2. INTRODUCTION
1.1. Background of the Study
Globalization changed the economic environment all across
the world (Shalender 2013).
As markets and competition become globalized, foreign
markets have become increasingly viable for growth-
oriented firms (O’Cass & Julian 2003).
Export marketing is the most popular mechanism by which
firms engage with international markets (Morgan et al.
2011).
Export market development is becoming more a matter of
survival rather than a matter of choice for many firms in the
world (O’Cass and Julian 2003).
3. …Cont’d
Trade in fruit and vegetable products has been among the
most dynamic areas of international agricultural trade,
stimulated by rising incomes and growing consumer interest
in product variety, freshness, convenience, and year-round
availability.
For developing countries, trade in these products has been
attractive in the face of highly volatile or declining long-term
trends in the prices for many traditional export products.
Although many developing-country suppliers have entered
the field, relatively few have achieved success, reflecting the
fact that the industry is highly competitive and rapidly
changing (Diop and Jaffee 2005).
4. …Cont’d
Exporting activity is important for the nation and the
firm.
For the nation, it contributes for the economic development;
increases foreign exchange; improves standard of living.
Ethiopia earned 52 million USD in 2012/13 budget year from
vegetable and fruit export which was only 9.6 million USD in
2002/03 (EHDA 2013).
At the firm level, exporting provides an opportunity for firms
to become less dependent on the domestic market;
exploration of economies of scale; reduces production costs,
stabilizing cyclical demand, reaching new markets and
gaining experience for other forms of internationalization.
5. …Cont’d
Exporting is constrained by many problems. Different
authors have identified and classified export problems
into different categories. However, the study has
considered the classification of Tesfom and Lutz (2006)
which is into internal and external problems.
Internal problems are constraints associated with
organizational resources/capabilities and company
approach to export business (Vohra 2008).
External problems are those barriers which are rooted in
the external environment and the firm itself has no
control over the consequences of such problems (Tesfom
and Lutz 2006)
6. 1.2. Statement of the Problem
Even though exporting is important for both the nation and
the exporting firm, it is constrained by many problems. In
addition, the Ethiopian vegetable and fruit export is not
consistent.
Authors identified export challenges in different ways.
(Rehber and Turhan 2002; Ghauri et al. 2001; Tesfom and
Lutz 2006; Tesfom et al. 2004) identified the challenges as
internal and external.
Karelakis (2008) classified export problems into four groups:
‘internal-domestic’; ‘internal-foreign’; ‘external-domestic’;
and ‘external-foreign’.
7. …Cont’d
Clarke (2013) generated list of export impediments and
grouped them into ‘generic’, ‘product specific’ and ‘market
specific’.
Studies provide evidence about Ethiopian potential in the
production and export of vegetables and fruit.
The trend of Ethiopian vegetable and fruit export lacks
consistency and characterized by a slight fluctuation year on
year basis (Digafe 2013).
There is a deficiency in identifying export challenges of
Ethiopian vegetable and fruit export. They have not yet been
empirically explored.
What are the major export marketing challenges?
8. 1.3. Research Questions
What is the status of Ethiopian vegetable and fruit
export in terms exported volume and export sales?
What are the major export challenges the vegetable
and fruit commercial growers facing?
9. 1.4. Objectives
General Objective:
To assess export marketing challenges of Ethiopian
vegetable and fruit commercial growers.
Specific Objectives:-
To assess the status of the vegetable and fruit export
commercial growers in terms of export volume and
export sales, and
To identify the major export challenges of vegetable
and fruit commercial growers.
10. 1.5. Significance of the Study
The study will:
add new knowledge to the existing literature and it
will be a stepping stone for academicians to carry
out further studies on the issue.
benefit existing growers and exporters to craft their
marketing strategy based on the identified
challenges and enhance their competitive position in
the international market.
encourage non-exporting growers to engage
themselves in the export.
be an input for policy makers to assess and intensify
policies and regulations of the country in order to
enhance the performance of the sector.
11. 1.6. Scope of the Study
The study has focused on assessing export problems of
commercial vegetable and fruit growers and exporters,
who are exporting to the Middle East and European
countries.
The study has covered 20 vegetable and fruit exporting
commercial growers situated in Hawassa, Koka, Meki,
Ziway, Debrezeit, Holeta, Sululta,Sendafa and Sebeta.
In addition, the study has covered 8 major stakeholders
EHDA, EHPEA, DBE, NBE, ESLSE, EAL, ERCA, and
EIA) in the sector.
The data was collected from May 20, 2014 to June 5,
2014.
13. 2. RESEARCH METHODOLOGY
Item Description
Research
design
- Mixed approach (descriptive & exploratory)
- Concurrent embedded/nested
Population and
sampling
- Census of 20 active vegetable and fruit
commercial growers &
- 8 stakeholders
Data sources
and collection
method
- Primary (Interview & questionnaire)
- Secondary (Export data, Journal articles,
websites)
Method of data
analysis
- Quantitative & qualitative analysis techniques
- Using SPSS & Excel
- Descriptive statistics
Data reliability
and validity
-Cronbach’s alpha = 0.849 (40 items)
-Content validity/face validity
14. …Cont’d
Content validity (face validity) has been selected to
assess the validity of the data.
Since the study covered all active vegetable and
fruit commercial growers, it is representative of the
population. During the pilot test, there were 47
Likert-scale questions but after discussing with the
selected 5 respondents, 7 of the questions were not
relevant and discarded. Therefore, the content
validity of the data is good.
15. 3. DATA PRESENTATION AND ANALYSIS
3.1. Background Information
Companies:
Export Experience Years:-
11 (55%) <5 years; and 9 (45%) >5 years.
Ownership:-
13 (65%) FDI; 5 (25%) local investors; and 2 (10%) joint
venture.
Respondents:
Sex:-
17 (85%) were male; and 3 (15%) were female.
Position:-
1 (5%) was a general manager; 10 (50%) farm managers; 4
(20%) production managers; 3 (15%) marketing managers; and
2 (10%) supervisors.
16. 3.2. Ethiopian Vegetable and Fruit Export
Total Ethiopian Vegetable and Fruit Export (2008/09-2012/13
Source: EHDA, 2014.
2008/09 2009/10 2010/11 2011/12 2012/13
Qty (in 000s ton) 39.83 66.41 93.01 123.60 137.66
Value (in mill USD) 17.41 31.86 40.00 53.15 52.63
-
20.00
40.00
60.00
80.00
100.00
120.00
140.00
160.00
Qtyin'000ston&Valueinmill.USD
Year
Qty (in 000s ton) Value (in mill USD)
17. No Market Destination % Share in Quantity % Share in Value
1 Somalia 46.3 37.2
2 Djibouti 44.0 26.4
3 Netherlands 3.0 17.1
4 United Arab Emirates 3.3 9.3
5 Sudan 1.8 1.8
6 United Kingdom 0.2 1.8
7 Belgium 0.4 1.8
8 Yemen 0.3 1.0
9 Saudi Arabia 0.4 0.8
10 Russian Federation 0.1 0.5
Top Ten Destination Markets for Ethiopian Vegetable and Fruit (2012/13)
Source: EHDA, 2014
19. Year
% Share of
Quantity
% Share of
Value
2008/09 5.9 25.5
2009/10 4.4 14.0
2010/11 4.2 15.1
2011/12 5.3 17.5
2012/13 4.7 14.3
Percentage Share of Commercial Growers from Total Ethiopian
Vegetable and Fruit Export
Source: EHDA, 2014
20. 4.3. Export Challenges of Ethiopian Vegetable and
Fruit Commercial Growers
The collected five point Likert-scale questionnaires were
analyzed based on the perception of commercial growers.
(Above 3.5 = most important; 2.5 – 3.5 = moderately
important; & Less than 2.5 = least important)
According to Tesfom and Lutz (2006), export challenges
are classified in to two major categories. These are internal
and external problems.
most of the companies are affected by the external barriers
(with a mean of 3.20) than the internal barriers (with a
mean of 3.07).
The total average of all the problems is 3.13; which is rated
as moderately important by commercial growers.
21. Response to the Importance of Exporting Problems by Category
No Items N Mean
Total average of barriers 20 3.13
1 Internal barriers 20 3.07
1.1 Company barriers 20 3.02
1.1.1 Marketing knowledge barriers 20 2.81
1.1.2 Financial barriers 20 3.10
1.1.3 Human resource barriers 20 3.40
1.2 Product barriers 20 3.12
1.2.1 Quality barriers 20 3.55
1.2.2 Technical adaptation barriers 20 2.91
2 External barriers 20 3.20
2.1 Industry export barriers 20 3.37
2.1.1 Industry structure 20 3.19
2.1.2 Competition 20 3.73
2.2 Export market barriers 20 2.74
2.2.1 Customer barriers 20 2.20
2.2.2 Procedural barriers 20 3.47
2.3 Macro environment barriers 20 3.49
2.3.1 Direct export barriers 20 3.65
2.3.2 Indirect export barriers 20 3.45
22. Growers' Perception Depending on Exporting Experience
Exporting
experience in
years
Compa
ny
barriers
Product
barriers
Internal
barriers
(tot. av)
Industry
barriers
Export
market
barriers
Macro
env’tal
barriers
External
barriers
(tot. av.)
Average
of
barriers
Below
5
years
Mean 3.13 3.26 3.19 3.39 2.78 3.56 3.24 3.22
N 11 11 11 11 11 11 11 11
% 55.0% 55.0% 55.0% 55.0% 55.0% 55.0% 55.0% 55.0%
Above
5
years
Mean 2.88 2.95 2.91 3.33 2.70 3.42 3.15 3.03
N 9 9 9 9 9 9 9 9
% 45.0% 45.0% 45.0% 45.0% 45.0% 45.0% 45.0% 45.0%
Total
Mean 3.01 3.12 3.07 3.37 2.74 3.49 3.20 3.13
N 20 20 20 20 20 20 20 20
% 100.0% 100.0% 100.0% 100.0% 100.0% 100.0% 100.0% 100.0%
23. Companies' Perception Depending on ownership
Ownership Compan
y
barriers
Produc
t
barrier
s
Internal
barriers
Industr
y
barrier
s
Export
market
barrier
s
Macro
env’tal
barrier
s
Extern
al
barrier
s
Average
of
barriers
Foreig
n
Mean 2.85 3.04 2.94 3.17 2.76 3.63 3.19 3.07
N 13 13 13 13 13 13 13 13
% 65.0% 65.0% 65.0% 65.0% 65.0% 65.0% 65.0% 65.0%
Local
Mean 3.92 3.47 3.69 4.00 2.83 3.27 3.37 3.53
N 5 5 5 5 5 5 5 5
% 25.0% 25.0% 25.0% 25.0% 25.0% 25.0% 25.0% 25.0%
Joint
ventur
e
Mean 1.85 2.78 2.31 3.08 2.43 3.17 2.89 2.60
N 2 2 2 2 2 2 2 2
% 10.0% 10.0% 10.0% 10.0% 10.0% 10.0% 10.0% 10.0%
Total
Mean 3.01 3.12 3.07 3.37 2.74 3.49 3.20 3.13
N 20 20 20 20 20 20 20 20
% 100.0% 100.0% 100.0% 100.0% 100.0% 100.0% 100.0% 100.0%
24. …Cont’d
The export challenges raised by the stakeholders and the
selected commercial growers through interview:
Management commitment problem of growers.
Lack of technological advancement and awareness; this
problem is especially witnessed on Ethiopian owned
companies.
Financial problems to run the farm operations smoothly
which in turn will affect the production and quality of the
products.
Lack of accessible land and sea transport system in the
country.
25. …Cont’d
Low awareness on the sensitivity of the sector among
stakeholders.
Seasonality of Ethiopian vegetable and fruit supply.
Shortage of cargo freighters to transport the produces to
the destination market.
Shortage of infrastructure.
Government organizations’ bureaucracy and lack of work
efficiency.
Different food safety certification needs from different
importers.
26. …Cont’d
Lack of potential markets. Locally owned companies do
not have the habit of searching new potential markets.
Inconsistent demand from importers (customers). The
product specification demand from importers varies from
time to time.
World economic and political crisis.
Shortage of inputs and expensive to procure.
27. SUMMARY, CONCLUSION AND
RECOMMENDATIONS
4.1. Summary of Findings
The export volume and value of the Ethiopian vegetable
and fruit commercial growers was inconsistent and
fluctuating. It dropped to 6.46 thousand tons and 7.53
million USD in 2012/13 suddenly when compared with
the 2011/12 performance (6.59 thousand tons and 9.32
million USD).
28. …Con’d
Most important problems:-
Quality barriers;
Procedural barriers;
Competition;
Macro environmental barriers (direct & indirect)
Moderately important problems:-
Company barriers (marketing knowledge barriers, financial
barriers, and human resource barriers);
Technical adaptation barriers;
Industry structure.
Least important problems:-
Customer barriers
29. …Cont’d
Problems by years of export experience:-
Internal problems: < 5 years = 3.19;
>5 years = 2.91.
External problems: <5 years = 3.24;
>5 years = 3.15.
Total average of problems: <5 years = 3.22;
>5 years = 3.03.
30. …Cont’d
Problems by type of ownership:-
Internal problems: Local growers = 3.69; foreign
growers = 2.94; and joint ventures = 2.31.
External problems: local = 3.37; foreign = 3.19; and
joint venture = 2.89. (moderately important)
All problems average: local = 3.53; foreign = 3.07;
joint venture = 2.60.
31. 4.2. Conclusion
Increasing exports is important factor for the development
and growth in developing countries. Exporters are
contributors to the exports of the country which in turn raises
the standard of living of the people of the country.
Even though exporting companies play vital role for the
economic development of the country, they are constrained
by several export problems.
This study was carried out to assess the status of the
Ethiopian vegetable and fruit commercial growers in terms
of export volume and export sales; and to identify their
export challenges.
32. …Cont’d
A 5 years trend of export volume and sales has been taken and
it shows increment in the first 4 years but dropped down in the
5th year. This has shown that the export status of the commercial
growers lacks consistency.
Both internal and external barriers are moderately important
export challenges for the growers.
Less experienced growers are highly affected than that of the
more experienced growers.
The severity of the export challenges is more for local growers
than foreign and joint ventures.
Internal problems (company barriers and product barriers)
highly affected local growers whereas foreign growers are
moderately affected.
33. 4.3. Recommendations
Commercial growers to identify their major challenges and
incorporate in their export marketing strategy so that they
will be ready to tackle these challenges and exploit the
opportunities.
Create enabling policy environment and improve the
service delivery reliability by involving the growers in
meetings and workshops so that they can forward their
thoughts.
34. …Cont’d
Practice fair and competitive air freight cost by carrying
out studies from the neighboring countries like Kenya
and Uganda so as to enhance the development of the
sector and as well as for the economic development of
the country. In addition, increase the cargo freighters to
tackle the cargo space problems.
Create new competitive input suppliers in the industry by
offering incentives from the government.
35. …Cont’d
The government has to especially support locally owned
growers in the area of market exploration and technical
capacity building to enhance their involvement in the
international market.
International market access and international market
opportunity can be facilitated by market study,
participating in international exhibitions, exploring
market through the Ethiopian embassies, etc…
36. …Cont’d
Stakeholders of the sector have to work hand in hand to
support the growers especially in the area of infrastructure,
market facilitation, etc…
Local investors has to recruit skilled manpower that has the
skill and knowledge in the production and marketing
process.
Growers to grow the products inside greenhouses so as to
produce more during the rainy season. In doing so, the
involvement of the government is needed especially in
facilitating long-term loans to invest in greenhouses.