Wood Value Chain and Market analysis in Chefasine

Deep observation of woodlots in the Kebele (© Redat Aysa)

I am Redat Aysa Choramo from Ethiopia. I researched on wood value chain and market chain in Chefasine Kebele, Hawassa Zuria district , SNNP-Region, Ethiopia. This research was done under WoodCluster project sponsored by German government under DAAD as a part of fulfillment for completion of my Masters of Science degree in Production Forestry at Wondo Genet College of Forestry and Natural Resources, Hawassa University.

In my MSc thesis, I wanted to assess wood value chain and market chain in Chefasine, identifying all actors within the value chain, their activities, value addition activities, production flow as well as transaction costs and profitability of the actors at each node along the value chain. During the preparation of my research concept I realized that my research could be integrated with the WoodCluster project. The research results could simplify the planning interventions pertaining wood value chain and market chain in Ethiopia. The Chefasine Kebele in Hawassa Zuria district was selected as the project study site.  But I selected the study villages based on time plan and site selection criteria formulated due to project objectives.

My study focuses on the huge gap between the supply and demand for wood products, which results from large-scale forest conversion and degradation as well as from population increment. The study had analyzed the value chain of wood, economic gain that could be extracted from value chain network, opportunities and constraints that hinder the profits of the farmers and the overall situations related to raw materials deliveries under study area.
So this study shed light on required efforts to be exerted so as to reverse the scenarios (existing problems in value chain). The findings of the study had provided a holistic picture of existing challenges within the value chain and market chain of wood in the study area.

With support from my supervisor and my fellow MSc student as the members of WoodCluster team in Ethiopia, we travelled to Chefasine in the end of December 2017 to do reconnaissance survey for study village’s selection. After introduction processes in the district authorities as well as villages for the project, we started to visit the village. We conducted Key Informants Interviews (KIIs) and Focus Group Discussions (FGDs). The FGDs collected the prior data, which were prerequisite for my study sites selection, hence the study site were selected based on the reconnaissance survey information’s and the target population or respondents were randomly selected. Having selected the study villages and respondents for the study, I also managed to get a field assistant. Thereafter, I started my household surveys and  finalize data collection process within the planned time. Although there were some challenges such as rain and some interviewers were willing to be interviewed in the afternoon time after they have come back from their farms.

Interviewing tree farmers (©Redat Aysa)

Data collection activities were conducted successfully with almost 99% of respondents who were hospitable and willing to provide their information for the research.
Some of the respondents reported, that they have been visited by researchers several times, carrying out data collection and said that the researches are for their own benefits.
Respondents did not get any feedback to their communities and do not see any results coming from the research. I assured them, that the data collection was for study purposes and other interventions pertaining smallholders farming activities in wood value chain and market chain.

After data collection at the field I went back to Hawassa University, Wondo Genet College of Forestry and Natural Resources, where I did the data analysis and research report. Furthermore my supervisor and some MSc students gave me a support. The most important experiences I got from the field, is the great chance to talk with local value chain stakeholders. Such as tree growers, retailers, middlemen, wholesalers, brokers, laborers, and transporters whose gave me a great opportunity to contribute potential solutions, pertaining smallholder plantation farming in woodlots and value chain in real-world problems, through my Thesis.

The challenge I faced during the study was a lack of record, kept by chain actors. Farmers and traders were not interesting to discuss for especially financial related topics. Fear of negative consequences like land ownership, tax, and related state costs hinders the farmers not to freely discuss topics related to annual income. There was a language barrier between researcher and the farmers, whereby a third party has to translate. Despite the above challenges, the data collected was reliable and adequate to address the objectives set in the study.

The results of the study show that the value chain of wood products (especially pole and fuel wood) originating from Chefasine kebele connects and engages various direct and indirect actors. Tree growers: Tree growers are those households or farmers who are involve in tree production activities. Transporters: Transportation involves the transfer of Eucalyptus poles and fuel wood from plantation area (tree grower) to the consumer and market (sell) area. Middlemen: Middlemen are important actors of pole and fuel wood business in Chefasine.
Their main function is buying tree, produced from tree growers, and delivering the harvested, disbranched and split wood mainly to Hawassa pole wholesalers and retailers. Sometimes to Tulla pole wholesalers, retailers and consumers as well. Tulla pole wholesalers and retailers: These are actors of pole value chain, located in Tulla town, from Chefasine to Tulla town. Hawassa pole wholesalers and retailers: They are actors, living in Hawassa, focussing on pole trading. The main function of these actors is storing, selling and assorting of pole that they received from the middlemen. Large fuel wood wholesalers and retailers: These actors are common fuel wood agents, whose primary function is distributing and vending fuel wood to small fuel wood retailers and consumers. Small retailers of fuel wood (Flyers): These are another familiar actors of fuel wood value chain, concentrating on the Transport, Distribution and Sell of fuel wood to the urban consumers by moving around the town. Laborers: Laborers are a critical component in most of the stages value chains of pole and fuel wood production and marketing. Brokers: These actors are farmers lived in Chefasine kebele. They intervened in the Sale of tree woodlots, by connecting tree growers, traders (middlemen, wholesaler and retailer) and consumers. Consumers: According to the focus group discussion, consumers of pole and fuel wood includes local (village) consumers and urban consumers (constructors, carpenters and service providers).

Pole and fuel wood in Tula town (© Redat Aysa)

I could conclude from my study, that wood production and marketing were financially profitable for producers, middlemen, Tulla/Hawassa wholesalers and retailers of pole and middlemen of fuel wood. However, the benefit distribution was vertically skewed for poles, implied that tree growers received less income in spite of their efforts and role in the production. The share of middlemen was relatively high compared to the other actors. The commercialisation margin shows a distribution increase towards the downstream actors for pole. In addition middlemen for fuel wood have received higher commercialisation margin (74%), than large fuel wood wholesalers and small fuel wood retailers (8% and 12%), respectively.

The value chain actors used different mechanisms to get access and control over the wood products and obtain benefit from the business of pole and fuel wood. These mechanisms include: access to market information, capital, finance, labour opportunities, relationship buildings, license and vending area among others. Tree growers had received lower profit compared with traders. However it is known that, under the present condition the downstream actors have a higher level of costs for both pole and fuel wood, except the middlemen in fuel wood. Value addition as the primary processing at the tree grower level is low, due to a lack of capital, a lack of knowledge and market information or license and vending area among others. Improving the processing activity at the tree growers’ level, would be a high potential for increasing the benefits of the tree growers. For example, if the tree growers were organised as cooperatives for selling and market information sharing or were able to find support like, access to extension services, credit facilities and training for their plantation, their income would be increased tremendously.

I would like to give my genuine thanks to my supervisor Prof. Tsegaye Bekele and Prof. Dr. Jürgen Pretzsch for their encouragement and helps. Furthermore for their advices during my concept note preparation, study sites selection, field work, research report writing and WoodCluster project for research activities funding. May Almighty God bless you all.
In addition my grateful thanks go to all district officers, Kebele Executive Officers and Agricultural agents who in one way or another make this research possible. Finally thanks to my family, my fellow MSc student Mr Bonsa Fantale, and all my colleagues and friends at Hawassa University, Wondo Genet College of Forestry and Natural Resources for their moral supports and encouragement which made this research successful.

By Redat Aysa Choramo

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