Inefficiency in the Market Profit Distribution Affected Date Palm Production in Yemen

Farmers in Yemen are facing many problems related to natural resource endowments, availability of water and in the marketing of their products. Despite the difficult natural circumstances the farmers produce agricultural commodities, including date palm. This product is sometimes sold in local markets and sometimes the product is sold to middlemen who transport the commodities to the markets or directly to the consumers. The value added in the chain will be distributed over the various actors, the farmers, the transportation sector and the middlemen. As a result of the actions of the middlemen only a small part of the value added in the chain is to the benefit of the farmers. The prices that are offered to the farmers do not allow compensating for the costs and this results in low profits or no profits at all to the farmers. As a result, the farmers are not able to expand their activities and are facing very low incomes and the risk of complete bankruptcy. This is a limiting factor for agricultural development and hampers modernization of the date palm trees in Yemen. Based on the feasibility study of net revenue $/ha for a farm in Wadi Hadramout during 2002 to 2006 the net revenue is negative for the farmers. In 2006 the farmer's loss is 233 $/ha. While the middlemen gains a profit of about 4,256 $/ha, for the same year which means that the net marketing margin is 244% for the middlemen profit. Marketing is frustration for small farmers in Yemen. Farmer's production increased, but their income did not.