Governance structures and incentives in the wheat value chain in Ethiopia

Abstract

Empirical studies on the effects of governance structures on incentives have still received little attention in the wheat value chain research of developing countries. The purpose of this paper is to investigate the effects of governance structures on actors’ incentives in different functional nodes of the wheat value chain. This study used personal interviews to collect primary data from input suppliers, wheat producers, wholesalers, wheat processors and co-operatives. Mixed sampling techniques (i.e. random, census and purposive) were applied to select sampling units. Descriptive statistics and the ordered logit model were used to analyse the data. This paper found that governance structures, opportunistic behaviour, asymmetric information and trust influence actors’ incentives in each functional node of the wheat value chain. Specifically, extension services, governance structures, power relations and price information have significant and positive effects on producers’ price incentives. The study provides pioneering evidence of the effects of governance structures on incentives in each functional node of the value chain. The study adds new knowledge to the existing empirical knowledge. The results recommend government to use effective policy interventions to reduce opportunistic behaviours and asymmetric information, and to adopt incentive strategies to encourage investment, and increase productivity and profitability.