Improving agricultural markets and trade

 

For many developing economies, local agricultural markets are the lifeline of smallholder agricultural production systems. Small holder farmers obtain substantial benefits through greater engagement in local markets.

Marketing of farm produce of smallholders in many developing economies is beset with a number of challenges which reduce the benefits of smallholder production. Especially in Africa and Asia where rural infrastructure is undeveloped, much farm produce is abandoned on the farm and thus notable to get to markets, as smallholders are confronted with physical and structural marketing challenges.

Taking a critical note at the situation on grounds shows that, attaining global food security may be impossible without increased distribution of food and reduction or elimination of the barriers that face small holders in the marketing of their farm produce. Smallholder production systems are broadly similar throughout the sub Saharan countries; therefore, identifying and addressing the marketing challenges faced by smallholders in Ghana is essential to sustained food security, income, and economic growth.

According to the International Fund for Agricultural Development (IFAD) and United Nations Environment Programme (UNEP) in 2013 smallholders form about 80% of all farmers in Ghana and contribute up to 90% of food production.

Efficient agricultural markets and trade can encourage agriculture-led economic
growth and food security in developing countries. However, Ghana’s efforts to move
toward a market-oriented economy are hampered by ineffective policies, weak institutions,
and inadequate infrastructure. Many smallholders in Ghana still do not have
access to markets and benefit very little from trade liberalization or macroeconomic policies. The development, marketing, distribution, and use of agricultural inputs play a large role in determining yields, production, and access to markets.

Similarly, delivery channels for agricultural outputs through commodity value chains or local, regional, and international trade depend on markets that are efficient and inclusive. Ghana can develop and strengthen it agricultural markets and trade throughout the country and beyond through some of the following ways.

Focus on market failures and how to correct them

There are a number of factors such as volatile prices of goods, low and volatile income for farmers, environmental costs of intensive farming (negative externalities), and agricultural key component of rural life (positive externalities) and many others hindering the agricultural sector from enjoying the full benefits the sector has for its stakeholders. Inventions such as buffer stocks can help stabilize prices through having minimum and maximum prices for all our goods. Subsidies for farmers who follow more environmentally friendly methods as well as tariffs on imports can increase the domestic price of agricultural produce. The government of Ghana recently has given some tax concessions specifically for the agricultural sector which stakeholders believe it will help relieve the industry players of some of their burdens.

Remove constraints to market access

Stakeholders in the agricultural sector should help find solutions to the constraints that make it difficult for agricultural produce to be accessed. Constraints that inhibit production, constraints that raise unit processing and marketing costs and constraints that reduce the number and size of accessible markets should be tackled so as to pave the way for farmers to reach out to every market in the country. The one district one warehouse and the one district one factory are perfect initiatives that when implemented throughout the country, can help farmers to have means of reaching out to most markets in Ghana. It is also important to have other platforms that can register major farmers on their personal details, what they produce, the quantity they produce and if possible the likely unit price of their produce. All these information should be made accessible at the district, regional and the national level.

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These information can help a buyer who lives far from the farmers to reach out to them in their respective farming areas.

Effective institutions and Policies

Institutions and policies can improve efficiency and reduce transaction costs by providing favorable prices, financing, and symmetrical information for farmers, processors, traders, distributors, and consumers. Major agricultural producing countries such as Germany, USA and China, aside the agricultural ministry that takes major decisions and policies for the sector also have the chambers, authorities and centers that regulate the general activities of the sector. The agribusiness unit under the ministry of agriculture in Ghana has two main functions, that is the facilitation of investment into the agriculture sector and also to provide support to small/medium scale local agribusinesses. As food security issue become more prominent on the policy agenda today than it has been in the past, it is very essential to have other authorities in Ghana that can go beyond the services of the agribusiness unit under the agricultural ministry. Their intervention can bring stability into the sector and help put mechanism to regulate the entire value chain system in Ghana. Currently, there exist a number of directorate tasked with specific duties and so it is believed that a chamber can bring all these stakeholders under one umbrella for effective supervision and delivery.

Establishment of marketing cooperatives

Establishment of marketing cooperatives can be the solution to many of the marketing problems faced by most farmers in Ghana. Purchase of inputs in bulk and their sale to members only can provide them agricultural inputs at right time and at minimum possible price. After harvest of the crop, these marketing cooperatives could accumulate the marketable surplus of farmers and send it to big markets and consumer cooperatives at maximum prices as they have the bargaining power. Also the post-harvest losses are reduced to minimum. In this way the farmers will get maximum reward for their output. When these marketing cooperatives become so much developed they can perform other market functions like storage, grading and packaging etc. In this way the return of the farmers can further be increased.

Value addition

The government should strictly monitor the supply of agriculture inputs at right time, of right quality and at subsidized prices. Agricultural credit facilities should be available for value-addition of agriculture produce especially for export items. There is also need to subsidize the imports of processing machinery especially for agriculture export items.  The middlemen, especially the processors, are supposed to add value to the product especially to the export items. Unfortunately we have not been able to earn name for any of our agricultural export item as value added in the international market. An example of this is the various cocoa processing companies we have in Ghana. These companies are supposed to add value to the raw cocoa beans they purchase from the local farmers but the reality is that most of these firms rather preserve the cocoa  beans for exporting. Ghana can improve it market if we chose to add additional value to the raw cocoa beans. An European Union delegation to Ghana being led by Ambassador William Hanna in an interview recently urged Ghanaian exporters to add value to their products in order to attract lower tariffs on the European market. The ambassador debunked the notion that when manufacturers processed their produce into higher value, they would encounter tougher tariffs barriers on the EU market, describing  it as untrue. Ambassador Hanna noted that the rules of the Economic Partnership Agreement (EPA) has been clearly spelt out and the steering committee would ensure a fair completion and level playing field for traders.

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Reducing marketing risk

Marketing problems gets intensified after the harvest of crop when farmers want to sell their produce in the market in order to fulfil their financial obligations. The small land-holders, who are in majority, have marginal income which makes them vulnerable to all kinds of marketing risks. Prices of agricultural commodities are related to supply and demand, as a result a glut of commodity occurs in the market. In this country there are cyclical trends in the arrival of agricultural commodities in the markets. Sometimes there is glut resulting in depressed prices, whereas shortage of commodities at other time pushes the prices up. In case of fall in the prices farmers get less value of their output. The middlemen avail this opportunity and purchase that commodity in bulk and store it to sell it at the time of shortage. These situations of glut and shortages in the market make a non-sustainable agriculture sector which is a big hurdle in the way of development.

Lastly, implementing public outreach, awareness, and education program that uses university curricula, national and regional conferences, alliances of agribusiness enterprises, training, and media campaigns to raise awareness of the benefits of market competition can boost the sector’s marketing activities. Throughout the year, it is only on farmers day that we do hear almost all our media channels discussing the challenges and opportunities of the agricultural sector. The agribusiness unit under the agricultural ministry can organize quarterly exhibitions at the various regional capitals where farmers and agricultural producers can display their products for effective business transactions. This in a way can improve the agricultural markets and trades in Ghana.

EVANS BRAKO NTIAMOAH is a researcher, lecturer, and a managing editor of Cillans Publications. He is also a member of the Ghana Chamber of Agribusiness (GCA). He is currently a doctoral researcher in Agricultural economics and management. He writes, teaches and consults on marketing, management and agribusiness issues. He serves as an editorial board member and a reviewer for a number of international journals. His research interest includes; agribusiness management, agricultural marketing, innovation management, agricultural innovation and organizational performance. You may contact him through E-mail: kwamebrako@yahoo.com

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