VALUE CHAIN ANALYSIS OF MILK IN DALOCHA DISTRICT, SILTIE ZONE, CENTRAL ETHIOPIA REGION

ABSTRACT The dairy sector in Ethiopia plays a vital role in livelihoods and food security, yet smallholder<br> farmers face persistent challenges in milk production, marketing, and value chain.This study<br> investigated the value chain analysis of milk and the determinants of the supply of milk to the<br> market in the Dalocha District of the Siltie Zone in Central Ethiopia. A cross-sectional research<br> design was employed, capturing data from a specific point in time, involving both primary and<br> secondary sources. Data collection was accomplished through household survey questionnaire.<br> The study utilized three stage sampling to select 4 representative kebeles from 18 kebeles and<br> drawing a total of 207 samples. Descriptive statistical methods were used to summarize socioeconomic<br> characteristics, while econometric analysis, specifically the Heckman selection model,<br> was applied to examine the factors influencing market participation and the volume of milk<br> supplied. The milk markets have a market concentration ratio of 40.73%, less than 50%,<br> indicating a loose oligopoly with four firms controlling 40.73% of the market. The study also<br> revealed that a total marketing margin of 33.33% for wholesalers and retailers in the milk value<br> chain, with a producer's gross margin of 66.67%. The study identified three distinct marketing<br> channels (producer-wholesaler-retailer-consumer, producer-retailer-consumer, and producerconsumer),<br> revealing substantial economic margins retained by different actors within the value<br> chain. A Heckman selection model was used to identify factors affecting milk market participation<br> and supply. The findings revealed that distance to the nearest milk market, access to credit,<br> access to milk market information, livestock holding, the number of children under five and breed<br> type play important roles in determining quantity of milk market supply. The findings also<br> revealed that distance to the nearest milk market, access to credit, education level, frequency of<br> extension services, livestock holding, the number of children under five and breed type play<br> important roles in determining milk market participation. Policymakers should enhance rural<br> market access and financial inclusion for smallholder dairy farmers in Dalocha District through<br> investments in milk collection centers, transport infrastructure, microcredit programs, and child<br> nutrition programs.