Accepted 30th July, 2014
This study was designed to analyze Coffee Market Structure and Conduct in Bench Maji zone with the specific objectives of coffee market structure and conduct and coffee marketing in Bench Maji Zone, SNNPRs of Ethiopia. A two stage random sampling techniques was used to select 15 Pas and 150 coffee growers from the two major coffee producing woredas of the zone, while a purposive sampling technique was employed to select 40 traders and seven processors. Both primary and secondary data were used for this study. Descriptive statistics, and Cnduct- structure and performance approach were employed to analyze the data. The analysis of market structure showed that strongly oligopolistic. The four firms concentration ratio for wholesalers were 70% and 84.77% for Sheko and South Bench woredas respectively, while the concentration ratio for coffee collectors were 68.8% and 60.33% for both woredas in the same order.. About 85% and 51% of sampled producers do not have reliable information about auction market and local market prices, respectively. Analysis of coffee market entry barriers indicates that shortage of capital, licensing only for specific business activities, and quality of coffee and presence of illegal traders were the major entry barriers into coffee trade for most traders. About 68% of traders reported shortage of capital. Regarding the conduct of coffee market, pricing strategy of the traders indicates that 55% of the traders set the purchase price. Purchasing strategy of traders shows that about 68% of traders purchase by themselves and 18% purchase by using brokers. Regarding selling strategy, 90% of wholesalers reported that they sell coffee to the auction market through their agents at Addis Ababa. However, coffee collectors sell purchased coffee by themselves to wholesalers.
Keywords: Coffee, Conduct, market structure, producers, traders