Trust and power in farmer-trader relations: A study of small scale vegetable production and marketing systems in Ghana Ph.D. Thesis Fergus Lyon A thesis submitted in fulfilment of the requirements for the degree of Doctor of Philosophy to the Department of Geography, University of Durham, UK 2000 The copyright of this thesis rests with the author. No quotation from it should be published without the written consent of the author and information derived front it should be acknowledged. 1 2 APR 2000 Declaration This thesis has been composed by myself and it has not been submitted in any previous application for a degree. The work reported within was executed by myself, and all information cited is acknowledged at the appropriate point in the text. Statement of Copyright The copyright of this thesis rests with the author. No quotation from it should be published without prior written consent and information derived from it should be acknowledged Abstract This thesis explores issues of trust and power in marketing and finance relations for small scale farmers and traders in Ghana. It is based on detailed qualitative and quantitative surveys with vegetable farmers, traders and agricultural input sellers in the Brong Ahafo Region. The study concentrates on the livelihood coping strategies of farmers and traders, and the indigenous institutional forms of marketing, finance and access to resources. The historical and environmental contexts of these institutions are explored. Of particular interest are the social relations and networks within rural areas and between urban and rural areas that allow actors to access informal credit and information with contracts based on trust. The mechanisms by which trust is created include the formal and informal networks of working relationships, customer friendships, pre-existing networks and intermediaries. The study of the marketing system shows how farmers' and traders' enterprises in the area build up bargaining power, and how the dynamics of these power relations change. The roles of trader associations are also explored. These are strong indigenous groups of women traders which have been able to sustain cooperation over many years despite restrictions, and in contrast to many other forms of collective action. The analysis relates the findings to the literature on socio-economics, institutional economics, collective action and concepts of social capital. The findings have broader relevance in that they explore the concept of social embeddedness of economic action, and the need to base developmental intervention on existing systems if there is to be support for sustainable rural livelihoods. Contents Abstract Contents List of maps and figures List of tables Acknowledgements Chapter 1. Introduction 1 1.1 Rationale 1 1.2 Entry into the subject 2 1.3 Research issues 3 1.4 Structure of the thesis 4 Chapter 2. Theoretical approaches to understanding economic 6 behaviour, markets and rural development 2.1 Introduction 6 2.2 Neo-classical approaches 6 2.3 New Institutional Economics 10 2.4 Structuralist approaches 12 2.5 Towards a framework for understanding social relations in the market 13 system 2.6 New economic sociology and socio-economics 15 2.6.1 Networks 17 2.6.2 Norms 18 2.6.3 The dimensions of trust 20 2.6.4 Power relations 22 2.7 Conclusion 25 Chapter 3. Methodology 26 3.1 Introduction 26 3.2 The research strategy 27 3.3 The dynamics of the research process and role of the researcher 32 3.4 The research experience 35 3.5 Selection of research sites and respondents 38 3.5.1 Selecting villages and markets 38 3.5.2 Selection of key informants 41 3.5.3 Sampling for the semi-structured interviews and 41 questionnaires 3.6 Methods used 42 3.6.1 Semi-structured interviews 42 3.6.2 Questionnaires and structured interviews 46 3.6.3 Participatory methods 47 3.6.4 Observation 47 3.7 Conclusion 48 Chapter 4. Tomato production and marketing in Ghana: establishing 50 the social, political, historical and environmental context 4.1 Introduction 50 4.2 Production context 50 4.2.1 The history of commercial agriculture in Ghana and the study 50 area 4.2.2 Environmental factors and location of tomato cropping 56 4.2.3 The tomato farming systems in Brong Ahafo 60 4.2.4 Disaggregation of tomato growers 65 4.3 The agricultural inputs supply context 74 4.3.1 Agro-chemical supply system 74 4.3.2 Disaggregation of agro-chemical sellers 75 4.4 The marketing context 77 4.4.1 Historical context of marketing and trade in Ghana 78 4.4.2 The present vegetable marketing system 86 4.4.3 Disaggregation of traders 90 4.5 Conclusion 95 Chapter 5. Social relations, contracts and institutional aspects of the 97 vegetable production system 5.1 Introduction 97 5.2 Access to land 97 5.2.1 Land ownership 98 5.2.2 Renting land 100 5.3 Access to Finance for Production 102 5.3.1 Loans from private individuals 103 5.3.2 Loans from banks 105 5.3.3 Susu collectors 107 5.3.4 Sponsoring and share cropping 109 5.4 Access to Trader Credit 112 5.4.1 Extent of trader credit 112 5.4.2 Lending and repayment procedures 116 5.4.3 Costs, interest payment and the extent of 'exploitation' 120 5.5 Access to labour 125 5.6 Access to inputs 129 5.6.1 Agro-chemical supplies to farmers on credit 129 5.6.2 Agro-chemical sellers buying on credit 139 5.6.3 Seed supplies 141 5.7 Conclusion 146 Chapter 6. Social relations and institutional aspects of the vegetable 147 marketing system in rural areas 6.1 Introduction 147 6.2 Institutional aspects of the transport system 147 6.3 Institutions of buying, selling and bargaining at the farm level 151 6.3.1 Customer relations 152 6.3.2 Shifting bargaining power and changing power relations 153 6.3.3 The bargaining process 154 6.3.4 Units of sale and supply of boxes 157 6.3.5 Cooperative marketing institutions 159 6.3.6 Adjusting contracts after price negotiation 161 6.3.7 Grading of produce - 162 6.4 Access to market information 164 6.4.1 Traders' information sources 164 6.4.2 Farmers' information on prices 169 6.5 Institutions for access to finance for trade 171 6.6 Conclusion 177 Chapter 7. Institutions of marketing in urban areas 178 7.1 Introduction 178 7.2 Association structures 178 7.3 Services and roles of the trader associations 182 7.3.1 Welfare 182 7.3.2 Reducing transaction costs 183 7.3.3 Settling disputes 184 7.3.4 Arenas for price setting 185 7.3.5 Controlling the supply 186 7.3.6 Associations to represent members 189 7.4 Powers of exclusion and controlling the market space 191 7.5 Institutions of retailing 197 7.5.1 Institutions for portering 198 7.5.2 Credit to retailers 200 7.5.3 Institutions for sales to consumers 202 7.6 Conclusion 203 Chapter 8. Towards an institutional theory of market relations 206 8.1 Introduction 206 8.2 Mechanisms of trust 206 8.2.1 Trust based on networks of working relationships 209 8.2.2 Trust based on customer friendship 211 8.2.3 Trust based on pre-existing networks 213 8.2.4 Trust based on intermediaries 214 8.3 Norms 215 8.4 Sanctions and power relations - 218 8.5 Socio-spatial relations: market relations and the location of tomato 223 production 8.6 Conclusion 227 Chapter 9. Conclusion 229 9.1 Introduction 229 9.2 Summary of research findings 229 9.3 Theoretical implications 233 9.4 Policy implications 238 Appendix 244 Glossary 247 Bibliography 248 List of maps and figures Map 3.1 Ghana and its regions 28 Map 3.2 The study area . 29 Map 4.1 Major trade routes, c.1702 (from Dickson, 1969:110). 79 Figure 4.1 Redistributive and two level marketing system 87 Figure 6.1 Seasonal wholesale tomato price indices in Kumasi, Sunyani 153 and Accra markets. Figure 6.2 Daily tomato prices in Kumasi Central Market 166 Figure 8.1 Networks, norms and trust formation 209 Figure 8.2 Power and coercion in collective action 221 List of tables Table 3.1 Details of villages covered in the surveys 39 Table 3.2 Details of markets in the study 41 Table 3.3 Number of interviewees 44 Table 4.1. Average monthly rainfall totals in Sunyani 58 Table 4.2 Seasons for growing tomatoes 62 Table 4.3 Average prices paid for fertiliser (November 1997). 65 Table 4.4 Types of tomato producers in Brong Ahafo 67 Table 4.5 Number of years selling agro-chemicals 76 Table 4.6 Number of sales outlets for each business 77 Table 4.7 Population of Ghana and major towns 83 Table 4.8 Types of markets 89 Table 5.1 Land tenure for present or most recent tomato farm in study 101 villages Table 5.2 Land tenure for present or most recent tomato farms according to 101 gender Table 5.3 Farmers' loans to other farmers in the past year. 104 Table 5.4 Details of susu collectors interviewed 108 Table 5.5 Contract form in sponsoring 111 Table 5.6 Credit from traders 113 Table 5.7 Farmers receiving credit from each village 113 Table 5.8 Number of farmer customers receiving credit from traders in the 115 past year Table 5.9 Average amount each trader gives to all customers at one time 116 Table 5.10 Forms of repayment 117 Table 5.11 Labour activities 126 Table 5.12 Number of farmers receiving credit from each chemical dealer.