Analysis of banana value chain in Ethiopia: Approaches to sustainable value chain development

Figures & data

Figure 1. Agricultural value chain Map, Source: Lundy et al. (2012): Link Model

Table 1. Selected indicators for the sustainability of banana value chain in Arba Minch district of Ethiopia

Economic	Social	Environmental
Profitability Value added received Governance/power Fair trade Productivity Product loss Market diversity	Employment Labor condition Gender/equity Market information Product information Farmers’ cooperation for bargaining power Safety and hygiene Product quality Stakeholder Relation Road and transportation	Emission of air pollutants Water usage waste management Soil degradation Biodiversity

Sources: Gebre and Rik (2016), Food and Agriculture Organizations for United Nations (FAO 2012), and Moreno and Salgado (2012).

Figure 2. Location map of the Arba Minch Zuriya district, Ethiopia

Source: Ministry of Agriculture and Rural Development [MoARD] (2005)

Table 2. Summary of research questions and data collection methods

Questions	Details	Method or tool used
1	What is the structure of existing banana value chain in Arba Minch?
1.1	What are key stakeholders (actors, partners and external influencers) and their role in the chain?	Survey, interview, and group discussion
1.2	How do products, payment and information flow through the chain?	Survey, interview, and group discussion
1.3	What is the division of profit margins throughout the chain?	Farmer survey and traders’ interview
1.4	What is sustainability performance of the banana value chain looks like?	Survey, interview, group discussion, and observation
2	What are factors for smallholders’ banana productivity in the Arba Minch?	Survey, interview, and group discussion
2.1	What are possibilities to improve sustainable banana productivity for smallholders?	Interview and group discussion
3	What are factors affecting smallholders’ banana marketing in Arba Minch?	Survey, interview, and group discussion
3.1	What are possibilities to improve sustainable banana marketing situation?	Interview and group discussion

Source: Developed by author’s for data collection from Arba Minch in 2016.

Table 3. Demographic and socio-economic characteristics of sampled banana farmers

Items	All	Cooperative members (N = 20)	Private farmers (N = 23)	Mean difference
Age of the farmers	42.63	38.60	46.13	−7.53***
Education level	4.41	4.87	4.30	0.57
Experience in banana farming	11.95	11.60	12.26	−0.66
Land planted with banana/ha	1.35	1.47	0.98	0.49**
Banana productivity Qt/ha	99.16	99.75	98.57	1.18

Source: Survey result (2016), *** significant at 1%, ** significant at 5%.

Figure 3. Banana value chain map in Arba Minch district, Ethiopia

Figure 4. Banana plantations and harvested banana fruit waiting for collectors at road side in Arba Minch

Source: Authors

Figure 5. Banana leaves and sucker management in Arba Minch

Source: Authors

Figure 6. Figure bananas weighing and loading by traveling traders in Arba Minch

Source: Authors

Figure 7. Banana retail market in Hawassa, Ethiopia

Source: Authors

Table 4. Production cost, cost price and volume of banana produced per hectare

Activities	Cost in Ethiopian Birr (ETB)
Labor cost
land preparation	1600
Planting	2560
Weeding and sucker removal	600
Watering	600
Harvesting and transport to road side	1000
Total labor costs	6984
Farm equipment, seeds & land costs
Banana sucker/seed	1248
Machete	300
Hoe	200
Pickaxe	240
Land Rent	35
Total cost of farm equipment, land and seed	2023
Interest cost (5%) (opportunity cost)	450.35
Total production/operational cost
Total cost per hectare	ETB 9457.36
Volume produced per hectare	99.16 quintal
Cost price (cost per ha/volume produced per/ha)	95.37 ETB

Source: Survey results, 2016. Note that farm equipment (machete, hoe, and pickaxe was used for one production period only. Quintal is a measurement unit equivalent to 100 kilograms.

Table 5. Profit margin and value shares of producer and traders in Arba Minch

Items (measured Birr/Qt)	Farmers	Traveling traders	Wholesalers	Retailers	Horizontal sum
Purchase price	-	425	670	1150	1800
Production cost	95.37	-	-	-	90.83
Marketing cost	-	-	-	-	-
Labor	25	10	11.5	18	54.5
Transport cost	-	12	20	15	35
Storage/shop house rent	-	-	20	100	120
Tax	-	8.4	172.5	23	195.5
Spoilage	180	65	13	115	308 71
Total marketing cost	205	95.4	237	271	713
Total cost	300.37	95.4	237	271	899.23
Sale price (Revenue)	425	670	1150	1600	3175
Profit margin	124.63	149.5	243	179	696.13
% share of profit margin	17.90	21.48	34.91	25.71	100
Gross Margin (%)	29.32	22.31	21.13	11.20	83.95
Added value	425	245	480	450	1600
Value Share (%)	26.56	15.32	30	28.12	100

Source: Survey results, 2016.

Table 6. Distribution of added value share of the actors in the marketing channels

Actors	Farmers		Cooperative		Traveling traders		Wholesalers		Rural Retailer		Urban Retailer		Rural Consumer	Urban consumer
Unit	ETB/Qt	%	ETB/Qt	%	ETB/Qt	%	ETB/Qt	%	ETB/Qt	%	ETB/Qt	%	ETB/Qt	ETB/Qt
Channel 1	350	46.67	-	-	-	-	-	-	400	53.33	-	-	750	-
Channel 2	385	24.83	-	-	255	15.45	460	29.67	-	-	450	28.125	-	1,550
Channel 3	500	31.25	80	5.00	-	-	570	34.62	-	-	450	28.125	-	1,600

Source: Survey results, 2016.

Table 7. Suitability assessment of banana value chain in Arba Minch

	Indicators	Chain Performance	Judgment scale	Performance score

Source: Case study results, 2016.

Table 8. Sustainability performance of banana value chain in Arba Minch

Source: Case study results, 2016.

Table 9. PESTEC Analysis of banana value chain in Arba Minch

PESTEC	Constraints	Suggested improvement or solutions
Political	Lack of intervention in the banana market to prevent illegal traders	Concerning body should intervene in the banana chain to eliminate illegal traders
Economic	Lack of the modern cooling store and cooling truck.	Support cooperatives to organize cooling stores and trucks.
	Lack of common banana marketing center in Arba Minch.	Organize common banana marketing center in Arba Minch.
	Shortage of road access to transport banana to main roadside/market	Construct all-weather and suitable road in an area where banana is producing
	Advance credit/payment by traders. Shortage of finance to join banana cooperatives	Creating awareness for farmers to access credit from formal financial institutions. Or place credit access for farmers from formal credit sources
	Lack of/limited of access to alternative markets	Link farmers and cooperatives with an alternative market outlet like eat fruits and other regional markets.
	Limited access to market information	Access updated market information for producers through mobile, the internet, and local FM radio and television programs.
	Cheating banana weight balance measure	Create awareness for farmers on how to measure banana by using calibrated weight balance measures
Socio-Cultural	Men dominated farming as farming is culturally considered as men’s task	Aware farmers and society on the contribution of women labor for banana production and marketing
	Limited awareness of farmers on the importance of joining cooperatives	Train and advise farmers about the importance of joining cooperatives
Technical	Poor Agronomic practice (mono-cropping, lack of crop rotation, over-application irrigation water, poor banana fruit management).	Improve farmers’ skill and knowledge on agronomic practices like raw planting spacing, frequent weeding program, soil management, leaf and sucker removal, crop rotation, appropriate irrigation water application. Develop a well-structured irrigation channel that suits for the farmer. Improve farmers skill on compost production, disease, and pest management
	Poor harvesting and post-harvest handling	Train and advice farmers and traders on modern harvesting and post-harvest handling techniques.
	Limited abilities and skills of cooperative management members on business management and linking their organization to different markets	Improve the knowledge and skill of cooperative management members on business management and market linkage through training, advice and experience sharing.
Environmental	Moisture stress and over flooding	Intercropping with legumes plants such as desmodium to keep soil moisture and reduce water stress.
	Reduction of biodiversity	Conserve plant and animal species.
	Soil fertility loss,	Crop rotation to improve soil fertility
	Sanitation and safety problem from banana waste at roadside & marketing area	Use banana waste for compost production and animal feed. Or apply modern solid waste management mechanisms.
	Banana disease and pests	Introduce disease-resistant banana varieties

Source: Case study results, 2016

Lundy, M., Becx, G., Zamierowski, N., Amrein, A., Jairo, J., Erika, H., Mosquera, E., & Rodríguez, F. (2012). Link methodology: A participatory guide to business models that link smallholders to markets. Centro International de Agricultura Tropical (CIAT). (CIAT Publication No. 380).

 Google Scholar

Gebre, G. G., & Rik, E. (2016). Sustainability assessment of a banana value chain: The case of Arba Minch, Ethiopia. Journal of Agribusiness, 34(2), 2016. Fall

 Google Scholar

Food and Agriculture Organizations for United Nations (FAO). (2012). SAFA: Sustainability assessment of food and agriculture systems. Guidelines Version 3.

 Google Scholar

Moreno, C. A. P., & Salgado, O. (2012). Sustainability indicators along the coffee value chain: A comparative study between Mexican & Colombian retail.

 Google Scholar

Ministry of Agriculture and Rural Development (MoARD). (2005). Woody biomass strategic planning project. A national strategic plan for biomass energy sector.

 Google Scholar