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EFFECTS OF INNOVATIONS ON THE PRODUCTION AND MARKETING OF FRESH

PINEAPPLES FOR EXPORT IN GHANA


by
****Kwamina Ewur Banson****

Ghana Atomic Energy Commission, BNARI, Box LG 80, legon. Accra Ghana. E-mail
asskeroo@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. Export
gives 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 a
decisive role in structuring the production and processing of fresh fruits exported from Africa and
other developing countries. The requirements they specify for innovation, for instance, new product
development, delivery, food safety and quality systems etc., determine what types of producers and
exporters 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 the
competitiveness of small and medium enterprises, innovation policy has attracted attention not only
from 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 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 this research, the effects of innovation on the performance of producers and exporters are
investigated. 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, as
their initiatives will determine the success or failure of the product innovation adoption process.

0.1 Objectives 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 the
relationships between the different actors and their behavior in the pineapple production and
marketing 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 marketing
system.
➢ To determine whether it pays off for peasant/producers to become involved in the given
innovative activity
➢ To identify barriers that prevent smallholders from adopting the pineapple innovation
efficiently
➢ To identify a key policy for the promotion of the pineapple sector
➢ To provide recommendations for feasible marketing strategies to improve the economic
efficiency of the pineapple production and marketing system

0.2 Hypothesis
➢ 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 producers
especially smallholders
➢ The key hypothesis is that innovations in product variety from Smooth Cayenne to MD2 have
decreased farm income and competitiveness of small scale resource poor farmers in Ghana

1 Methods
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 were
selected purposively in the peri-urban areas of Greater Accra, The field survey took place from
October 2006 to January 2007 using standardised questionnaires. The samples include 79 pineapple
producers, 15 producing exporters, and 1 exporter without own cultivation of pineapples. The
interviewed exporters represent 71.4 percent of exporters registered by the Organisation “Sea Freight
Pineapple 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 district
governments were interview with unstructured questionnaires. (The 15 producing exporters were
interviewed 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 to
name other farmers.
Further visits were paid to the facilities for export of fresh produce at Tema port and Kotoka
International Airport.
1.1 Data 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.

1.2 Survey limitations


Since the selection of respondents is not based on a probability sampling limitations are put on
results accuracy. Most of the farmers interviewed do not keep written farm records and therefore
many 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. Thus
the production and export volume of this year are lower than of the years before.
2 Conceptual 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 with
time. 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 units
involved in production and distribution processes, which are important for dynamics of changes and
developments 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 and
weaknesses, and to examine the opportunities and threats of fresh pineapple production and
marketing in Ghana.
Result and Discussion
The study confirms the hypothesis that the innovation in pineapple variety from Smooth Cayenne to
MD2 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 main
constraints. All the actors also lack sufficient market and price information’s and capital. There are
some issues that are actor specific: for the producers the lack of knowledge on best practices on
cultivating the MD2 variety is perceived to be a major constraint. For the exporting producers the
issues 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 inputs
increases. 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 risks
and 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 might
decrease even more if they do not get sufficient support from the government or development
agencies.
The risks and uncertainty reflect the uneven power distribution between producers and exporters. In
addition, small Ghanaian pineapple producers have little advantages compared to large-scale
plantations that have been increasingly established since the late 1980s. Better credit conditions,
economies of scale, and a higher level of knowhow lead to the result, that producing exporters can
achieve higher profits with the new variety MD2 in the long run.
The disadvantages of small producers originate mainly from the requirements set by the European
importers for MD2, which are high and uniform quality, bulk as well as consistent and timely
supplies. Therefore exporters rely on their own plantations and on largescale farmers as their supply
sources to a larger extent, putting smallholder producers in a marginalized position in the fresh
pineapple export sector.
The pressure on individual producers is not expected to change in the near future. Government
supports do not cover all resource poor producers because most producers cannot meet the minimum
standard set for government support. The government will provide MD2 plants to producers if they
can finance recommended inputs such as fertilizer and chemicals required for the period cultivation.
The future of the small producer production will depend on the ability to raise productivity, reduce
production costs and improve product quality in order to stop and reverse the decline of shares in
international markets.

References
FAO (2004). The Market for Non-Traditional Agricultural Export. Series title: FAO Commodities
and Trade Technical Papers 3, 2004 184 pg. Available at:
http://www.fao.org/documents/show_cdr.asp?url_file=/docrep/007/y544 5e/y5445e00.htm.
Accessed on 9th May 2006.
Hagen, J. M. (2003). Agri-Food Innovation in Developing Countries: The Role of Retailers.
Department of Applied Economics and Management. Cornell University, Ithaca, New York.
Submitted for IAMA-2003-Cancun.
Horticultural Exports Industry Initiative (HEII) (2006). Implementation Guide MD2 Pineapple
Sucker Multiplication Programme. AgSSIP/MOFA, Accra.
Hörmann, D. M. (1995). Production and Marketing Systems for Fresh Vegetables from Urban and
Peri-urban Areas in the Tropics and Subtropics. In: Richter, J. et al (eds). Vegetable Production
in Peri-urban Areas in the Tropics and Subtropics: Food, Income and Quality of Life. Feldafing.
Marion, B. W. (1985). The organisation and Performance of the U. S. Food System. Lexington,
Massachusetts / Toronto.