Determinants of the decision to participate in the marketing of goats by rural households in Ethiopia

The study aimed to identify factors that affect the decision and extent of market participation. Data were collected from 357 households and 1030 goats that are marketed. Focus group discussion was conducted to point out households marketing strategies. The study attempted to see both supply and demand side issues in different angles. Since the likelihood ratio test of no selection-biasness indicates selectivity of households marketing behavior, ordered tobit selection model was employed to analyze determinants of market participation decision and the extent of participation. To this effect, the ordered probit and multiple linear model were estimated simultaneously using Full information maximum likelihood estimation. All factors that affect market participation decision except distance to market, goat owned, and price of goat determined the extent of participation of net buyers, autarkic and net sellers. Transaction costs had indispensable role on why commercialization of goat is limited. As from the main objective of goat keepers observed their goat production was not designed in a manner to promote commercialization of goat. They used goat as a sort of walking bank. Hedonic price model was employed to analyze consumer’s preference by fitting the revealed data. Implicit price analysis using ordinary least square estimation resulted estimates with standard errors that are heteroscedastic. As a result the study employed alternative robust estimation methods and based on Akaike, Bayesian and log-likelihood criteria of model selection, the modified structural heteroscedastic-in-mean is more appropriate for examining implicit price function. Goat markets were in-competitive. The common animal attributes had an impact on price of goat. However, animal attributes demanded by local and export market were different. Occasion had generally significant influence on price of goat. Goat marketed during festive periods in general and festive period that have an international demand in particular commands high price. Using revealed data, it was difficult to capture the influence of breed on price of goat. Empirical results regressed using those models as well as qualitative analysis of focus group discussion was consistent especially regarding marketing behavior of households. That is the negative sign of price risk premium shows that net sellers are not responsive to the change in price implying sellers that opt to sell are somewhat more desperate for cash. This is also in line with marketing strategies of households. The study mainly recommended improving access to information to promote both market participation and market orientation