Is Potato Market Efficient in Ethiopia? Evidence from Farta District of Amhara Region

Abstract

The study aimed to explore the structure and conduct of the potato market in the Farta District of Amhara Region in Ethiopia. Data was collected from 123 potato producers, 30 traders and 13 consumers selected through a two-step random sampling procedure. Four major value chain actors that held about 49.2 percent of the total quantity of potato purchased were identified. It was found that the Farta potato market was weakly oligopolistic. The study showed that competition, commercial licenses and limited capital are the main obstacles to enter the potato market. About 47.11 percent of the overall gross margin of marketing was added to potato prices in the value chain. Approximately 19.5% of total gross margins were absorbed by collectors, while retailers and wholesalers accounted for 15.6% and 11.9%, respectively. The actors in the value chain of potatoes generated positive profits, but the barriers to entry, the structure of oligopoly markets and the inability to determine price sets the potato market inefficient.