ECONOMICS OF TOMATO MARKETING IN ASHANTI REGION, GHANA

RJOAS, 2(26), February 2014

ECONOMICS OF TOMATO MARKETING IN ASHANTI REGION, GHANA

Camillus Abawiera Wongnaa, Stephen Opoku Mensah, Alexander Ayogyam, Lydia Asare-Kyire, Zu Kwame Seyram Anthony, Researchers
Kumasi Polytechnic, Kumasi, Ghana
E-mail: wongnaaa@yahoo.com, steopo@yahoo.com, kingmulleraa@yahoo.com, lydiaasarekyire@yahoo.com, zukwame@gmail.com

ABSTRACT
The perishable nature of most agricultural produce and the concomitant need for effective marketing outlets carries along huge economic consequences, especially in developing countries like Ghana. This study examines the determinants of profit in tomato marketing in the Ashanti Region of Ghana. Cross-sectional data collected from a random sample of 200 tomato marketers consisting of 100 wholesalers and 100 retailers were analyzed using descriptive statistics and the multiple linear regression technique of the ordinary least squares. The results show that wholesalers have a higher margin of 99.7 percent, while the retailers have a margin of 75.4 percent. Labour cost, purchase price, transportation cost and selling price run through all the estimated regressions as determinants of marketing profit. The effects of these variables on marketing profit could raise public concern since they have implications on prices received by tomato producers and those paid by final consumers and therefore there is the need for the government to devise policies aimed at stabilizing the local currency.The results also call for policy efforts to completely eliminate illiteracy among tomato traders in Ghana especially in the Ashanti Region. Policies that could enable the retailers to increase their scale of operations are also advocated. Future researchers may also estimate the exact point in the age variable at which retail profit declines and possible antecedents.

KEY WORDS
Socioeconomics; Wholesalers; Retailers; Marketing; Profit; Tomato; Ghana.

     Agriculture is an important sector in most developing countries. Increase in agricultural productivity depends heavily on its marketability. Efficient market does not only link sellers and buyers in reacting to current situations in supply and demand but rather has a dynamic role to play in stimulating consumption of outputs which are essential elements of economic development (Haruna et al, 2012). Katharina and Stefan (2011) reported that the concept of marketing subsumes a set of different innovative advertising instruments which aim at gaining a large effect with a small budget. Agricultural marketing is defined as the performance of all the activities involved in the flow of agricultural products and services from the initial points of agricultural production until they reach the hands of the ultimate consumers. It is interested in everything that happens to crops after they leave the farm gate; making decision, taking actions and bearing the responsibility of the action. Agricultural marketing also articulates all processes that take place from when the farmer plans to meet specified demands and market prospects to when the produce finally gets it to the consumers (Haruna et al, 2012).
     Aminu (2009) pointed out that in a typical vegetable marketing, even though the marketing of vegetable crops does not require much capital, it essentially requires experience and good rapport with the commission agents and farmers. Olukosi and Isitor (2004) explained that the marketing task involves transferring goods from producers to consumers. It is the marketing function that ensures that consumers acquire the product in the form, places and time desired. Marketing stimulates production, enterprise and specialization, hence resulting in an improved productivity of all sectors of the economy. As the economy of a nation grows, the gap between farmers and consumers widened and the task of marketing becomes more complex (Abbott, 1987). In a research conducted by Oladejo and Sanusi (2008), the net returns to marketing were affected by estimated marketing costs and selected personal characteristics of marketers. The authors further

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RJOAS, 2(26), February 2014

disclosed that the marketers in the study area were carrying out their distributing function using diverse channels revealing that 10.9% claimed to supply their wares in wholesales while the remaining 26.4%, 42.7% and 20% sell directly to the retailers, final consumers and processors/food vendors, respectively.
      Tomatoes are important in the daily meal preparation since it can be eaten raw or cooked. Larger quantities are used to produce soups, juice and sauces, ketchups, purees and paste. The seeds which are extracted from the pulp and its residues contain 24% oil which is used for salad dressing and in the manufacturing of margarine and soap. The residual press cake is used as stock feed as well as fertilizer. In addition, vegetable such as tomato apart from being consumed at home also earns foreign exchange to the producer countries, due to exportation. (Sani et al., 2011; Singh, 2004).
      A well developed marketing system is expected to complement the farm production effort towards the realization of its desirable goals through the provision of time, place, possession and form utilities. The production and the marketing system of tomato consist of a myriad of relationship and arrangements which are based on structure conduct-relationship paradigms at each marketing level, that is, from the producers to the consumers. In order to ensure a stable supply of tomato throughout the year, the market structure should first be considered in addition to examining how they are procured and disposed. This can best be achieved through a critical analysis of the factors influencing the profitability of tomato marketing (Haruna et al, 2012). Massaoud and Srinivass (2012) revealed that there is the tendency to increase producer’s share in the consumer’s price if the number of intermediaries is reduced and the government intervenes in order to organize and structure the marketing cooperative unions so that the farmer can use these unions as profitable channels to sell their produce.
      Marketing functions are specialized activities performed in accomplishing the marketing process. These functions are broadly classified as follows: physical functions, exchange functions and facilitating functions. Most decisions on pricing, channels, storage, and transportation depends on the accurate information available. Kluwana et al (2011) reported that supply chain management requires integration of processes between supply chain members in all functional areas including sourcing, manufacturing and distribution. This barrier has been categorized into different levels: managerial, organizational, technological, individual, financial, social and cultural. However, Yayock et al (1998) classified the intermediaries associated with the marketing of farm produce into several categories viz; local and urban. The local traders live in the village and take their produce to the market and then sell collections in village markets, either through village retailers or directly to consumers while the urban traders on the other hand purchase farm produce in rural markets from retailers or directly from farmers, and transport the produce to other markets or to urban centres for sale and their purchases are larger than the local traders. Retailers generally purchase produce from wholesalers and sell to the consumers who buy in small quantities at a time. The functions performed by retailers of farm produce include: reducing produce to small units where relatively low-income consumers can easily afford or buy, buying and displaying produce for sale at places that are convenient to consumers and sorting, processing and repackaging produce to suit consumers’ needs. The wholesalers are individuals who rent stalls in urban markets and handle large quantities of farm produce and perform marketing functions such as buying, storing and financing the exchange of produce. Marketing through wholesalers has important advantages. Firstly, wholesalers buy produce from farmers or local traders and sell to the retailers, to other wholesalers’ domestic and foreign markets and to manufacturers and agricultural processors. Secondly, wholesalers often finance the movement of produce and invariably bear most of the marketing risks. In general, farmers who are able to sell their produce directly to wholesalers at the village markets have better chance of receiving higher prices than those who dispose of theirs through local traders to wholesalers. The transporter is another intermediary in the tomato marketing value chain. The transporter conveys farm produce from place to place by means of animal power and various types of motor vehicles (Haruna et al, 2012).

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