Marketing of selected agricultural commodities in the Baco area, Ethiopia

Because cereals make up the bulk of the Ethiopian diet and production of the needed quantities lags with concomitant imports, the development policy of the government towards the agricultural sector is directed towards increasing production and gaining the participation of the subsistence farmers in the marketing process. Present prices for cereals are high and far above world market prices and increases in indigenous production have to be accompanied by decreasing prices over the long-run, a goal attainable through technological change in agriculture. This study attempts to analyze the present marketing situation of agricultural commodities in the Baco area of Ethiopia and to search for the reasons for the existing market imperfections. This study is based on the weekly price series of different markets in the Baco/Shoa region in Ethiopia and on the main demand centers for that area, Addis Ababa and Gimbi in western Ethiopia. Price series of cereals, red pepper (chili) and noog (nigerseed) were chosen because of their importance for the Baco area. The present marketing system of agricultural commodities are examined in this study with respect to the following questions: (1) What are the reasons for the present high price fluctuations? (2) Do the spatial price differences exceed the shipping costs? (3) Does the present marketing system enable the merchants to make excessive profits?