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APORI's M. Sc. THESIS.Pdf “Market Organisation and Consumers’ Perception of Locally Produced Rice in the Ashanti Region of Ghana” Master’s Thesis submitted to The School of Graduate Studies – Kwame Nkrumah University of Science & Technology (KNUST), Kumasi, Ghana. In Partial Fulfillment of the Requirements for the Master of Science Degree in Agricultural Economics from the Department of Agricultural Economics, Agribusiness and Extension, Faculty of Agriculture, KNUST, Kumasi, Ghana. Francis Apori-Buabeng June 2009 1 DECLARATION I, Francis Apori-Buabeng, the author of this thesis do hereby declare that apart from references to other people’s works, which have been duly acknowledged, the research work presented in this thesis was done by me. ……………………….. Francis Apori-Buabeng (Student) …………………….. Dr. S. C. Fialor (Supervisor) ……………………… Dr. S. C. Fialor (Head of Department) 2 Dedication This work is dedicated to my life-long partner, Elizabeth and my boys, Obrempong, Okatakyie and Ohene. 3 ACKNOWLEDGEMENT My greatest gratitude goes to God Almighty for His love, grace, mercies and favour upon me which has seen me through this study. My sincere appreciation also goes Dr. S. C. Fialor of the Dept. of Agricultural Economics, Agribusiness and Extension whose sacrifice and support led to the completion of this work. Special thanks also go to Dr. J. A. Bakang, Head of Dept. of Agricultural Economics, Agribusiness and Extension, Mr. D. C. Asante-Kwatia and the rest of the Lecturers of the Department for their support. I am grateful to Dr. T. Sakurai, Dr. J. Furuya and Dr. T. Towa of Japan International Research Centre for Agricultural Sciences (JIRCAS) for their immense support in the data collection for this study. To Robert, Vincent and Kassim, my course mates, God bless you for all the encouragement. To my life-long partner, Elizabeth, may the good Lord bless you for the immense encouragement and support. God richly bless you all. 4 ABSTRACT Poor perception or attitude of consumers concerning local rice has adversely affected its production and consumption. It is general knowledge that there is a preference for imported rice and so local rice has a competitive disadvantage against imported rice. The question is, what factors account for the poor perception or attitude towards locally produced rice? This study was conducted to find out how the marketing of local rice was organised and coordinated in the Ashanti Region of Ghana. The study investigated the socio-economic profile of the market participants, the structure, conduct and performance of the local rice market, the perception or attitudes of consumers towards local rice. Information and data were collected from rice farmers, millers, paddy traders, wholesalers, retailers and consumers. The data were analysed using both descriptive and inferential methods. The descriptive method included the use of frequencies and percentages in analysing some of the trends or characteristics of the data. Kendall's Coefficient of Concordance (W) was used in the inferential analysis. The W was used to analyse the attributes of rice on which preferences were based by consumers. These attributes included colour, presence of stones or foreign material, taste, aroma or fragrance and cooking quality. Results indicated that at each level of the marketing chain, there were large numbers of sellers and buyers. None of the market agents controlled a sufficiently large share of the marketed volume, which they could use to influence prices to their advantage. Apart from their traditional roles, millers also provided other services such as loans and credit for farmers, and provision of storage facilities. Paddy traders also provided loans to farmers. Consumer ratings of local rice attributes that influence their choice depended on colour, aroma, stickiness, tastes, absence/presence of foreign materials, expansion and percentage of broken rice. Constraints identified were non- uniform weights and measures, inadequate information, difficulty in accessing transportation in the remote areas and difficulty in accessing loans. To help improve the system, it was recommended that the milling machines be provided with de-stoners to improve the quality of local rice. Provision of adequate market information and improved road network in the remote areas were also recommended. 5 CONTENTS Acknowledgement i Abstract ii Contents iii List Tables vii List of Figures viii CHAPTER ONE 1 1.0 Introduction 1 1.1 Background to the Study 1 1.2 Overview of the Rice Industry 2 1.3 The Importance of Rice in the Economy 6 1.4 Problem Statement 7 1.5 Objectives of Research 9 1.6 Justification of the Study 9 1.7 Organisation of the Study 10 CHAPTER TWO 11 2.0 Literature Review 11 2.1 The Importance of Rice in an Economy 11 2.2 Definitions of Marketing 11 2.3 Organisation of Marketing 132.4 Food Wholesaling 14 2.5 Grading 15 2.6 The Role of Government in Marketing 16 2.7 Marketing Infrastructure 17 2.7.1 Roads and Transport Services 18 2.7.2 Grain Storage 20 2.7.3 Distribution 21 2.7.4 Market Information 23 2.8 Marketing Costs 26 6 2.9 Market Analysis 28 2.9.1 The Structure-Conduct-Performance School 28 2.9.2 Market Structure 29 2.9.3 Market Conduct 30 2.9.4 Market Performance 30 2.10 Kendall’s Coefficient of Concordance 32 2.11 Previous Rice Marketing Studies 32 CHAPTER THREE 36 3.0 Methodology 36 3.1 Data Type and Method of Collection 36 3.1.1 Questionnaire Design and Pre-Test 36 3.1.2 Main Surveys 36 3.2 Survey Samples and Sampling Technique 37 3.3 Theoretical Framework of Analysis for Investigating the Marketing System 38 3.4 Method of Data Analysis 38 3.4.1 The Kendall’s Coefficient of Concordance 39 CHAPTER FOUR 41 4.0 Results and Discussion 41 4.1 The Study Area 41 4.2 Infrastructure and Facilities in the Study Area 41 4.3 Socio-economic Characteristics of Respondents 42 4.3.1 Characteristics of Farmers 42 4.3.2 Characteristics of Millers 47 4.3.2.1 Services Provided by Millers 49 4.3.3 Characteristics of Paddy Traders 50 4.3.4 Characteristics of Wholesalers 53 4.3.5 Retailers 55 4.3.6 Consumers 57 4.4 Characteristics of the Structure and Conduct of the Rice Market 59 7 4.4.1 Market Structure 59 4.4.1.1 Size Distribution of Sellers and Buyers 61 4.4.1.2 Degree of Market Transparency 61 4.4.1.3 Presence or Absence of Entry Barriers Facing New Traders 62 4.4.2 Market Conduct 63 4.4.2.1 Buying and Selling Practices 63 4.4.2.2 Pricing Behaviour 64 4.4.3 Performance Indicators 65 4.4.3.1 Consumer Ratings of Local Rice Quality 65 4.4.3.1.1 Colour 65 4.4.3.1.2 Presence or Absence of Foreign Materials 65 4.4.3.1.3 Percentage of Broken Grains 66 4.4.3.2 Labelling/Branding 66 4.4.3.3 Percentage of Producers Who Market Their Own Produce 66 4.4.3.4 Range of Products Available 66 4.4.4 Estimated Volume of Flow of Rice in the Ashanti Region in 2007/8 Season 67 4.4.5 Consumers’ Rankings of Rice Attributes 68 4.4.6 Constraints Faced by Market Participants 71 4.4.6.1 Lack of Established Standards 71 4.4.6.2 Access to Market Information 71 4.4.6.3 Access to Transport Services 72 4.4.6.4 Access to Bank Credit 72 CHAPTER FIVE 73 5.0 Summary, Conclusions and Recommendations 73 5.1 Summary and Conclusions 73 5.1.1 Socio-economic Characteristics of Respondents 73 5.1.2 Characteristics of the Structure and Conduct of the Rice Market 73 5.1.3 Performance Indicators 76 5.1.4 Consumers’ Rankings of Rice Attributes 76 5.1.5 Constraints Faced by Market Participants 77 8 5.1.6 Volume of Flow Along the Marketing Chain 77 5.2 Recommendations 77 References 79 Appendix A 85 Appendix B 86 9 LIST OF TABLES Table 1.1 Area and Production of Rice in Ghana 1970 -2008 2 1.2 Quantities and Value of Rice Imports 3 4.1(a) Age Groups of Farmers 42 4.1(b) Ethnic Groups of Farmers 42 4.1(c) Educational Level of Farmers 43 4.2(a) Land Tenure of Rice Farmers 43 4.2(b) Rice Variety Planted by Farmers 44 4.2(c) Average Months of Storage of Paddy 45 4.3 Other Characteristics of Rice Farmers 46 4.4 Characteristics of Millers 48 4.5 Manufacturing Country/Services Provided by Millers 48 4.6 Other Characteristics 50 4.7 Characteristics of Paddy Traders 52 4.8 Funds/Other Businesses 52 4.9 Storage/Loan for Farmers 52 4.10 Characteristics of Wholesalers 54 4.11 Funds/Other Businesses 54 4.12 Storage/Loans for Farmers 54 4.13 Characteristics of Retailers 56 4.14 Funds/Other Businesses/Storage 56 4.15 Characteristics of Consumers 58 4.16 Occupation/Monthly Income/Religion 58 4.17 Attribute Rankings of Marketed Rice by Consumers 68 4.18 Totals of Attributes Rankings for Selected Local Rice 70 4.19 Results of W for Local Rice Attribute Rankings 70 10 LIST OF FIGURES Figure 1 Volume of Rice Flow from Farmers to Consumers 67 APPENDICES A: Locations and Other Details of Rice Mills Used in Study 85 B: Markets in which Study was Done 87 11 CHAPTER ONE 1.0 INTRODUCTION 1.1 Background to the Study Rice has become an important staple food in Ghana and per capita consumption is increasing steadily. The per capita consumption between 1980 and 2005 is estimated to have increased from 12.4 kg/year to 15.1 kg/year (MOFA, 2009).
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