Financial Profitability Analysis of Dairy Marketing in Bako Tibe District, Ethiopia

Abstract

The study was carried out to analyze the financial profitability of dairy farmers in Bako Tibe district, Ethiopia. The necessary data was obtained from dairy producing households through survey. In addition, data was collected from secondary sources such as District Agricultural office, Bako Agricultural and Mechanization Research Centres. Gross margin and descriptive statistics was employed to analyze financial profitability of dairy farmers. Besides, total Revenue less total variable costs and OLS were used in examining financial profitability of the dairy farmers. The study revealed that financial profitability was affected by distance from market, extension visit, education level of the house hold head, number of milking cows owned and family size. The results indicated that production and marketable surplus should be improved through introducing improved technologies and adequate marketing infrastructure such as roads and transport facilities. Transportation infrastructure and facilities should be established between rural and urban areas in the district to enhance market participation. The results also pointed out that there should be adequate marketing link, through institutional arrangements such as dairy cooperatives, between the rural producers and urban consumers to reduce transactions cost. Relaxing the criteria required to obtain bank and micro credit and forming a well functioning urban and rural financial system would also enable resource poor farm households participate in dairy markets and improve the supply of dairy products.