Value chain analysis of hide and skin in Dendi district, West Shoa zone of Oromia, Ethiopia

Ethiopia has made the leather and leather products value chain among the top four most promising industries in the country due to its strong backward linkages to the rural economy, and potential for poverty reduction Despite its importance, this critical strategic sector is facing many difficulties including: low quality and fluctuating output price, high and increasing price of input factors and fewer infrastructures which discourage the producers from improving the quantity and quality of skin production. Both qualitative and quantitative data was collected from randomly selected hide and skin producers’ households, input suppliers, traders, consumers and support providers. The data were analyzed using descriptive statistics such as frequency, mean, percentage, t-test and chi-square were used to summarize and compare the key variables between the two groups. Multiple linear regression model was used to analyze factors affecting farm level hide and skin supply to the market in the study area. Moreover, a multinomial logit model was applied to explain inter household variation in the choice of a specific marketing outlet. Result of the study shows that fourteen explanatory variables were hypothesized to determine the household level marketable supply of hide and skin. Among these: flock characteristics of sheep by age category, breed type, access to market information, hide and skin farming experience, sex of the household head, age of the household head affects positively and significantly. Three independent variables namely breed type of hide and skin kept, average lagged price and purpose of hide market coop members and skin keeping has been found to be highly significant in the participation decision. There are also two independent variables namely age and purpose of the hide and skin that head affect the participation decision at 1%, 5%, 10% level of significance. Therefore to address the existing gap, a clear policy and strategy for the development of leather sector should be developed by government, the district needs to organize its production base to take advantage of these opportunities, strong extension service and the trader as well as producer should use technology properly, institutionalizing the management of the leather sector will provide a sustainable approach to growth of the sector.