Customer Evaluation of Supply Systems: The Case of Ethiopian Seed Supply Systems

ABSTRACT

This study explores the performance of Ethiopian seed systems from a customer’s perspective. The study builds on the view that seed supply systems perform marketing functions such as developing new varieties of seed, multiplying the right quantity and quality, and distributing to the right places, at the right time, for an acceptable price. Hence, supply systems create value and satisfy customers. This study’s contribution is twofold. First, customer satisfaction theory is applied to complex chains (i.e. seed supply systems) in emerging markets, with their specific contextual challenges. Second, it identifies the criteria that farmers use to evaluate seed supply systems and evaluates Ethiopian seed supply systems from a farmer customer’s perspective, which can be used as a basis to increase customer satisfaction.

KEYWORDS:

• Customer satisfaction
• seed systems
• customer value
• emerging markets

1. Introduction

Customer satisfaction is considered a central concept in marketing theory. It results from quality and value that customers receive (Hurley & Estelami, 1998). Customer satisfaction is an important source of competitive advantage (Lemon, Rust, & Zeithaml, 2001), often leading to customer loyalty and repeat purchases (Bolton, 1998; Lam, Shankar, Erramilli, & Murthy, 2004), which will eventually lead to an increase in the number of customers (Busacca & Padula, 2005; Kim, Jung, Suh, & Hwang, 2006), as well as increases in sales, profitability, and return on investment (Luo & Homburg, 2007). Thus, to increase customer satisfaction, firms try to improve quality and create value for customers more than their competitors do (Kotler & Armstrong, 2009).

Customer satisfaction is a measure of how products and services meet or exceed customer expectations (Fornell, 1992; Olsen & Johnson, 2003). Two conceptualizations of customer satisfaction dominate the literature: as a transaction-based evaluation and as an overall evaluation of a series of transactions. The literature on transaction specific satisfaction views customer satisfaction as a postchoice evaluative judgement of a specific purchase occasion (Fornell, 1992). It is an immediate postpurchase evaluative judgment or an affective reaction (Gupta & Zeithaml, 2006). Cumulative satisfaction is conceptualized as an overall evaluation based on the total purchase and consumption experiences with a good or service over time (Anderson, Fornell, & Lehmann, 1994; Homburg & Stock, 2004), thus reflecting the customer’s entire experience with the company. This perspective suggests that the most important antecedents of satisfaction include past, current, and future customer expectations (Anderson & Fornell, 2000; Oliver, 1980; Zeithaml, 1988). Combining both perspectives, customer satisfaction involves keeping customers happy in day-to-day interactions and during consumption (Ellinger, Daugherty, & Plair, 1999; Hunt, 1991; Johnson & Fornell, 1991). This requires that firms track customer’s needs and customer satisfaction (Day, 1994; Kohli & Jaworski, 1990; Narver & Slater, 1990).

Customer satisfaction theory has its basis in developed, mostly Western, economies. Research on customer satisfaction in developing and emerging (D&E) markets is gradually emerging (Mittal, Han, Lee, Im, & Sridhar, 2017), but customer satisfaction drivers have not been sufficiently examined in such contexts. Consequently, firms often find themselves involved in a variety of strategic initiatives that they believe are helping customers. Customers see it differently – they see a firm that is unfocused, inconsistent, and not satisfying their needs (Mittal et al., 2017).

Research on customer satisfaction in business-to-business relationships or in supply chains is still limited and lagging far behind consumer marketing (Mittal et al., 2017; Rossomme, 2003). Over the years, thousands of customer satisfaction studies have been conducted in marketing research, mainly on consumer services (e.g. hotel, tourism, banking, etc.), consumer goods, industrial manufacturing, and distribution. Some of them focus on internal employee satisfaction. However, research in supply chains with multiple actors that perform different roles in the context of D&E markets is limited. Moreover, a standard model measuring supply chain performance from the customer perspective does not exist to the best of our knowledge.

Each organization varies in the effectiveness and efficiency in which it performs functions. Thus, the constellation of organizations in a value chain determines what they can offer in the market. However, it is not clear how functions in the supply chain contribute to the customer satisfaction of the final customer. Our study explores how fragmented supply systems in D&E markets contribute to the customer satisfaction of end users. It does so in the context of Ethiopian seed supply systems from the perspective of farmers as end customers.

Using individual interviews with 30 farmers, the central research questions that this paper aims to address are: (1) From an end customer’s perspective, what criteria do farmers use to evaluate a seed supply system? (2) To what extent do different seed supply systems meet these criteria? Together, these two research questions provide a perspective on the current level of customer satisfaction of alternative Ethiopian seed supply systems, as a basis for potential improvement.

The remainder of this paper is organized as follows. The next section presents the research context. The paper then presents an overview of the relevant literature on customer satisfaction in D&E markets. It also presents the theoretical framework and concepts used in the present study. Then, the study’s methodology is described, followed by a presentation of the results. The paper then presents a discussion of the results and implications for managers and theory. The paper ends with a conclusion of the results, its implications for the African Agribusiness literature, directions for further research, and limitations.

2. Research context

The specific research context of this study is that of seed supply systems in Ethiopia. The Ethiopian government has identified improving the performance of seed systems as one of its objectives to improve agricultural productivity, to ensure food security and for economic growth (Alemu, 2010). A well-performing agricultural sector is of paramount importance to Ethiopia, as it accounts for 43 percent of GDP, 70 percent of exports, and 85 percent of employment (UNDP, 2014). The performance of Ethiopian agriculture is, however, below its potential. The poor quality of the seed used, and a lack of demand focus in production, distribution, and marketing have been identified as the key underlying causes of this low performance (Alemu, 2010; Atilaw & Korbu, 2011; Lakew & Alemu, 2012; Thijssen, Bishaw, Beshir, & de Boef, 2008).

Seed systems have a long history in Ethiopia and find their basis in the centrally led political system that has long been dominant in Ethiopia. However, Ethiopia is currently moving toward a market economy with room for entrepreneurship and local initiatives, which provide alternatives to the state-level institutions that have long dominated the seed systems (Alemu, 2010; Alemu, 2012; Louwaars, de Boef, & Edeme, 2013).

Seed supply systems include all organizations, individuals, legal frameworks, and institutions involved in the collection and conservation of germplasm, variety development, testing, and release; early generation seed multiplication and maintenance (at both the breeder and prebasic level), multiplication of basic and certified seeds; quality control and certification; storage and processing; and distribution and marketing of seeds (Maredia et al., 1999). The research and development function develops new varieties that offer solutions for the farmer customers. The government reviews and approves these new varieties for admission and release to the Ethiopian market. The approved new varieties are then scaled up to a sufficient quantity to allow large-scale multiplication. The seed multiplication function produces quantities sufficient to meet the market demand. Processing provides clean seeds, treated against pests, and packaged, with the required labeling. Storage spans the time between harvest and demand, while maintaining the quality of the seed; the seed is ventilated, and protected from insects, diseases, pests, rain, and heat. Distribution provides the seed on time and to accessible locations. Marketing communication provides the farmer customers with information about varieties, services, and prices. Marketing facilitates the exchange of seeds with the end customers in terms of availability and accessibility, supported by product information and services. Quality control and certification play an important role in providing guarantees and transparency regarding genetic characteristics, purity, germination, moisture content, and seed health.

The quality control and certification function represents an important distinction between the formal and informal seed systems. Outside the formal seed system described above, an informal seed system, known as the farmers’ seed system also exists. In this system, individual farm households carry out the seed system functions for landraces. It is based on seed saved from previous crops, seed obtained from the informal economy through farmer-to-farmer exchange, or seed obtained from traders. The informal seed system in Ethiopia is deeply rooted in local communities, traditions, and networks. It has two important distinguishing features. First, the informal system is not regulated by law and operates without legal certification of the process (Alemu, 2010; Louwaars et al., 2013). Second, the quality of the seed deteriorates rapidly across the different cycles of its use, because of lack of quality control and the reliance on farm-saved seed. Hence, after a number of cycles, the seed needs to be replaced by new higher quality seeds to safeguard against insufficient levels of productivity and quality of produce.

Despite its limitations, the informal system dominates the Ethiopian seed supply, accounting for approximately 90% of all seed supplied, leaving 10% for the formal system (Atilaw & Korbu, 2011; CSA, 2011). However, considerable variation exists between crops. The informal seed system in Ethiopia mostly supplies local landraces for a wide range of crops (cereals, pulses, oilseeds, vegetables, root crops, fruits, stimulant crops), such as teff, wheat, barley, sorghum, finger millet, beans, faba beans, field peas, sunflower, sesame, tomatoes, red peppers, carrot, onion, potatoes, mangoes, and coffee. The formal seed system in Ethiopia mostly supplies improved and certified seeds for a limited range of crops, mainly major grain crops (cereals, pulses and oilseeds) in the country, such as maize, wheat, teff, barley, rice, faba beans, field peas, haricot beans, chick-peas, and linseed. The formal system also offers to a limited extent improved seeds for vegetables, root crops, fruits, and stimulant crops, such as tomatoes, red peppers, carrot, onion, potatoes, and coffee. Hybrid seeds (dominant in crops such as maize and horticultural crops) do not have an important position in the informal seed systems because harvested seeds cannot be used as seed in the next season.

Coming from a centrally led political system, the formal seed system has long been dominated by state control. In this system, the variety development and early generation seed production have been dominated by public agricultural research institutes and state universities. These institutions select varieties from landraces and imported materials from international agricultural research centers (e.g. CIMMYT, ICARDA, etc.), and further optimize them to local Ethiopian conditions, which is challenging given the large ecological heterogeneity across Ethiopia (18 major agro-ecologies). The government selects seeds to be added to the formal seed registration list of approved varieties and, through the Ethiopian Seed Enterprise (ESE), takes the lead for multiplication. Multiplication is done through different channels, mainly state farms, farmers’ cooperatives, unions, and community-based seed production based on contractual agreements. From the seed produced for ESE, seed producing cooperatives can keep 10% for own use and return 90% of the seed to the ESE. However, this contractual arrangement does not include hybrid maize, for which cooperatives are required to return 100% of the seed they produce to the ESE. The produced seed undergoes further quality control and a number of processing steps at the ESE, before formal certification is granted. Distribution of the certified seed is organized through public agricultural extension organizations based on demand assessments or forecasts across the regions. The seed is distributed through local agricultural extension organizations (Woreda Office of Agriculture; WoA), and general unions. These unions are groups of cooperatives for further distribution of seed to end customers (farmers) through local multipurpose cooperatives accessible to both members and nonmembers. Marketing support to smallholder farmers is realized through the multipurpose cooperatives and the local extension organizations. The informal system has always existed next to the formal system based on the 10% of seed retained at the level of the seed-producing cooperatives. The cooperatives can sell this seed to farmers who can use it for their own use and subsequently sell it for cash to traders or end consumers, or barter in exchange of other commodities. In the informal seed system, individual farm households multiply the seed of local landrace varieties for cash and household consumption. Individual farm households also multiply improved varieties obtained from the formal system. However, the informal system does not rigorously follow systematic procedures for seed multiplication.

In recent years, with Ethiopia moving to a market economy, the seed system has largely diversified with new partners, stakeholders, and structures emerging. Multinational companies have entered the seed supply system, but for selective crops, mainly hybrid maize and vegetables, such as potato, tomato, and onion. As part of the formal system, multinational companies (MNCs) play an important role in the development of seed varieties and the early generation seed development, which they typically conduct in the private domain, as also holds for the multiplication of their seeds. They adhere to the formal certification procedures and work closely with the government to discuss the quantities needed in response to the government’s demand forecasts. The seed from the MNC seed system is distributed through agents (own and public channels), who also conduct the marketing functions. The seed often sells at double the price of that from the public seed system. Domestic private producers (companies and out growers) have also entered the seed supply system, but for selective crops, mainly hybrid maize. As part of the formal system, they play an important role in the multiplication of certified seeds, for which they typically depend on the public breeding material for source seed. Seed from the domestic private producers is distributed through agents (own and the contacting public enterprise channels), who also conduct the marketing functions.

In Ethiopia, a powerful regional political system exists, and next to the national-level ESE, Regional Seed Enterprises (RSEs) have been established in the three main regions of Ethiopia, Amhara, Oromia, and South, and most recently in Somalia. Mostly, the RSEs conduct the same role as the national-level ESE. Emerging pilot projects are local seed businesses (LSBs). LSBs traditionally served as seed multiplication units for ESE, RSE and farmer-based Cooperative Unions in the formal system (as previously described). Now they have greater independence and are working without contractual agreements. LSBs buy seed from various parties, including the ESE, RSE, Research Centers, and Seed Unions. They multiply seed and distribute directly to customers. LSBs serve local governments (WoA), individual farmers (both members and nonmembers), other cooperatives, multipurpose distribution cooperatives, and NGOs.

A variety of options have become available for local farmers to obtain seed. Such seed may be (1) obtained from their own storage (i.e. farm-saved seed), (2) obtained from the local community through a bartering system, (3) purchased from the cooperative, (4) purchased from agents representing MNCs, domestic private producers, and public enterprise-seed systems, (5) obtained from the local market (grain), or (6) occasionally obtained from NGOs in the case of severe seed scarcity and drought.

3. Literature review

This section first takes a customer perspective by discussing customer satisfaction theory and the value creation process. Then, a firm perspective is detailed by discussing the functions in a firm’s value chain that allow it to make an offer (i.e. a marketing mix). Next, it is acknowledged that the functions in value chains may be performed by different organizations and with varying degrees of efficiency and effectiveness, which results in several value chains that customers can choose from. Consequently, each value chain will offer a different marketing mix that customers can choose from and each value channel will have elements that customers like or dislike.

3.1. Customer satisfaction

This research defines a farmer customer’s satisfaction with a supplier as an overall evaluation based on the total purchasing and consumption experience with a good (seed varieties) or service over time. Thus we conceptualize customer satisfaction as cumulative satisfaction. Following the disconfirmation paradigm (Parasuraman, Zeithaml, & Berry, 1988), farmer customer’s feeling of satisfaction is a result of a comparison process between perceived performance and expectations (Oliver, 1980, 1981, 1999).

Customer satisfaction has customer consequences, such as (1) repeat sales and customer loyalty (Fornell, Johnson, Anderson, Cha, & Bryant, 1996); and (2) positive word of mouth (Fornell et al., 1996). These result in organizational performance indicators, such as (3) current performance (Anderson et al., 1994), including profitability and return on investment (Luo & Homburg, 2007); (4) future performance (Anderson et al., 1994), including sales growth (Luo & Homburg, 2007), market share (Adeoye & Lawanson, 2012), and business extension (Kim et al., 2006); (5) shareholder value (Anderson, Fornell, & Mazvancheryl, 2004; Gruca & Rego, 2005) and stock market performance (Fornell, Mithas, Morgeson, & Krishnan, 2006); and (6) lower transaction costs (Fornell, 1992).

Market offerings, including product attributes (Zeithaml, 1988), service attributes, such as interactions with service-support personnel (Humphreys & Williams, 1996), price, location, and communication influence customers’ satisfaction (Mittal et al., 2017).

Different factors mediate between product attributes (including services) and customer satisfaction. Customers see products as solutions to their problems (Shahhosseini & Ardahaey, 2011) or as complex bundles of perceived benefits that satisfy their needs (Vargo & Lusch, 2004). Customers’ perceptions are defined as what customers think about an offer. Customer evaluations determine how these perceptions contribute to value for customers. The customers’ perception and evaluation of a market offering, i.e. customers’ value-creation processes (Grönroos, 2008; Gummerus, 2013; Saarijärvi, Kannan, & Kuusela, 2013), highlight that value of offers can only be evaluated through the lens of the customer (Vargo & Lusch, 2004). This “lens” model suggests that (1) customers see the world through the lens of their perceptions, (2) customers choose (buy) a product or service if they evaluate it to be superior to others (Griffin & Hauser, 1993), and (3) customers only choose offers that are available to them in the marketplace. In summary: offers are different in terms of their attributes, customers’ perceptions of those attributes, the benefits derived from those attributes as a function of customer needs, the perceived costs to acquire the offer, and the trade-off between the benefits and costs (Woodruff, 1997).

Price is for customers the total costs of obtaining, using, and disposing of a product (Shahhosseini & Ardahaey, 2011; Zeithaml, 1988). Price is usually one dimension that influences how offers are perceived (Sinha & Smith, 2000) and is very influential in purchasing decisions. Customers also use high prices as cues for superior product quality (Rao, 2005).

Location is important, as customers’ convenience includes availability in the right place at the right time and in the right quantities. It is critical to achieving customer satisfaction/success (Sterling & Lambert, 1989). The product has to be available, which means that there has to be physical access to the right quantity of the right product at the right time (Louwaars & de Boef, 2012).

Communication influences expectations and thus customer satisfaction. Quality is defined as the difference between customer expectations and the perceived product/service (Lewis & Mitchell, 1990). Quality is strongly related to customer satisfaction (Cronin, Brady, & Hult, 2000; Kuo, Wu, & Deng, 2009), and even considered as a main predictor of customer satisfaction (Zeithaml, Berry, & Parasuraman, 1996).

3.2. Market offerings in value chains

To be able to provide an offer in the market, firms need to perform primary functions (Porter, 1980). Secondary functions need to be performed to support and guide the primary functions, such as human resource management, infrastructure, financing, and market orientation (Porter, 1980). Firms vary in the effectiveness and efficiency in which marketing functions are performed, which results in different possibilities for offering a specific marketing mix (Hunt & Morgan, 1995).

Value chains consist of organizations that perform the functions required to provide an offer in the market. Each organization varies in the effectiveness and efficiency in which they perform functions. Thus, the constellation of organizations in a value chain determines what offer they can make in the market.

3.3. Perceived seed quality

In this study, perceived quality is the farmer customers’ judgement about the superiority of a product in terms of genetic and physical characteristics. In the seed industry, perceived seed quality is determined not only by the seed genotype and physical characteristics, such as size, shape, appearance, and moisture content but also by farmer customers’ expectations about and experience with the genotype and the characteristics. Farmer customers are satisfied when the seed quality meets or exceeds their expectations, but the majority of Ethiopian farmer customers are not satisfied with the quality of seed they receive from their seed suppliers (Alemu, 2010; Alemu, Rashid, & Tripp, 2010; Thijssen et al., 2008). Therefore, understanding the customers’ perceived quality and the influencing factors is critical to increase supply-chain performance.

Quality seeds have good germination, have a low moisture content, have uniform grades, are pure, and are free from diseases, insects, physical damage, trash, or foreign seed. However, the right quality of seed differs between farmers because farmers seek crop varieties that are adapted to the local environment. Moreover, perceived quality changes over time as a result of agricultural research, which constantly improves the seed (i.e. innovation), information (i.e. expectations), and competition (i.e. experiences) (Zeithaml, 1988). The perceived quality is also strongly related to productivity of the seed, which is the volume of grain production on harvest. Genetic and physiological characteristics of the seed influence perceived productivity, but also experiences and expectations of farmers, adaptation to the local climate, and prevailing weather conditions.

3.4. Price as perceived costs

Farmers trade off perceived quality against perceived costs. Farmers also use high prices as cues for superior product quality. In the seed industry, farmer customers always compare the prices of alternatives before making a purchase. Considerable variation exists, however, between crops and farmers. Most smallholder farmers in Ethiopia buy seeds of lower quality and lower prices from the informal seed system instead of purchasing seeds of higher quality and higher prices from the formal seed system. This is also related to the nature of the crop. For example, farmers are more inclined to use the offers of the informal seed supply system for open or self-pollinated crops, such as teff and wheat, because their yield potential diminishes less between generations.

Perceived costs also vary between farmers. For example, Ethiopian farmers are more inclined to use the noncash-based seed channels (gift, exchange) of the informal seed system than the cash-based seed channels of the formal system (Mekbib, 2007). Lack of cash increases the perceived costs of the formal system. Typically, large- and medium-scale farmers buy more from the formal system, because they have more cash available than the small-scale farmers have. Specifically, they purchase high-yielding varieties of superior quality seed from the formal suppliers, such as hybrid maize, vegetables, wheat, teff, and bean crops.

3.5. Place as customers’ convenience

In the seed industry, spatial gaps exist between the multiplication of seed and the use by farmer customers of seed. Farmers are dispersed over a large geographical area, while seed trade is usually located in towns and seed multiplication is concentrated and thus distant from many farmer customers. The availability of seed influences purchase decisions (MacRobert, 2009). In addition, a time gap exists between the multiplication of seed and the farmer customers’ use of seed. Farmers require seed for planting at particular times of the year, while companies produce seed one or more seasons ahead of the selling period. The timely availability of seeds prior to planting time is considered one of the important factors influencing the farmers’ buying decisions. In the seed industry, a quantity gap exists: seed companies produce large quantities of seed, while individual farmer customers only buy small package sizes.

The informal seed system is dominant over the formal system because the seed offered is readily available in the farmers’ villages when the seed is needed (Atilaw & Korbu, 2011). Often, the formal seed systems in Ethiopia do not supply seed at the right time and in sufficient quantity to farmer customers. The ineffectiveness of the public seed demand planning, distribution, and marketing mechanisms have been identified as major limitations (Alemu, 2010; Alemu et al., 2010). The formal seed system often does not respond to demands for different package sizes (Alemu, 2010; Atilaw & Korbu, 2011; Tripp, 2006; Tripp & Rohrbach, 2001).

3.6. Promotion and communication as customers’ awareness

Customers need to be aware of the existence and availability of products, which involves two-way communication and feedback between suppliers and buyers. Farmer customers seek information to make a decision to purchase a product or service, while seed supply systems provide information to try to increase demand (Shahhosseini & Ardahaey, 2011). In the seed industry, customers have certain preferences and requirements regarding the seed they wish to plant, while seed companies have information about the varieties in their assortment. The farmer may be ignorant of what the seed company has on offer (MacRobert, 2009). Thus, farmers need to have information about the seed products available to determine whether the offer meets their demand.

Social capital is an important factor for the seed sourcing decisions of farmers in relation to informal seed systems (Almekinders, Louwaars, & De Bruijn, 1994; Badstue et al., 2006; Batt & Rexha, 2000; MacGuire, 2005; Winters, Cavatassi, & Lipper, 2006). The exchange of products and information occurs within networks of families and communities. Thus, networks influence the farmers’ access to seed. Different forms of social capital with indigenous social networks and family relationships in the informal system have a differential impact on the farm-level choice of crop and variety to plant in Ethiopia (Seboka & Deressa, 1999). Therefore, the informal seed systems provide more varietal information and have seeds available in more accessible places than the formal systems.

4. Methodology

The present study adopts a qualitative approach to the understanding of customer satisfaction at the level of seed supply systems in Ethiopia. Seed value chains, which are the unit of analysis in this research, occur in a wide variety, but the study specifically focuses on seed supply chains for maize and teff, and does so across three regions of Ethiopia: Amhara, Oromia, and the Southern region.

As the end customers of seed supply systems, 30 farmers, 10 from each region, were selected to participate in personal interviews to voice their opinions on the offer they (could) receive from different seed supply value chains. The personal interviews were conducted between November 2013 and January 2014 at the farmers’ personal fields. The respondents, a priori informed about the purpose of the research, the confidentiality, and anonymity of the data, gave their verbal consent to be audio-recorded. The personal interviews took, on average, approximately 50 minutes to complete, for which the interviewee received a daily allowance of 250 birr (1€ = 26 ET birr) to show our appreciation for their participation.

The personal interviews (PIs) followed a semistructured research protocol, which was developed in the local languages of each region as a guide for the researcher during the interviews. Open-ended questions were used to allow respondents to express their views and insights in their own words until they were unable to give more answers. The PIs covered three main parts.

The first part was partly an introduction to relate the topic to the farmers’ own practices. Respondents indicated what crops and varieties are prevalent in the region/locality and are grown by themselves. For each of the crops grown, the respondents indicated which seed supply chain they obtain their seeds from and which alternative seed supply channels would be available to them. To identify the end customer expectations and decision criteria for the seed supply, the first part ended with the critical question, “what criteria do you use to evaluate the offers of the different seed suppliers?” The respondents were probed to list as many relevant considerations as possible.

The second part focused specifically on the evaluations of alternative seed supply chains. Respondents were asked to express what they like and dislike about seed supply chains that they have experience with or see as a viable alternative for their seed supply. Four questions were asked for every crop that the farmer grows and seed supplier mentioned: “What do you like about the seed that you purchased for crop 1?”; “What do you dislike about the seed that you purchased for crop 1?”; “What do you like about the alternative seed suppliers for crop 1?”; and “What do you dislike about the alternative seed suppliers for crop 1?”

The third part of the personal interview focused on the farmers’ satisfaction with the seed supply systems. It included four open-ended questions related to satisfaction (“Are you satisfied with seed system 1?”), trust (“Do you trust seed system 1?”), repeat purchase (“Do you expect to buy again from seed system 1?”), and positive words of mouth (“Would you recommend seed system 1 to other farmers?”). After each question, the respondents were asked to explain why and were prompted to give more reasons until they were unable to provide any additional reasons. These four questions were repeated for each seed system mentioned.

All answers from the PIs were audio-recorded, transcribed, and translated from the local languages into English. The data for two of the dominant crops, maize and teff, were analyzed using ATLAS.ti. Text fragments (cues) related to the research questions were assigned codes using a “bottom-up” approach. The texts were examined line by line in search of cues related to what farmer customers (dis-) like about the offers of the seed supply systems. For example, if a respondent farmer would say, “I like ESE as they offer the high yielding BH-660 maize variety of seed,” this part would be given the code “LIKE ESE BY OFFERED PRODUCTIVE VARIETIES.” Codes were not assigned to one interviewee more than once, but could be used again for another interview if the content of the quote was similar. After identifying the elements or benefits, which were perceived by farmers, the data were further reduced by combining several codes into “families.” The purpose was to aggregate the related codes to a more abstract level. Continuing the above example, the code “PRODUCTIVE VARIETIES” would form the family “RIGHT VARIETY,” together with codes such as “MARKET DEMANDED VARIETIES,” “VERIFIED VARIETIES (TESTED AND DEMONSTRATED SEED),” and “BASKETS OF VARIETAL OPTIONS/PRODUCT DIFFERENTIATION.” In a similar way, the other families were created.

After coding and categorizing, frequencies were computed for each family that indicates what farmer customers (dis-) like about the offers of the seed supply systems. This result shows differences in performance between seed supply chains from a customer perspective. This analysis is restricted to maize and teff because only for these crops are a variety of different seed systems present in the regions, and together the two crops account for the lion’s share both in area and in volume of crop production across the regions and the country in general. In addition to their significant contribution to food security and agricultural growth of the nation, the two major crops by nature, hi-bred (maize) vis-à-vis self-pollinated (teff), can potentially describe the nature and extent of the Ethiopian seed systems.

5. Results

The results will be organized around the two research questions: What criteria do farmers use to evaluate a seed supply system? To what extent do different seed supply systems meet farmers’ criteria? The respondents reported a wide variety of crops that they grow and seed supply chains that they see as viable options. Seed supply chains were clustered into five categories: (1) the national (ESE) seed supply system, (2) the regional (RSE) seed supply systems, (3) multinational companies (MNCs), (4) domestic private producers (DPPs), and (5) the informal seed system (ISS). Table 1 shows the number of respondents who reported on the different seed supply chains. It reveals that, for maize, the respondents perceive wider access to alternative seed supply chains than for teff, where MNC and DPP were not seen as viable options.

Table 1. Number of Respondents Reporting about the Different Seed Supply Chains for Maize and Teff.

	ESE	RSE	MNC	DPP	ISS	Total
Maize	28	16	29	12	19	30
Teff	22	12	0	0	29	30

5.1. End customer criteria

The customer criteria to evaluate seed supply systems were extracted from the response to the question, “what do you (dis-)like about the offers of seed supply chains?” From the primary codes, 28 criteria were extracted for maize and 30 for teff, which could be summarized into seven major themes for maize and eight for teff supply chains. The analysis reveals that for farmer customers, the key evaluation criteria are that the seed supply systems deliver seed (1) of the right variety, (2) at the right quality, (3) easily available, (4) in the right quantity, (5) at an affordable price, (6) with adequate supporting services, (7) with limited production uncertainty, and, specific to teff, (8) with an appreciation of cultural heritage.

5.1.1. Meaning/content of the criteria

Table 2 shows examples of quotes related to the identified customer criteria.

Table 2. Major Themes and Customer Criteria for Maize and Teff Supply Chains.

Customer criteria	Examples of quotes
1. Right variety	“We like seed supply chains when they offer high yielding varieties of seed.” “We like the supply of varieties that match market demand…because we buy seed that meet our felt needs … we also benefit by selling surplus production to consumers in the market.” “provision of tested and demonstrated seed under local conditions,” and “provision of wide ranges of varieties for customers.”
2. Right quality	“We like seed supply chains when they deliver quality seeds that are pure and well graded … because it enhances uniform germination, growth, and maturity … hence we benefit as it increases production, productivity and income … moreover, it reduces additional costs for cleaning and grading (i.e. before planting).”
	“We dislike the supply of ungraded seeds … because nonuniformly germinated seeds can increase cost during harvesting … some seeds mature early while others mature late, which increases the farmer’s cost of performing double and separate harvesting operations.”
3. Availability	“We like seed supply chains when they deliver the demanded seeds at low cost and on time, unlike the disadvantages of late delivery, which increases the farmer’s cost to obtain seed from different sources, localities and often from distant places.” “Availability [of seed] helps us to adjust varieties in response to the prevailing weather conditions … long maturing crop varieties can be planted if the rainfall starts too early and early maturing varieties can be planted if the rainfall starts too late.”
4. Right quantity	“I dislike the lack of availability of seed in the required amount. Most of the time we did not get sufficient quantities of maize varieties like BH-660, BH-540, and Pioneer. As a result, farmers are incurring costs due to all the ups and downs they are suffering to obtain the demanded seed quantity from different localities and sources.”
5. Price	“I will buy seeds from the different suppliers if they ensure the availability of high yielding varieties and superior quality seed at a fair seed price.”
	“… even if the price of the maize offered from the MNCs is much higher than that of public seed enterprises, we are willing to buy…because the benefit obtained from the MNC’s maize seed offers are much higher than the others in terms of grain production and profitability by selling the surplus to consumers in the maize market.”
6. Supporting service	“Certification tags attached to the inside and outside of the seed package provide information about varietal characteristics, productivity, quality standards, warranty, year of production, packed time, suppliers’ name, brand and address … we are satisfied because it builds a good image and brand … as well as helps during purchase decisions, trust and loyalty.” “We like product services during sales, such as information, one stop shopping, full time[over 12 hours) sales per day, repeat availability and sales, and assurance.” “We like services before sales, such as customer responsiveness … services after sales, such as provisions of chemicals and fertilizers, risk taking (compensation), and joint monitoring and evaluation of product field performance.”
7. Production uncertainty	“We like varieties that mature early under local conditions … because other crops can be planted early, which increases the efficient utilization of farm plots … moreover, bi modal production of crops in a season increases farmer’s income and food security, unlike the disadvantages of using long maturing varieties, such as maize, for a single year production.”
	“I am very much satisfied with farm-saved seeds [informal seed system]. I always use my own saved seeds mainly of two local varieties; these are, black finger millet and red teff. These varieties are well adapted to our environment. We inherited them from our ancestors. I grow both varieties every year on my farm field because they are important to avert risk and for diversification. When there is a prolonged rainy season, the black finger millet variety provides high yield, while the red teff variety provides low yield since it is an early maturing variety. When the rainy season is short, I get high yield from the teff crop and low yield from the finger millet crop variety. Therefore, whether the rainy season is short or long, I am on the safe side as I grow these [teff and finger millet] varieties simultaneously. I will grow these varieties in the future for the sake of risk diversification.”
8. Cultural heritage	“… even if the formal supply chains offer improved seeds, we still keep on producing and saving our traditional landrace varieties … because they are transferred from generation to generation, which increases the farmer’s prestige, ownership, and long tradition of sharing, keeping, and consuming, and value in use. … moreover, the local varieties are important for risk diversification, which increases optimal production, farmer’s income, and food security.”

Right variety as an evaluation criterion is related to the supply of productive (high-yielding) varieties that meet market demand of the farmers’ customers. Varieties should be tested under local conditions and/or demonstrated in field trials. Moreover, farmer customers like to have an assortment of varieties available to them. Right variety was mentioned frequently and seems to reflect an important theme.

Right quality was expressed in considerable detail in the individual quotes. It is related to purity, uniformity, size, and color of the seed. Seed should be dry, fresh, clean, and treated against pests and diseases. Finally, after planting, seed should show high germination and vigor. Rights quality was mentioned frequently and emerged as a dominant theme. Farmers think that quality depends on activities within the supply chains and has a strong influence on their household income and food security, because it increases food quality, animal fodder, and production efficiency.

Availability was expressed in terms of having physical access to seed, timely, and convenient. It reflects physical access to seed, at the right time, and in the most accessible places consistent with the farmers’ purchasing patterns, which are related to local growing conditions. It was mentioned more frequently than any of the other themes. Several respondents shared the opinion that they like seed supply chains if they offer seeds at low sacrifice in terms of monetary, time, effort, and search costs.

Right quantity means sufficient quantities of seed to ensure that every customer can obtain the demanded amount. The respondents expressed dislike for the extra sacrifice that they have to make because not enough seed is available in the local market. It was mentioned frequently but less dominant than the criteria mentioned above.

Price as an evaluation criterion was expressed as affordable seed in terms of “provision of affordable seed to the market.” However, it was mentioned less frequently than most of the other themes, but about equally often as quantity. Several respondents agreed that the price must be right to make the variety affordable to the market and to reflect the value of the benefits provided.

Supporting services occur before, during, and after sales. It related to the provision of varietal information, the right packaging formats (strong material, color appearance, and volume), quality assurance through certification by seed laboratories and added services, such as trainings, demonstrations, experience sharing, and in-house activities. An interesting insight was that farmers identified packaging as a key evaluation criterion. Responsiveness and assurance contribute positively to a farmer’s evaluation of supporting services.

Production uncertainty relates to the adaptation to local conditions, such as maturing under local conditions, resistance to (local) diseases and pests, drought or a prolonged rainy season, and animal attacks. Risk diversification was mentioned only for teff. Production uncertainty emerged as an evaluation criterion, but was mentioned less frequently.

Cultural heritage emerged as a criterion only for teff seed supply chains. It reflects maintaining and conserving local (landrace) varieties to safeguard against extinction from production, and for social responsibility. Several respondents emphasized that landraces are most adapted to local conditions, a sustainable input for farmers, important for risk diversification, and food quality.

5.2. Perceptions and evaluations of alternative seed supply systems

Having identified the end farmer customers’ evaluation criteria, Figure 1 (for maize) and 2 (for teff) summarize the customers’ perceived likes and dislikes regarding the alternative seed supply chains available to them. The nature of the data (qualitative) and the differing numbers of observations per chain only allow for qualitative interpretation of the perceived satisfaction (i.e. the balance between expressed likes and dislikes on the key themes) of alternative seed supply systems. However, three important observations emerge from the comparisons within and between Figures 1 and 2.

Figure 1. Farmer Customers’ (Dis-)Likes about the Offers of Maize Seed Supply Systems.

Figure 2. Farmer Customers’ (Dis-)Likes about the Offers of Teff Seed Supply Systems.

First, the result shows profound similarities and differences in seed supply-chain evaluations between maize and teff. For example, supporting services provided by the ESE and RSE are evaluated mostly positively for both crops, as is the production certainty provided by RSE. However, although both the ESE and RSE are believed to deliver the right quality and quantity of teff, the quality and quantity meet with much more mixed responses in the case of maize. The informal system is perceived to have specific strengths for teff, in terms of availability, price (affordability), and quantity, but not for maize, where, for perceived quality, quantity, and variety, the dislikes dominate over the expressed likes.

Second, the results confirm the strong dominance of the ISS for teff. This is primarily due to the availability, price (affordability), and right quantity of the seed that can be obtained from this supply system compared with the ESE and RSE channels. However, the variety, quality, and provision of supporting services generated mixed responses from the end farmer customer.

Third, for maize where a wider variety of seed supply systems is available to the end customer, in terms of their profiles of likes and dislikes, the public (ESE and RSE) and private (MNC and domestic) systems all outperform the informal system, which is perceived to be rather weak in providing the right varieties and quality. The private seed systems (MNC and domestic) stand out in terms of the positive end customer associations with the quality and right varieties that these systems provide. The supporting services of all private and public seed systems are evaluated relatively positively, whereas this is seen as a shortcoming of the informal system. For the public systems, the ESE is evaluated positively on price, responses for which are more mixed for the RSE. However, the RSEs are appreciated more in terms of production certainty. The end customers see availability as a relative strength for the ESE and domestic private producer supply chains.

From the mixed likes and dislikes that farmer customers associate with the offer, we found that farmer customers trade-off perceived quality against perceived costs. We found that medium- and large-scale farmers choose to pay high prices for the hybrid maize seed of MNCs and teff seeds from public enterprises. The MNC’s maize offer satisfies their felt needs and demands, but farmers indicate that they often obtain it by making a sacrifice in terms of time, search costs, and effort.

The private seed system tends to be liked more in terms of supporting services. Packaging received more likes from the private systems than from the public and ISSs. Customers seemed to dislike the public enterprises and informal traders compared with private suppliers.

5.3. End customers’ level of satisfaction

Farmers’ satisfaction with the seed supply systems was obtained from the responses to the four questions regarding “satisfaction,” “trust,” “repeat purchase,” and “positive word of mouth.” The interviews showed that the differences in likes and dislikes associated with alternative seed supply systems translate into end customer/farmers satisfaction, and satisfaction related behaviors such as trust, repeat purchase (loyalty) and positive word of mouth. For example, several customers who were satisfied with the productivity (the right variety) and the right quality of seeds (as in the case of MNCs for maize and public enterprises for teff), indicated that this increased their trust, turned them into loyal customers, and generated positive words of mouth. For maize and teff, several respondents shared their dissatisfaction about the quality of seed from ISSs (such as for local traders and farmer-to-farmer exchange), leading to distrust and negative word of mouth. The end customers frequently mentioned supporting product services, including quality guarantees, as a trigger to becoming trusting and loyal customers.

6. Discussion

Although the (formal) seed supply systems exist to serve the needs of local farmers as their end customers, the results of this study suggest that their performance needs to be improved. The findings from this study confirm the research that emphasized the farmers’ dissatisfaction with the quality of seed received from public enterprises (Alemu, 2010; Alemu et al., 2010; Thijssen et al., 2008). From the mixed likes and dislikes that farmers express with the alternative supply systems as well as their level of (dis-)satisfaction, it seems that there is much to be gained by incorporating the “voice of the customer”/farmer more centrally in the development and provision of seeds. This is central to Ethiopian Agricultural policy and is a cornerstone of the recent ISSD initiative to strengthen the process of direct seed marketing from the different suppliers to end customers (Astatike et al., 2012; Benson, Spielman, & Kasa, 2014).

The findings of this study provide important building blocks for improved performance in seed supply systems. The farmers’ key performance criteria, as identified in this research, confirm that end customer satisfaction can be enhanced by providing “the right variety, at the right quality level, available at the right time and accessible place, in sufficient quantities, and for affordable prices.” However, it also identifies the provision of supporting services and production (un-)certainty as criteria relevant to end users.

Coming from a centrally led economy, the Ethiopian government is gradually moving toward a more liberal market. For maize and teff, as the key crops addressed within the present study, there is a choice for farmer customers between alternative seed supply systems, although more so for maize than for teff. Farmers now have the choice to obtain their seeds from a variety of seed systems, both public (ESE and RSE) and private (MNCs and domestic systems), although not for all crops to the same extent. This allows seed systems that satisfy customers to prosper and grow, while other systems that farmers dislike may disappear. Under pressure of competition, seed systems are stimulated to deliver more improved seed, of the right variety and quality in the right quantities, at the right time, at accessible places, and at affordable prices.

Seed systems have advantages and disadvantages as is evidenced by the mix of likes and dislikes that farmer end customers associate with different seed supply systems. Farmer customers do not agree about the seed system that satisfies their needs best. Consequently there are opportunities for a variety of seed supply systems that meet the heterogeneous needs of farmer customers. For example, the largely dominant informal system ensures that the seed offered is readily available in the farmers’ villages when the seed is needed (Atilaw & Korbu, 2011; Batt & Rexha, 2000; Seboka & Deressa, 1999). As a result, the informal system provides a broad range of crops to a wide variety of customer segments that often operate in risk prone and diverse agro-ecologies of Ethiopia (Louwaars et al., 2013; Mekbib, 2007).

Identifying and communicating the drivers of customer satisfaction from the customer’s viewpoint are likely to lead to more vivid perceptions of quality (Zeithaml, 1988). Seed suppliers may benefit from this research because it identifies the drivers of customer satisfaction about seed systems from the farmer customers’ perspective. Research and development strategies based on customer value and perceptions channel resources more effectively, and will meet customer expectations more, than those based only on supply chain standards (Zeithaml, 1988). Research that investigates how customers form their impressions of quality based on experiences, expectations, technical, and objective cues is necessary (Oude Ophuis & Van Trijp, 1995; Steenkamp, 1990; Zeithaml, 1988).

Customer value and satisfaction are a source of competitive advantage (Parasuraman, 1997; Rodriguez Cano, Carrillat, & Jaramillo, 2004; Woodruff, 1997). This research shows strengths (i.e. likes) and weaknesses (dislikes) of different seed supply systems, which shows how they can improve their offer to better satisfy their customers. Supply systems can enhance customer satisfaction and customer value by improving functions within value chains. Further research is needed to show which functions within seed supply systems need to be enhanced to improve their offer in the market.

7. Conclusions

This study qualitatively explored the performance of Ethiopian seed systems from a farmer customer’s perspective. Using individual interviews with 30 farmers, the central research questions that this paper aims to address are: (1) What criteria do farmers use to evaluate a seed supply system? (2) What extent do different seed supply systems meet these criteria? Together, these two research questions provide a perspective on the level of customer satisfaction with alternative Ethiopian seed supply systems, as a basis for potential improvement.

Seven criteria that farmer customers use to evaluate a seed supply system were identified. These can be summarized as: (1) making the seed supply system available to farmers, (2) making the seed supply system affordable for farmers, (3) the right variety of seed, (4) the right quality level, and (5) sufficient quantities. In addition, (6) production uncertainty and (7) supporting services are criteria from the perspective of farmer customers. Supporting cultural heritage is a unique criterion for teff.

In examining to what extent different seed supply systems meet these criteria, there are profound similarities and differences in the evaluations between maize and teff, and between formal and informal seed supply systems. The customer’s evaluations of the market offerings of the maize and teff seed supply systems show that each of these supply chains has its own specific strengths and weaknesses. Moreover, there are differences in the evaluations of seed supply systems between farmer customers, for example between small and medium-sized farmer customers.

For maize, the formal seed systems, both public and private, outperform the ISSs, but the evaluations of the formal systems differ considerably between and within the public and private supply systems. The private seed systems (MNCs and domestic producers) stand out in terms of right variety, quality, and supporting services, while the public seed systems (ESE and RSEs) outperform the private systems in terms of product availability, quantity (specific to ESE), price affordability (specific to ESE), and production certainty (specific to RSEs). For teff, the ISSs tend to dominate the formal systems (public seed enterprises) on availability, price (affordability), and quantity, but not for quality and supporting services, where the formal system outperforms the ISS. The ISSs also perform better than the formal systems in terms of providing production certainty and enhancing cultural heritage.

7.1. Limitation and future research

The present study provides a first and unique qualitative perspective on end customer/farmer perceptions regarding the performance of seed supply systems. The finding of this study suggest a need for future (quantitative) research that sheds more light on how marketing channel functions influence the evaluation of complex (seed) supply systems.

The present study has explored only maize (hybrid) and teff (self-pollinated) crops. Therefore, the results may be different for different types of crops and varieties.

By its very nature, qualitative research has its strengths and weaknesses. Despite its strength of providing more in-depth and contextualized insight at the individual level, it does not allow for quantification. Future research, building on these initial insights needs to be done in larger and representative samples of farmers to provide external validity. Moreover it allows for the identification of heterogeneity between farmer customers and thus the identification of market segments.

Disclosure statement

No potential conflict of interest was reported by the authors.

Additional information

Funding

This work was supported by the The Netherlands, Centre for Development Innovation, Wageningen University, and Research.