Physical assets: Physical assets related to their business are summarized in Table 15. The survey indicates that 22% of the sample traders reported that they had a separate place of storage while 20% of them indicate that they had residence store. Especially, wholesalers (regional and urban) and urban assemblers assemble pepper from one or more markets and transport to regional or terminal markets for sale. Traders’ average storage holding capacity for such separate store was 73 quintal whereas the residence store was 5 quintals. Traders’
separate store with the largest capacity was found in terminal market especially with the average capacity of 225 quintals for urban wholesalers. The chi-square test indicates that there is a significantly difference regarding ownership of separate store at 10% significant level.
About 74% of the traders store their pepper for 50 days on average before sale. Farmer traders store for 10 days before they sale while regional sellers store their pepper for about 99 days before they sale.
Only 11% and 17% of the total sample traders had mobile phone and land line telephone, respectively. In terms of value, vehicles are clearly the most important. However, ownership of vehicles is highly concentrated with a small proportion of surveyed traders. Thus, only 7%
of traders (regional wholesalers in Alaba Kulito market) had vehicle. About 9% of sample traders (in Alaba Kulito) own bicycle. In terms of equipment, 63% of the surveyed traders own weighing scale and the rest borrow from other traders’ scale. For transporting pepper from collection point to store and market, and from store to market, only 11% and 4% of traders had hand pool cart and pack animals, respectively. Among the sample traders, 9% had shop (shade) and 7% had collecting place in the market.
Table 15. Physical assets owned by pepper traders (2004/05)
Variables Alaba
Kullito Besheno Guba Kobo Sitti Dalocha Tora Alem Gebeya
Addis Ababa
/Merkato Toital t/χ2 Separate store (yes, %) 9 2 2 2 2 4 22 10*
Separate store capacity(qt) 24 2 22 10 100 225 73 3.78
(24) (106) (98)
Residence store (yes, %) 2 7 4 4 2 20 2.778 Residence store capacity(qt) 3 5 9 10 4 5
(0.7) (7.77) (4)
Mobile telephone (yes, %) 4 7 11 0.833 Land line telephone (yes, %) 9 4 4 17
Truck (yes, %) 7 7
Bicycle (yes, %) 9 9
Weighing scale (yes, %) 2 4 4 4 4 9 9 9 9 63 Hand pool cart (yes, %) 4 4 2 11 Pack animal (yes, %) 4 4 4 Shop(shed) (yes, %) 2 2 4 9 Purchasing place (yes, %) 4 2 7
* significantly at less than 10% level, figures in parenthesis indicate standard deviation Source: survey result, 2006
Financial capital: Table 16 reveals that the average nominal value of the 2004/05 working capital of pepper traders is more than 2.5 times greater than their initial capital and initial capital varied from Nil to Birr 30000. Sampled traders, had average working capital of Birr 9691 in 2004/05. The working capital of this year varies from Nil to 100,000. The regional wholesalers had the highest average capital of Birr 3129. The χ2-test for mean difference is at 10% significance level among markets on the 2004/05 working capital.
The table shows that most of the working capital comes from internal sources and the external finance is extremely limited. About 63% of pointed out that they the sample traders used their own fund and only 22% of them was used personal loan. The rest of them took working capitals from bank and the combination of personal saving, micro finance, personal loan, gift and share funds. Table 15 suggests again that the loan repayment duration was determined in month, weekly and monthly basis. However 13% of debtors repay their loan when they have money at hand and the other 7% of the sample trader are limited to repay within a month and week, individually. Only 4% of the sample trader could pay the loan they paid daily basis.
Variables Alaba
Kullito Besheno Guba Kobo Sitti Dalocha Tora Alem Gebeya
Maximum 100000 15000 2500 700 4600 60000 25000 7000 10000 100000
own 17 4 4 4 7 9 4 13 63 45.1
Table 16 . Financial capital of pepper traders
* significantly at less than 10% level Source: survey result , 2006
Social capital: Social capital is summarized in Table 17. It is broadly defined as a ‘stock’ of trust resulting from close functional or emotional attachment to a group or society that facilitates the provision of public goods (Fukuyama 1995). With respect to previous occupation prior to becoming involved with pepper trade, one fourth of the sample traders previously worked in different trading activities, and three fourth of them works in non-trading activities. Previous trade experience is nearly in non-agricultural trade and agricultural trade. In terms of parental background, most of the traders came from a non-trading family background. The table shows that about 61% of traders had farmer father. The obtained data indicates that 24% of the sample traders were from trading pepper, of pepper trader fathers most of them found in Addis Ababa market. The rest are engaged in other different trading activities. According to the data, traders’ mothers have different occupations. However, 80%
of them were housewives and 15% were involved in pepper trade. Most of pepper trader mothers are found in the terminal market.
Suppliers and buyers are from different ethnic and religious groups. About 39% of the sample traders are not ethnically nor religiously related, 17% met socially, and the rest had the combination of relation in religion, social, close relative, no relation and have ethnic relation with their suppliers. This indicates that the existing relationships are based on business trust rather than ethnic, social or family relationships. This is due to the fact that most of the suppliers in regional markets were farmers. About 59% of sample traders are related to their buyers as client dembegna. And 22% of the sampled traders had no relationship with their buyers, and only 2% were close relatives. The rest are the combination of relative, exclusive relations and social relations. This indicates that these relationships are based on client.
Traders often deal with regular suppliers and buyers. Among the sample traders, 76% of traders have an average of 9 regular buyers in 2004/05. Addis Ababa market traders have the highest number of regular buyers (23 on average). And 28% of sample traders have an average of 6 regular suppliers. Therefore, the transactions with suppliers are conducted through non-regulars whereas transaction with buyers is through regulars.
Indicators Alaba
Kullito Besheno Guba Kobo Sitti Dalocha Tora Alem
Table 17. Social capital of pepper traders (2004/05) (percentage of traders)
Figures in the parenthesis indicates that standard deviation
The data in Table 17 shows that pepper traders use different methods to approach their supplier and buyers. About 30% and 48% of them attract their suppliers by paying better price than others and fair scaling, respectively. The rest of them use both methods to approach their supplier. Traders express their loyalty to their buyers by the quality of their product. About 59% of sample traders used this method to attract their buyers. The rest used charge better price than others, fair scaling and other methods used to attract their buyers.
On average traders could speak about 3 languages which help them to communicate with other traders and farmers. However Siltigha language is spoken next to Amharic. Even in Alba special woreda markets, Siltigna is more popular and all regional wholesalers came from Silie ethnic group. Pepper traders do not seem to be organized into any formal groups or associations that may play a role in the marketing process by providing various services and price formation. No one of the sample traders reported being a member of a formal association and only 2% of them have informal credit societies called Ikub.
Table 18. Manpower of pepper traders Alaba
Kullito Besheno Sitti Dalocha Tora Alem
Gebeya Addis Ababa
/Merkato Total
Employees (Yes, %) 20 4 2 9 7 2 7 50
No. of family 4 2 4 4 1 3 3.5
(4) (2) (2) (4) (3)
No. of non-family 3 2 1 2 4 3 3
(1) (1) (2) (1)
Total employee 5 2 4 6 4 3 4
(3) (1) (1) (3) (4) (3)
Figures in the parenthesis indicates standard deviation Source: survey result, 2006
Trader’s manpower: Table 18 indicates that apart from the trader himself or herself, the traders employ assistants to help them carry out their business. About 50% of the sample traders have average employed on a total of 4 individuals. The average number of family and
non family employees is almost similar. This simply indicates that pepper trade is non family based business.