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4.5.1. Market Places
Market is an important factor that affects household decision-making in agricultural activities. Access to markets is a distance measured in kilometers to reach the nearest market. The study revealed the infrastructure in Mana woreda is generally satisfactory. There is an availability of market places near to villages with easy road access and proximity to larger towns. This has assisted farmers to reduce their transport cost and enlarge their market surplus and margins. The access has further supported to increase coffee production by the farming households. According to the survey result, it is confirmed that the average distance from the main road is at about 2km and from a rather close average distance from the main village market is at about 3.7 Km. Sample households are also located at a distance of 4.2km from cooperatives. The main market center is in Yebbu town, which is the woreda capital.
4.5.2. Market Participants
Coffee passes through several stages before it reaches the ultimate consumers. These stages are local collection station, processing, storage, transportation and grading, exporting and domestic distribution. Both governmental and private enterprises are participating in collecting, processing, wholesaling and exporting activities (Elias, 2005). This study identified different coffee market participants in the exchange functions between farmers and final consumers. The major coffee market participants in the study area include coffee farm households, local collectors, wholesalers (suppliers) and Cooperatives.
Coffee growers are the primary actors who cultivate and supply coffee to the market. They do not have adequate, reliable and timely market information than traders which forced them to sell their produce at low selling price. Local collectors are farmers or part time traders in assembly markets who collect coffee from farmers in village markets for the purpose of reselling it to wholesalers and consumers in the main market center. They use their financial resources and local knowledge to collect a bulk of coffee from the surrounding area. Wholesalers are known for purchase of coffee in a large amount with better financial and information capacity. They purchase coffee either directly from farmers or local collectors. They distribute large amount of coffee to the regional market (Jimma) and to terminal markets (Addis Ababa). Service Cooperatives (primary societies) made up of different local peasant associations play an important role in organizing farmers. They own washing stations and warehouses. They purchase coffee from the farmers and distribute to unions.
4.5.3. Marketing Channels
Generally, four marketing channels were identified in the study area where coffee was passing from producers to consumers. The first channel was passing coffee from producers via coffee primary cooperatives to export through secondary cooperatives (Unions). In the second channel producers sold dried coffee to collectors who were selling to primary cooperatives to be exported directly through the Union. The third channel is a principal marketing channel with larger number of marketing agents through which sun dried coffee is passed from the coffee growers to coffee collectors and dry processed coffee is passed from coffee wholesalers to export market. In the last channel, coffee growers sell their coffee to wholesalers to export through exporters.
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The coffee marketing channels of the study area can be sketched like this:
Therefore, the structure of coffee marketing system in the study area was characterized by the presence of individual coffee farmers to the production side and coffee primary cooperatives, local collectors and wholesalers (suppliers) to the marketing side. The Oromia Coffee Farmers’ Cooperative Union and private exporters were the members of the coffee marketing structure outside the study area.
4.5.4. Place and Price of Coffee Sale
As the starting point for the distribution of coffee from producer to final consumer, farm respondents were asked where they were selling their different forms of coffee. According to the sample respondents, the major market places for selling both red cherry and sun-dried coffee were the nearest local markets for collectors, primary cooperative associations and Yebbu town (main market center of the woreda) for wholesalers and other marketing agents. With respect to whom the sample farm households are selling their coffee among the different marketing agents (intermediaries), they responded differently with regard to red cherry and sun-dried coffee.
Farmers sell their coffee in the form of red cherry during harvesting and in sun-dried form after storing for some months. For the red cherry coffee, the majority (about 72.3%) of the farm household were sold to the Cooperatives. The remaining 19.2% and 8.6% were sold to Local collectors and Wholesalers respectively.
Local collectors purchase the bulk of coffee in the case of sun dried (70.8%) from farm households where as the remaining 22% and 7.2% of sun-dried coffee bought by coffee wholesalers and cooperatives respectively.
As indicated in the above table 4.10, from the total production of coffee, the sample farm respondents are producing more of sun-dried coffee (63%) than that of red cherry (37%). The red cherry coffee will be sold immediately after harvesting mostly for cooperatives which have washing stations and hand pulpers. According to the survey result, the principal cost of the farmers was cost of transporting coffee to the market followed by labor cost.
Regarding with price, there is a difference in the price between red cherry and sun-dried coffee. The price of sun-dried coffee was higher than that of red cherry. All of the sample farm respondents in the study area reported that the average price for red cherry was nearly 6 Birr/kg during the last harvest season whereas for sun-dried coffee the mean price was 24.4 Birr/kg. But the prices of both types of coffee were fluctuating from time to time.
Farmers sell their coffee for cooperatives as well as local traders. They preferred to sell their coffee to cooperatives because most of the sample farm households are members of the cooperatives and the prices of cooperatives for red cherry and sun-dried coffee were better than the other local traders. But, cooperatives were not active participants in the early and late seasons and favored to buy red cherry. During this time farmers were forced to sell their coffee (especially sun-dried) to local traders at a lower price due to limited bargaining power.
According to the survey result, the sample respondents replied that there is no uniform coffee price at the market place. The reason for difference in the price of coffee was color difference (2.6%), quality difference (89.7%) and Farmer’s negotiating capacity (8.7%). Prices were exclusively determined by traders negotiating with farmers during time of transaction. Majority of farmers responded that they were price takers. Price setters were mostly local traders (81.7%) and only 18.3% of the farmers were in a position to decide on coffee price.
Regarding with the terms of payment, 76.2 percent of the respondents stated that they were selling their coffee on cash basis and received the price as soon as they sold.
According to the survey result, 71.3 percent of the respondents replied that the trend of coffee market is apparently decreasing across time. The reason behind this is the fluctuation and volatility of coffee price. Hence, the benefits earned from the production of coffee are significantly deteriorating because of the declining prices of coffee in the market.
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