Analysis of Malt Barley Value Chain Finance: A Case of Lemu Bilbilo District, Arsi Zone.
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Date
2022-12
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Addis Ababa University
Abstract
Ethiopia is the second largest barley producer in Africa next to Morocco. Financial constraints in agriculture specifically in malt barley value chain remains outward and agricultural finance are costly and inequitably distributed, limiting producers’ ability to use quality input, use machinery to produce more. The purpose of the study was to analyze malt barley value chain and determinants of malt barley value chain finance. To comprehend the objectives, data were collected from both primary and secondary data sources. Data analyzed by descriptive statistics and econometric analysis. Binary Logistic Regression model was used to analyze the determinants of malt barley value chain finance. The study revealed that, major actors in supply function of Malt Barley value chain in the study area are; Galema Union, Ethiopia Seed Enterprise, Oromia Seed Enterprises, Heineken, Soufflét malting plc, Buusaa Gonofaa MFI S. Co, Asella Malting factory, Farmer service center. Smallholder farmers, Commercial farmers, Seed producer cooperatives are major actors in production function. Respondent’s access to finance for inputs was only 40% cost of production needed per hectare of land. About 36% of respondents responded that religious probation (riba) was a major reason hindering farmers to take a loan, followed by 26% and 20% Lack of guaranty/physical collateral and respondents do not know where to take a loan from, respectively. The estimated odds' ratio of respondents gender, Education level 0.157and 2.22 respectively have positive effect whereas that of access to financial service and average productivity per hectare of land with 0.948 and 1.071 p-value respectively has negative effect on access to malt barley value chain finance. Microfinances, rural financial Institute involved in financing malt barley producers shall practice value chain finance approach than disbursing only cash to producers, adopting input finance, warehouse finance and facilitating market linkage. Rural financing institutions or Microfinance Association shall work on improving farmer’s financial literacy, easing credit collateral requirements for agricultural and agricultural output trade loans.
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Keywords
Malt Barley, Malt Barley Value chain, Value chain Finance, Value Chain Analysis