I
FEDERAL DEMOCRATIC REPUBLIC OF ETHIOPIA MINISTRY OF WATER RESOURCES
WOLKAYITE IRRIGATION FEASIBILITY AND DETAIL DESIGN PROJECT
VOLUME V AGRICULTURE
PART III: AGRICULTURAL MARKETING
JULY 2009
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jQFfVlATJr
C4 AND
INTERCONTINENTAL CONSULTANTS & TECHNOCRATS PV^jb'.
P.O. Box 2561, Addis Ababa, Ethiopia Tel. 251-11 -6614501/6631890 Fax: 25^11 -€§15371
E-mail: w.w d.s.e@telecom.net.et
'*
'FINAL FEASIBILITY REPORT
lAlrtlLIrrin^fizirt Poocihulttv and f"W»Laf! OPSJOH PfOlftCt
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1)  Project Executive Summary
2)  Main Report
3)  Vol. I Survey and Investigations
•     Part I     Soil Survey
•     Part II    Land Suitability Evaluation
•     Part III Annexure to Soil Survey
•     Part IV Geological and Geotechnical Investigations
4)
5)
6)
7)
Vol. II Water Resources
•     Part I      Hydrology
•    Part II     Hydrogeology
Vol. Ill Head Works & Feeder Canal
•     Part I     Report
•     Part II    Drawings
Vol. IVA Irrigation & Drainage Network
•     Part I    Report
•     Part II    Drawings
Vol. IVB Canal Structures
•     Part I
Report
•     Part II
Drawings
8)    Vol. V Agriculture
Part I
Part II
Agronomy and Agriculture Planning Agriculture Mechanization
Part IV Livestock
9)   Vol VI Environment and Socio-Economy
Part I      Socio-Economy
Part II     Environmental Impact Assessment Part  III  Organization  and  Management Part IV Financial and Economic Analysis
10)
11)
12)
13)
14)
Vol VII Natural Resources
Part I
Part II
Forestry
Energy
Vol VIII Infrastructure Development Part I      Public Health
Part II     Settlement Planning Part III    Physical Infrastructure
Vol. IX Cost Estimate
Vol. X Fishery Study
Vol. XI Watershed Management Study
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TABLE OF CONTENTS
ABBREVIATIONS.............................................................................-................................................ 111
EXECUTIVE SUMMARY.....................................................................-............................................. ,V
1. INTRODUCTION............................................................................................................ ~............. 1
1.1 BACKGROUND....................................................................................................................... 1
1.2 GENERAL OBJECTIVES......................................................................................................... 3
1.3 SPECIFIC OBJECTIVES..........................................................................................................3
2.  MARKETING SYSTEM FOR AGRICULTURAL INPUTS................................................. -............5
2.1 AGRICULTURAL INPUTS........................................................................................................ 5
2.1.1 Consumption......................................................................................................................5
2.1.1.1    Fertilizer...................................................................................................................3
2             1.1.2. Seed.............................................................................................................. 6
2.1.1.3.   Chemicals................................................................................................................6
2.1.         2 Pre- project Demand and Supply of Inputs...............................................................7
2.1.         3. Post Project Demand for Inputs...............................................................................9
2.2 CREDIT..................................................................................................................................... 9
2.2.1 Demand and supply................................................................................................ -........ 10
2.2.2. Local moneylenders....................................................................................................... --Il
2.2.4       1 Inputs...................................................................................................................12
2.2.42 Loan.......................................................................................................................... 12
2.2.5 Proposed Mitigation Measures for Agricultural Inputs..................................................... 12
2.2.6 Proposed Mitigation Measures for Credit........................................................................ 13
3       MARKETING SYSTEM FOR AGRICULTURAL OUTPUTS................................................... 14
3.1  CROP PRODUCTION AND CONSUMPTION..................................................................... 14
3.2        MARKETING OF FARMERS’ PRODUCES..................................................................... 17
3.2.1 Storage.............................................................................................................................18
3.2.2 Manufacturing Plants....................................................................................................... 18
3.2.3. Road and Transportation................................................................................................ 19
3.2.4 Market Size and Location.................................................................................................20
3.2.5 Months of Sales and Prices............................................................................................. 22
3.2.6  Market Information and Channels.................................................................................. 23
3.2.7 Market Participants and Capacity.................................................................................... 24
3.3 Export Market....................................................................................................................... 28
3.4 CONSTRAINS FOR AGRICULTURAL OUTPUTS MARKETING...........................................28
3.5 PROPOSED MITIGATIVE MEASURES..................................................................................29
4. CONCLUSIONS AND RECOMMENDATIONS..............................................................................30
4             1 CONCLUSIONS...........................................................................................................3q
4.2          RECOMMENDATIONS................................................................................................... 31
REFERENCES..................................................... .. ..................... ~............_....... ~.............. ...............32
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LIST OF TABLES
Table 2.1 Fertilizer and seed consumption by year, proposed irrigation Kebeles
AND QUINTAL............................................................................................................................................................. 7
Table 2. 2 Increase in cultivated area after the project....................................... 8
Table 2. 3. Loan disbursement and collection by year in Birr in Wolkayite Woreda
11
Table 3.1, Crop production and consumption in the proposed six Kebeles...... 15
Table 3.2 Crop production and consumption in Wolkayite WEreda................... 16
Table 3. 3 Crop production after the project in the proposed command areas... 17
Table 3.4 Market size, volume of sales and major commodities transacted in the
Woreda..................................................................................................................... 21
Table 3. 5 Major crops marketed by seasons & Birr/quintals in the Woreda.. 23
Table 3.6 Livestock marketed by seasons & prices in the Woreda......................23
Table 3. 7 Quantity of major export by items, value and year.............................29
ABBREVIATIONS
CSA DAs DPPB
ESE
Central Statistics Authority
Development Agents
Disaster Promotion and Preparedness Bureau
Ethiopian Seed Enterprise
EU
European Union
GDP
Ha
Gross Domestic Product
Hectare
HHs
Households
TNRS
Tigray National Regional State
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EXECUTIVE SUMMARY
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The Ethiopia's rural development strategy attaches the highest importance to the use of agricultural inputs and vigorous extension services, which are considered essential in bringing about a transformation from subsistence level of production to market-led commercial production, and thereby  by  increasing farm productivity  and alleviating poverty. Therefore, improving farmer's  access  to irrigation facility  and timely supplying adequate and quality inputs have been given due attention. In addition to that promoting market-oriented production has  received the maximum attention in rural development strategy  by  offering sound price to producers so as to ensure a sustainable increase in agriculture production and productivity.
In view of that agricultural marketing is a dynamic force in agricultural development and irrigated agriculture dictates the production of high value crops, the government of Ethiopia decided to facilitate a detailed market study. Accordingly, this  market assessment was carried out on the proposed irrigation project area: Tigray National Regional State, Wolkayite Woreda.
The assessments including the write up of this document were conducted in January 2008 and took  fifteen days. The assessment comprised: farmers  in Wolkayite Woreda and market participants  at all levels, Woreda and regional levels governmental organization. The methodologies  employed in the process  were reconnaissance survey, individual interviews, group discussions  and field observation. Parallel to it relevant information was  gathered from the secondary sources  to enrich the assessments: private and governmental market participants were contacted for information, available published and unpublished literature and reports were also consulted.
The result of the assessment revealed that the utilization of improved agricultural inputs  fluctuates  due to fast increase of prices, unreliable weather conditions, inadequate and late supply  of inputs. In recent times, although the prices  of agricultural products  have been increasing in the region, farmers  still complained about that the prices of agricultural inputs and consumer goods have been escalating through time.
The net productions and consumed amount in 2006/07 are estimated at 13.138 and 5,661 tons, respectively. According to the information obtained from agricultural desks: the total population of the Kebeles  is  estimated at 28,377 persons-5675 household heads. As  compared to the Disaster Prevention and preparedness Commission recommendation (annual intake of 9 qt grin equivalent per household),
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the share per household in the proposed irrigation areas (six Kebeles) exceeds by 11% percent. The generous estimate made also depicts that a surplus of 803 qt is supplied to the market and it can be safely concluded that the surplus is even more if the value of the livestock  production is  added. Therefore, the inhabitants  in the proposed irrigation area are food secured.
According to the modest estimate of Water Works  Design and Supervision Enterprises, the productions  after the project exceed the production before the project by  many  folds  - production in 2007/08, 131,375 Qt. and after the project estimated at 11.871,115 Qt.. The seeds  and fertilizer requirements  after the project exceed the amount used before the project by  many  folds, the seed requirement exceed from 21.5 qt in 2004/05 to 267,106 Qt., while the fertilizer requirement exceeds from 198 Qt. in 2005/06 to 7,932,245 Qt..
On the contrary, the market participants  in charge of supplying inputs  and collect farmers' produces are insignificant. The credit institutions are not available at close proximity  and retailers  are dependent to lotal money  lenders  and wholesalers. Hence, with limited size and insignificant capital of the retailers, introduction of irrigated agriculture, of these magnitude demands  significant changes. Therefore, it is  necessary  to improve the efficiency  of agricultural marketing in line with the irrigation structures development.
The study  also attested that the product produced in the proposed project areas, especially  sesame, cotton, ground nut, rice, and chickpea and sugar cane would deserve high demand both at domestic and international markets. The live animals also highly  demanded at home and in the neighboring states, especially  Sudan. Therefore, to tap the aforesaid potential linking markets  at close proximity  and elsewhere, provision of market information, and convincing farmers  towards producing high value crops are essential
It is  also evident that the decision to implement the proposed irrigation project is timely because the inhabitants of the command areas would directly benefit from the project and have ready  access  to food, generate additional income and would be fortunate to enjoy a recommended package of nutrient for a healthy life. And people reside out of the command areas  would also get easy  access  to a recommended package of nutrient and become healthy and productive. Therefore, the project would contribute to attain the ultimate aim of the government: secure food for the citizens bring about a rapid economic development and make poverty a history.
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1. INTRODUCTION
1.1 BACKGROUND
The Tigray National Regional State (TNRS) is one of the nine regions of Ethiopia and located in northeast part of the country. The Region has  been administratively divided into six zones and 36 Woredas. The study area, western zone of Tigray is situated at 36°55’10" - 14 0 10' 48” N latitude and 36°48'30“ to 37°2 00"E longitude. The population size of the zone is estimated at 273, 176 and accounts for 5-6% of
the  regional  population.  The  population  density  of  the  zone  is  closing  up  for  21
2
persons per Km and by far less than the regional average-73 persons per Km . The figure depicts that the zone is sparsely populated. The proposed irrigation structure development Woreda, Wolkayite belongs  to the region. The mainstay  of the inhabitants  in the region and upcoming irrigation structure development areas  has been recognized as  mixed farming: crop production and livestock  rearing. The system has been practiced by peasant farmers in wide range of agro ecologies ancf the altitude ranges  from 500 meter in semi-arid plain up to 2800 meter in the highlands of Tsegede.
On the average, the sector contributes for about 50% and 57% of the GDP of the country  and the region, respectively. About 85% and 91% of the population of the
country  and the region earn livelihood from this  sector, respectively  (CSA, 1996). Furthermore, the country  commands  about 90% of its  foreign exchange from agriculture. Therefore, the agricultural sector has been recognized as a main engine for rapid and equitable economic  growth. Despite its  determinant role as  the main sources of income and employment for the majority of the population, the status of agricultural sector is at a very low level of development. Therefore, the livelihoods of the inhabitants are vulnerable to food and livelihood insecurity
According to the review of the European Union (EU, 1999) more than 50% of the populations in the country don't have access to sufficient food. The severity of food poverty is staggering as well, and almost unparallel in international comparison. More than 25% of the populations  suffer from extreme food poverty, which implies  that expenditures on food stuffs are not enough to sustain even a minimal consumption of 1650 kcal a day  (EU. 1999). Whereas, according to Humera Irrigation feasibility study (2007), about 75% of the regional population lives in absolute poverty.
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However,  the  same  study  reported  that  the  Western  Zone  of  Tigray  is  surplus production area.
The major factors contributing to the livelihood insecurity in TNRS is low production that couldn’t cope with population growth. The annual population growth is 3% (CSA, 1996). The farm sizes  are small and fragmented. Farmers  use entirely  traditional farm implements  and commercialized agriculture is  seldom practiced consequently the sector is at subsistence level. The rainfall is extremely unreliable and of 93,500 ha - potential irrigable area in the western zone only 2% is irrigated (Western Zone Administration Office). In recent times, although the prices  of agricultural products have been increasing in the region, farmers still complained about that the prices of agricultural inputs and consumer goods have been escalating through time. Owing to this  reason, among others, and inadequate and untimely  supply  of improved technologies the vast majority of farmers do not use optimum amount of fertilizers, improved seeds, chemicals and other inputs.
The Ethiopia’s rural development strategy attaches the highest importance to the use of agricultural inputs and vigorous extension services, which are considered essential in bringing about a transformation from subsistence level of production to market-led commercial production, and thereby  by  increasing farm productivity  and alleviating poverty. Therefore, improving farmer's  access  to irrigation facility  and timely supplying adequate and quality inputs have been given due attention. In addition to that promoting market-oriented production has  received the maximum attention in rural development strategy by offering sound price to producers so as to ensure a sustainable increase in agriculture production and productivity.
The government has  liberalized the socialist oriented marketing system, which had discouraged the involvement of private traders (between 1975 and 1992) to improve the efficiency  of agricultural marketing system. The prevailing traditional and inefficient marketing system that is  dominated by  limited market participants  with inadequate capacity, in terms  of marketing knowledge, information, capital both for the transaction and storage and poor capacity for secondary processing have been changed, and the newly  organized cooperatives, private traders  and governmental organization have joined the business. International communities  like USA, EU and China have shown keen interests  to uplift the foreign exchange earning of the country and thereby the market participants at all levels.
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In  view  of  the  fact  that  irrigated  agriculture  introduces  high  value  crops  with  high investment   and   considering   the   role   of   agricultural   marketing   in   agricultural development  a  detailed  study  of  market  system  was  considered  essential  before implementing the proposed irrigation structures development in the project areas: Accordingly, agricultural marketing study has been carried out.
1.2  GENERAL OBJECTIVES
The general objective of this study is to assess the prevailing agricultural marketing system in the project areas and other potential markets and propose future market interventions  that would enable farmers  to exploit available market opportunities through effective and systemic use of markets to buy inputs, access credit and sell their produce and thereby improving their livelihoods by increasing net incomes and profit margins.
1.3 SPECIFIC OBJECTIVES
The task was designed at two levels and includes assessments at the project areas and other market chains and emphasized on inputs and outputs marketing systems.
The  assessment  under  the  study  comprised:  farmers  in  Wolkayite  Woreda-  32
farmers: drawn from May-Geba Kebele 15 farmers (7 females) and Tsebri Kebele 17 farmers (7 females). Individual discussions were also held with 4 farmers, a male and a female from each Kebele. 14 professionals: 4 from Western Zone of Tigray, heads of Wolkayite and Humera (2), Wolkayite Woreda experts  (3) and supervisors  and development agents  5 (3 and 2 drawn from May  Geba and Tsebri Kebeles, respectively). The interviewed market participants  included (2 retailers  and a wholesaler at May-Geba) and 3 owners of processing plants at Humera.
In the project area, issues like: demand and supply of major agricultural inputs, size and efficiency  of suppliers  were assessed at Kebele and Woreda levels. Furthermore, on production side, major crops produced and consumed and storage, transportation, exchange system and prices, marketing channels  and means  of transportation were thoroughly assessed.
At the Woreda level: demand and supply  of major agricultural inputs, size and efficiency  of suppliers  were assessed. Moreover, on production side: market participants and proximity. exchange system and prices. storage,
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processing/manufacturing and marketing chain were given due attention. In line with the mentioned issues, major marketing problems  were identified and appropriate measures sorted out for the attention of the clients.
1.4 METHODOLOGY AND APPROACH
The methodologies  adopted during this  study  comprised document review, group discussions and individual interviews. Parallel to it relevant information was gathered from the secondary  sources  to enrich the assessments: private and governmental market participants  were contacted for information, available published and unpublished literature and reports  were also consulted The Western Zone Administration, information, capacity  building and agriculture and Wolkayite Woreda experts  were contacted, several interviews  were made and relevant secondary information was  gathered from various  sources  Furthermore, retailers  and wholesalers at Woreda level and processing plants at zonal level were consulted for information. In all sessions, the themes  of the mission were introduced, and discussions and interviews were undertaken after informing participants that all these are voluntary.
Wolkayite Woreda, which entitled for the proposed irrigation development has  been administratively  divided into 19 Kebeles. Of the total Kebeles, 5 Kebeles  are expected to benefit from the up coming irrigation structure and amongst these Kebeles, May  Geba and Tsebri Kebeles  were selected for detailed study  with the help of experts  of Woreda and cooperative desks. The major criterion for the selection of the two Kebeles was the size of irrigable land - the largest (May Geba Kebele) and the smallest Tsebri Kebele.
After the selection of the Kebeles  participants  for the interviews  and discussions were identified with the help of DAs, arrangements  were made and tentative schedule was  set. During the selection, attentions  were given to include various economic  classes: rich, medium and poor farmers, female-headed households, elderly  and adolescent farmers  Then individual interviews  and group discussions were held with different categories of farming communities.
At the Woreda level, interviews and discussions were conducted with representatives' of agriculture; cooperative promotion; with retailers, whole sate/distributors and owner of the processing plant. At the zonal level interviews were carried out with representative of
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administration, information, capacity building and agriculture offices and owner of the processing plants, especially sesame. Discussions were also held with Ethiopian Seed Enterprise and Agricultural Input Supply Corporation. Finally available documents at Woreda and zonal levels were reviewed.
2. MARKETING SYSTEM FOR AGRICULTURAL INPUTS
The economic policies endorsed by the Federal Democratic Republic of Ethiopia have shifted the socialist oriented economic  development to market Led Agricultural Development. Following the policies the then traditional and inefficient marketing system has been changed. Globalization has also contributed a lot to curb the world economy towards free market and extensive private sector involvement. Therefore, the favorable environment at home and international level creates a good opportunity for effective and efficient marketing system mushroom in the country.
2.1       AGRICULTURAL INPUTS
The transaction of agricultural products in the study area is made at local, Woreda and zonal levels, hence this report discuss marketing at all levels. The agricultural inputs marketing include fertilizers, improved seeds and chemical. The consumption, demand and supply of major agricultural inputs are discussed here under in brief.
2.1.1 Consumption
2.1.1.1 Fertilizer
The fertility of the soil in the region has been declining due to intensive land use, without revitalizing its fertility for several years. Participants of the discussions in the Woreda informed that the yield obtained without fertilizer is much lower than that with fertilizer. They  further explained that the application of fertilizer, which was  earlier limited to cereals, has  now been diversified. Farmers  were using fertilizer for sorghum, millet, teff and during recent times they started to use for sesame. All these crops were produced without fertilizer some years back.
Individual interviews reported that they don’t need fertilizer because the fertility of the soil is adequate for optimum production. The fertility of the land in the area may be attributed to its  location, where the soils  eroded from the upstream (highlands  of Tsegede) are deposited.
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Table 2.1 shows consumption of fertilizer under the proposed five irrigation areas- May-Geba, Lailay Mayhumer, Tsebri, May-Timket, Delessa Kokuah and adjacent to the proposed irrigation areas-Miacha. The figures available in Table 2.1 depict that the fertilizer consumption in the proposed irrigation areas and its adjacent Kebele- increased by 80 % over the previous year during 2005/2006 and reduced by 59% in the year 2006/07 over the previous year.
2.1.1.2. Seed
It is evident that the local seeds are performing poorly and this may be one of the reasons  for low level of production and farmers  demand for improved seed is increasing. However, the utilization of improved seed is oscillating in the mentioned six Kebeles. As it is depicted in Table 2.1, as compared to the previous years the consumption of seed in the Kebeles  has  reduced by  36% and 62 % during successive years- 2005/06 and 2006/07, respectively. This is due to the shortage of seed and late supply of fertilizers. For instance, in 2006/07 the cooperative promotion desk in Wolkayite Woreda demanded 50 qt of improved wheat seed to supply for the farmers and received nothing. Farmers also reported that improved sorghum seed supplied to them fails  to adopt because the improved seed matured fast, easily attacked by birds and difficult to be processed as compared to the local varieties.
2.1.1.3. Chemicals
As regards chemicals, herbicide, by the trade name 2.4.D is the most utilized. In 2005/2006 and 2006/07 about 1694 and 532 liters of 2.4.D were utilized in Wolkayite Woreda. of which, the lion share was applied on land covered by sesame-because farmer command large income from sesame. The cooperative desk of the Woreda also reported that 50 kg of pesticide- by the trade name Actlic Dust 2% was utilized in 2006/07. The utilization of pesticides  and insecticides  are insignificant in the Woreda due to limited and late supply, prevailing abundant labor and rapidly skyrocketing price.
Although the rate of consumption fluctuates due to fast increase of prices, unreliable weather conditions, inadequate and late supply of inputs; lack of availability of credit facilities and limited market participants, one safely concludes that the interest of farmers  towards  using fertilizer and improved seed has  been increasing in the Woreda.
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Table 2.1 Fertilizer and seed consumption by year, proposed irrigation Kebeles
ana qumia
Year
1
Six Kebeles
Six Kebeles
1
2
3
Later year against former
4
5
Later year against former
DAP ♦ urea
seed
2004/05
110
21.5
2005/06
198
Increased by 80%
13.75
Reduced by 36%
2006/07
82
reduced by 59%
3.875
Reduced by 62 %
Source: Supervisors of the six Kebeles.
2.1. 2 Pre- project Demand and Supply of Inputs
The Ethiopia’s rural development strategy attaches the highest importance to the use of agricultural inputs and highly favors high external inputs to agriculture to increase productivity  and alleviate poverty. In view of this  strategy  and prevailing blanket recommendation (recommendation is not area specific), and poor involvement of the farmers during demand forecast, consumption of fertilizer is very insignificant.
It has  been realized that the demand for DAP in the zone is  more than urea. Participants of the discussion reported that they are suffering from shortage and late supply  of fertilizer. The farmers  interviewed in May-Geba Kebele also complained about that only DAP was supplied in 2007/08. Furthermore, the supply of seed is not adequate to meet the demand of the farmers and fails to adopt the local condition.
Farmers in May-Geba Kebele were also heard saying that they don't need fertilizer because the fertility of the soil is adequate for optimum production. The suspected high fertility of the land in the area may be attributed to its location in the highlands of Tsegede, where the soils eroded from the upstream are deposited.
All interviewees confirmed that adequate amount of fertilizer was not supplied to the zone and the supply was not in time. However, the Western Zone Offices explained that the amount and time of delivery were better in the last two years. Vegetables 
and fruit seed are seldom supplied at close proximity. Therefore, in most cases improved hybrid seeds are provided to the farmers through drawing lots.
As  to quality  of fertilizers, participants  at all levels  reported insignificant problem. However, farmers informed that crystallization and fine-particles (broken into pieces) have been observed in rare cases. Users of fertilizer and agriculture and cooperative offices explained that they observed few worn out sacks due to poor storage
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negligence during transportation and refilling of carry over into bags. With regard to
seed the interviewees in May-Geba complained about early maturing, short 9 and difficulty during processing (sorghum seed) and inferior quality of sesame. They also reported that they like the improved seed of cotton; however, lack of market
outlet discourages its production and the land covered by cotton abruptly declined.
2.1. 3. Post Project Demand for Inputs
As it is depicted in the Table 2.2, when the project starts the crop production pattern will be changed. On the average, area covered by the major crops will be increased between 197 %- (sorghum) and 7203 % (fruits) and only  the area covered by sesame reduced by 12 %. The total area to be irrigated will increase from 54 ha to 45966 ha (210%) - in recent times, only 54 ha is cultivated using traditional irrigation (Tsebri Kebele). The seeds  and fertilizer requirements  after the project exceed the amount used before the project by many folds, the seed requirement increased from 21.5 Qt in 2004/05 to 267,106 Qt., while the fertilizer requirement rises from 198 Qt. in 2005/06 to 7,932,245 Qt. (Table 2.3 and 2.4). On the other hand, it is evident that the proposed irrigated agriculture is  expensive and demands  adequate seed, fertilizer and chemical to offset the investment costs. Therefore, the production and supply of inputs and facilitating effective and efficient marketing system are critical.
Table 2. 2 Increase in cultivated area after the project
Crop types
Pre project
Post project
Cultivated area
Cultivated area
% change
Ha
Ha
Sesame
8231
7301
88 70125137
Rice
1622
Sorghum
3428
6760
197.1995333
Wheal
541
Teff
1352
Millet
2350
5408
230.1276596
Maize
459
1082
235 7298475
Barely
811
Chick pea
89
2073
2329.213483
Vegetables/polato
70
2704
3862 857143
Fruits
30
2161
.
7203.333333
Cotton
145
AJfa-alfa
2163
Sugar Cane
5408
Cow pea
1803
Soya
2344
Noug
2434
Total
14802
45967
310.5458722
Source: Supervisors of the six Kebeles and Water Works Design and Supervision Enterprise.
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Table 2. 3. Cultivated area and seed requirement after the project
Crop types
Cultivated area
Seed
Rate/Ha
Total
Ha
Qt
QI
Sesame
7301
005
365 05
Rice
1622
1.1
1784.2
Sorghum
6760
0.4
2704
Wheat
541
1.75
946.75
Teff
1352
0
Millet
5408
0075
4056
Maize
1082
0.2
216 4
Barely
811
0.5
405 5
Chick pea
2073
0.6
1243.8
Vegetables/potato
2704
25
67600
Fruits
2161
25
54025
Cotton
0
Alfa-aifa
2163
0.03
64.89
Sugar Cane
5408
25
135200
Cow pea
1803
0.4
721.2
Soya
2344
0.4
937.6
Noug
2434
0.2
486.8
Total
45967
267106.8
Source: Water Works Design and Supervision Enterprise
Table 2. 4. Cultivated area and fertilizer requirement after the project
Crop types
Cultivated
area
Fertilizer/DAP
Ferlilizer/Urea
Total
Rate/Ha
Total
Rate/Ha
Total
Quintal
Ha
Qt
Qt
Qt
Qt
Qt
Sesame
7301
50
365050
50
365050
730100
Rice
1622
100
162200
150
243300
405500
Sorghum
6760
100
676000
50
338000
1014000
Wheat
541
80
43280
0
0
43280
Teff
1352
0
0
0
Millet
5408
100
540800
50
270400
811200
Maize
1082
80
86560
150
162300
248860
Barely
811
40
32440
40
32440
64880
Chick pea
2073
100
207300
0
0
Vegetables/pototo
207300
2704
100
270400
200
540800
Fruits
811200
2161
100
216100
100
216100
Cotton
432200
0
0
o
Alfa-alfa
2163
75
162225
0
0
Sugar Cane
162225
5408
200
1081600
300
1622400
Cow pea
1803
2704000
100
180300
0
Soya
0
2344
180300
50
117200
0
0
Noug
2434
117200
0
0
0
Total
o
Source: Water Work*
45967
Des ion and
4141455
naruivinn £
r 7932245
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2.2 CREDIT
2.2.1 Demand and supply
There is a strong conviction of the regional government that yields can be boosted up with high external inputs  and credit has  to play  important role One Micro Finance Institution, Dedebit is available in Wolkayite Woreda and there is no bank service. Therefore, on the average, the inhabitants in the Woreda have to travel 123 km to Humera or Shiraro towns to access credit.
The Wolkayite Woreda Cooperative desk revealed that about 90 % of the farmers couldn’t afford fertilizer and improved seeds  without credit. The major supplier of credit for inputs  in the proposed project areas  is  cooperative and Dedebit Micro Finance Institution- provides  credit within 30 km radius  from the Woreda town-Adi Remetse and only five Kebeles qualifies for credit.
It has been learnt that Dedebit is more interested to supply medium and long-term credits. This is because the institution follows a group lending method for a medium and long-term loan, which they thought assures loan repayment and the interest rate is also high, 12 % per annum The Woreda cooperative office reported that Dedebit is less interested to provide credit for short term loan (loan for fertilizer, seed and chemical) in the proposed project areas  due to the suspect of high default, inaccessibility  and high operation costs. Farmers  in sampled Kebeles  also complained about absence of credit facilities.
The regional government guarantees  the amount of loan provided for fertilizer and seed. Since the micro finance institutions and banks are not willing to deliver credit to farmers without collateral, owing to high default during the Derg Regime and farmers lack the required collateral to qualify for credit. In line with the regional government policy, in order to qualify  for credit a down payment is  mandatory. Indeed, the interviews  at zonal and Woreda levels  complained about the late release of credit and the cooperatives (sole supplier of fertilizer and seed) are not blamed for the late supply. It was  observed that the cooperatives  and banks  charged 6.5% and 7.5% interest per annum, respectively. Therefore, farmers  are expected to pay  14% interest for the input loans per annum if they take loan from cooperatives.
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2.2.2. Local moneylenders
Agricultural MarteUng
Although the amount of the loan is  low, there are opportunities  to take loan from friends, relatives  and local money  lenders. In order to qualify  for local credit a borrower is expected to assign a person (collateral) and two persons as a witness. The rate of interest varies depending on the agreement made between the lenders and borrowers. In most cases, on the average, the charge is 10% per month. If one takes loan in cash and in kind and agreed to repay in kind the rate ranges from 30% to 60% within three to six months. For instance, in case of this year (2007/08), a farmer who takes 400 Birr in June and September to hire casual labor for weeding and harvesting sesame, repays a quintal of sesame that worth Birr 1150. This shows that the interest rate is 129% within three to six months and the windfall benefit - from the skyrocketed price in international market entirely went to the local money lenders.
2.2.3 Loan collection
The amount of the loan that was provided to the farmers in the Wolkayite Woreda has been fluctuating. The actual loan provided to the farmers in 2004 I 2005 and 2006/07 was  Birr 4,607,944 and Birr 426,486 and this  shows  that the disbursed amount reduced by 91%. The figures in the same Table show that the repayment has increased by 11 and 140% as compared to the previous years. As it is depicted in Table 2 .5. on the average, the repayment was  38%. This  is  because of the reduction of the loan size and extension service provided and gradual attitudinal change of the farmers' towards loan repayment.
Table 2. 5. Loan disbursement and collection by year in Birr in Wolkayite Woreda
Years
Released
Collected
%
Later year against
former
1
2
3
4=3/2*100
2004/05
4.607.944
1.557,998
34
2005/06
3.976.944
1.487.301
38
increased by 11
2006/07
426.486
386.072
91
Increased by 140
Total
9.011,374
3.431.371
38
The respondents at zonal level reported that the rate of default in recent times is low. The respondents in Wolkayite Woreda reported that the repayment in 2004/05 was worst because of the prevailing political instability. They further reported that the
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repayment in 2006/07 was better than other periods because of intensive follow up and extension services.
The primary responsible organ for credit collection in the region is Agricultural Inputs Coordination Units, organized from region down to the Kebele. The agricultural offices at all levels are member of the units. In addition, the cooperative executive committees are responsible to collect repayment issued by the cooperatives. At the Kebele level, the DAs are the vanguard for the collection and this leads to frequent conflict between the farmers and DAs.
2.2.4  Major Issues Constraining Agricultural Inputs Marketing
2.2.4.1 Inputs
The major constraints  for fertilizer marketing are: the rapidly  escalating prices  of fertilizer, untimely supply and overlapping of transporting fertilizer with sowing times, involvement of limited suppliers, inadequate supply  of fertilizer, and utilization of fertilizer below the optimum level and low return of fertilizer due to natural hazard. Despite the limited capacity of improved seed producers in the country and region: the sole producer Ethiopian Seed Enterprise (ESE) and very  few private seeds producers, the major factors that constrained improved seed marketing are similar with that of fertilizer.
2.2.4.2 Loan
The major factors  that constrain loan disbursement and collection are: rapidly increasing of prices  coupled with down payment, delay  in release of loan, poor capacity of the sole loan distributors and routine planning and loan disbursement. Furthermore, lack  of frequent follow up on utilization of loan, loan diversion and developed bad behaviors of farmers towards loan repayment in the region (farmers are not voluntarily willing to liquidate loan timely) have impeded loan collection.
2.2.5  Proposed Mitigation Measures for Agricultural Inputs
The respondents emphasized on subsidizing the price of fertilizer and scheduling of fertilizer purchase and distribution. Encouraging private dealers at all levels was also suggested for a sustainable supply  and cost reduction, through competition. Conducting research, which helps to reverse the prevailing blanket recommendation to the lower levels, conducting decrimental price and advising farmers  to apply optimum level of fertilizer for the production of crops with higher value are among
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some of the measures recommended to bring about efficient distribution of fertilizer. Furthermore, promoting participatory planning and advising farmers to adhere to the plan are also advised to avoid carry over, which leads to quality deterioration and increase of prices.
It is  evident that the value of organic  crops  is  more than inorganic  crops  in international market; hence, the promotion of organic  fertilizer is  recommended. Furthermore, organic  fertilizer will minimize dependency  on inorganic  fertilizer, and the high prices may also promote best use of livestock manure, which is abundantly available in zone. With regard to seed, intensive expansion of seed multiplication centers, encouraging private seed producers and small-scale seed multiplication at the farmers’ level are recommended.
2.2.6  Proposed Mitigation Measures for Credit
The respondents stressed on subsidizing the prices of fertilizer that influences the amount of the credit and timely  delivery  of the guaranteed amount of loan, empowering and enhancing the capacity of the cooperatives and encouraging free market. They also recommended the shifting of the prevailing loan collection months, from December to January (which overlaps with the peak harvest periods and high supply of crops that resulted in fetching low prices) to March and April.
Furthermore, promoting participatory planning, vigorous extension work to enhance a voluntarily and timely repayment and convincing farmers to apply optimum level of fertilizer for the production of high value crops are also recommended to increase the income and repayment. Farmers  may  be advised to avoid loan abuse, participate during the planning, adhere to the plan and repay the loan voluntarily on time. The cost of borrowing in the region ranges  from Birr 50 to Birr 60, per quintal. The farmers who afford are advised to purchase fertilizer and seed without credit.
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3 MARKETING SYSTEM FOR AGRICULTURAL OUTPUTS
3.1   CROP PRODUCTION AND CONSUMPTION
Crop production is  the main occupation of farmers  in Wolkayite Woreda and it is carried out in combination of livestock  rearing. The area experiences  one rainy season, Meher, which lasts from June to September. Crops are grown both in the field and in homesteads. Irrigated agriculture is  seldom practiced and crops  are mainly produced under rainfed conditions. However, the participants in Tsebri Kebele (Mogou village) reported that they  have experienced traditional irrigation and produced tomato and onion on 54 ha of land. Two types  of crops  economy  are identified in the Woreda, namely cereals and cash crops. According to the average estimate made by the participants about 70% of the income is generated from crop production.
The major crops  grown in Woreda under rainfed in 2006/2007, Meher season include: sesame (8231 ha), sorghum (3428 ha), Millet (2350 ha), maize (459 ha), chickpea (89 ha) and cotton (145 ha) (Table 3.1). Of the total cultivated areas, sesame and sorghum occupied 56 and 23%, respectively, while the production estimates reveals that sorghum exceeds sesame by 20%.
As compared to the report on productivity by European Commission (2002): cereals 11.54 and pulses  6.74 qt per ha, respectively, the productivity  of cereals  in the proposed irrigation Kebeles exceeds by 30%, while the productivity of pulse is about 49%. As  compared to the zonal and Wolkayite Woreda average productivity  of sesame, the estimated productivity in the proposed irrigation areas exceeds by 4%- 4.7 against 4.5 qt per hectare.
It has  been also learnt that sesame is  largely  grown to generate income and sorghum is produced for consumption. About 70% and 56% of the cultivated areas in the zone and Woreda is covered by sesame, respectively. The stable crops of the Woreda include sorghum and millet and about 54 and 33% of the net production is allotted for consumption. The major reasons for the preferences of the crops that are consumed in the Woreda are: rich experience of the farmers  and favorable environment to produce the respective crops, high production and flavor.
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Furthermore,  farmers  reported  that  they  provide  teff  to  the  market  due  to  its  high prices in the market, although they prefer to eat
The production of different crops  during the year 2006-2007 for the proposed irrigated areas  is  available in Table 3.1. The estimated net productions  and consumed amount are totaled 13,138 and 5,661 tons, respectively. According to the information obtained from agricultural desks: the total population of the Kebeles  is estimated at 28,377 persons-5675 household heads.
As compared to the DPPC recommendation (annual intake of 9 qt grain equivalent per household) the share per household in the proposed irrigation areas exceeds by 11% percent. The generous estimate in Table 3.1 depicts that a surplus of 803 qt is supplied to the market and it can be safely concluded that the surplus is even more if the value of the livestock  production is  added. Therefore, the inhabitants  in the proposed irrigation area are food secured.
Table 3. 1. Crop production and consumption in the proposed six Kebeles
Crop types
Cultivated area
% share
Productivity
Net production
Seed
Quantity consumed
Quantity
Sold
Ha
Qt
Qt
Qt
Qt
Qt
Sesame
8231
0.56
4.7
38958
5843.7
3895 8
29218.5
Sorghum
3428
023
13.6
46657
4665.7
30327.05
11664.25
Millet
2350
0.16
15.9
37396
3739.6
18698
14958.4
Maize
459
0.03
15.6
7158
357.9
3579
3221.1
Chick pea
89
0.006
3.3
293
58.6
87.9
146.5
Vegetables
70
0.005
NA
NA
NA
NA
NA
Fruits
30
0.002
NA
NA
NA
NA
NA
Cotton
145
0.010
6.3
913
91.3
1826
803.44
14802
Source: Supervisors of the six Kebeles.
Total
59.4
131375
14756.8
56606
66012.19
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Table 3. 2 Crop production and consumption in Wolkayite Wereda
Years
Crop types
Total
Average
2005/06
2006/07
2007/08
Net
product!
on
Seed
Quantity consumed
Quantity
Sold
Qt
QI
Ql
Qt
Qt
Qt
at
Qt
Qt
Sesame
48482
90490
65452
204424
68141.33
68141
10221.15
6814 1
51105 75
Sorghum
291449
202288
224706
718443
239481
239481
23948 1
155662.7
5987025
Millet
213178
90273
134856
438307
146102.3
146102
14610.2
73051
58440 8
Noug
30854
28038
31236
90128
30042.67
30043
4506 45
3004 3
2253225
Maize
38648
26263
47785
112696
37565.33
37565
1878 25
18782 5
1690425
| Total
622611
437352
504035
1563998
521332.7
521332
55164.15
257314.6
208853 3
As  it is  depicted in table 3.1, the production of different crops, recently  cultivated under rainfed agriculture in the six  Kebeles, where the project is  proposed to be established is  estimated at 131,375 Qt., while the expected production after the project in the same localities is projected to 11,871,115 Qt. -more than 90 times as compared to before the project.
On the other hand, the comparison made between the current level of production in the Wereda, average production under rainfed agriculture, between 2005/06 and 2007/08, 521332 Qt. (Table 3.2) and the production after the project, 11,871,115 (Table 3.3) Qt reveals that the later production exceeds more than 23 times.
It is  realized that the recent marketing system is  inefficient. Therefore, vigorous extension services to enhance the quality of the produces and organizing farmers in groups/cooperatives  to compete in local and elsewhere markets  are critical. The situation also demands  the construction of road networks, establishment of processing plants, improved storage centers  and encouraging private traders from the point of assembling products  to export levels  so as  to encourage farmers  to sustain products. In summary, according to the market-oriented production policy of the country facilitating efficient and effective marketing system is essential so as to ensure a sustainable increase in agriculture production and productivity.
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Table 3. 3 Crop production after the project in the proposed command areas
Crop types
Cultivated area
% share
Productivity
Net production
Per hectare
Ha
Qt
Qt
Sesame
7301
1588
15
109515
Rice
1622
3.53
50
81100
Sorghum
6760
14.71
50
338000
Wheat
541
1.18
45
24345
Tefl
1352
294
20
27040
Millet
5408
11.76
40
216320
Maize
1082
2.35
50
54100
Barely
811
1.76
40
32440
Chick pea
2073
4 51
25
51825
Vegetables/pototo
2704
5.88
400
1081600
Fruits
2161
4.70
340
734740
Cotton
0.00
0
Alfa-alfa
2163
4.71
400
865200
Sugar Cane
5408
11.76
1500
8112000
Cow pea
1803
3.92
20
36060
Soya
2344
5.10
30
70320
Noug
2434
5.30
15
36510
Total
45967
100
11871115
Source: Water Works Design and Supervision Enterprise.
3.2   LIVESTOCK PRODUCTION AND CONSUMPTION
Livestock  play  a key  role in the life of the farmers  and as  a result a number of animals  are kept in proposed irrigation areas. The zonal administration office reported that the cattle breed in the zone is popular in its breeding efficiency, size and milk  production and highly  demanded both for the production and breeding. Livestock move freely and feed on natural pastures and improved forage is hardly touched. The main purpose of keeping livestock is for replacement of oxen, which provide the traction power needed for land preparation. Farmers are also engaged in raising cattle for production of milk and meat for consumption and largely for sales.
Shoats are maintained, as capital reserve to be used in time of cash needs: payment of taxes and other needs. Surplus from crop production is saved in the form of
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animals. Farmers buy heifers if the surplus is large and shoals 
if the surplus is small.
Equines, especially donkeys are used as means of transport.
3.3    MARKETING OF FARMERS’ PRODUCES
3.3.1  Storage
The most common structures used for storage in the Woreda is made of mud, split bamboo, grasses, sorghum/maize stalk, woods, etc. The structure is  cylindrical in shape and its height ranges from 1.5- 2 meters. The size varies from 5-8 quintals depending on the quantity produced by the farmers. It has been realized that forage is stored on out door structures through erecting poles or on tree. Farmers reported that a weevil infestation is the most important causes of crop losses and followed by rodents' damage in the stores.
Retailers in the Woreda don’t need to construct improved storage because they store the purchased items for a maximum of a month due to shortage of capital to hoard the commodities for long time. While the wholesalers construct improved storage to hoard product due to the capacity to furnish collateral to the bank at Sheraro and Humera and qualify for credit.
The retailers are more interested to buy commodities that are fast moving and simple for storage like sesame, sorghum and teff. while the wholesalers are inclined to buy sesame due to its guaranteed market, both in close proximity and elsewhere. The wholesalers also explained that if the worst comes sesame would be processed and the extracted edible oil stored for long.
According to generous estimates of experts the post harvest losses including storage ranges from 30% to 35% in the country. The Tigray Bureau of Finance and Economy Development also estimated that the post harvest lose is  closing up for 30%. Therefore, the typical traditional and improper structures  that have been used by farmers and traders have contributed a lot to the damage of the produces.
3.3.2 Manufacturing Plants
The industrial sector in the region was at very low level of development due to the frequent conflict between the former government and Tigray People Liberation Front.
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However, after the turmoil of the Derg Regime, the Regional Government has been promoting and encouraging both cottage and large scale industries. Therefore, the private investors are striving to invest on small and large scale industries such as food and beverages, textile, hides and skin processing, metal and wood work and construction materials production.
The existing industries  in the region are concentrated in few urban centers  like Mekele, Adwa and Humera. These industries, however, are not adequately  linked with the rural sector, which constitutes  more than 85% of the population of the region. The major industries that located about 100 km from the proposed irrigation areas  are: a plant meant for processing sesame and cotton ginnery. It has  been learnt that the five huge sesame-processing plants and the mushrooming small size plants are working far below its capacity. For instance, plants owned by Helen and Altasire, which have a capacity to process 122,500 qt sesame per year, each has been processing about 37% of its  capacity  and are demanding large amount of products.
Although the existing industries are good opportunities for securing export market for sesame, which heavily produced in the localities and to encourage cotton production, the attempts for the expansion of industrial crops like sugar cane, rice and soybeans are demanding agro-processing plants to exploit the fertile Humera lowlands.
3.3.3. Road and Transportation
The region has three major transport systems that include land, air and marine. According to Tigray Bureau of Economic development (2006) the overall road density of the region was found to be 0.6 km/1000 people or 44km/1000 square km.
Mekele, a capital city  of TNRS is  located about 700 km away  from Addis  Ababa, while Adi Remetse, the capital city  of Wolkayite Woreda is  located 799 km from Mekele, along the road that connects Mekele with Shiraro via Axum.
Farmers in the proposed irrigation have to travel about 68 km to Maytemen village to reach a gravel road connection so as  to purchase commodities  for consumption and/or to sell their produces at better prices. Therefore, as compared to the national average, 25 km travel to reach road connection the farmers in the proposed area
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have to travel additional 43 km and one may safely concludes that the inhabitants are isolated.
The mode of transport used to supply agricultural products and inputs in the study area include: family  labor, equines, mainly  donkey  and vehicles  depending on the wealth status and size of the commodities to be transported. Rich farmers use their own donkey, while poor farmers entirely use rented donkeys/mule -at the rate of Birr 40 and 60, respectively to transport surplus to the market. Carrying small size crops is generally the responsibility of women.
3.3.4  Other Infrastructures
The proposed irrigation area is the origin of the struggle against the former Ethiopian Government and the inhabitants  suffer from frequent war until the collapse of the Military  Regime This  coupled with its  location-far from the center, located at periphery  have impeded infrastructure development. Therefore, the proposed irrigation areas  are lacking credit, bank, telephone, postal and electricity  services. Farmers traveled for an average of 3 days to reach Shiraro and Humera Market to. get the mentioned services.
3.3.5 Market Size and Location
Market size and location have been viewed and determined on the basis  of perception of the participants  of the group discussions  and individual interviewee. The markets in the study areas have been classified into big. medium and small. The major criterion used for categorizing the market is: sizes of items delivered to market that include livestock, crops and industrial products.
According to the participants  of the discussions  about 60%, 25% and 15% of the crops they deliver to the market are sold in large, medium and small size markets, respectively, while about 70% and 30% of the livestock  are marketed at large and medium markets  respectively. There are four large, three medium and four small markets in the Woreda. The lists and location of the market along with the types of commodities exchanged and its size are available in Table 3.4.
Assuming that on the average a person travels 5 km in an hour; farmers on average have to travel for about 3 days to reach Adi-Remetse, Woreda capital and back
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home. Farmers have also travel 3 days and half from May-Humer, Tsebri and Mogou to reach Adi-Remetse. Farmers in Maya-Geba have also traveled for an average of 3 days  to reach Shiraro and Humera Market. Of all the markets  in the Woreda, farmers  prefer May-Geba market because of the best price they  fetch. Thus  they have to travel a substantial distance to undertake large sales (on the average a day and half) and the burden of walking to the town become very significant if farmers have to carry items for sell or other wise.
On the average, during the peak agricultural periods, farmers’ visit large and medium size markets once in one week and small size markets once in two weeks. The main reasons  for visiting towns  include: to buy  and sell goods/ for majority  of farmers. However, a few inhabitants  go to town for administrative reasons  and for social issues, while other visiting town to secure information. Therefore, the existences and nearness  of market centers, the pattern and the frequency  of its  visiting have significant contribution to the overall development.
Table 3. 4 Market size, volume of sales and major commodities transacted in the
Woreda
Volume & items
Volume & items
Name of lhe
market
& size
Volume of
Sales (%)
Types of
commodities
exchanged
Name of the market
& size
Volume of
Sales (%)
Types of commodities 
exchanged
Large
Mia-Geba
60
Crops in
quintals.
Mia-Geba
80
livestock.
Adi-Remethi
60
Crops in
quintals.
Adi-Remethi
70
Livestock.
Deb re -Mari
40
Cloth and
Debre -Mari
70
Cloth and
Edaga-Arbi
40
House utensils
Edaga-Arbi
House utensils
Medium
Medium
Mia-Humer
25
Crops in
quintals.
Mia-Humer
30
Crops in quintals.
Tsebri
25
Crops in
quintals,
Tsebri
30
Livestock.
Mayguhi
(new)
25
Cloth and
Mayguhi (new)
30
Cloth and
Small
Small
Delesa Kokeche
15
Sugar, salt, kerosene
Delesa Kokeche
Layilamay- humer
Sugar, salt, kerosene
15
, Match &
others
Layilamay-humer
. Match & others
itano
15
Itano
Bagind
15
Bagind
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3.3.6 Months of Sales and Prices
Agricultural Marketing
It is evident that men take care of selling and buying agricultural produces especially when marketed in bulk, and when cattle, camel, sheep and goats are involved, while women do minor sales and purchase of food items/egg, butter and milk and small size crops. Buying clothes and farm inputs are the responsibility of men.
Farmers  in the proposed project Woreda supply  their products  mainly  during the months of December to February, immediately after harvest. The reasons for selling produces immediately after harvest is: subsistence nature of production, absence of credit service, fear of weight loss and overlap of fertilizer and seed loan collection and cash need immediately after harvest for various social commitments: wedding and other traditional ceremonies. Some sales  are also made during the lean seasons, March to April, especially by the well to do families. Therefore, farmers lose 22-32% of the price because of immediate selling of crops (Table 3.5).
The livestock  marketing outlets  in proposed project areas  suffer from absence of legal transaction. The transactions  of livestock  in the localities  are carried out between farmers  and illegal traders  and in rare cases  with butchers  The traders interviewed in May-Geba market estimated about 25 illegal traders-10 rich and 15 medium and reported that they smuggled the livestock to Sudan. The duration of the single transaction takes  an average of 20 days  and traders  have to travel with animals for 15 days on foot. The remaining days used to wait the client and negotiate for the better prices. Thus the traders have to travel a substantial distance to fetch better price and the burden of walking to Sudan is significant if farmers have to travel during wet season-when Tekeze River swells.
The illegal marketing coupled with poor infrastructure has contributed a lot to loss of animal weight and physical condition. Therefore, the livestock  production is  not market oriented and a lot is  expected to tap the abundant livestock  resources  in proposed project areas  thereby  to increase the income of the producers  and generate foreign exchange.
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The mismatch between seasons of crop production and better livestock prices has also contributed to marketing inefficiency. As  it is  presented in Table 3.5, on the average, the prices of cattle increased between 16.5 and 24.5% in wet season as compared to dry  season, while the price of goat increases  between 29 and 36%. During the peak  crop harvesting time (December to March), in the middle of dry season animals  tend to lose weight and the price go down. This  leaves  the inhabitants with little cash on hand in order to hoard grain for the remainder of the year. On the other hand when feed improves  between June and September, and animals’ weight recovered the prices of grain would usually increase absorbing the gains in good animal prices.
Table 3. 5 Major crops marketed by seasons & Birr/quintals in the Woreda
Type of
crops
Peak harvest
period
Price range
Lean
season
Price
range
% Change
1
2
3
4
5
6
7
8
9
10=8/4
11=9/5
Sesame
Dec.
Feb.
450
600
Feb
Apr.
650
720
44
20
Sorghum
Dec.
Feb.
120
130
Mar.
Apr.
140
160
16
23
Millet
Dec
Feb.
120
130
Mar.
Apr.
150
170
25
31
Teff
Dec.
Feb.
350
400
Feb.
Apr.
450
500
29
25
Maize
Dec.
Feb.
100
120
Mar.
Apr.
120
140
20
17
Source: Generous estimate of the participants of the discussion
Table 3. 6 Livestock marketed by seasons & prices in the Woreda
Type of
livestock
and size
Dry season
Wet season
•/• Change
Price range
Price range
January
March
June
September
1
2
3
4
5
6=4/2
7=5/3
Cattle
Big
2200
2500
2800
3000
27
Medium
20
1800
200
2200
2500
22
Goat
13
Big
400
450
500
600
25
33
250
33
39
Medium                                150                180             200
Source: Generous estimate of the participants of the discussion
3.3.7   Market Information and Channels
It was  realized during the assessments  that adequate market information is  not disseminated to the farmers. The experts meant for this purpose have attempted to provide information through local radio and development facilitators residing in close proximity. However, they lack the capacity and resources to analyze and disseminate information frequently. The absences  of such information coupled with the subsistence nature of production have adversely affected the efficiency of marketing
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These situations are very disadvantageous to farmers for both cases during selling and buying commodities
Farmers  involved in the group discussions  informed that they  sell most of their produces  like: sesame, millet, sorghum and maize to consumers  and retailers  and that the transaction of these products  with cooperatives  and wholesalers, except sesame is insignificant. They also explained that wholesalers are more interested to buy  sesame and the interviews  at zonal level also reported that the cooperatives have been involved in marketing sesame.
The interests of farmers in producing sesame have been growing rapidly, because of long experience in producing the crop and the growing tendency of its demand both in the local and international market. For instance, in 2007, 58,000 tons of sesame exported to China, Switzerland, Holland, Turkey and Israel only through Port Sudan. The high adoptable nature of the crop to the local environment, generation of more income and withstands drought are also reported for the preference of the crop.
Both the retailers  and wholesalers  reported that they  are more interested to buy sesame because of its  high supply, guaranteed market, fast moving (exportable product) and simple for storage. They  also explained that sesame is  locally processed and converted to edible oil if the worst comes (inhabitants in Zarima, Shire and Humera prefer to buy the oil extracted from sesame) - two kilograms of sesame is converted to a litter of edible oil. The retailers and wholesalers also ranked second the transaction of stable crops, sorghum and teff due to its guaranteed market, both in close proximity and elsewhere. It has been learnt that sorghum secured market in Shire, Adwa and Axum, while teff largely  demanded in the Woreda, Shiraro and Humera.
Farmers in Tsebri Kebele also reported that the perishable products produced using irrigation, especially  onion and tomato lack  market outlet, unless  they  adjust the supply  to the market with the fasting months  of Orthodox  Christian believers. Therefore, as the products don’t fetch sound prices farmers are discouraged and the expansion of irrigation agriculture is limited.
3.3.8 Market Participants and Capacity
It is evident that the size of the retailers in the Woreda is quite small According to the estimate made by  the retailers-engaged in crop marketing the market participants with revolving capital between Birr 15, 000 and Birr 20,000 are about twenty. They 
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esign Project
Agri
ajttural Mark
eting
also e
stimate about forty ill
egal assemblers with
revolvin
g capital that
ranges 
from
5,000
to  10,000  Birr.  The
livestock  traders  inter
viewed
in  May-Geba
market
also
estimated about 25 illegal traders-10 rich and 15 medium with the revolving capital that ranges from Birr 40,000 to 50,000 and 15,000 to 20,000, respectively.
The retailers also informed that they lack access to formal credit due to the absence of micro finance institution and bank. However, with the agreement to pay  10% interest per month, they  have an opportunity  to take loan from the local money lenders. On the average, the capacity of the store that owned by the retailers is about 100 quintals and poorly constructed - the floor is not cemented, easily affected by rodents, no ventilation and lack medicine to prevent weevil
The zonal administration office reported that the cooperatives  societies  are encouraged to involve in supply  of agriculture inputs  and purchase of farmers produces. There are about 17 primary  cooperatives  in the proposed irrigation development Woreda. Of the cooperatives  restructured in the Woreda, only  one cooperative is  functioning in the proposed irrigation areas- Tekeze Primary  and Multipurpose Cooperative.
According to the information obtained from the wholesalers, they  are about six wholesalers with the revolving capital that ranges between Birr 500,000 and 700,000 in the Woreda. It is also evident that the capacity of their store ranges from 40 to 60 M and constructed poor -easily affected by rodents, no ventilation and lack medicine
2
to prevent weevil. They also complained about the absence of credit, road network, telecommunication and electric supply system.
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II
Marketing Channel for crop production
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Marketing Channel for Livestock Production
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3.4  EXPORT MARKET
According to the annual report of National Bank of Ethiopia, the volume of the world trade in goods and services was expected to grow by 4.3% in 2003 compared to an increase of 0.1% and 2.9 % in 2001 and 2002, respectively, owing to global economic recovery and improved financial conditions. Exports of good and services from advanced economies; developing countries and transition are projected to rise by 3.8, 3.7 and 5.9%, respectively during 2003 vis-i-vis 2.0, 5.1 and 6.3% in 2002, respectively.
The same report depicts  that in 2002/03, following the commitment of the government to liberalize the foreign trade sector and integrate the Ethiopian economy with the rest of the world, the role of the trade in economy has expanded continuously. Accordingly, merchandise trade grew to 36.2% of GDP in 2002/03 against 31% in 2000/01 and 35.5% in 2001/02. Owing to that the country earns about 90% of its foreign exchange from agriculture. Table 3.7 shows the quantity and value of major export items during 2000-01 to 2002-03. On the basis of figures in Table 3.7 it may be concluded that the lion share of the exports were from agriculture sector.
The figures in Table 3.7 depict that the products and income generated from oil seed, pulses, and meat products, fruit and vegetables, sugar and live animals  in international markets  are rapidly  growing. It has  been observed that the proposed irrigation development areas  are favorable for the production of these crops, especially  sesame, groundnut, rice, niger seed, sugarcane and cotton. Of the mentioned products, farmers and market participants at all levels are more interested to produce and trade sesame: due to the fact that farmers are well acquainted with its production, favorable climate, guaranteed and sustained market, best price and multiple use. Farmers are also convinced to produce groundnut, sugar cane, rice and cotton due to the extension service they received.
Therefore, it is encouraging to note that the product produced in the proposed project areas, especially sesame, rice, sugar cane and ground nut and cotton would secure market and encourage farmers to sustain the products because of its sound prices. As to perishable products: fruits and vegetables a lot is expected to link markets at close proximity  and elsewhere, for which providing marketing information and encouraging private investors to invest for processing plants are critical.
3.5       CONSTRAINS FOR AGRICULTURAL OUTPUTS MARKETING
Farmers in the Woreda is recognized as price takers because of their subsistence nature; low productivity coupled with the overlap of fertilizer and seed loan collection
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period with that of the peak harvest periods; and cash need immediately after harvest for various social commitments.
The mismatch between seasons of crop production and better livestock prices has also contributed to marketing inefficiency. Besides  lack  of competition / limited market participants, in the aftermath of socialist oriented marketing and inadequate capacity, after the market liberalization, in terms  of knowledge, information and capital, especially  lack  of credit both for the producers  and traders  are major constrains for agricultural outputs marketing. In addition to these, the production of perishable products is seldom practiced and impeded with the food intake habit of the inhabitants in close vicinity. The livestock marketing is entirely illegal and suffered from poor infrastructure development. This bound to trekking with animals for more than 20 days  and has  contributed a lot to lose of animal weight and physical condition.
Table 3. 7 Quantity of major export by items, value and year
Quantity supplied/metric tons
Value of exports/thousands Birr
Commodities
Years
Years
2000/01
2001/02
2002/03
% Changes
2000/01
2001/02
2002/03
% Changes
1
2
3
4=3/1
5
6
7
8=7/5
Oil seed
55.051
76604
82801
150
269598
278738
395565
147
Hides &skin
12409
10334
10545
84
633752
474426
448003
71
Pulses
26861
109227
66154
246
72800
281409
171244
235
Meat products
870
662
1722
198
14366
9423
20781
145
Fruits & vegetables
17030
29696
25304
149
45689
80114
82118
180
Sugar
57005
58041
77000
135
68472
85106
153712
225
Live animals
214
166
607
284
1506
7132
4129
274
Source: National Bank of Ethiopia 2002/03 Annual Report
3.6  PROPOSED MITIGATIVE MEASURES
Participants  of the discussion emphasized on subsidizing the price of inputs  and reduction in interest rates (14%), especially the interest rates of medium and long term loans per annum and 10% per month- if one takes from local money lenders This point deserves serious consideration. They also recommended the shift of the prevailing loan collection months from January -February to March - April. Changing the habit of local inhabitants towards eating fruit and vegetables and encouraging private dealers at all levels are considered for sustainable supply and cost reduction. This can be achieved through creating the conditions in which healthy competition flourishes.
Encouraging traders to involve in legal livestock marketing and enhancing the market information system are advised. Furthermore, encouraging agro processing and developing infrastructure, especially road network and shelter, watering and feeding points  for animals  and building the capacity  of traders  and local government are critical to improve agricultural marketing efficiency.
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4. CONCLUSIONS AND RECOMMENDATIONS
4.1 CONCLUSIONS
The entire production is rainfed and about 42% of the production in the proposed irrigation areas-six Kebeles is cereals. It is evident that only 54 ha is cultivated using traditional agriculture (Tsebri Kebele) and the area is  characterized by  extensive agriculture. Therefore, the decision for the implementation of proposed irrigation project is considered very appropriate and timely action in view of declared policy of the government.
Market centers are places, where farmers get agricultural inputs, sell their products and buy  consumable items  and service for their life. They  also serve as  a main source of information and social interaction. Hence, the presence, proximity, pattern and frequency  of visiting the market centers  have significant role to play  for the overall development. Therefore, strengthening the prevailing markets and facilitating the establishment of additional market centers in the Woreda are essential.
It is evident that adequate and timely supply of quality inputs and easy access to
credit are critical to bring about optimum yields Therefore, encouraging and
facilitating private dealers at all marketing levels / both in soft and hard wares are considered for securing market and encouraging farmers to increase production in a sustainable manner.
Marketing also depends  upon availability  of adequate number of educated and trained personals and shortage of such personals acts as a major constraint for the improvement of planning and service delivery  and leads  to inefficient marketing. Hence, although, marketing improvement is a continuous process a rapid change in marketing structure and technique are needed to bring about a general economic development.
One way of helping farmers to get fair and reasonable prices is through increasing their capacity of selling their products at a time when it is in high demand, and for this adequate assistance in terms of credit facilities is considered necessary. The credit facilities should also be extended to traders to improve the condition in which healthy market system may flourish.
In view of the fact that irrigated agriculture facilitates the introduction of high value crops, which requires high investment, crops like sesame, cotton, ground nut. rice, chickpea and sugar cane would be encouraged. Production of these crops will generate foreign exchange and more income for the farmers through offsetting the
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high  investment  in  cultivation.  Therefore,  providing  a  vigorous  extension  service towards convincing farmers to produce high value crops is very essential.
As  regards  fruits, despite the favorable environment in the Woreda, the areas covered and productions  obtained are nil. The same is  true for other perishable products: onion, potato and tomato and as  well as  livestock  forage, alfa-alfa and green manure. Therefore, a lot is expected to boost production, link markets at close proximity  and elsewhere and encouraging private investors  so as  to invest in establishing processing plants. A vigorous extension work is also very vital to change the habit of food intake of the inhabitants towards fruits and vegetables, which will help in the creation of healthy and productive labor in and around the project areas.
4.2  RECOMMENDATIONS
The respondents  emphasized on subsidizing the price and proper scheduling of purchase and distribution of fertilizer. Therefore, at all levels, encouraging private inputs  dealers  for a sustainable supply  and cost reduction is  essential. Besides, conducting research, which helps to reverse the prevailing blanket recommendation to the local level and applying optimum level of fertilizer on the products that worth more are also recommended to maximize the benefits of the farmers.
It is  evident that organic  fertilizer that produced from plant and animal manure is cheaper than inorganic fertilizer and it also maintains the soil structures for long. It is also proven that crops  produced by  organic  fertilizer command more income than inorganic  one’s  in international market and minimizes  dependency  on inorganic fertilizer and allows a best use of livestock manure, which abundantly available in the zone. Therefore, promoting the production of organic fertilizer is advised.
With regards  to seed, intensive expansion of governmental seed multiplication centers, encouraging private seed producers, small-scale seed multiplication at the farmers' level and cutting down the prices  of seed are advised. Furthermore, promoting participatory planning and advising farmers adhere to the plan are also advised for effective and efficient use of scarce resources.
It has been learnt that ready access to credit enhances the production capacity of the producers’ trough providing agricultural inputs  and also supports  farmers  to get sound prices, through increasing their capacity of selling products at a time when it is demanded most. Therefore, it requires the maximum attention of the policy makers, to enhance the prevailing keen interest on supplying credit to the farmers.
Farmers  are  also  advised  to  avoid  loan  abuse,  participate  during  the  planning, adhere to the plan and repay the loan voluntarily on time. Given the high cost of
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borrowing in the region, farmers  who afford fertilizer and seed are advised to purchase fertilizer and seed without credit. The provision of credit for retailers, wholesalers and for those interested to engage in agricultural products processing is also recommended for healthy market system flourish.
A vigorous extension work is also very vital to change the habit of food intake of the inhabitants  towards  fruits  and vegetables, which will help in the creation of healthy and productive labor in and around the project areas. In due course, farmers diversify income and generate foreign exchange.
Empirical experiences  evidenced that the presence, proximity, pattern and frequency of visiting the market centers have significant role to play for the overall development. Therefore, strengthening and expanding the prevailing large size markets  and facilitating additional three medium and two large markets  in the Woreda are essential.
It was realized that the illegal livestock marketing, especially to Sudan demands 
more than 20 days. The livestock marketing outlets also suffered from poor
infrastructure and contributed a lot to loss of animal weight and physical condition. Encouraging traders to shift to legal livestock marketing and enhancing the market information system are advised.
The government has  facilitating irrigation structure mushrooms  throughout the country  aiming to secure food, supply  raw materials  for agro processing, substitute import and promote export and thereby  attain the intended rapid economic  growth. Therefore, networking amongst the region and elsewhere in the country  through organizing Marketing Corporation are essential to enhance the marketing effectiveness  and efficiency. Furthermore, arranging contractual agreement between the farmers  and market participants, especially  with the wholesalers  and owners  of the processing plants are also critical to shorten the payback period of the structure and generate sustain profit for the participants.
REFERENCES
Agricultural Statistic Bulletin. Central Statistic Authority, 1996
European Commission, Information Section, 2002
Food Security and Food Aid NGO Coordination Manual, European Union, 1999 National Bank of Ethiopia, Annual Report. 2002/03
National Food Security Unit of Ministry of Economic Development, Ethiopia's Rural Development Strategy (1998-2002)
Plan for Accelerated and Sustainable Development to End Poverty (2005-2010)
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Summery

Summary of Wolkayite Irrigation Feasibility Report

Introduction

The Wolkayite Irrigation Feasibility and Detail Design Project focuses on improving agricultural productivity in the Tigray National Regional State, Ethiopia. The project aims to transition from subsistence farming to market-led commercial production by enhancing access to irrigation and agricultural inputs. The study assesses the current agricultural marketing system and proposes interventions to improve farmers' livelihoods.

Agricultural Inputs

The report highlights the importance of fertilizers, improved seeds, and chemicals in boosting agricultural productivity. However, the supply of these inputs is often inadequate and untimely, leading to fluctuating consumption. The demand for inputs is expected to increase significantly post-project, necessitating efficient marketing systems and credit facilities.

Credit System

Credit is crucial for farmers to afford inputs, but access is limited. The Dedebit Micro Finance Institution is the primary credit provider, but its focus on medium and long-term loans leaves a gap for short-term credit needs. Local moneylenders charge high interest rates, further burdening farmers. The report recommends improving credit access and reducing interest rates to support farmers.

Agricultural Outputs

Crop production in Wolkayite Woreda is primarily rainfed, with sesame and sorghum being the main crops. The project aims to increase production through irrigation, with significant expected increases in crop yields. The marketing of agricultural outputs is currently inefficient, with farmers often selling their produce immediately after harvest at low prices. The report suggests improving storage, transportation, and market information systems to enhance marketing efficiency.

Export Market

The report identifies potential for exporting high-value crops like sesame, cotton, and sugar cane. However, the lack of processing plants and infrastructure hinders export potential. Encouraging private investment in agro-processing and improving market linkages are recommended to tap into international markets.

Constraints and Mitigation Measures

Key constraints include inadequate infrastructure, limited market participants, and poor access to credit. The report proposes measures such as subsidizing input prices, improving credit access, and enhancing market information systems. Additionally, promoting organic fertilizers and encouraging private sector involvement are suggested to improve agricultural productivity and marketing efficiency.

Conclusions and Recommendations

The report concludes that the Wolkayite Irrigation Project is timely and essential for improving food security and economic development in the region. Recommendations include subsidizing inputs, expanding credit facilities, improving market infrastructure, and promoting high-value crops. The project is expected to significantly increase agricultural productivity and improve farmers' livelihoods.

References

Agricultural Statistic Bulletin, Central Statistic Authority, 1996
European Commission, Information Section, 2002
Food Security and Food Aid NGO Coordination Manual, European Union, 1999
National Bank of Ethiopia, Annual Report, 2002/03
National Food Security Unit of Ministry of Economic Development, Ethiopia’s Rural Development Strategy (1998-2002)
Plan for Accelerated and Sustainable Development to End Poverty (2005-2010)