Abstract:
With the aim to study gross margin of the smallholder cotton producers in Metema area, cross-sectional
survey involving both quantitative and qualitative approaches was employed. The data were generated
using household survey from lead cotton smallholder farmers, key informant interview with cotton traders
and marketing institutions. Taking all possible costs that smallholder cotton producers used and the
revenue generated from sales in the local market, the study revealed that smallholder cotton producers are
benefited by generating higher return with gross margin of 39%. From the cost side of the smallholder
cotton production, 27% of the total cost is found to be on weeding followed by harvesting and oxen driven
plough. Average product of cotton in the study area per hectare is reported to be 12.05 quintals. Despite
higher potential of the area for cotton production, the smallholders are challenged by different endogenous
and exogenous constraints ranging from production to marketing chain. Crop pest and q uality issues are
some of production constraints whereas market constraints are characterized by asymmetry of price
information and limited buyers of the product affecting the bargaining power of smallholder producers.
The study boldly recommended that creating access to the market information and stakeholder integration
are profoundly important.
Keywords: Gross margin, cotton, production, demand and inve stment
