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Optimal Farmer Choice of Marketing Channels in the Ethiopian Banana Market

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  • Woldie Getachew Abebe

    (Justus-Liebig-Universität Giessen)

Abstract

In this paper, we propose an optimal marketing decision model in the context of poor agrarian economies. We consider a risk averse banana producer who faces an optimal allocation decision on how much to sell to a cooperative vis-à-vis private traders. To validate the model, a numerical exercise was undertaken using farm-gate transaction data. The overall result suggests that under different risk scenarios, an optimal earning is obtained if a farmer allocates 70 to 85 percent of his produce to a cooperative and the rest in the private market. Any allocation more than 85 percent or less than 70 percent is likely to result in a sub-optimal solution given the current market structure and price setting.

Suggested Citation

  • Woldie Getachew Abebe, 2010. "Optimal Farmer Choice of Marketing Channels in the Ethiopian Banana Market," Journal of Agricultural & Food Industrial Organization, De Gruyter, vol. 8(1), pages 1-19, October.
    • Handle: RePEc:bpj:bjafio:v:8:y:2010:i:1:n:7
    DOI: 10.2202/1542-0485.1298
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    References listed on IDEAS

    as
    1. Ferto, Imre & Szabo, Gabor G., 2002. "The Choice Of The Supply Channels In Hungarian Fruit And Vegetable Sector," 2002 Annual meeting, July 28-31, Long Beach, CA 19647, American Agricultural Economics Association (New Name 2008: Agricultural and Applied Economics Association).
    2. Zheng Xiaoyong & Vukina Tomislav & Shin Changmock, 2008. "The Role of Farmers' Risk aversion for Contract Choice in the US Hog Industry," Journal of Agricultural & Food Industrial Organization, De Gruyter, vol. 6(1), pages 1-22, June.
    3. Gabre-Madhin, Eleni Z., 2001. "The role of intermediaries in enhancing market efficiency in the Ethiopian grain market," Agricultural Economics, Blackwell, vol. 25(2-3), pages 311-320, September.
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    Cited by:

    1. Ndoro, Jorine & Mudhara, Maxwell & Chimonyo, Michael & Hitayezu, Patrick, 2015. "Farmers' Choice of Cattle Marketing Channels in Rural South Africa: A Transaction Cost Economics Perspective," 2015 Conference, August 9-14, 2015, Milan, Italy 212526, International Association of Agricultural Economists.
    2. Wollni, Meike & Fischer, Elisabeth, 2012. "Commitment in Collective Marketing Relationships: Evidence from Coffee Cooperatives in Costa Rica," 2012 Conference, August 18-24, 2012, Foz do Iguacu, Brazil 126884, International Association of Agricultural Economists.

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