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Effects of Innovations on the Production and Marketing of Fresh Pineapples for Export in Ghana

Effects of Innovations on the Production and Marketing of Fresh Pineapples for Export in Ghana

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In Ghana, pineapple export accounts for more than 50 percent of the total horticultural exports and is a source of income and employment to many people. However, the pineapple industry is facing a major challenge due to innovation in product development. The predominantly produced variety, Smooth Cayenne is being progressively squeezed out of the market by the newly introduced, highly export market favoured, golden sweet, less acidic MD2 variety. As a result, the MD2 variety has gained about 70 percent of the international market share for fresh pineapples within a short period of time (HEII, 2006). This development poses a threat to the survival of the resource poor pineapple growers in Ghana, who account for roughly 50 percent of production volumes and cannot easily catch up with this innovation.
In Ghana, pineapple export accounts for more than 50 percent of the total horticultural exports and is a source of income and employment to many people. However, the pineapple industry is facing a major challenge due to innovation in product development. The predominantly produced variety, Smooth Cayenne is being progressively squeezed out of the market by the newly introduced, highly export market favoured, golden sweet, less acidic MD2 variety. As a result, the MD2 variety has gained about 70 percent of the international market share for fresh pineapples within a short period of time (HEII, 2006). This development poses a threat to the survival of the resource poor pineapple growers in Ghana, who account for roughly 50 percent of production volumes and cannot easily catch up with this innovation.

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Published by: Banson on Mar 04, 2009
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08/07/2014

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EFFECTS OF INNOVATIONS ON THE PRODUCTION AND MARKETING OF FRESHPINEAPPLES FOR EXPORT IN GHANAby
****Kwamina Ewur Banson****Ghana Atomic Energy Commission, BNARI, Box LG 80, legon. Accra Ghana. E-mailasskeroo@yahoo.com. Telefax: 00233-21-402286-Results of innovation effects on system participants
Introduction
Increasing production and export of agricultural products can be an effective way of reducing rural poverty in developing countries (FAO, 2004). Agriculture is a key sector of West African economies:it contributes to almost one third of GDP and employs about 70% of the entire active population.Many export oriented agricultural activities are organized and implemented by producers. Exportgives firms access to improved capital inputs such as machine tools, boosting productivity and providing new opportunities for growth for developing countries. Large importers in Europe play adecisive role in structuring the production and processing of fresh fruits exported from Africa andother developing countries. The requirements they specify for innovation, for instance, new productdevelopment, delivery, food safety and quality systems etc., determine what types of producers andexporters are able to compete in the export market and maintain access to the fresh fruit chain(Hagen, 2003). The key question facing policy makers is how to improve the competitiveness of African’s small and medium enterprises. Among the many initiatives being proposed to improve thecompetitiveness of small and medium enterprises, innovation policy has attracted attention not onlyfrom policy makers, but also from researchers and the business community.In Ghana, pineapple export accounts for more than 50 percent of the total horticultural exports and isa source of income and employment to many people. However, the pineapple industry is facing amajor challenge due to innovation in product development. The predominantly produced variety,Smooth Cayenne is being progressively squeezed out of the market by the newly introduced, highlyexport market favoured, golden sweet, less acidic MD2 variety. As a result, the MD2 variety hasgained about 70 percent of the international market share for fresh pineapples within a short periodof time (HEII, 2006). This development poses a threat to the survival of the resource poor pineapplegrowers in Ghana, who account for roughly 50 percent of production volumes and cannot easilycatch up with this innovation.In this research, the effects of innovation on the performance of producers and exporters areinvestigated. This survey allows distinguishing between characteristics of producers’ and exporters’ behaviour to adopt innovations. It also enables to analyse profitability in farms engaged in innovative pineapple activities.The results will be useful for policy makers who prepare policies to develop markets. Moreover,these information may also facilitate the decision making process of private traders and farmers, astheir initiatives will determine the success or failure of the product innovation adoption process.
0.1Objectives of the study
This study examines the effect of product innovation on the production and marketing system for fresh pineapple export in Ghana. It focuses on the export market structure as well as on therelationships between the different actors and their behavior in the pineapple production andmarketing system to assess the performance.
 
The specific objectives of this study are the following:
To examine the market structure, conduct and performance of the export sector.
To enumerate the effects of innovation on performance of the production and marketingsystem.
To determine whether it pays off for peasant/producers to become involved in the giveninnovative activity
To identify barriers that prevent smallholders from adopting the pineapple innovationefficiently
To identify a key policy for the promotion of the pineapple sector 
To provide recommendations for feasible marketing strategies to improve the economicefficiency of the pineapple production and marketing system
0.2Hypothesis
Barriers to enter the production of MD2 are higher for resource poor producers than producing exporters
Resource poor producers adopt MD2 later than large scale and producing exporters
Producing exporters reach higher profits from MD2 production than resource poor producersespecially smallholders
The key hypothesis is that innovations in product variety from Smooth Cayenne to MD2 havedecreased farm income and competitiveness of small scale resource poor farmers in Ghana
1Methods
This study start with a detailed literature review on theoretical approaches, on the concept of innovation, the diffusion of product innovations, and value chains as well as on the development of the international markets for fresh and processed pineapples. Furthermore literature on the Ghanaian pineapple sector was analysed.Both primary and secondary methods were used for data collection. The survey districts wereselected purposively in the peri-urban areas of Greater Accra, The field survey took place fromOctober 2006 to January 2007 using standardised questionnaires. The samples include 79 pineapple producers, 15 producing exporters, and 1 exporter without own cultivation of pineapples. Theinterviewed exporters represent 71.4 percent of exporters registered by the Organisation “Sea FreightPineapple Exporters of Ghana (SPEG)” in 2006. Beside of them, 3 processors, 6 local traders(wholesalers and retailers), 5 communal leaders of farmer groups and 2 representatives of districtgovernments were interview with unstructured questionnaires. (
The 15 producing exporters wereinterviewed separately as producers and exporters).
Since the total number of pineapple growers is not available for the design of a probability sample,their selection was based on snowball sampling in which interviewed farmers were requested toname other farmers.Further visits were paid to the facilities for export of fresh produce at Tema port and KotokaInternational Airport.
 
1.1Data entry and analysis
The data of the standardised questionnaires were coded and transferred into an Excel sheet. For their analysis the program Statistical Package for Social Sciences (SPSS) was used.
1.2Survey limitations
Since the selection of respondents is not based on a probability sampling limitations are put onresults accuracy. Most of the farmers interviewed do not keep written farm records and thereforemany figures they named are estimates. The survey was conducted in the season 2006/07, which was just the transition period of variety changes from the production of Smooth Cayenne to MD2. Thusthe production and export volume of this year are lower than of the years before.
2Conceptual framework: Structure, Conduct, Performance (SCP) approach
The
Structure-Conduct-Performance
approach is often used to analyse agricultural sub-sectors.The term originates from industrial organisation theory and has been developed much further withtime. The sub-sector analysis is one of the system analysis approaches for the examination of economic activities. The analysis stresses the interdependent relationships between economic unitsinvolved in production and distribution processes, which are important for dynamics of changes anddevelopments in production and distribution (Marion, 1985 and Hörmann, 1995).
Strengths, Weaknesses, Opportunities
and
Threats
(SWOT) analysis is used for the evaluation of the results found for the SCP criteria. It is a powerful technique to identify the strengths andweaknesses, and to examine the opportunities and threats of fresh pineapple production andmarketing in Ghana.
Result and Discussion
The study confirms the hypothesis that the innovation in pineapple variety from Smooth Cayenne toMD2 has worsened the plight and competitiveness of the resource poor small scale farmer in Ghana.To sum up: for all system participants fluctuating prices and deteriorating quality are mainconstraints. All the actors also lack sufficient market and price information’s and capital. There aresome issues that are actor specific: for the producers the lack of knowledge on best practices oncultivating the MD2 variety is perceived to be a major constraint. For the exporting producers theissues of producers not complying with contractual agreements is regarded to be an important bottleneck.The research shows that innovative firms are mostly large producing exporters. At the moment planting material for the new variety MD2 is scarce and very expensive and the need for other inputsincreases. But the new variety has a high rate of sales growth.The individual producers fetch lower farm gate prices from the exporters than the exporters do for their own production. In addition, production of individual producers involves a high level of risksand uncertainty concerning the rejection of produce by exporters, sales risk, and late or non-payment by exporters. In future their market share for exportable pineapples and their competitiveness mightdecrease even more if they do not get sufficient support from the government or developmentagencies.The risks and uncertainty reflect the uneven power distribution between producers and exporters. Inaddition, small Ghanaian pineapple producers have little advantages compared to large-scale plantations that have been increasingly established since the late 1980s. Better credit conditions,

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