Open Access
American Research Journal of Business and Management
ISSN (Online): 2379-1047
DOI: 10.46568/arjbm
Determinants of Wheat Value Chain Finance: The Case of Hetosa and Lode Hetosa Districts of Arsi Zone, Oromia, Ethiopia
Abstract
This research endeavor aimed to explore the factors influencing the financing of the wheat value chain in Hetosa and
Lode Hetosa districts of Arsi zone, Oromia, Ethiopia. The specific objectives were to identify the determinants of credit
utilization among wheat producers and examine the limitations and opportunities within the wheat value chain finance
in the study area. A combination of qualitative and quantitative data from primary and secondary sources was collected.
Primary data was obtained through semi-structured questionnaires administered to 154 farmers, 4 wholesalers, 4 flour
factories, 8 retailers, 6 input suppliers, 20 consumers, and 4 bakeries. Descriptive statistics were utilized to analyze the
socio-characteristics of the respondents, as well as to identify the challenges and opportunities associated with wheat
value chain finance in the research area. A logit model was employed to assess the factors influencing the financing of the
wheat value chain in Hetosa and Lode Hetosa districts. The results of the Binary logit model revealed that variables such
as gender, educational level, wealth status of households, farm size, credit source, loan size, and interest rate significantly
influenced the credit utilization of households in wheat value chain finance. Consequently, it is recommended that
governmental and non-governmental organizations engaged in crop value chains should prioritize awareness campaigns
and provide sufficient loan sizes based on households’ demands, while maintaining reasonable interest rates. Specifically,
efforts should be made to promote education through extension services, enhance gender equity and equality in value
chain finance, diversify and expand credit sources with fair interest rates, and develop alternative collateral options.
