ANALYSIS OF THE GROSS MARGIN FOR SMALLHOLDER COTTON PRODUCTION IN METEMA WOREDA

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 quality 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.