry: contributions of value chain analysis in Ethiopia: Cases from Arsi and East Shewa Zones in Oromia National and Regional State

In this paper an attempt is made to analyse factors affecting supply issues at different functional nodes of Wheat Value Chain (WVC), flow of commodities and roles of cooperatives and other institutions in supply issues. Sources of primary data include input suppliers, service providers, wheat producers, traders, cooperatives, wheat processing industries. Interview schedules, informal group discussions and observations were used to collect primary data from actors in wheat value chain. The sample design was multiple sampling stages, zones as first stage sampling unit, districts as second stage sampling unit, kebeles as third stage sampling unit and key WVC actors as fourth stage sampling unit. Factors of supply issues in wheat industry has been analyzed with the help of descriptive statistics, qualitative methods and stepwise multiple regression (OLS). The result indicates that cooperative as actor has failed to supply adequate input, namely pesticide and herbicide caused input retailers to manifest their opportunistic behavior and exploit asymmetric information on input quality at small shops and spot market, which in turn, declined wheat productivity. Wheat producer’s marketed surplus significantly increased with land size, fertilizer, extension service, and distance from main road, producer’s WVC function, and decreased with crop rotation. About 90% of wheat processing industries ranked shortage of raw materials as the number one barrier for wheat product supply. Concerned body should work on technology and extension service supply and coordination to address low raw materials and final products supply at each functional node of wheat value chain.