Analysis of the Cassava Value Chains and Economic Implications on Actors in Southern Ghana
Currently, the cassava crop is transiting from a staple food commodity into an industrial crop for the production of starch and ethanol and this suggests probable changes in marketing arrangements and conditions. The present study analysed the cassava chains and the economic implications on actors in Southern Ghana. The value chain actors interviewed include cassava farmers and small-scale (gari and agbelima) processors who were selected randomly and large-scale cassava processors, purposively selected from the Volta, Eastern and Central regions of Ghana. The field survey was conducted in October and November 2016. The study describes a value chain map for cassava using an organogram and uses percentage distribution of respondents to describe the nature of trust, type of governance structure, and upgrading along the value chain. It used the Herfindahl-Hirschman Index (HHI) to assess market concentration. The value-added and its distribution, return to labour in the value chain and competitiveness of value-added activities were analysed. The analysis on gross and net value added used the production and income account approach. Measures of competitiveness employed in the study include the estimation of social and private profit using the Policy Analysis Matrix. From the Policy Analysis Matrix the domestic resource cost coefficient, private cost ratio, private value added ratio, among other were estimated. The results obtained for level of trust relationships along the cassava value chains were mixed. Generally, the findings suggest that a captive market and a market governance structures exist between cassava farmers and their buyers, small-scale (gari and agbelima) processors and their buyers respectively. Modular governance exists between large-scale cassava processors and their buyers. There is low process and product upgrading among smallholder farmers, while the process upgrading by large-scale cassava processors is high. The estimates of the HHI for cassava farmers, small-scale processors are low, suggesting low market power and thus, inability of a cassava farmer and small-scale processors to influence the price of their respective products. However, estimate of the HHI for large-scale (high quality cassava flour, cassava starch and cake) processors is very high, suggesting their market is concentrated. Analysis of the distribution of gross value-added in the cassava value chains shows that the production of high quality cassava flour generates the highest gross value-added of 36%. In addition, high quality cassava flour generates the highest profit of 58%. It came out from the study that Southern Ghana is efficient in the production of cassava, agbelima, gari, high quality cassava flour and cassava starch. On average, a domestic resource cost coefficient of 0.110 is obtained. The study recommends, among others that policy to increase production should focus on improving the capacity of small- scale processors who represent a less concentrated segment of the value chain and a major market for smallholder farmers. Improvement of the capacity of farmers and small- scale processors is also necessary to ensure process, product and functional upgrading. Farmers and small-scale processors should be given technical and credit support, which could help to modernize the cassava value chains in the long term. Cassava and its value added activities should become an important tool in poverty reduction and food security in Ghana. The study further recommends that value chain actors are incentivized and protected.
Agriculture is important to the development of Ghana, and is particularly crucial for reducing poverty (Cervantes-Godoy and Dewbre, 2010). While agriculture contributes 52% of the workforce in Ghana, the service and industry sectors contribute 29% and 19% respectively (Ghana Statistical Service, 2013). The manufacturing sector depends on the agricultural sector for raw materials in the production process, with usage of agricultural raw material by the manufacturing sector going beyond the agri-food and fibre sector to the ethanol, biodiesel and polymers sectors (Boehlje and Bröring, 2011). In the Food and Agriculture Sector Development Policy (FASDEP II), Ghana’s strategies to generate economic activities from agriculture include, increased access to market, value chain development, improved competitiveness of production and institutional support (Ministry of Food and Agriculture, 2007).
The linkage of the agricultural sector with industry has numerous advantages. The advantages are in terms of increasing employment, income and thus decreasing poverty (FAO and UNIDO, 2009). This is shown by the growing trend of industrialization using agro-based materials. They note that it has led to a transformation of a predominantly informal agricultural sector to a formal sector in some developing countries.
Major crops in the agricultural sector in Ghana include roots and tubers such as cassava, yam and cocoyam. The root and tubers contribute 24% of agricultural share of gross domestic product. Export crops such as cocoa, oil palm, fruits, vegetables, rubber and cotton contribute 22% to agricultural share of gross domestic product. The contribution
of cereals to agricultural share of gross domestic product is 10%, while, other staple crops contribute 21% to agriculture share of gross domestic product (Diao, 2010) .
Cassava an important crop in Ghana grows well under most soil conditions. Total crop production for cassava is about 50% of all roots and tuber production in Ghana. Smallholder farmers grow the crop. Production of cassava on small scale does not typically involve the use of agrochemicals. Farmers usually adopt low technology from production to processing. Typical production areas in Ghana are the Central, Eastern, Brong Ahafo, Volta, and Ashanti regions ( Kleih, Phillips, Wordey and Komlaga, 2013) .
Ghana is the sixth largest producer of cassava in the world (FAO, 2013). The productivity of the crop is still lower than the expected level of 28 metric tonnes per hectare. The Food and Agriculture Organizations’ report for 2013 states that Ghana’s productivity is about 15 metric tonnes per hectare in spite of the introduction of improved and diseased tolerant varieties. The crop is disease tolerant, drought resistant and low input dependent. Cultivation using stem cutting gives the crop an added advantage. Production failure from cassava is relatively low (Kariuki, Ochugboju and Kottoh, 2013). They suggest that cassava has broad soil suitability; where most cereal production fails, cassava production will thrive. In addition, the crop can be harvested all year round.
Cassava produced in Ghana is mainly used for food consumption. Food consumption constitutes 95% of cassava produced by smallholder farmers. This includes its use in the preparation of local food such as fufu, gari, agbelima and kokonte. Production of high quality flour and starch contributes to small volumes of domestically processed cassava in Ghana (Naziri et al., 2014).
Ghana’s cassava production, as indicated in Figure 1.1 shows an increasing trend over the years. In 2004 total production of cassava was 9,739,000 tonnes; this increased by 4.92% to 10,218,000 million tonnes in 2007. In 2010, cassava production increased from 10,
218,000 tonnes obtained in 2007 by 32.16% to 13,504,000 tonnes. The increasing trend
continued from 13,504,000 tonnes achieved in 2010 by 18.41% to reach 15,990,000 tonnes in 2013. The increase in production is also reflected in annual nominal weighted average rural wholesale price.
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