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Trader-supplier Coordination in the Agrifood Supply Chains in Northern Ethiopia

  • Alemu, Abebe Ejigu
  • Mathijs, Erik
  • Maertens, Miet
  • Deckers, Jozef A.
  • Gebregziabher, Kidanemariam
  • Baur, Hans
  • Gebrehiwot, Kindeya

There exists a huge agrifood potential in Ethiopia. However, the country's agrifood supply chains are underdeveloped to deliver quality supply to traders and supplement household livelihoods from the sector. The key factors that determine the proper functioning of supplier-trader chains were not rigorously investigated, at least in the case study area. This paper aims at examining the key determinants in choosing vertical coordination for agrifood products in Tigray, Northern Ethiopia. Structured questionnaires were administered to 247 traders in 10 towns in Tigray. Probit model was employed to identify the key determinants of vertical coordination. Model results show that market information, product characteristics, firm characteristics, and product quality were found significant factors in determining the adoption of vertical coordination. An interesting finding is that traders tend to vertically coordinate so as to get credit from suppliers. Based on our findings we suggest that strengthening quality assurance and contract enforcement institutions appears to be an important intervention area to improve the agrifood chain in the study area. Moreover, providing financial support to encourage the private sector to operate in agro-processing is among the efforts that need to be focused so that it facilitates the rural development process in the region.

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Paper provided by European Association of Agricultural Economists in its series 2011 International Congress, August 30-September 2, 2011, Zurich, Switzerland with number 114218.

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Date of creation: 2011
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Handle: RePEc:ags:eaae11:114218
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  1. Nigel Key & William McBride, 2003. "Production Contracts and Productivity in the U.S. Hog Sector," American Journal of Agricultural Economics, Agricultural and Applied Economics Association, vol. 85(1), pages 121-133.
  2. Nigel Key & Elisabeth Sadoulet & Alain De Janvry, 2000. "Transactions Costs and Agricultural Household Supply Response," American Journal of Agricultural Economics, Agricultural and Applied Economics Association, vol. 82(2), pages 245-259.
  3. Franken, Jason R.V. & Pennings, Joost M.E. & Garcia, Philip, 2008. "Do Transaction Costs and Risk Preferences Influence Marketing Arrangements in the Illinois Hog Industry?," 2008 Conference, April 21-22, 2008, St. Louis, Missouri 37599, NCCC-134 Conference on Applied Commodity Price Analysis, Forecasting, and Market Risk Management.
  4. Christopher G. Davis & Jeffrey M. Gillespie, 2007. "Factors Affecting the Selection of Business Arrangements by U.S. Hog Farmers," Review of Agricultural Economics, Agricultural and Applied Economics Association, vol. 29(2), pages 331-348.
  5. Awudu Abdulai & Eliud A. Birachi, 2009. "Choice of Coordination Mechanism in the Kenyan Fresh Milk Supply Chain," Review of Agricultural Economics, Agricultural and Applied Economics Association, vol. 31(1), pages 103-121.
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