Analysis of Potato Value Chain and its impact on farming household’s economic welfare: The case of Tsaeda-Emba Woreda, Eastern Zone, Tigray Regional State

Abstract

Various project-based initiatives including those led by the International Potato Center (CIP) have been implemented to upgrade the potato value chain in the region. However, despite these targeted interventions, the actual contribution of potato production to the welfare of smallholder producers remains inadequately understood. Therefore, further efforts were made to empirically examine how potato value chain impacts households’ income and consumption expenditure to improve our understanding of the welfare implications of the crop. The study aimed to identify actors and their roles, analyze benefit distributions of actors, assessing the impacts of potato value chain on households’ economic welfare. For this study 137 potato producers, 137 nonproducers were randomly selected, 5wholesalers, 3collectors, 9 retailers and 5 small scale processors were purposefully selected. Value chain mapping was used to identify actors, their roles and linkages. Endogenous switching regression model was employed to identify determinants of participation decision and to analyse welfare impacts through Average Treatment effect on the Treated (ATT) estimates in potato value chain business. The identified key actors in potato value chain were input suppliers, producers, wholesalers, collectors, retailers, small scale processors and consumers. Main supporting actors were office of agriculture and rural development, micro finance institutions, (union) cooperatives, trade and market development office, Mekelle Agricultural Research Centre, NGOs and banks that found in the woreda. The results of economic analysis revealed that 86% profit goes to small scale potato processors and 5.8% profit margin was captured by potato producers respectively. The rest actors (collectors, wholesalers and retailers) received profit margins of 2.4%, 1.5% and 4.3% respectively. The results of ESR model analysis showed that gender, farming experience, access to credit, irrigation cooperative’s membership, demonstration sits visit, listening to radio programs, and access to irrigation influenced participation decision significantly and positively. Age, family size, training frequency, food shortage experiences affected potato participation decision negatively. Economic welfare of potato producers’ is much higher than non-producers’ because their annual income, annual consumption expenditure, food consumption score and household diet diversity score is increased by 50.7%, 48.7%, 13.7% and 23.3% respectively.