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I I ., I . a. I. I . . . . . . V s . I b .. . . .I I , . .. . . . . .. t!’.t%tfu ’{Th4 .§’I’IImamani mmmloz 32.3. 5.63.2.2. ... >52... mafia... manna. 11.? ...—03.26.. . $93332... moo.— Vesta :55... .1335?- # flame—263 . . £6:— en 23:. . £86138 mung «02.8. 10 Have . 18.— 93. nae—83.728 . 233.8. moo.— 32.398.— ..x. 23.833 weal. Ix. Cam-agree.“ participants in Ashanti Region. In the absence of relevant and timely external information, word-of-mouth information is sometimes the only major source of information available to maize marketing channel participants in the region. Word-of-mouth information is therefore a very useful source of information to the extent of its accuracy. Personal experience, as a source of information, refers to personal observations and knowledge gained about the marketplace. The major shortcoming of such information is that it is parochial in nature. Personal experiences are limited to events occurring in the immediate geographic environment of the marketer or the markets he or she has visited. Personal experiences, if adequate, however, provide useful sources of factual information for decision making. External Information Sources: Information outputs of public agencies and organizations also constitute an important source of information for marketing channel operators in Ashanti Region. Public organizations offer market information support services for three reasons. First, Ghana as a developing country is in its infancy in the development of the private sector of its economy. The majority of entrepreneurs in the country are small operators and cannot financially support market information production activities needed for decision making. Second, the dominant positions of state enterprises in the economy put the government in situations requiring it to offer information services to state enterprises for decision making. This includes provision of minimum guaranteed price information to guard the operations of the Ghana Food Distribution Corporation and other marketing institutions, price and food supply sourcing information for public schools and institutions that shop for food commodities in the marketplace, and information for the development of national food policy. Third, the government is interested in the production and dissemination of market information to support the production and marketing activities of food growers who constitute an important part of the national economic development program. This study therefore will investigate an information system in which the public sector plays a dominant role in information acquisition, processing and dissemination. In Ghana, external food marketing information services are provided by the following organizations: 1. Ghana Food Distribution Corporation (GFDC) 2. Committee on Agricultural Commodity Prices 3. Ministry of Agriculture Field Extension Services and Information Units 4. Radio Ghana Programs for Farmers and Food Distributors 5. Maize Growers and Distributors Cooperative Associations, and 6. Services of Agricultural Development Banks and Farmers Cooperative Banks. A brief discussion of market information services provided by these public agencies and organizations will also be presented. Ghana Food Distribution Corporation (GFDC): The Ghana Food Distribution Corporation is a state corporation charged with the marketing of major food crops produced in Ghana. In this respect, GFDC is charged with the responsibility of making sure food growers throughout Ghana find markets for their outputs. In the case of maize production, the corporation is charged with the responsibility of providing maize growers with informaiton concerning the location of GFDC maize buying depots, minimum guaranteed price information of the government, and the actual buying of farmers' maize output. Discussions with maize growers in the field show that these important market information services generally are provided by GFDC. Services of the Committee on Agricultural Commodity Prices: Maize marketing institutions in Ghana receive an important price information annually from the Committee on Agricultural Commodity Prices. This committee is assigned a yearly task of studying food production and marketing costs and advising the Ghana government on remunerative prices for major food and industrial crops produced in Ghana. The end product of this Committe's studies is the recommendation of minimum guaranteed prices for major food crops. The basic goal of the Committee is to offer positive incentives to farmers. From the farmers' point of view, ”appropriate" or incentive support producer price is: i) the price which yields revenue from the sale of the produce that exceeds the cost of producing that product ii) the price which yields profit margin adequate to support his/her family and induce the producer to adopt new techniques of production to increase productivity and production, and iii) the price which yields profit that exceeds the levels of profits to be earned from the production of other commodities; otherwise even though the profits from producing a particular commodity may be positive, the producer will redirect his/her resources into the production of the more profitable alternatives (CACP Report, 1985, p. 3). Table 1 shows recommended maize prices of the Committee from 1980-1986. "Recommended price" is the price recommended for purchasing a product from producers. This price may vary from the producer price in an upward or downward direction; or may be the same (CACP Report, 1985, p. 3). An important information problem that arises out of the setting of the minimum guaranteed price by the Committee is the interpretation of the term "minimum guaranteed price." Table 1 Guaranteed Minimum Price for Maize for Periods 1980-1985 Year Minimum Guaranteed % Change Inflation (%) Price (per 220 lb/lOO kg bag of maize) 1980 ¢100 --- 50.1 1981 ¢165 65 117 1982 ¢500 203 22 1983 .. ¢1,000 100 122 1984 ¢1,800 80 40 1985 ¢2,000 11.1 -20 1986 ¢2,600 30 Source: Ministry of Agriculture; Accra, January, 1986. Government administrators in the Ministry of Agriculture interpret minimum guaranteed price as the willingness on the part of the government to buy, through the marketing activities of GFDC, maize that farmers are unable to sell on open markets at the government guaranteed price, to the extent that the financial resources of GFDC would permit. Farmers, on the other hand, interpret it as the Government's guarantee to purchase all crops produced at the guaranteed price. This issue poses a real problem in maize markets. The minimum guaranteed price information sends confusing 10 signals to food marketing channel participants in the country. The important question is how this misinterpretation affects the remuneration and morale of maize growers and distributors. Furthermore, how does the misinterpretation affect the overall goal attainment of the Committee on Agricultural Commodity Prices and the Ghana Government? Maize marketing channel Operators also believe the credibility of the minimum guaranteed price information is undermined by the poor representation of food growers and distributors on the Committee. This information problem will be discussed fully in Chapter Five of this study. Ministry of Agriculture Field Extension Services: The Ministry of Agriculture's Field Extension Services and Information Units provide useful technical and practical information for maize production activities. Maize growers over the years, have come to trust and work effectively with agriculture extension officers. The Ministry of Agriculture's field officers could be effective sources and medium of communication in develOping and transmitting food policy and market information. These field officers, however, do not provide marketing services to maize marketing channel operators. Their job description cover only production activities. What happens to the farmer's output after harvest is therefore none of their business. 11 It is the business of the Ghana Food Distribution Corporation (GFDC). Field discussions with maize growers, however, show that the GFDC does not provide maize growers with market demand and supply information they generally need. Thus, agriculture field officers' knowledge about food markets are not utilized in the field. Radio Ghana Prggrams for Farmers and Food Distributors: Government owned Radio Ghana broadcasts weekly farmers and food distributors forums taking the form of questions and answers and sometimes lectures on food production and marketing in the major local languages of Ghana. Food production and marketing programs directed at maize growers and distributors in Ashanti Region are broadcast in Twi, the major language of the region. The programs are designed to improve the production and distribution fuctions of food producers and distributors. The radio programs are quite informative and useful. They, however, have scheduling problems that affect their usefulness. The programs are scheduled in time periods when most maize growers and distributors are busy at work on farms or in markets; or scheduled at night when they are asleep. Useful information disseminated through the radio programs therefore often miss their target audiences. Another problem that plague the effective utilization 12 of radio information about food marketing is the inability of most food producers and distributors to purchase radios. Radios in developing countries are expensive items, and the majority of people do not have the discretionary income to purchase them. Furthermore, people who are able to purchase radios may not have additional money to regularly buy batteries for the equipment. At times, the batteries are not even available for sale on markets. It would therefore be useful to determine whether the programs directed at maize producers and distributors in Ashanti Region do achieve their desired goals. Information Services of Maize Growers and Distributors Cooperative Associations: Maize growers, assemblers, wholesalers and retailers in Ashanti Region have organized themselves into cooperative associations or market unions. Although these co—operative associations are in their early developmental stages and lack adequate financial and other operating resources, they do provide useful information services for their members. Cooperative associations provide social and market information support services. These information services include information about misfortunes of association members, local council market regulations regarding food marketing activities, and information about other community matters that are relevant to maize marketing activities. 13 Other information services include dissemination of government minimum guaranteed price information, buying and selling practices of other maize marketing institutions, and maize supply information. A large portion of these information services are transmitted informally by word-of- mouth. The value attached to cooperative association market information is a function of the degree of trust that association members have for one another. The accuracy of such information also may vary across marketing institutions. Services of Agricultural Development Banks and Farmers Cooperative Banks: The government of Ghana has developed an extensive network of Agricultural Development Banks and Cooperative Banks in the ten regions of Ghana. The basic function of these banks is to provide financial services to rural communities. The Agricultural Development Bank and Cooperative Banks specialize in offering financial services to farmers and agriculture related business activities. Ashanti Region has many such banks. Maize growers and distributors in the region therefore have financial services at their disposal. Notwithstanding, most maize growers and distributors in Ashanti Region do not take advantage of the financial services available to them. Discussions with maize 14 marketing channel participants in the field show that there seem to be an information gap between the banks and the local business communities. Farmers and food distributors are either afraid to approach the banks for financial services for fear of failure to repay loans, or do not know the requirements of the banks' loan programs. This study will examine the effects of information provision problems of the commercial banks on the decision making processes of maize marketing channel operators in the region. Food Production and Marketing in Ghana Agriculture is the dominant sector of Ghana's economy. Table 2 shows the value of Ghana's agricultural output in relation to other domestic products of the economy. Agriculture accounts for an average of 45.8% of Ghana's Gross Domestic Product (GDP). The total agricultural labor force in 1980 was estimated at about 2.4 million, i.e. 69% of the total labor force of 3.46 million. Nearly 70% of the population in Ghana is rural and derives its income from agriculture and related activities (Djang, 1984, p. 3). Ghana's major agricultural outputs consist of cocoa (cultivated mainly for export), livestock and food crops, timber and fishing. The majority of Ghana's agricultural community are food crop producers. The most important food crops produced in Ghana are maize, rice and cassava. These food crops constitute the major portion of food supply of 15 m2 GPBYINIBIRDLCRIEIN AI'CIJNSIPNI'M, GM(ML‘I.1.imCHfis) 19513-196 mmmmmmesa/ Agdoalmre 21,589 21,05 21,352 19,187 21,151 21,974 Pgdc. & livestock 14,723 14,607 13,991 12% law) 15,105 (Inn 3,979 3,86 3,613 3,32 3,256 3,55 may & Logirg 2,216 1,96 2,097 2,53 2,315 2,570 Elshlrg 672 679 652 664 679 713 nfisuy 6,533 5,489 4,554 §L% 4,278 ifiB Mimrg & My 517 479 439 394 439 467 W 4,197 3% 2,694 2,55 2,811 3,234 Electricity & Nata: 314 $1 323 197 183 241 (113mm 1,315 1,270 l,C99 84) 876 gm Servica 12,85 gas 12,% lag) 13L%7 146% 1:33:11: & (hurmiatlms 1,211 1,292 1,317 1,42 1,446 1,518 flab & 31213 4,660 3% 3,569 3,745 3,972 4,170 Bat-61g, 1mm, mal Estate 2,715 2,85 2,98 3,- 3,115 3,271 Wit Savims 4,4fi 4,746 4,549 4,819 4,98 5,175 Otter Savirss ' ‘ 4'5 459 479 4% % $2 Inpxtai Savim flanges -89) iw -1,213 4,25 —1,373 -1,453 mm was 5.32 a Q .31_4 325; at: G? at W Prices 43,7(3 39,149 $370 5,689 @433 Q63 1h“ (anal GP (Chile) 3,667 3,67 3,145 2,977 3,125 3,13 Rzmatlm (Millim) 11.10 11.39 11.69 11.99 12.29 12.61 Nate: 'mtalsnaymtafltpdammrdirg. a/Etlnatai mmm Wthme—w (Ana: Ministrydl‘lramaflmrmdcnamg, (13mm), p. 54. mmmmflmwflhmmmm KBQ=¢%(J%OEfidalrata) 16 most Ghanians. During a drought and ensuing famine in 1983, maize, rice and cassava became rare commodities in the country. A West African market report records that in 1983, maize, the major staple diet of the people living in Accra sold on the open market at ¢200 for 8Lb, approximately one week's wages (Consumer Markets in West Africa, 1984, p. 84). A major economic development policy objective of the Ghana Government is to be able to feed the Ghanaian population through the country's agricultural efforts. Ghana Agricultural Policy: Action Plans and Strategies 1984-1986 stated that the Government of Ghana commits itself to an agricultural program that will provide: 1) adequate and well-balanced diet for every Ghanaian, and ii) sufficiency buffer to meet unforeseen food deficit resulting from adverse climate conditions or natural disaster (Djang, 1984, p. 4). In more specific terms, the national agricultural policy was aimed at achieving the following objectives: 1) Self sufficiency in the production of cereals, starchy staples and animal protein to ensure adequate nutrition for every Ghanaian. 2) Maintenance of adequate levels of buffer stocks of grain particularly maize and rice to ensure: i) availability of food during the lean season (March-July) ii) to support price stability, and iii) provide maximum food security against unforeseen crop failure and other natural hazards. 3) 4) 5) 17 Self-sufficiency in the production of industrial raw materials such as cotton, oil palm, tobacco and groundnuts to feed installed and future agro- based industries. Promotion of increased production of exportable agricultural crops, including cocoa, pineapples, coffee, sheanuts, ginger and kola, and Promotion and provision of improved storage, processing and distribution systems to minimize post harvest losses (1984-1986 Agric. Policy, p. 4). Maize, rice and cassava were selected as top priority crops in the Government's agricultural program. The stated reasons for selecting these food crops were: i) ii) iii) iv) V) maize, rice and cassava are among the foremost staples consumed in Ghana the major food items imported into the country with Ghana's limited foreign exchange to make up for short falls in food production have been maize and rice Ghana has the land, water, technical know-how and other resources to attain self-sufficiency in the production of these three crops the three crops were adequately cater for the requirements of the livestock industry if production is increased, and maize and rice are crops which can easily be preserved and stored. Hence it is possible to build up buffer stocks against lean seasons (Djang, 1984, p. 8). Maize production and distribution are important business activities in Ghana. Maize is grown in all ten regions of Ghana. Figure 2 shows the geographic regions in which maize is grown in Ghana. Heavy maize production activities occur in the southern part of the country which enjoys adequate rainfall needed to sustain the crop. The FIGURE 2 MAP OF GHANA MAJOR MAIZE PRODUCTION CENTERS n 00,- up ‘ ,}\ .NI o —r ‘5‘ MN ‘\\‘\‘i.i\\\fi\\‘§‘ ‘\ I \ | ‘35-.) ‘ t ".4 .'. iv -., ,t Wu-fi' ' . . ..‘iy‘rfi 'HIE'R.P'.‘VJI.2 3‘: 1' l. .. we,» .. «J- , .-. ~ ”my H. '~'- ' a. I... h.;:-r_*_tr,¢‘u.*~--‘c N “L. . . )3" ;.T""' . “’7 '1". “‘3 «luv-ow 4 r ~ flop-v1 um ____ Ari 9m ‘1 or ~ {nu-u . Mic-v c u 01 . -10 - IS ~-"5-to - _EEL°~ 5 Source: Dr. P.A. Kuranchie; (Director) Ghana Food Distribution Corporation, Accra., 1985 18 Figure 3 Map of Ghana Showing Ashanti Region E 3’2 32%} $0M 1 4 \\\\' - Ashanti Region Source: A New Geography of Ghana by Dickson, K.B. and Benneh. p.89. 19 20 Table 3 Regional Maize Output: 1980-1984 (Thousand Metric Tms) Regicn 1980 1981 1982 1983* 1984 Western 21.0 15.1 13.2 22.8 eentra1 30.6 32.2 26.7 97.9 Eastern 39.5 41.8 34.4 63.0 Gt. Accra 8.0 6.6 4.4 9.0 v61ta 24.1 29.5 24.4 90.0 Ashanti 59.9 59.1 43.8 119.9 Brtng Ahafo 71.1 68.8 50.8 138.8 Northern 74.3 44.9 33.9 28.5 Upper 25.5 36.0 32.7 5.1 *1983 - Noregicnal breakdownis available. Famine year. **UpperRegim--ccnprisedofUpperEastarfiUpperWest. Source: Ministry of Agriculture, Accra, Giana (1985) 21 volume of maize output decreases as one moves northwards of the country beyond Brong Ahafo Region and the amount of annual rainfall decreases. Maize Production and Marketing in Ashanti Region Ashanti Region, positioned in the southern part of the country, as shown in Figure 3, is the second largest producer of maize in Ghana. Table 3 shows that Ashanti Region produced 119.9 thousand metric tons of maize in 1984. The region ranked second to Brong Ahafo Region which produced 138.8 thousand metric tons of maize in the same 'year. Ashanti Region was, however selected as the focus of 'this study for several reasons. First, although Ashanti Region is positioned to the south of Ghana as shown in Figure 3, it is a "central inarket" (i.e. food sourcing center) for the other regions of ‘the country. Ashanti Region is linked with other regions by a large network of motorable roads. It therefore «constitutes an interesting and useful market center for a marketing research. Brong Ahafo Region, on the other hand, lies between the sparsely populated northern regions of Ghana and the Ivory Coast which do not constitute major markets for Ghana's domestic food trade. Brong Ahafo Region food markets could be important external trade centers, but such trading (activities were prohibited by the Ghana Government at the 22 time of this study. The major portion of Brong Ahafo Region's surplus maize output therefore is shipped through Ashanti Region food markets to the large population centers in the southern parts of Ghana. Brong Ahafo Region is linked to other Regions of Ghana by very poor roads, which discourage trading activities. Second, although Ashanti Region ranks second to Brong .Ahafo Region in maize output, it has a higher density in acreage under maize production. Figure 3 shows that Brong Ahafo Region is almost twice the size of Ashanti Region, however, Ashanti Region produces 86% of Brong Ahafo's maize output. One reason for this phenomenon is the fact that Ejura Farms, the largest maize producing company in Ghana is located in Ashanti Region. This company cultivates 2,156 hectares (5,390 acres) of maize land, and produces over 2,200 metric tons of maize annually (1985 Ejura Farms Bulletin, p. 1). Third, the heavy production of maize in Ashanti Region is due to the fact that maize production is the principal business of several rural communities in Ashanti such as Sekodumasi, Asempanaye and villages around Mampong. Many maize farmers in these communities are semi-mechanized farmers who cultivate large acreages of maize land. Maize growers in Brong Ahafo Region, on the other hand, are mostly mixed-crop farmers. They produce other important food crops such as yams, beans, and groundnuts in addition 23 to maize. These other crops are as important as maize to most food growers in this region. Brong Ahafo Region does not have as many semi-mechanized and fully mechanized farms as Ashanti Region, but its large number of maize farmers help it produce more maize than Ashanti Region. Finally, Ashanti Region was selected as the focus of this study because its land mass is small and permitted adequate coverage in the study, given the limited time and financial resources of the researcher. Maize Marketing Institutions in Ashanti Region Maize marketing institutions that conduct maize marketing functions in Ashanti Region include maize growers, assemblers, wholesalers, the Ghana Food Distribution Corporation and maize retailers. Maize Growers: Maize growers in Ashanti Region fall into three major groups: fully mechanized growers, semi- mechanized growers and traditional non-mechanized growers. Fully mechanized maize producing companies and farms are large-scale maize producers. They generally cultivate over 2,000 acres of maize land. Fully mechanized maize farms can further be divided into two sub-groups: farms that do not perform marketing functions and commercial farms that perform marketing functions. Fully mechanized maize farms that do not perform 24 marketing functions are farms that are owned by livestock companies. Maize produced on these farms become direct raw Inaterials of livestock feed plants. This study recognizes the existence and economic importance of such farms but will :not evaluate their operations since their maize outputs are not marketed through traditional channels of distribution for maize. Fully mechanized commercial maize farms, on the other hand, operate well developed marketing departments that perform most basic marketing functions, i.e. accumulation, bagging, storage, transporting, warehousing and selling of maize. Some farms in this group maintain field personnel that provide the companies with information support services needed for making marketing decisions. There are only four fully mechanized maize producing companies in Ashanti Region. Interviews with the Ministry of Agriculture field officers show that the four companies produce about 4% of Ashanti Region's maize output (1986 Officers' Interview). The second group of maize growers are the semi- mechanized maize producers. These farms cultivate on the average, 10-50 acres of maize land. Growers use tractors in preparing the maize fields and sometimes also in planting, spraying and weeding the farms. Maize harvesting, and other production functions, however, are done through manual labor. Information gathered from Ministry of Agriculture's .Ashanti Region extension officers show that about 20% of Own rbi ”(6' V5. {J to 15: "we ‘~bd ”Ad 3‘9 “fa gm.” 25 maize growers in Ashanti Region are in this category. They produce close to 40% of Ashanti Region's maize output (1986 Officers' Interview). Farms in this group generally have no field marketing staff. The owners of the farms perform all .marketing functions. Their knowledge about maize markets are generally limited to their experiences and what they are able to learn about the marketplace from public information sources and other channel operators and friends. The third group of maize growers is the traditional non-mechanized maize growers. They cultivate, on the average, 1-10 acres of maize land. Close to 80% of maize growers in Ashanti Region fall into this group. They produce approximately 56% of the region's maize output (1986 Officers' Interview). The size of the farms of maize growers in this group is a function of the capital of the farmers (which generally is very small) and physical strength (i.e. manpower) of the farmers to provide manual labor. These farmers use human labor for all production, harvesting and marketing activities. They perform limited marketing functions. Interviews with Ministry of Agriculture field extension officers (1986 Officers' Interview) show that the surplus maize output of these farmers is sold on local markets of their rural communities. The majority of farmers in this group perform their marketing functions with little market information. They rely mostly on word-of- 26 mouth information from friends and trade associates. Maize Assemblers and Wholesalers: Assembling and wholesaling activities of the maize industry in Ashanti Region is highly integrated. These two marketing functions are often performed by the same independent maize wholesaler or assembler. Full-time assemblers are often hired to work for wholesalers. Assemblers also sometimes maintain market stalls in city and urban markets where their children or family members wholesale maize. The assembling activities of maize involve purchasing supplies of maize from rural farmers, bagging the raw dry maize, and transporting it to large population centers in truck loads to be sold to wholesalers or retailers. Maize assemblers maintain close ties with maize growers and wholesalers and therefore informally obtain information about the marketplace. Maize wholesalers in Ashanti Region are resident central market operators. They have stalls or selling spaces in large open markets in the major city, Kumasi or local towns. Maize wholesalers purchase maize directly from maize growers, through hired assemblers, or from independent assemblers who transport maize to city or urban markets. Prior arrangements or business relationships must have developed between a wholesaler and an independent assembler before an assembler ships a truckload of maize to a 27 wholesaler. Sometimes a wholesaler, upon receiving direct information from farmers about the presence of large quantities of maize in a particular farming community will send his or her agent to the farms to purchase quantities of maize. Farmers also sometimes bring in truck loads of maize to city markets to be sold to wholesalers. The Ashanti Region maize Wholesalers Association does not maintain records of total volume of maize handled by its members, but officers of the Ministry of Agriculture (Ashanti Region) believe maize wholesalers in the region handle 60-70% of the surplus maize produced in Ashanti Region (1986 Officers' Interview). Wholesalers generally operate with better market information than maize growers and retailers. This is because they operate in central markets and do receive direct information from assemblers and farmers on the one hand, and retailers and other maize buyers on the other. Ghana Food Distribution Corporation: An important maize assembler and wholesaler organization in Ghana is the Ghana Food Distribution Corporation. This state enterprise was established in 1971 to perform the following marketing functions: a) to purchase, store, preserve, sell and distribute foodstuffs including meat, fish and meat preparations. 28 b) to export foodstuffs to overseas markets. c) to buy and sell agricultural machinery and implements to farmers. d) to organize grocery shops, and e) to carry out such other activities as are incidental to the attainment of the foregoing objects. Over the years, however, time and circumstances have altered the corporation's role to that of largely a service organization which functions primarily-- a) to provide a ready, regular and stable market for producer farmers as incentives for them to produce more food, and b) to buy and distribute (locally produced) foodstuffs so as to make same readily available to all Ghanaians at reasonable prices all year around (1985 GFDC Brochure, p. 2). The Corporation is charged to conduct its affairs on sound commercial lines. This sets up the company in direct competition with private wholesalers and retailers of food commodities in the country. The company conducts its marketing activities nationally. In 1985, the company purchased 25,750 metric tons of maize, about 6% of Ghana's maize output (1985 GFDC Brochure, p. 2). The company has, besides its administrative departments, four operational departments--marketing, research and development, transportation and workshop, and storage/infestation departments. A network of field support staff provide the company with relevant market information. Field officers of the corporation travel to maize farms and rural market centers to purchase and transport maize to 29 district and regional company warehouses. The company's fleet of trucks and vans support its purchasing and transportation activities. At storage centers maize is properly dried, fumigated, bagged and stored. The company uses two main sales outlets: i) sales are made directly to consumers through the corporations own retail outlets strategically located in residential and public places in all the major urbanized centers in the country, and ii) the corporation also acts as a wholesaler to many commissioned retailers (1985 GFDC Brochure, p. 2). In addition to the above, the company makes bulk sales directly to institutions which depend upon government subvention for feeding. These institutions include the correction institution, secondary schools and colleges, hospitals, the armed forces, etc. Field personnel of the corporation provide relevant information (through monthly and quarterly reports) needed to make important marketing decisions such as: When to purchase maize Where to purchase it from How much to purchase Where to move and store maize, and When to sell maize The Food Distribution Corporation is therefore a well- organized marketing company. It is supported by strong financial backing from the government, and has access to government market information and statistics. The corporation is also able to provide maize producers with 30 essential commodities like soap, kerosene, machetes, cloth, etc. to entice maize producers to sell their output to the corporation rather than to private wholesalers and retailers. The Director of the corporation also has the enviable privilege of serving on the very important Committee on Agricultural Commodity Prices which will be discussed later. Surprisingly however, the corporation does not dominate the maize market in Ashanti Region. Private wholesalers and retailers are also able to give maize growers cash advances (without interest) and other gifts to neutralize the incentives that the Ghana Food Distribution Corporation gives to maize growers. The efforts of private wholesalers and retailers are effective since they market approximately 90% of the national maize output. Maize growers who are unable to sell their stock of maize on open markets are advised by the government to sell their maize to the Ghana Food Distribution Corporation at the government's minimum guaranteed price. This marketing arrangement does not always work. Sometimes the Food Distribution Corporation runs out of trading capital, and other times, the corporation purchases maize at less than the guaranteed minimum price, especially during bumper harvests. GFDC's marketing problems will be discussed in depth in Chapter Five of this study. 31 IMaize Retailers: Maize retailers, like wholesalers, also (operate on open markets. They purchase maize in small ‘volumes (usually one 220 Lb. bag of maize at a time) from ‘urban wholesalers or directly from farmers or assemblers who 'bring the maize to local markets. The majority of retailers (generally cannot afford the cost of transporting few bags of Inaize from distant farms to urban markets, nor can they afford the time to travel out of their market centers to ‘visit farms and purchase maize. Since maize is a staple food for many Ghanians, the retailer's market is generally stable. Almost the same quantities of maize can be sold on any particular market day; The maize retailer in Ashanti Region therefore just sits on an open market and waits for customers to walk over and buy his or her maize. A retailer's ability to attract a particular customer usually depends on the quality of her :maize on any particular day, and on past business relationships with the customer. Retailers' sources of maize supply are generally assured, except in times of great scarcity. Most retailers establish loyal business relationships with the wholesalers *who assure them of continuous supply. Maize retailers (generally operate with little information about demand and supply factors of the marketplace. Their major source of Inarket information is word-of-mouth information from maize 32 growers, assemblers, wholesalers, and other retailers. Maize Marketing Channels of Distribution in Ashanti Region: Maize produced in Ashanti Region reach markets by different channels of distribution. Figure 4 shows the different distribution channels that move maize from growers to final consumers or users. Maize moves directly from the grower to consumers or through several market intermediaries . The shortest distribution channel for maize in the region involve maize growers direct sale of maize to consumers or food processors. Ministry of Agriculture field officers believe about 10% of maize produced in Ashanti Region reach markets along this channel (1986 Officers' Interview). Maize growers who use this type of channel are mostly small-scale farmers. They sell their maize outputs directly to consumers and food processors on local markets in their communities. A major reason for the use of a short distribution channel is the maize growers' inability to move their maize to distant markets. Often these farmers sell on local markets because they cannot pay transportation costs or their maize outputs are so small that it is not worth the time and cost to move the maize to markets outside local communities. Small-scale maize farmers also often lack knowledge about demand for maize on markets outside their communities . AAAAAAAA 33 «scene a . 2.6.8 0.5.50.» 0. 96365—0: ... >253. 38.0: 0822 - Onese- wl 5.5.98.2 9.3.5.8- a. 3x... 1:892: 9.35:2 an ace.— 5:63.5- 9:65.8- ca ...—xx. 1386.: 05.2.32 2 mac.- 132%.: aAnhA' 1 nit-5V ‘ I azhzev "W n :9...“ ‘hu ‘5‘ 34 Maize growers can also move their maize through assemblers or retailers to final consumers or users. Market intermediates in these two distribution channels consolidate small volume purchases into truckloads to achieve cost efficiencies in transporting maize to urban markets. Since most final consumers of maize and food processors cannot finance or store large volumes of maize purchased through these channels, the volume of maize distributed along these channels are usually small. The longest channel of distribution for maize in Ashanti Region involve the movement of maize from growers through assemblers, wholesalers and retailers to final consumers or users. This is the distribution channel used 'by the majority of maize wholesalers in Ashanti Region. Maize ‘wholesalers generally have more operating capital than do :maize assemblers and retailers in Ashanti Region and have adequate storage places in open markets in the urban centers. They are therefore able to purchase maize in large ‘volumes and do benefit from the economies of scale. Ministry of Agriculture officers believe over 60% of maize produced in.Ashanti Region moves along this distribution channel. Maize assemblers, wholesalers and retailers in .Ashanti region are mostly independent operators. They (generally buy and take title to the stock of maize they Ihandle. On some occasions, however, when a maize assembler, 1121883 "r 131 o . . :“9 A: ..V“ w ‘4‘»; , "'i‘fae I-.' O. 4‘29 V 'J‘ ;:?e:s I‘ . | :NJ‘ ‘5". . V I EC‘R'A, 35 Awholesaler or retailer does not have adequate funds to pay for maize purchased from a supplier, the channel operator is able to work out credit arrangements with his or her ‘business partner. Credit arrangements are possible because of mutual trust that develops between members of the distribution channels after years of doing business together. Maize distribution channels perform important information functions in the marketing of maize. Channel participants gather and transmit information about the marketplace by word-of-mouth, as they move grain along the channels. In Ashanti Region, this source of information often constitutes the only source of market information for many channel operators. Maize Marketing Decisions and Market Information Network in Ashanti Region Tactical Maize MarketingDecisions Maize growers, assemblers, wholesalers and retailers inake important tactical maize marketing decisions that :require the use of accurate and timely market information. Maize Growers: Discussions and interviews with local maize growers cooperative executive committee members (1986, Coop. Interview) showed that maize growers make important tactical decisions such as: when to sell maize finding markets for maize output pricing, and i fill ’ :JE. . C ‘:‘I’A' nucly‘ “I .44 '9 u v. a: I u . at... . ".5 U ml 36 finding financing services. The majority of maize growers interviewed felt the issue of when to sell maize was the single most important Inarketing decision facing maize growers annually. Factors influencing this decision included the maize (grower's immediate need of cash and anticipated favorable or unfavorable government guaranteed floor price announcement. The government's minimum guaranteed price announcement is usually made in early August, about four weeks after the first maize crops have been harvested. At that time of the 'year, the supply of maize on food markets in the country is at its lowest level and food prices are high. Maize growers 'who are risk averters usually take advantage of the high food prices and sell off large portions of their maize crops soon after they are harvested. The majoirty of maize Igrowers, however, prefer to wait in anticipation of a good (government minimum guaranteed price announcement to give 'them better bargaining position than prevailing market prices would allow. In the past five years the government has consistently raised the floor price of maize as shown on Table 1. One might think maize growers would be smart in holding 'back on the sale of maize early in the harvest season, ‘wait for government price announcement, and then take advantage of a better floor price announcement. The problem Ihowever is not that simple. The government generally raises 37 the minimum guaranteed price based on the level of inflation, anticipated volume of maize output nationally and other factors. Thus a new floor price might be set higher or lower than anticipated by maize growers. A small price increase in floor price of maize sends signals to maize assemblers and wholesalers that the government anticipates a bumper crop that year and maize distributors would begin to lower their offering prices right away. Market price of maize could therefore fall well below the price level that existed before the floor price announcement. The timing of the government minimum guaranteed price announcement is therefore critical to maize growers time-of—sale decision making process. Maize assemblers, wholesalers, retailers and consumers are also directly affected by the timing of this announcement since the majority of maize growers hold back from selling maize early in the harvest season as they wait for government price announcement. Maize assemblers, wholesalers, and retailers generally do not find adequate supply of maize until the minimum guaranteed price information is announced. Maize growers in Ashanti Region also have the perennial problem of finding customers and markets for their maize outputs (except in a famine year like 1983). This problem arises partly because most maize growers in the region lack knowledge about demand factors of the marketplace, and also 38 due to lack of financial resources needed to transport maize outputs to markets outside farming communities. For many maize growers in Ashanti Region, the search for loans to finance production and marketing activities is a formidable task. Maize growers in the region generally have little or no knowledge about services offered by financial institutions in their communities. They therefore finance their business activities with private savings and loans taken from friends. Maize Assemblers and Wholesalers: Maize assemblers and wholesalers have a longer list of important tactical marketing decisions which require the use of accurate and timely market information. These decisions include: finding maize supply sources determining market demand for maize purchase price determination selling price determination storage and movement of maize, and finding financial services. Most of the above tactical marketing decisions are interrelated. Determination of purchase price and selling price are related to supply and demand factors of the marketplace. For a majority of maize assemblers and wholesalers, the two most important marketing decisions in the above list are demand estimation and finding financial services. Maize assemblers and wholesalers in Ashanti Region generally receive no external information about the demand for maize. Neither the Ghana government nor any 39 other organization compile statistics on demand for maize. Maize assemblers and wholesalers' knowledge about market demand for maize is obtained mainly through friends and other maize marketing business partners. Maize Retailers: Maize is a staple food crop in Ashanti Region. There is therefore a stable consumption and use of the grain all year round. Maize retailing decisions are therefore routine. Important maize retailing decisions include finding: maize supply sources, and financing services. Maize wholesalers in Ashanti Region are generally reliable in the supply of maize to maize retailers. However, in seasons when rainfall fails and production is poor, the supply of maize becomes a major problem for maize retailers. In such situations, maize retailers have to visit maize farms and production centers in search of maize. Since the tropical climate of Ghana experiences occasional rainfall failures, this market condition does occur infrequently. Maize retailers, like other maize marketing channel participants, have little or no information about external financing services in their communities. They are generally ignorant about the services of financial institutions in their communities. The volume of their marketing activities 40 are generally small due to lack of adequate funding. Maize retailers purchasing decisions are often difficult, since they must enter into complicated credit agreements with maize growers, assemblers, and wholesalers in order to obtain an adequate supply of maize. The Problem Market information is essential for effective decision making. The use of relevant and timely information improves the quality of marketing decisions. A desire to improve the performance of market systems therefore requires serious study of the effectiveness of information systems that support markets. In a developing country, such as Ghana, due to the small size of individual private business operations and financial constraints of entrepreneurs, most businesses are unable to effectively produce or acquire external market information necessary for decision making in the marketplace. Internal information gathered by market participants such as word-of-mouth information, although very useful, are often inadequate. Owing to the importance of market systems in Ghana's national economic development programs and the desire to have markets operate efficiently and effectively, the government of Ghana plays important roles in the development and dissemination of market information. It allocates money, technology and manpower resources to the development 41 and dissemination of market information. The government has set up marketing institutions, trade and price advisors boards and other facilitating organizations to help provide market information support services for domestic food markets. The important questions however are: 1. what kinds of public and private information systems exist in the marketplace? 2. what are the goals and functions of these information systems? 3. what information outputs are generated and how are they transmitted to end users? 4. how credible are the information outputs? and, 5. how do marketing channel operators use existing information? There is a need for a systematic analysis and evaluation of market information systems in maize markets with emphasis on the quality and value of information produced. A food market system was selected as the frame of references for this study for four reasons: First, it is a market system that enjoys a fair amount of freedom. Most business activities involving wholesaling and retailing of essential products and services are tightly controlled by governments of most developing countries. Food marketing, in the case of Ghana, is one of few business activities that thrive in a free market environment. This kind of environment is essential for the study of information 42 because it provides the motivation for the acquisition and use of information. The effect of information on marketing activities can be fully felt in a free market system where differences in marketing Operators' abilities to acquire and use information can give marketing operators competitive urge. Second, food production and marketing constitute the livelihood of nearly 70% of Ghana's rural population. Maize is an important segment of Ghana's food production industry. Improvement in the operating efficiency of Chadian food market systems would therefore benefit a large percentage of Ghanaians who depend on the industry. Third, food production constitutes an important portion of Ghana's gross domestic product. The growth of the food industry therefore would make an important contribution to Ghana's economic development program. On the other hand, food deficit situations drain Ghana's limited stock of foreign currency reserves, as such funds are used to import food to supplement Ghana's domestic food output. Finally, since self sufficiency in food production is an important national economic development goal, the Ghana government would be willing to commit resources to help improve the food production and marketing industry. The findings of this study will therefore not fall on deaf ears, but will make a direct contribution toward the achievement of this national economic develOpment goal. 43 Research Objectives The overall objective of this study is to understand information systems and use in maize markets in Ashanti Region, Ghana. Specific objectives of the research include: 1. Provide in-depth description of the structure and marketing functions of maize marketing institutions in Ashanti Region. 2. Identification and qualitative evaluation of market information systems that serve maize marketing institutions in the Region. 3. Determine the usage of market information by maize marketing channel operators, and 4. Suggest changes in policy and administrative practices in the development and dissemination of market information needed to improve maize marketing decision-making. Research Process Overview The first part of Chapter Two presents the conceptual framework for the study of market information. This is followed by a review of literature pertinent to this study. Research questions are developed at the end of the literature review. Chapter Three discusses the research methodology of the study. The chapter describes in detail research instruments, field study program, sampling plan, and data collection methods and processes. Chapter Four gives a detailed description and qualitative evaluation of maize marketing channel 44 participants demographic factors and information resources. Chapter Five evaluates the quality of information support services of public organizations. This is followed by Chapter 6 which evaluates information services of trade cooperative associations. Chapter Seven summarizes the strengths and weaknesses of present information systems that serve the maize marketing institutions, and offers recommendations that will help improve the quality and usefulness of maize market information systems. 45 References Agricultural Commodity Prices in 1984: Report of Committee on Agricultural Commodity Prices, March, 1985, p. 3. Consumer Markets in West Africa (London, Euromonitor Publications Ltd., 1984), p. 84. Dickson, K.B., and G. Benneh: A New Geography of Ghana (London: Longman Group Ltd.), 1970, p. 89. Djang, R.K.O. ed.: Ghana Agricultural Policy: Action Plans and Strategies, 1984-1986. (Accra, GIMPA, April 18, 1984). Ejura Farms Company News Bulletin, Ejura, Ghana, 1985, p. 1. Information Brochure on the Ghana Food Distribution Corporation, (Accra: GFDC, 1985), p. 2. Interviews with Regional Agriculture Officer and Economic Research Officer, Ashanti Region, Kumasi, 1986. Interviews with Sekodumasi and Kwamang Maize Growers Cooperative Committee Members, 1986. Peter, Paul J. and James Donnelly, Jr.: Marketing Management: Knowledge and Skills (Plano, Texas: Business Publications, Inc., 1986), p. 38. Stigler, George J. "The Economics of Information” Journal of Political Economy, (Vol. 69, No. 3, June, 1961, Chicago, University of Chicago, Ill), p. 213. CHAPTER TWO CONCEPTUAL FRAMEWORK AND THEORY Introduction: Market information facilitates marketing decision making. It influences and shapes marketing plans, policies and strategies. The capacity to acquire and apply such information is called marketing intelligence (Lazer and Culley, 1983, p. 213). Market information is obtained from systematic collection, organization and analysis of internal and external data and events about the marketplace. Such information must be developed and made available to marketing decision makers on routine basis. A firm's arrangements to systematiza market information flows constitutes the firm's marketing information system (MIS). CONCEPTUAL FRAMEWORK Several information system models have been developed in marketing literature that emphasize specific management goals. In this study, a marketing information system will be examined from a perspective that considers the goals of both the information developer and user. Figure 5 presents a conceptual framework for the 46 mu Ava-.376. A Iii fi :23 ,.. -c A. U ‘ .co'OVO I . ... .;‘~-‘. coco—D- -. .-g‘ I‘o. via. ‘ 48 development of a marketing information system that can help provide qualitative and relevant information for marketing decision makers. The development of an effective marketing information system begins with a thorough study and evaluation of an information system and information needs in the macro- environment environments of the firm and the economy under considerationx _At the macro level, relevant considerations would include the society's level of economic development, technology, laws and politics, culture and other relevant resources of the economy. Another important factor would be a study of the level and the extent to which private enterprise is permitted to develop, and has developed in the economy. Thus existing information systems should be studied and evaluated in the historical, political, economic and social setting of the firm to permit objective diagnosis and prescription of information needs of a particular firm or industry. The goal of the macroenvironment analysis of a firm's information systems is to determine the quality of existing market information systems, a study of agencies and organizations that impact the development and functioning of information systems, and to determine the extent to which information developed and disseminated by the society meets the needs of marketing decision makers and the economic goals of the society. 49 Information networks of the firm or the task environment must also be carefully studied at the macro level. Relevant factors to be studied in this area include producers, buyers, channel competitors, suppliers, government and other private agencies operating as information users and transmitters. A thorough study of information networks and needs of the task environment would help provide insight into levels of information flow within the firm or industry, marketing decision makers analytical abilities and information use habits. This will help determine information deficiencies in the task environment. The next stage in the development of a marketing information system, after a thorough study of the macro environment of the economy is the development of goals for information systems. A marketing information system requires clearly defined goals. Since the primary purpose for developing marketing information is to help the decision maker improve marketing decisions, it is essential to identify the user and the purpose for a particular piece of information or information network. Developing an information network without first knowing the purpose of such a network is a futile but all-too-common practice (Ballenger and Greenberg, 1978, p. 12). Clearly defined information goals help direct information development efforts toward the needs of information developers and 50 users. At the firm's level, the usefulness of market information lies in its ability to form the basis for formulating marketing mix tactical and strategic decisions. A marketing information system should therefore provide market intelligence on production, pricing, demand, distribution and other marketing mix elements. It is also useful to subject a market information system to an internal qualitative and quantitative evaluation. An evaluative criteria of accuracy, understandability, timeliness, relevancy, sufficiency and the assurance of a two—way communication process between information developers and users could be used to determine the quality and relevancy of information developed and disseminated to decision makers. Attention should also be paid to information transmission. Media choice, formal or informal information transmission, and the scheduling of information dissemination should be carefully analyzed and implemented to assure maximum utilization of information resources by information users. Failure on the part of information producers to develop proper mix of information transmission factors can render an information system ineffective or sometimes useless. Information output is useful to the extent that it facilitates planning, executing and controlling of marketing 51 management activities. At the output level, plans of marketing decision makers are implemented and results are monitored by collecting and assessing feedback. Feedback from an information system users should be used to modify and improve the quality of information output of the system. In the dynamic market environment, an information system's ability to respOnd to changes in the market environment must be a prime goal. Market Information Benefits In a Market System: Market information has a facilitating effect on decision-making, which in turn influences a market system's performance. Figure 6 presents a conceptual framework of the benefits of market information on a market system. A study of the model should begin with "Market Information" and move in the direction of "Risk and Uncertainty." At the individual channel operator's level and the firm level, market information reduces uncertainty and risk. It also helps to increase awareness of marketing opportunities. These operational conditions help improve distribution functions of marketing operators. Knowledge about the marketplace also facilitates market specialization. Improvement in distribution functions has direct effect on production functions. When distribution functions are performed efficiently, assemblers, wholesalers, and \ retailers are able to effectively carry through exchange 5283 .0332 a a. 8:280 5:258... .9962 .0 2:9“. 53 processes with food producers. Under such market conditions, marketing functions are effectively coordinated by the use of relevant and timely information. Food distributors are therefore able to provide guidance to producers in their production activities. Improvement in production and marketing functions improves the overall performance of a market system at the firm level. The firm's efficient market performance, resulting from production and distribution efficiences, can help improve channel operators remunerations. It can also facilitate growth. Growth at the firm level in turn, can help improve the firm's market information resources. Individual firms' efficient market operations could result in the market system's provision of wide product assortment, improved product quality, reduced prices and increased demand at the industry level. Growth and progressivaness of the food production and marketing industry, in the and analysis, would have positive effects on a nation's economic development. The theoretical basis for this conceptual framework will be presented in the Theory section of this study. Theory The study of the effect of information on market systems has its foundations in information theory. The basic economic theory of information states that information 54 reduces uncertainty and risk. The fundamental concepts around which Shannon developed his theory of information are choice and uncertainty (Lamberton, 1971, p. 84). He investigated the degree of uncertainty that is removed by the act of specifying a particular symbol or message from a group of such messages. In theory, economic decisions regarding alternative choice of actions are generally made without complete knowledge of future outcomes. The decision maker therefore benefits from information that can facilitate formulation of decisions that would increase the certainty of future outcomes. Karin and Peterson (1981) observed that: A prerequisite for successful decision making is the effective management of information. Put simply, the better the information, the better the decision, because decisions are made in an environment of uncertainty and information reduces uncertainty. Hence, the less uncertainty, the less risky a decision (p. 85). An important assumption in the development of information theory is that people make rational decisions in an attempt to achieve expected outcomes. Peter Drucker (1956) observed that the burden of decision-making can be lessened and better decisions can result if a manager recognizes that decision making is a rational and systematic process and that its organization is a definite sequence of steps, each of them in turn rational and systematic. Decision makers therefore needed relevant information to 55 enable them to make rational decisions. The economic importance of information is seen in the operation of competitive markets. Traditional microeconomic theory, in the development of the model of pure competition, assumes perfect knowledge, no lags or friction, large number of firms, standardized or homogeneous products and no exercise of monopolistic power (Brassler & King, 1970, p. 84). Perfect knowledge in the model means both buyers and sellers are endowed with perfect information; the buyer to discriminate perfectly between all offerings and the seller to judge perfectly consumers needs (Mazis, at al., 1981, p. 12). In theory, in the uncomplicated world of the idealized competitive economy, there are two kinds of information that market participants need to enable them to make effective decisions in the marketplace: information as to prices of goods and information as to timing of receipts. Perfect information about prices in the economic model implies perfect information on the specification of goods (Preston, 1970, p. 133). The free interplay of suppliers and consumers leads to the establishment of a unique market price, such that the marginal cost of suppliers are balanced against marginal benefits of buyers, and no market participant can be made better off without making another worse off. Information, in the economic model of pure competition, thus sets efficient price levels and revenues ‘1‘ 56 are maximized on markets. In the homogeneous market of perfect competition, therefore, price performs the economic function of matching demand and supply. The market is thus cleared by price, and market information is an attribute of price (Alderson, 1965, p. 30) Marketing theorists and economists differ in their assumptions, in the study of information and market systems. In the study of competitive market systems, economists assume perfect knowledge about the marketplace. Marketers, on the other hand, believe the economic model of a perfectly homogeneous market with perfect information has no counterpart in the real world. Alderson is of the view that this assumption is only a convenient fiction adopted by economists who want to think about the economic problem of price, rather than the marketing theorist who wants to think about the marketing problem of information (Alderson, 1965). In marketing literature, therefore, Alderson assumes: i) a heterogeneous marketplace, and ii) imperfect levels of market information. In his view, market imperfections result from failure in Imarket communications. Furthermore, his heterogeneous market model lies closer to the facts of the marketplace 'than what economists have assumed over the years (Alderson, 1965, p. 30). Mitchell (1978) has observed that research in 57 economics of information has demonstrated quite clearly that information imperfections exist in the marketplace (p. 104). Stigler (1961) states further that "price dispersion is a manifestation--and, indeed, it is a measure of ignorance in the market" (p. 62). Arrow believes the theory of optimal allocation of resources under uncertainty should be linked to the critical notion of information (Lamberton, 1971, p. 141). Alderson's heterogeneous market model thus views the marketing activity as a problem solving process, and searching, which pertains to the movement of information between market participants is a major function in the marketing process. Accordingly, the heterogeneous market is cleared by information. Either consumers must find the «goods they want or suppliers must find the consumers who 'will accept the goods offered. Confusion of signals in the marketplace results in a mismatch. IFunctions of Information: Economic and marketing literature have identified several important functions of information within the market system. These functions can be grouped into two general «categories: market structure and managerial functions. Market Structure Functions: Market structural functions (If information refer to information attributes influencing the physical structure of market systems. Information 58 functions in this category include: a) formation of efficient market price b) product differentiation c) better product selection d) improved product quality, and a) market specialization. Information's role in the development of efficient market price was partially examined in the discussion of the economic model of perfect competition. In theory, an efficient market resulting from the presence of perfect market information establishes optimal prices that are interrelated through space by transportation costs, and through time as a consequence of the costs of storage (Brassler and King, p. 413). Shaffer (1983) has observed that markets provide mechanisms for collecting and summarizing enormous quantities of idiosyncratic information about production possibilities and preferences in the easily understood form of prices, which at the same time carry .incentives to produce or conserve (p. 6). Market information facilitates product differentiation iai'the marketplace. In the economic model of perfect competition, where market participants are fully informed of available product choice alternatives, only normal profits can be made. To make above normal profits, therefore, a market participant must use market information to 59 differentiate products or services being offered in the marketplace (Alderson, 1965, p. 104). The effective use of market information on competitive markets, therefore, help move market participants toward product differentiation. Similarly, effective use of market information encourages specialization in marketing functions. Alderson (1965) has observed that perhaps the most essential function of a marketing firm is handling information and acting as a kind of switchboard, connecting the consumer with specialized need with the specialized product which satisfies the need: that there are firms at the intermediary stages of distribution, such as brokers and ‘wholesalers without stocks, who handle information and do not handle goods at all (p. 75). The effective use of market information facilitates improvement in product quality and also offers better consumer choice in service variety. Mazis, et a1. (1981), Ihave observed that improved product quality usually occurs ‘whanever new information allows some consumers to alter 'their choices, thus providing a signal to sellers to change 'their products (p. 12). Product variety offered to consumers improves consumer choice alternatives in the Inarketplace. Consumers and product users are, therefore, able to make decisions which enhance their well-being. Finally, information facilitates product comparisons thereby encouraging competitive market forces. Price 60 reduction which often results from competitive market activities is an important benefit of effective use of information that characterizes an efficient market system. Managerial Functions: The managerial functions of information include the use of information for planning, executing, controlling and coordinating marketing activities. Market information is critical to short- and long-range planning. Information helps an organization to assess the environment, forecast it, develop strategies for taking advantage of it, and to the degree possible, to alter the environment (King and Cleland, 1974, p. 35). By the establishment and use of accurate and timely information system, a firm can create and maintain a dynamic program of policy formation, along with appropriate actions and necessary controls. Duddy and Revzan (1953) have observed that communication (defined here as the flow of information ‘within the organization) in its application to business k‘ i ‘- 0W3 /’ 2 :- : 2 1' a' \_ \'o’ I ‘. \'\ C." . .:."-‘\ Q . [mute ‘. ) I f 1' .1 f ./ I § 0 Dan-mum ‘ 5‘ ‘. \‘ I \ f" f ’\ ‘.\ I \ ~ I \ ‘. \ _ I ? f ‘ \ ‘ \\ ’ . J I O Sauna l \ .‘ ‘ \ ' ' a In" \ ‘ \ ) ‘I ‘\ I -\ g I i \ -‘ I s H n, M .’. i \\ ”~’ _’ elm-nu . . if r/ " a)“\ i I J .flmu. mo \. 9" ‘. .I A!» 2mm. \\\ ! .I . , 0 "same Dame ‘ I I \ ' -.." .. :mu-”’ \‘ \\ \.‘. i omnmmam : ' I! .\ e an... ’_--‘_,J (. . ' . .I . A kLW ' I J «:1:me “W 2 < "\ .m «- . ( " --\ J ... '"l t ‘ \ ' “amuse ' “' ' . \ I < '8 ocean” KUMA ' am "mo {5 we no " "w." .\.‘ .’ I f ( i . 53A “3“” x ‘. ‘\ ,“ O '08 ..eoocu I .\.o.\ \_ ‘- .um I ”drew. -\ ‘. \P oAImhm . hologram-.m- . ‘33". 0 .O“‘“ O“ \ I I Amtnaq,’ :, .Hummv‘ - ' ". ‘\ \‘ o'umcn' ‘.*‘dum..w .m 7 .‘d-H’no". ‘- ‘\ .. ~ I Charmin“! ‘1’ \\ \. \\ --\’-' \ A‘.Il"\fl§0'£0. \. \ ‘ o Nude-am ‘i ‘\ t“- "\ or...“ 'm .0 “~h.fl“l. .a \ - --' o . ' . Omnhoc o \.’ q‘ .l. ‘ 5“:an i Sui" ‘ ('unfln.‘ Amman: \ ‘\ Mm.» r, ' As: .vw I o 3 o 50 «we» '-"’ -.- NQUJW" ":mum'e‘ ' . tax!- AcumJ Jun: "no. . ‘ '5' 5. ‘. 0/" ~------ In J '1" .0 . I‘ .1 . I. h - ' - ll ' E .T—i- “‘17 A Maize Growing and Marketing Communities. Source: A New Geography of Ghana by Dickson, K. B. and B. Benneh. 1970, p. 89 11]. 112 maize output and marketing transaction that took place in the selected city and towns. Most of the maize-producing towns selected for the study were "dead-end road" farming communities. All classes of maize growers were therefore well-represented in the selected samples. It was explained earlier in the study that local co- operative association members made up the study population from which samples were selected. Explanation for this cause of action was also discussed. Simple random sampling was used to select the study samples of maize growers and retailers. All maize wholesalers identified were interviewed because they were few in number. The selection followed the following processes: 1) Co-operative association membership lists for each local association was obtained from the association's management and brought up-to-date. 2) A single number was assigned to each name on the association membership list. No name was skipped in the process, and 3) A table of random numbers was used to select elements for the sample. Each association member had the chance of being selected (Babbie, 1979, pp. 177-178). Sample Size: Differences in population sizes for the various maize marketing institutions in the different towns and city created a need to develop a criteria for determining sample size for each town and city. Sample sizes for maize growers and retailers had to be limited for 113 several reasons. First, the limited financial resources of the researchers necessitated limiting to a manageable size study subjects to be interviewed. Second, the socio- economic environment of Ashanti Region necessitated the scaling down of the study samples. Transportation services were difficult to obtain in rural parts of Ashanti Region, and when such services were found, were very expensive. Besides, some farming communities had so few resources to support a visitor that it was difficult for the researcher's hosts to support him physically for any length of time. The researcher therefore determined a minimum of 30% of maize growers and retailers identified would be interviewed._ Table 4 shows only 30 maize wholesalers operated in Ashanti Region maize markets in the study period as compared to 429 maize growers and 233 maize retailers. All the wholesalers identified in the study were therefore interviewed. Thus a total of 130 maize growers, 3O wholesalers, and 70 retailers were interviewed. The general manager, production manager, and director of Ejura Farms, the largest maize production company in Ghana, were interviewed. The regional manager and two district marketing managers of the Ghana Food Distribution Corporation (Ashanti Region) were also interviewed. In addition, 25 public policy makers whose activities 114 and decisions provide market information to maize production and marketing channel operators in Ashanti Region were also interviewed. The public policy makers included the director and executive officers of the Ghana Food Distribution Corporation (Accra), senior officers of the Ministry of Agriculture (Research Division), Ministry of Agriculture (Ashanti Region Extension Services), Ghana Grains Development Board (Ashanti Region), Ghana Seed Company (Kumasi), Ghana Co-operative Association (GAFA-Cop.) Ashanti Region, local Agriculture Development Banks, local Cooperative banks, and some members of the Committee on Agricultural Commodity Prices. Surveinnstrument Pilot Test: All survey instruments of the study were pilot-tested. Ten potential questionnaire respondents whose composition reflected both urban and rural orientation, large and small-size operations, and varying levels of education were carefully selected for the pilot test. Five public policy makers representing different public organization that offer information services to the maize production and marketing industry were also selected for the pre-test. These study subjects were served with appropriate questionnaires for the institutions in which they function. The respondents were requested to verify adequate coverage of the information environment of their respective institutions, understandability and relevancy of 115 the research instruments. Suggestions of the respondents were used to revise the research instruments to assure adequate coverage of subject areas being studied and research instrument understandability. Survey Instrument Administration: The researcher personally administrated each questionnaire. Study subjects who could read and write English fluently were permitted to complete the questionnaires on their own. The researcher was always on hand to answer respondents' questions whenever the need arose. For semi-illiterate and illiterate respondents, the researcher read translated versions of the questionnaires to them and recorded their responses. In situations where a husband and wife or two business partners were in the immediate vicinity of the interviewer, and where an interview respondent wished to have the other business partner answer a specific question (due to the fact that the partner had better knowledge of the marketplace), such arrangements were permitted. The researcher believed such interviewing process was healthy since the basic purpose of the study was to discover the true operating environment of the industry and practices of its channel operators. Each field interview lasted between 30-45 minutes and the administration of the research instruments took 12 weeks. 116 Research instrument respondents were permitted to give additional information that did not relate directly to information development and dissemination, but were of importance to the general area of maize production and marketing. This information gave the researcher a clearer understanding of the overall operations of the maize industry. The remaining chapters of the study will present analyses and evaluations of the field data collected for the study. Conclusions will be drawn from the study findings and appropriate policy recommendations made to interested parties of the maize market system. Channel mapping will be used as the framework for presenting the study data. Chapter Four presents demographic factors of the channel operators that facilitate information acquisition and use, marketing functions, and marketing mix decisions of channel operators. Chapter Five identifies and evaluates information production efforts of public organizations. Chapter Six evaluates information services of cooperative associations and market unions while Chapter Seven offers conclusions and recommendations from the study. The value of information in the marketing system will be evaluated on the basis of accuracy, relevance, timeliness, sufficiency, and equitable distribution of information among maize marketing institutions. 117 References Babbie, Earl R., The Practice of Social Research (Belmont, CA: Wadsworth Publishing Company, 1979), pp. 177- 178 0 Field Interview with Ashanti Region Agriculture Officers, 1986. Goldberg, R.A., et al., Agribusiness Management for Developing Countries: Latin America (Ballinger Publishing: Cambridge, Massachusetts, 1974). Green, Robert T. and P.D. White, ”Methodological Considerations in Cross-National Consumer Research," Journal of International Business Studies, Fall/Winter 1976, pp. 81- 87. Harrison, Kelly, et al. Improving Food Marketing Systems in Developing Countries: Experiences from Latin America (East Lansing, Michigan State University Latin American Studies Center, 1974), p. 8. Jones, W.0. "Measuring the Effectiveness of Agricultural Marketing in Contributing to Economic Development: Some African Examples," Food Research Institute Studies in Agricultural Economics, Trade and Development, (Vol. IX, No. 3, 1970). Lele, Uma J., ”Considerations Related to Optimum Pricing and Marketing Strategies in Rural Development," papers and reports from the 16th International Conference of Agricultural Economists, 1976. Mellor, J.W., T.F. Weaver, U.J. Lele and S.R. Simmons, "Developing Rural India," (Cornell University Press, 1968), Chapters 12, 13 and 14. Phillips, Richard, Ed., Building Viable Food Chains in the Developing Countries, (Manhattan, Kansas: Food and Feed Grain Institute, Kansas State University, August, 1973). 118 Preston E. Lee and Norman Collins, "The Analysis of Market Efficiency," Social Issues in Marketing--by Lee Preston (Berkeley: Scott Foresman and Co., 1968), p.96. Pritchard, Norris T., "A Framework for Analysis of Agricultural Marketing Systems in Developing Countries," Agricultural Research (Vol. 21, No. 3, July 1969). Riley, Harold, et al. Market Coordination in the Development of the Cauca Valley Region, Columbia (MSU Latin American Studies Center, 1969), p. 1. Riley, Harold M. and Michael T. Weber, "Marketing In Developing Countries," Working Paper No. 6 (East Lansing, MI: Michigan State University, 1979), p. 7. Slater, Charles, et al., Market Processes in NE Brazil (MSU Latin American Studies Center, 1969), p. 1-1. Slater, Charles, et al., Easing Transition in Southern Africa: New Techniques for Policy Planning (Boulder, Colorado: Westview Press, 1979), p. 6. CHAPTER FOUR MAIZE MARKETING CHANNEL PARTICIPANTS: DEMOGRAPHIC CHARACTERISTICS, MARKETING FUNCTIONS AND MARKETING MIX DECISIONS This chapter presents demographic characteristics of maize marketing channel participants in Ashanti Region with the purpose of identifying personal attributes of marketing operators that facilitate information acquisition and usage in the market system. The chapter will also identify marketing functions and marketing mix decisions of the maize marketing channel operators to help determine their information resource and needs. Demographic Characteristics: A critical analysis of demographic factors such as sex, age, marital status, level of education and number of years maize marketing channel operators in Ashanti Region had been in the maize business will help in understanding information development and transmission opportunities and problems in the region. 119 120 Sex of Channel Participants Both males and females are well represented in the maize production and marketing business in Ashanti Region. Table 5 shows the distribution of males and females in the maize production, wholesaling and retailing business in the region. The chi-square test of independence shows that there is sufficient evidence that type of marketing institution an operator participates in is not independent of the sex of the marketing operator. That is, the sex of a marketing operator varies with the type of marketing institution an operator participates in. A close study of Table 5 shows that the role of males in the maize production and marketing business becomes less dominant as one moves from grower to retailer. 67% of the growers are males while only 33% are females. Among the wholesalers, 53% are males and 47% are females. There is greater female participation in maize wholesaling than in maize production. Females, however, show an overwhelming domination in maize retailing in the region. 94% of the maize retailers studied are females while only 6% are males. Male and female ratios in the study data are explained by some Ashanti cultural practices. First, it should be noted that female participation in the maize production business is higher than the data really shows. In Ashanti culture, wives of farmers are regarded as helpers of their husbands. As such, husbands are recognized as "the farmers" 121 Table 5 Chi-Square Table Showing Gender of Maize Marketing Channel Operators Type of Marketing Female Male Sample Institution % % Size Maize Growers 33 67 130 Maize Wholesalers 47 53 30 Maize Retailers 94 6 70 123 107 230 X2 = 69.16158 with d.f. = 2, Significance = .0000 122 and not the wives. Although farmers wives are full—time farmers in their own rights only their husbands get registered as farmers. The females who are registered as Maize growers on Table 5 are therefore mostly single women or women whose husbands are not farmers. Maize growers male-female ratio in this study would therefore be about equal in participation. Second, food crop distribution in Ashanti culture is a "woman's business." Hence the strong female representation in the maize retailing business. The culture tends to look down on males who retail food crops in the marketplace. This explains the low participation of males in the maize retailing business. Maize wholesaling business, on the other hand, is regarded in the culture as challenging business activity involving the complexity of assembling functions, urban marketplace management, out-of-region wholesaler and retailer business interactions, and difficulties in raising operating capital, in contrast to unchallenging maize retailing. Hence the strong male participation in maize wholesaling. The study found differences in information acquisition sourcing among male and female marketing channel operators. Table 6 shows marketing channel operators who listen to Radio Ghana's food production and distribution programs. The tabIe shows that there is sufficient evidence that gender of marketing channel operators in the various 123 Table 6 Chi-Square Table Showing Marketing Channel Operators Who Listen to Radio Food Production and Distribution Programs by Gender Type of -- Once a Once a Marketing Week Month Never Sample Institution % % % Size Female Grower 27 22 51 41 Male Grower 54 13 33 82 Female Wholesaler 29 7 64 14 Male Wholesaler 63 25 12 16 Female Retailer 24 5 71 66 Male Retailer 0 50 50 4 85 30 108 223 x2 = 42.52254 with d.f. = 10, Significance = .0000 124 marketing institutions are not independent of the operators' sources of information. The table shows that on the average, a higher percentage of males listen to food production and distribution programs than their female counterparts. Among maize growers, 54% of male growers interviewed said they listen to the radio programs once a week whereas only 27% of female growers listen to the programs once a week. Weekly radio listenership among maize wholesalers is 63% of males to 29% of females. Among maize retailers, 50% of males interviewed listen to the program once a month while only 29% of females interviewed listen to the radio programs once a month. Age of Marketing Channel Participants: Table 7 shows that age is not a significant factor in the type of maize marketing institution a marketing operator chooses to participate in. Age group distribution are very similar among maize growers, wholesalers, and retailers. 46% of the maize growers studied were between the ages of 1-40 years, 42% between 41-60 years and 12% over 60 years. The age distribution for maize wholesalers were 43%--between 1-40 years, 43% between 41-60 years and 14% over 60 years. There were more young people among the maize retailers than the other two marketing institutions. 62% of the maize retailers studied were between 1-40 years, 31% between 41-60 125 Table 7 Chi-Square Table Showing Age Groups of Maize Marketing Channel Operators Type of 1-40 41-60 Over 60 Marketing years years years Sample Institutions % % % Size Maize Growers 46 42 12 130 Maize Wholesalers 43 43 14 30 Maize Retailers 62 31 7 70 115 90 25 230 x2 = 5.49034 with d.f. = 4, Significance = .2406 126 years and 7% above 60 years. One reason explaining why age was found not to be significant in this study could be the low sample size and the large age brackets developed for the study. Field study observations showed that people under twenty could operate more easily as maize retailers than as maize growers or wholesalers. This is due (from field study information) to the low capital requirement for getting into the maize retail business. Field study interviews showed that the free flow of informal market information between channel operators across age groups diminishes the chance of one age group being more informed about the marketplace than the other. Marital Status of Channel Participants: The majority of maize production and marketing operators in Ashanti Region are married. Table 8 shows that 82% of maize growers studied were married, 12 % single and 6% were widows or widowers. Among maize wholesalers, 74% were married, 23% single, and 3% widows or widowers. Similarly, 76% of the maize retailers studied were married, 14% single and 10% were widowers or widows. Chi-square test of independence of Table 8 shows that marital status is not a significant factor in the selection of the kind of marketing institution an individual channel operator chooses to participate in. 127 Table 8 Chi-Square Table Showing Marital Status of Maize MarketinggChannel Operators Type of Widow/ Marketing Single Married Widower Sample Institution % % % Size Maize Growers 12 82 6 130 Maize Wholesalers 23 74 3 30 Maize Retailers 14 76 10 70 32 182 16 230 x2 = 4.46242 with d.f. = 4, Significance = .3470 128 Marital status, however, is a relevant factor in the study of information in Ashanti cultural setting. For a married couple in the maize business, each partner in the household can act as an opinion leader. It was explained in the previous chapter that both the husband and wife are equally knowledgeable in the maize business, and operate as partners in the business. Information transmission directed at a married marketing operator can therefore be directed at either partner. This phenomeon is still true even if one of the partners is not directly involved in maize production and marketing. Married couples in this culture pay close attention to, and have great interest in the business in which the other partner is engaged. Level of Education of Channel Participants: Table 9 shows the level of education of maize marketing channel operators. The chi—square test of independence of Table 9 shows that there is sufficient evidence that type of marketing institution a marketing operator chooses to participate in is not independent of the level of education of the marketing operator. That is, the level of education of a marketing operator varies with type of marketing institution he or she participate in. A close study of the table shows that the level of formal education decreases as one moves from maize growers to retailers. 53% of maize growers studied had had at least 10 129 Table 9 (mi-Square Table Showing Level of Educaticn of Maize Marketixg Charrnel Operators Type of No Formal Primary Middle Seomdary Satple Marketing Educatim (6 yrs (10 yrs and Above Size Institution % School School % % % Maize Growers 36 11 33 20 130 Maize Vbolesalers 37 13 30 20 30 Maize Retailers 63 17 14 6 70 102 30 62 36 230 x2 = 21.62210 with d.f. = 6, Significance = .0014. 130 years of formal education, 11% had had 6 years of formal education and 36% no formal education. Among maize wholesalers 50% had had at least 10 years of formal education, 13% - 6 years of formal education and 37% - no formal education. Maize retailers had much lower levels of education than maize growers and wholesalers. Only 20% of maize retailers studied had had at least 10 years of formal education. 30% of the retailers had had 6 years of formal education and 63% had no formal education. An important finding of this study is the high percentage of educated people among maize growers. In a developing country such as Ghana, one would generally expect farmers to be mostly illiterates. This study shows otherwise. There is a high level of well-educated people among maize growers in Ashanti Region. This is explained by the large number of professional elementary school teachers living in farming communities who farm on part-time basis, and also by the large number of elementary and high school graduates and other professionals who have taken up full-time farming. Maize wholesaling business in the region is performed by both literates and illiterates. Culturally, the two groups of people feel comfortable performing maize wholesaling functions. Maize retailing business in the region, on the other hands, is dominated by illiterates. The level of education of marketing channel 131 participants of the various maize marketing institutions influence the methods by which they receive information from external sources. Literate channel participants are able to read newspapers, Ministry of Agriculture newsletters, Co- operative Association newsletters, and also listen to radio programs in English, in addition to programs transmitted in local languages. Illiterate marketing channel operators, on the other hand, have limitations in their abilities to acquire information from external sources. Field study interviews show that direct information sources of these marketing channel operators are limited to radio programs in the local language, informal word-of-mouth information and translated information from their literate business associates. Effective transmission of information to illiterate marketing channel operators therefore would require careful choice of language and communication medium. Number of Years in Maize Business: Table 10 shows the number of years maize marketing channel operators have been in the maize business. The chi-square table shows there is sufficient evidence that type of marketing institution a marketing operator participates in is not independent of the 132 Table 10 Chi-Square Table Showing Number of Years MarketingChannel Operators Have Been in Maize Marketing Business Type of 1-10 11-20 Over 20 Marketing Years Years Years Sample Institution % % % Size Maize Growers 31 34 35 130 Maize Wholesalers 53 27 20 30 Maize Retailers 77 17 6 70 111 64 55 230 x2 s 40.48441 with d.f. = 4, Significance = .0000 133 number of years the marketing operator has been in the maize business. That is, the number of years a marketing operator has been in the maize business varies with type of marketing institution. Table 10 shows that maize production and marketing business is a life-long vocation for some people in the maize business, and a short-term vocation for other operators. For most maize growers in Ashanti Region, maize production and marketing activities is a life-long vocation. 69% of the maize growers studied had been in the maize business for over 10 years, and 35% of the growers interviewed had been in the business for over 20 years. A possible explanation for this phenomenon is that either maize production activities are attractive to the operators or maize production is a "deadend" vocation. Field study discussions with maize growers show the latter condition is true for many growers. After maize growers have settled in farming communities for some years, it is usually difficult for them to move out of the rural communities to find new livelihoods. Unlike maize growers, the majority of maize wholesalers and retailers studied had been in the maize business for shorter time periods. The study shows that only 47% of maize wholesalers and 23% of the maize retailers studied had been in the maize business for over 10 years. Field study 134 discussions with maize wholesalers and retailers indicate that, given the unpredictable nature of maize business (i.e. unpredictable yearly maize outputs) many maize distributors in Ashanti Region exit from the industry in times of maize scarcity into other retailing activities. In years of maize shortages, maize wholesalers and retailers search extensively through farming communities to assemble maize. The purchase price and assembling costs of maize in such low output seasons are usually very high. When such scarce maize is transported to urban markets, maize wholesalers and retailers are often instructed by government officials to sell the maize at some controlled price to the urban population. Thus instead of making fair profits in times of scarcity, some maize wholesalers and retailers operate at a loss. These wholesalers and retailers therefore exit from the industry when such problems arise. Notwithstanding these problems, maize growers interviewed believe their business activities are more risky than maize wholesaling and retailing. Maize production and marketing institutional leaders in the region believe lack of effective communication between maize marketing operators and government officials bring about such adverse operating conditions. Maize marketing channel participants cannot effectively present their operating costs and margins to government officials who set minimum and sometimes maximum market prices. Even 135 when maize marketing channel operators are given the opportunity to present their case before appropriate public policy-making boards, their claims are often held in doubt and ignored. Lack of long-term continous operations for many maize wholesalers and retailers does hinder improvement of their market information systems. While there is a need to encourage continuity of operations in maize wholesaling and retailing, there is also an important information system implication in maize production being a life-long vocation for many maize growers. Maize growers continous operations in the industry provide rich environment and opportunity for the development of effective and permanent communication systems. Such communication systems can help improve maize growers' decision making processes in the long-run. Maize Marketing Functions and Marketing Mix Decision Information Marketing Functions: Table 11 shows the major marketing functions of maize growers, wholesalers and retailers in Ashanti Region. Maize marketing operators in the three marketing institutions perform some unique marketing functions in addition to their basic functions. 17% of maize growers in Ashanti Region, in addition to growing, shelling, bagging, transporting, and wholesaling of maize also retail maize on local markets. Field study 136 interviews indicate that some female maize growers wholesale part of their maize outputs and retail the remaining maize stock (after setting aside what they would need for domestic consumption) on local markets. Several reasons help explain this market phenomenon. First, some maize growers, in order to improve their profit positions, choose to retail part of their maize outputs. Second, maize growers store part of their maize outputs in the harvest season and retail the stocks in the dry season to provide them with some useful employment while they wait for the rains and the next planting season. Third, some maize growers retail maize in the hope of higher market prices, as supply of maize on the market diminishes. Thus, they are able to benefit from daily or weekly market price changes. Field study interviews indicate that male maize growers generally do not retail maize but sell their outputs to assemblers or wholesalers at farm-gate wholesale prices. A male grower who chooses to retail part of his maize output usually delegates the retailing activity to his wife or other females in his household. The upward integration of marketing functions of some maize growers provide them with useful information about market demand. 137 Table 11 Maize Graders, molesalers and Retailers Marketing Functions ‘ Trans- Whole Type of Grow Shell Assenble Bag port Retail sale Offer Marketing Maize Maize Maize Maize Maize Maize Maize credit Institution % % % % % % % % Maize Growers 100 100 0 100 29 17 100 0 rhize “molesalers '67 67 93 100 100 7 100 70 mize Retailers 19 19 35 17 100 100 0 20 Source: 1986 Field Study data 138 It was noted early in this study that the assembling and wholesaling maize marketing functions in Ashanti Region are highly integrated. Field study information on Table 11 confirms this market condition. 93% of wholesalers studied perform maize assembling functions themselves or hire other people to perform the functions for them. Furthermore, 67% of maize wholesalers interviewed indicated that they grow maize in addition to their basic wholesaling functions. Thus maize wholesaling functions in the region show both downward and upward integration. This market condition greatly improves maize wholesalers information acquisition capabilities over maize growers and retailers. Maize wholesalers, through channel integration, gain access to relevant farm-gate information through the assembling process and they also obtain information about market demand from retailers and wholesalers from other regions who buy maize from them. 7% of the maize wholesalers interviewed indicated they retail maize on urban markets. This limited retail activity serves customers who lack sufficient funds to purchase a bag of maize, or who have limited need for maize. 70% of maize wholesalers and 20% of maize retailers interviewed indicated that they offer credit services to their business partners; namely, maize growers and retailers. These credit services link maize growers, 139 wholesalers, and retailers to an on-going business relationship. It helps maintain open communication between the business partners. It also facilitates constant visits and transmittal of supply and demand information between the marketing channel participants. Maize retailing activities in Ashanti Region, like wholesaling, show a unique backward integration. 19% of maize retailers interviewed indicated they grow maize in addition to their maize retailing functions. 35% of the retailers also said they visit farm-gates to assemble maize. The retailers believe this market behavior is necessary due to the limited financial resources of some maize retailers in the region. The backward integration of marketing functions help retailers purchaze maize at low farm-gate prices, thus stretching the purchase potentials of their limited capital. Some retailers also supplement their purchases with their own maize outputs. Maize retailers ability to integrate backwards in the distribution channel enhances their knowledge about supply factors of the market system, just as wholesalers who operate in a similar manner. In summary, the integration of marketing channel functions and the ability to offer credit services to some business partners help maize wholesalers and retailers improve their information positions and knowledge about the marketplace. Field study interviews indicate that channel 140 operators like most maize growers, and other channel participants who do not enjoy such channel function integration are at a disadvantage in information resources. MarketingMix Decision Information Sources: An important research objective identified in the initial stages of this research project was to determine information sources for marketing mix decisions of maize growers, wholesalers and retailers in Ashanti Region. The study findings that address marketing channel participants information sources are most intriging, and raise some important information development questions. As stated earlier in this study, the basic purpose of market information is to facilitate marketing decision making to bring about desired goals. Marketing mix decision making framework was therefore used to study channel participants information sources. The study's research instruments thus asked information-source questions along the marketing mix framework covering product, price, place, and promotion strategies. Relevant research questions asked include information sources for the determination of: 1) market demand 2) market supply 3) marketing inputs and facilities 4) information about markets, and 5) information about purchase and selling prices. 141 Market Demand Information: 29% of maize growers, in response to the question inquring about their sources of market demand information, said they look at the amount of rainfall received in the planting season, and its effect on maize output. 26% of the growers said the number of assemblers who visit farm-gates and general scarcity of maize help them determine general market demand for maize, and 45% of those interviewed said they had no idea about market demand. In the absense of formal public information about demand for maize, therefore, the majority of maize growers in Ashanti Region have no idea about market demand. Maize assemblers and wholesalers, like maize growers, observe rainfall in the planting season and the resulting maize output to determine general demand for maize. 83% of maize wholesalers interviewed said they use these information sources. 4% of the wholesalers determine demand for maize from information passed on to them by friends or business associates, and 13% determine demand by observing the number of prospective buyers in the marketplace. 74% of maize retailers interviewed said they determine market demand by observing the number of customers in the marketplace and the other 26% by observing maize supply shortages on markets. The use of rainfall and its effect on maize output to determine general demand for maize appears to be more 142 stategic than the use of supply shortages of maize. This is because whereas rainfall in the planting season gives a good lead-time for planning, market supply shortages give no time for anticipatory planning, but lends itself to reactive strategies. Maize channel operators' use of weather conditions to forecast market demand for maize brings up the need for accurate weather forecast information. The quality of meterological services in Ghana unfortunately is low. Field study discussions with officials of the meterological department in Accra and Kumasi show that the department's equipment for studying weather conditions at both Accra and other regiona1_stations are outdated and function poorly. The department therefore is often not able to accurately forecast local weather conditions. Farmers often plant maize in anticipation of rain, and are disappointed. Maize crop is often planted too early or too late for the rains. This situation results in crop losses and wastage of fertilizer and funds used in land preparation. Sometimes maize growers experience complete failure of a maize planting season due to poor weather forecast. Maize distributors who depend on weather forecasts for maize purchasing and transporting activities also experience operating difficulties and losses due to their inability to accurately predict weather conditions. When maize 143 assemblers and wholesalers purchase maize in the rainy season, their stock of maize occasionally gets drenched by rain. The maize gets moldy and can only be sold at cheap prices for animal feed. Similar weather disturbances are experienced by maize growers, wholesalers and retailers whenever maize that is not fully dry is spread out in the sun to dry. When maize marketing channel participants incur such weather related losses, field interview information indicate that they raise the price of the remaining maize stock that was not destroyed by rain to help pay for the losses. Such losses thus are passed on to consumers. The .importance of accurate weather forecasts cannot therefore be over-emphasized in the production and marketing of maize. Market Supply Information: Maize wholesalers and retailers, in the study, were requested to state their sources of market supply information. 50% of maize wholesalers interviewed indicated they obtain information on maize supply conditions by visiting farms. The other 50% said they obtain market supply information from farmers, business associates and friends. Maize retailers, like maize assemblers and wholesalers, obtain maize supply information by visiting farms and directly from farmers. 50% of retailers interviewed said they obtain maize supply information from friends. 31% of the retailers obtain supply information by visiting farms 144 and the remaining 19% obtain supply information from wholesalers. It is clear from the responses of the maize marketing channel participants that they make concerted efforts to seek information on maize supply in the region. Any attempt by public food production and marketing boards and other public organizations to assist food marketing channel participants in providing them with accurate and timely maize supply information would therefore be very useful. Maize supply information that would be given to the marketing channel operators will help reduce the number of visits of marketing operators to farm-gates, reduce their operating costs and operating time spent in seeking maize supply sources. Market Inputs and Facilities: Maize growers, in the study, were asked to state their sources of information for farm inputs, namely seed maize, fertiziler, agriculture machinery, farm loans, and maize drying and storage facilities. Responses to this question show that small- scale and large-scale maize growers differ in their information sources for finding essential farm inputs. Small-scale maize growers are farmers who generally cultivate less than 10 acres of land. 92% of small-scale maize growers interviewed in the study said they do not have access to public information 145 about where to find essential farm inputs. They therefore use their own inputs in maize production and marketing operations. These farmers indicated strongly that they would appreciate receiving external information about farm input sources. Large-scale maize growers interviewed, unlike the small-scale growers, seemed to have some information about farm input sources. 96% of these maize growers said they obtain seed maize from the Ghana Grains Development Board and fertilizer from the Ministry of Agriculture's district depots. Farmers in this group, interestingly, are operators who regularly attend co-operative association meetings and famers rallies. At these meetings, farmers are informed about farm input supply sources, modern farming practices, and the importance and use of improved seeds that are provided by the Ghana Grains Development Board. Maize growers who attend farmers rallies also receive instructions on grain preservation and storage, so maize stock can be sold in the lean food season when grain prices are high. It is unfortunate that small-scale maize growers do not have access or avail themselves of such useful information. Their lack of exposure to such information may have resulted from two factors: lack of motivation to seek relevant information or lack of formal or informal organizational structures to provide essehtial information services. These information issues will be discussed fully when information 146 services of public organizations, cooperative and trade associations are evaluated. Information About Markets: 45% of maize growers interviewed in the study sell their maize outputs to assemblers, wholesalers or retailers who visit growers local markets or farm-gates. 33% of the growers seek information from friends, business associates, and family members. 8% of the growers said they sell mainly to the Ghana Food Distribution Cooperation and the remaining 14% said they had no information about markets. Field interview information indicate that all maize wholesalers and retailers have stalls or selling spaces on local markets where old and new customers visit them to purchase maize. Wholesalers and retailers who wish to sell maize mainly on their local markets therefore do not seek information about demand on other markets. 40% of wholesalers interviewed, however, said they seek information about demand and prices on other regional markets in the country. When they find that market prices are better on other regional maize markets, they transport some of their maize stock to those markets. Friends and trading partners of the wholesalers are the major sources of information about markets outside Ashanti Region. On rare occasions, some maize wholesalers read about demand and prices of maize on other regional markets from 147 newspapers. Maize growers, wholesaler, and retailers who seek information about favorable markets could greatly benefit from timely and regular public information about demand conditions on major maize markets throughout the country. As noted earlier in this study, the Ministry of Agriculture does compile such information but does not make it available to food marketing channel operators. Field study interviews with public officials who compile this information give some reasons why the information is not made public: Some officials in the Ministry think if this information is made public, food distributors in the country may irrationally move food across regions, causing food surpluses in some areas and deficits in others. This view, however, is inconsistent with long-term market behavior in economic theory: That in the long-run an equilibrum market condition will develop if there is adequate information about demand and supply conditions on food markets. Withholding such important market information from channel operators, therefore, indirectly helps few sellers in the marketplace who privately have access to such vital market information, and use it to their advantage. Purchase and Selling Price Information: Maize wholesalers in Ashanti Region determine their purchase price for maize through systematic analysis of several market factors. 60% 148 of maize wholesalers interviewed said they base their purchase price on expected margins. One wholesaler explained it this way: "I know the selling price of maize on the city market, so when I visit farm-gates, I offer a purchase price that takes into consideration my transportation costs, handling costs and my expected profit margin." These assemblers and wholesalers, although they may not have had formal education, show high degree of sophistication in the determination of purchase price for maize. By the use of intuitive cost accounting analytical processes and their knowledge about prevailing selling prices, are able to effectively determine purchase prices. 27% of the maize wholesalers interviewed base their purchase price on market demand for maize, and the other 13% on competitors prices. 34% of maize retailers interviewed said they offer purchase prices based on their expected selling prices. The majority of the retailers (66%) said they determine purchase price by observing maize supply conditions in the marketplace and making price offers accordingly. Field study interview information indicates that maize assemblers and wholesalers are more sophisticated in the formulation of purchase prices than maize retailers. Maize retailers have fewer operating expenses, and with a generally stable market demand for maize, can easily sell 149 maize on local markets at reasonable profits. Hence their lack of sophistication in purchase price determination. The study findngs show that maize growers in Ashanti Region generally are price takers in the maize market system (except in times of famine). This is because most maize growers lack storage facilities and are sometimes in great need for money to pay for their business and domestic debts. They therefore are forced to sell their maize outputs to willing buyers after hard bargaining. Responses from field study interviews show 27% of maize growers interviewed do not have access to selling price information except the government's minimum guaranteed price information. 62% of the maize growers interviewed said they just accept the price of assemblers and wholesalers. The remaining 11% observe market demand and set selling price accordingly. One maize grower, when questioned about his source of selling price information, sadly remarked; "middlemen bring their prices to our markets and we take them or leave them." Unlike most maize growers, maize wholesalers and retailers interviewed in the study said they base their selling prices on their costs and expected profit margins, just as they determine their purchase price. Others said their selling prices are based on demand and supply conditions in the marketplace, and on competitors' prices. 150 Product Standardization and the Use of Standard Measures: There are no product standards on Ashanti Region markets. Field study interviews show that maize growers, wholesalers, and retailers do recognize different quality levels or grades of maize on maize markets but the maize market system in the region does not relate specific grades of maize to specific prices. Maize marketing channel operators recognize differences in size, dryness, and lack of mold on the grain. The Ghana government, in setting the minimum guaranteed price for maize, however, does not consider grades in maize. Maize marketing channel participants therefore bargain on maize prices; with maize sellers emphasizing quality of maize being sold and the buyers ignoring quality factors and desiring to pay the same price for all grades of maize. Ashanti Region maize growers and wholesalers also do not use standard measures on maize markets. Different sizes of sacks are used for measuring maize at the wholesale level. Sack sizes are manipulated by maize wholesalers to take advantage of maize growers. Maize retailers, on the other hand, have standard measures in the form of aluminum pans and tin cans for retailing maize. Some retailers, however, do not use "correct volume" pans or cans: Aluminum and tin measures are sometimes knocked-in to reduce the volume of the 151 measures. No public organization inspects retailers standard measures to ascertain their volume. Unsuspecting consumers could therefore receive inadequate volume in the use of retailers' standard measures. In summary, maize marketing channel participants perform market functions with little information from external public sources. They however make marketing decisions by the use of information acquired through integration of marketing channel functions and with the use of informal information support services provided by friends, family members and business associates. They also use intuitive estimation of market demand and supply conditions, largely based on rainfall in maize growing seasons and expected maize output, to formulate their marketing mix strategies. Although these private information gathering efforts of the maize marketing channel operators are helpful for decision-making, it was observed in the early part of this study that these information sources are often inadequate, since they do not present complete pictures of the regional or national maize market systems. There is certainly a need for the public sector to assist in the development of a system-wide information service to augment information resources in the market system. In the next chapter, an attempt will be made to 152 determine DUblic information production efforts and how they influence maize marketing channel activities. The chapter ‘will investigate why most maize market channel operators claim they have little or no access to public market information. CHAPTER FIVE INFORMATION SUPPORT SERVICES OF PUBLIC ORGANIZATIONS The Ghana Government is interested in the success of food production and marketing programs in Ghana. This is seen in the establishment of the many public agencies and organizations commissioned to offer support-services to food production and marketing operators. Such major food production and marketing support-service organizations, as identified earlier in this study, include: The Ministry of Agriculture Ghana Food Distribution Corporation Ghana Grains Development Board, and Ghana Agriculture Development Banks and Co-operative Banks Departments of these organizations that offer essential information services include: a) The Ministry of Agriculture - Economic Research and Planning Services I” Ministry of Agriculture - Information and Field Extension Services Units c) Ghana Food Distribution Corporation d) Ghana Grains Development Board e) Committee On Agricultural Commodity Prices f) Agriculture Development Banks and Co-operative Banks Loans Departments, and 153 154 g) Radio Ghana and Newspaper Information Services. What information services are these organizations commissioned to offer? To what extent do they accomplish their stated information development and transmission goals? How do the successes or failures of these public organizations in their information development and dissemination programs affect the decision making processes of maize production and marketing channel operators in Ashanti Region? Analyses of field research data in this chapter will help answer these important research questions. Twenty-five public officials, including chief executives, board Chairpersons, department heads and other officials of public organizations were interviewed in the field study of this research project. The public officials were asked to identify information services that are developed and transmitted to maize marketing channel operators by the organizations they represent. They were also requested to evaluate the quality and usage of information outputs of their organizations. Similarly, maize marketing channel operators were also asked to indicate their awareness of information services produced by these public organizations, the perceived value of the information ouputs and the extent of use. The responses of the public officials and maize marketing channel operators will be discussed in the rest of this chapter." 155 Information Services of the Ministry of Agriculture: Economic Research and Planning Services The Economic Research and Planning Services Department of the Ministry of Agriculture conducts extensive market studies into food production and marketing in Ghana. Among the many activities performed by the department are: l) compilation of prices of major food products in Ghana 2) compilation of statistics on movement of food products on Ghanaian food markets 3) announcement of government minimum guaranteed prices for major food commodites on radio, and 4) development of major local foods production forecasts. Field officers of the department visit regional food markets to compile maize prices. From these price studies the department develops the National Average Wholesale Commodity Prices shown in Appendix B. Officials of the department explained that the National Average Wholesale Commodity Prices and other market statistics developed by the department are used for, among other things: 1) national food production and policy planning, including identification of need areas and direction of food production efforts 2) research activities of FAO, World Bank, food research organizations, and such other organizations‘ 3) research activities of potential food growers, and 156 4) early warning signs about potential food problems. It is important to note that the market price and food production forecast information developed by the department is used for planning activities of several public and private organizations, with the exception of present food producers and distributors. Officials of the research department were asked to explain why the information could not be made public to present food producers and distributors. Reasons offered to support the non- transmittal of the price information to the general public include: 1) fear that price announcement will lead to irratic behavior of food producers and distributors, causing food surpluses in some regions and deficiencies in others 2) misunderstanding of the purpose and meaning of the information outputs. 3) past price announcement had not been useful because they were untimely and lacked continuity, and 4) food prices on local markets change almost daily and such price information would confuse food producers and distributors rather than help them. Maize growers, wholesalers, and retailers in the study were asked whether they would like to have the government make public regional wholesale prices of maize that are compiled by the Department of Economic Research and Planning. Table 12 shows the maize marketing operators' responses to this question. The chi-square test of independence shows that the responses of the marketing 157 Table 12 Chi-Square Test Showing Maize Marketing Operators' Desire to Have the Ministry of Agriculture Announce Regional Wholesale Prices for Maize to the Public Type of Would like to Would not like Marketing have Prices to have Prices Sample Institution Announced Announced Size % % Maize Growers 93 7 130 Maize Wholesalers 57 43 30 Maize Retailers 56 44 70 177 53 230 x2 = 43.82641, d.f. = 2; Significance = .0000 158 operators vary with the different marketing institutions. 93% of maize growers interviewed indicated they would like to have the wholesale prices announced. Among maize wholesalers, 57% said they would like to have the price information made public. Similarly, 56% of maize retailers interviewed were in support of announcing the price information to the public. The desire to have this price information announced is strongest among maize growers than the other twc marketing institutions. An important question that should be asked at this point is how would the public announcement of regional' wholesale prices for maize help coordinate maize production and marketing activities? Maize marketing channel operators provided answers to this question in the field study: First, the regional wholesale price announcement, in their view, would show them on what maize markets they could take their maize to gain high market prices. Second, the price announcement would help them bargain effectively in the marketplace. These responses are consistent with economic theories that have been discussed in this study. Regional wholesale price information are good indicators of demand and supply conditions in the marketplace. Second, such price information will make the channel operators knowledgeable and will put them in good bargaining positions. Third, 159 price information from regional markets would help marketing channel operators determine potential profitable operations and would again help direct distribution activities. Lack of this important market information therefore severely restricts the efficient operation of the market system. Service of Ministryioprgriculture Information and Field Extension Services Units: Both the Information Unit and Field Extension Services Unit of the Ministry of Agriculture provide food growers in Ghana with useful information services. Among the many information services provided by the Ministry of Agriculture Information Unit are: 1) weekly T.V. programs called "The Agricultural Magazine" 2) print brochures and other literature 3) slide and movie programs 4) mass education, including farmers rallies 5) posters, and 6) radio programs. The printed materials and TV programs of the department are used to instruct food growers in the use of improved seeds for better yields, correct use of fertilizer, proper land clearing methods, proper planting and harvesting methods and fumigation of maize crop against insects for safe storage. Field study discussions with officials in the Information Unit show that the department's mandate is to 160 offer assistance to food and other crops growers in the production, harvesting and storage processes and nothing more. The department had a marketing unit some years ago, but it was abolished. The Field Extension Services Unit of the Ministry of Agriculture offers similar services to food growers as the Ministry of Agriculture's Information Department does. The primary function of an agriculture extension officer is to help the farmer improve his or her yield. Agriculture extension officers educate and encourage farmers to use improved seeds and fertilizer. They also instruct farmers on other modern methods of farming. The only marketing related service offered to farmers by this department is the crop preservation program which helps farmers to store maize outputs for good market prices later in the year. According to a senior officer of the department, the Ghana Food Distribution Corporation is the public organization with the sole responsibility to assist farmers market their food outputs. An FAO project which has been proposed to the Ghana government and may be implemented in the near future will directly involve the Agriculture Field Extension Unit in the marketing of food crops in Ashanti Region. This project will provide farm equipment, land preparation, seed planting and harvesting services to co-operative farmers in the region. After harvesting maize outputs of farmers involved 161 in the program, the maize outputs will be stored in silos and later sold when market price is good. Production expenses will be deducted from the sale proceeds and the rest of the revenue given to the individual farmers. This program certainly will provide the much needed marketing support services to maize farmers in Ashanti Region. The program will, however, exclude farmers who do not join the co-operative program. Officers of the Field Extension Services Unit are often very sympathetic to the plight of farmers in the marketing of their crops. Interviews with some officers in this ' deparment, however, show that they have been instructed to leave marketing support services to the Ghana Food Distribution Corporation. According to one officer, ”GFDC is the marketing link between the Ministry of Agriculture and farmers. But GFDC has its own going concern objectives and does not work in the interest of farmers.” Field study discussions revealed officers in the Information and Field Extension Services Departments regret that not much consideration is given to the marketing of food crops after harvests. Agriculture officers in the field believe the Ministry of Agriculture should get more involved in the marketing of food outputs of farmers. 162 Services of the Ghana Food Distribution Corporation: It is useful at this point to examine the kinds and quality of marketing services that GFDC offers to maize growers in Ashanti Region since both the Ghana government and the Ministry of Agriculture expect it to provide marketing services to farmers in Ghana. The objectives for establishing the Ghana Food Distribution Corporation and the functions of the company were discussed fully in the first chapter of this study. The primary function of GFDC is to provide regular and stable market for food crop farmers as an incentive to produce more food, and to buy and distribute foodstuffs so as to make food readily available to all Ghanaians at reasonable prices all year round. Senior officers of the corporation at the national, regional and field depot levels were interviewed during the field study of this research project. Officers of the company were requested to describe marketing support services they offer to farmers. Among the marketing services that the officers said the corporation offers include: 1) organization of farmers rallies to inform and explain to farmers the meaning of minimum guaranteed price information, product standards and purchasing practices of the company's field officers 2) company's field officers inform farmers about purchasing seasons and location of purchasing depots, and 163 3) field officers maintain a farmers' linkage program under which basic consumer requirements such as soap, wax-print, matchets, kerosene, etc. are sent to farmers to help make their lives a little more comfortable, and to entice farmers to sell their output to the corporation. As stated earlier in this study, farmers are well informed about GFDC's marketing activities. The business relationship between maize growers and GFDC is, however, not very attractive. Maize growers and GFDC seem to maintain a cat and mouse relationship. In times of food scarcity, maize growers avoid GFDC field depot officers. Maize growers, in such food seasons, prefer to sell their outputs to private assemblers and wholesalers for prices far above what GFDC would offer them. In times of food abundance and bumper maize harvests, however, when market price for maize is far below the government's minimum guaranteed price, farmers literally beg GFDC purchasing agents to buy their maize. This is because under such market condition, GFDC is required by the government to purchase maize at the minimum guaranteed price which is generally above market price. GFDC, in such heavy purchasing seasons, however, often runs out of funds (i.e., government grants) for maize purchases, and is forced to decline further purchases. Discussions with maize growers in the field reveal other problems. GFDC field purchasing officers, in bumper harvest seasons, enjoy their "field days." With their 164 limited funds, some purchasing agents purchase first maize outputs of their friends and when the funds are exhausted, then that is it! Sometimes purchasing agents are permitted to purchase maize on credit when thier funds are exhausted. In such situations, which occur occasionally, some farmers have to wait for weeks before they are paid. In the field study, a case was cited in which a farmer who had not been paid for weeks after the sale of maize reported the case in a letter to the superiors of the purchasing agent. This farmer got paid all right, but the following harvest season the purchasing agent would not buy his maize. GFDC field purchasing agents can also get caught between their corporate head office and farmers, when the delay in payment is caused by lack of funds from corporate headquarters. The above problem is compounded by other practices of GFDC agents. In bumper harvest seasons, some purchasing agents refuse to buy the entire maize outputs of farmers in maize farming towns and villages close to purchasing depots. Instead, using corporate trucks, they visit remote farming communities and purchase maize at prices well below the government's minimum guaranteed price. Maize growers in such communities usually have no alternatives but to sell to the GFDC agents. Such purchases are also measured at the ”bush weight," that is, almost ten kilos above the required 165 100 kilo weight, the government standard weight for the minimum guaranteed price. Maize growers in farming communities often complain about such buying practices. Purchasing practices of GFDC field agents do not give GFDC a good image among many maize growers in Ashanti Region. These marketing and other food production problems usually discourage maize growers in Ashanti Region. Discussions with maize growers in the field reveal frustration from their inability to have an open dialogue with appropriate government agencies to discuss these marketing problems. Senior officers of GFDC blame most of the company's marketing problems on the company's inherent operating problems. Some of these problems are: l) insufficient operating funds 2) lack of adequate storage facilities, and 3) lack of adequate number of suitable vehicles and spare parts. These problems, in the view of the officers, greatly limit the effectiveness of the company's marketing operations. One officer complained that "there is no use for establishing the minimum guaranteed price if the government cannot provide adequate funds to make the purchases." This statement shows the frustration of some GFDC officials. The root problem, in the view of some officials, seems to lie outside GFDC's operations. In many 166 maize harvest seasons, the Ghana government (through the activiites of GFDC) does not have adequate funds to purchase all maize outputs that are not purchased by private channel operators. The government, however, has banned foreigners from operating in the Ghanaian maize market system. An official of the Ministry of Agriculture, speaking in support of this food policy, said the participation of foreigners from neighboring countries in the market system will bid up the domestic price for maize. Thus raising the cost of living for Ghanaians. This viewpoint, however, ignores the business interests of Ghanaian farmers. Services of The Ghana Grains Development Board: The Ghana Grains Development Board primarily develops and distributes improved seeds to maize farmers. The Board operates field depots from which seed maize sales are made to farmers. Most large—scale farmers acknowledge the benefits of using the Board's improved seeds. Small-scale maize growers, who traditionally have used seeds from their farm harvests for replanting, however complain about the high cost of the Board's improved seeds. 78% of maize growers interviewed said they do not receive any marketing support service from the Ghana Grains Development Board. The other 22% said the Board's field agents sometimes help farmers who cannot sell their maize outputs, sell to the Ghana Food Distribution Corporation. 167 The majority of maize growers interviewed were, however, displeased with the Grains Board's lack of concern about the marketing of farmers' maize outputs. According to one farmer, "the Grains Board sells its seed maize to you at high price so you will have better yield. The Board, however, does not care if you sold the yield after harvest." Field study interviews indicate that in some harvest seasons, some farmers are unable to pay their bills on fertilizer and seed maize that they purchased during the planting season. This in the view of the farmers, is partly due to lack of marketing support services for farmers in harvest seasons. It is useful to note that failures of the Ministry of Agriculture's Field Extension Services Unit, GFDC and the Grains Development Board in offering appropriate marketing support services hurt the maize grower the most. Field study interviews revealed mild adverse effect on the marketing activities of maize assemblers, wholesalers and retailers. Maize growers' basic problem in all these cases lie in their inabilities to coordinate their marketing activities during harvest seasons due to lack of relevant information about demand and supply market factors. Services of the Committee On Agricultural Commodity Prices: The Committee On Agricultural Commodity Prices studies expected maize output, inflation rate, production costs and 168 market prices for major food commodities, and annually recommends minimum guaranteed prices for the commodities to the Ghana government for adoption. Field study interviews show that the government usually adopts the recommendations of this committee. Minimum guaranteed prices have little meaning and use to food marketing channel participants in times of food scarcity. This is because food commodities are sold on markets at prices many times higher than minimum guaranteed prices. In such market conditions, demand and supply factors of the marketplace determine market price. The Government's minimum guaranteed price, however, becomes very important in times of food abundance. This price offers support to farmers production costs. The Minimum Guaranteed price will also continue to play an important role in the future of Ghana's agriculture industry as the Ghana government and world organizations like FAO and the World Bank continue to push for self-sufficiency in food production in developing countries. Field study interviews with maize growers indicate that maize growers in Ashanti Region believe the minimum guaranteed price is a necessary assistance to farmers. Farmers strongly support its maintenance. The important question in this study, however, is whether maize growers and distributors believe the minimum guaranteed price that is formulated annually, is usually fair, and whether maize marketing channel operators participate in the development 169 of this important price information. Maize growers, wholesalers and retailers, in the study, were requested to evaluate the adequacy or fairness of the current government minimum guaranteed price for maize. Fairness refers to the guaranteed price's ability to cover production cost and a fair margin. Only 1% of maize growers interviewed said the current (1985) minimum guaranteed price of the government was fair, 97% said it was understated and 2% had no idea about its fairness. Among maize wholesalers, 27% said the price was fair, 27% felt it was overstated, 43% said it was understated and 3% had no idea about its fairness. Maize retailers, in response to the same question, were divided as follows: 20% of those interviewed said the minimum guaranteed price was fair, 11% felt it was overstated, 29% said it was understated, and 40% had no idea about its fairness. The responses of the maize marketing channel operators show varied perceptions. It is important to note, however, that there is general agreement among maize growers that the year's (1985) minimum guaranteed price was understated in relation to production cost and fair margin on production efforts. Table 13 compares the government's minimum guaranteed price for maize in a seven year period (1980-1986) with actual national average wholesale maize prices and inflation 170 rates. Figures 8 also shows graphic relationships between the government minimum guaranteed prices, national average wholesale maize prices and inflation rates for the same period. Figure 8 shows that percentage change in government minimum guaranteed prices followed the consumer price index and the national average wholesale maize prices (NAWMP) closely between 1980 - 1982. Then the minimum guaranteed price shot up in 1983 (the famine year) beyond the percentage increases in inflation and NAWMP. Figure 9 presents a graph of absolute minimum guaranteed prices and national average wholesale maize prices. The figure seems to confirm maize growers assertion that government minimum guaranteed prices, over the years have fallen behind actual market prices. Table 14 presents a regression analysis showing effect of inflation and national average wholesale market prices on government minimum guaranteed prices. Inflation seems to be more important in explaining the variation in government minimum guaranteed prices than NAWMP. Maize channel participants, in the study, were also requested to evaluate the timeliness of the minimum guaranteed price announcement, and the representation of their marketing institutions on the Committee On Agricultural Commodity Prices. Timeliness of price information was studied to determine the usefulness of the price information for marketing operators' planning 171 Table 13 (kxnnrmmxn:hfirflnmmlGUaranteed.Prices» crrsmnsr'Prioe Index and Actual National Average Wholesale Prices for Maize 1980~l986 Year Gov'thinflmun Actual Nat'l (Ixrnmrn: Guaranteed.Price Avg. Wholesale Price Index Price 1980 (100%) 1980 ¢ 100 ¢ 413.31 100 1981 165 773.59 217 1982 500 797.51 265 1983 1000 3857.59 587 1984 1800 2337.82 824 1985 2000 2087.91 660 1986 2600 3271.74 * *Figure not available Samoa: Ministry of Agriculture, Accra, Ghana, 1986. 172 Figure 8 Percentage Change in Government Minimum Guaranteed Prices, National Average Wholesale Maize Prices and Consumer Price Index ,‘chaqga 1M mu m m: mi 1m ms 73...} 173 Figure 9 Absolute Increases in Government Minimum Guaranteed Prices and National Average Wholesale Maize Prices in Cedis Bflfl’ 350° 3000 V ,g 1960‘ 3 30m” I500“ } I 0004 Saw "8° I981 "‘1 I783 I"? [755 I m thfis 174 Table 14 Regression Analysis Showing Effect of Inflation and National Average Wholesale Market Prices on Government Minimum Guaranteed Prices Standardized Regression Standard Significance Variable Coefficient Error t of t inflation 1.16 .75 4.4 .0216 NAWMP -0.29 .17 -l.l .3567 R2 = .92 adj R2 = .86 SE = 308.37 F = 16.197 Significance of F = .0247 175 activities. Representation of the various maize marketing institutions on the Committee was also studied to determine the extent to which the various maize marketing institutions participate in the development of the minimum guaranteed price information. Tables 15 and 16 show the responses of the maize marketing institutions to the two questions, i.e. timeliness of the price information and representation on the Committee for setting the minimum guaranteed price. Table 15 shows that there is sufficient evidence that type of marketing institution an operator participates in is not independent of the operator's perception of the timeliness of the government's minimum guaranteed price information. Marketing operator's perceptions of the timeliness of the price information, therefore, varies with the type of marketing institution in which operators function. A close study of Table 15 shows that 82% of maize growers perceived that the minimum guaranteed price information was released late in the maize production season and was not very useful for planning purposes. If growers could have the price information earlier, they would be able to determine the appropriateness of investing in the production of maize early in the farming season. Some farmers, if they could have this information early in the farming season, perhaps would switch to the production of 176 Table 15 Chi-Square Test Showing Maize Marketing Channel Operators Perceptions of the Timeliness of Minimum Guaranteed Price Information Type of Late No Marketing Timely Release Idea Sample Institution % % % Size Maize Growers 6 82 12 130 Maize Wholesalers ' 40 60 0 30 Maize Retailers 17 26 57 70 32 143 55 230 x2 = 92.11135, d.f. = 4, Significance = .0000 177 Table 16 Chi-Square Test Showing Maize Marketing Channel Operators Perceptions About Their Institution's Representation on the Committee On Agricultural Commodity Prices Type of Not No Marketing Represented Represented Idea Sample Institution % % % Size Maize Growers 27 38 35 130 Maize Wholesalers 10 50 40 30 Maize Retailers 3 74 23 70 40 117 73 230 x2 = 30.44421, d.f. = 4, Significance = .0000 178 other crops or move into mixed crop farming. 40% of wholesalers interviewed said the price information was timely and useful, while 60% thought the information was released quite late. The differences in maize wholesalers' perceptions can be explained by the fact that some wholesalers are also maize growers. Maize wholesalers who are also growers, in the study, said they would like to receive the price information early in the farming season. The other group of wholesalers who do not grow maize, on the other hand, perceive the timing of the release of the price information to be right. They would like to have the price information in the harvest season when new maize is dry. 57% of maize retailers interviewed in the study had no idea of the timeliness of the minimum guaranteed price information. They did not seem to have much need for the price information for planning their marketing activities. However, maize retailers who also grow maize said the information was released quite late and would like to have it earlier. Field interviews with members of the Committee on Agricultural Commodity Prices indicate that the committee cannot make minimum guaranteed price recommendations until it is able to forecast maize outputs for coming maize seasons. Hence the delay in providing the price information. Table 16 also shows there is sufficient evidence 179 that type of marketing institution an operator participates in is not independent of the operator's perception about the marketing institution's representation on the Committee On Agricultural Commodity Prices. Marketing operators perceptions about their representation on the pricing committee, therefore, vary with the type of marketing institution in which they operate. A close look at the table shows that maize marketing channel operators become more certain about lack of representation of their marketing institution on the commodity pricing committee as one moves from growers to retailers. Maize growers seem to be quite divided on the question. 27% think maize growers are represented on the committee, while 38% think they are not represented, and a third group (35%) have no idea about the question. 50% of the maize wholesalers interviewed think they are not represented on the committee, 10% said they are represented, while the remaining 40% have no idea about the question. A much larger percentage of maize retailers (74%) responding to the question think they are not represented on the pricing committee. In summary, the majority of maize marketing channel operators in Ashanti Region believe they have little or no say in the decisions of the Committee On Agricultural Commodity Prices. Channel operators interviewed in the field study expressed regret and frustration that as 180 operators in the industry, they are not consulted in such important pricing decisions that affects their livelihood. Most maize growers believe their cost of labor, land preparation (if mechanized system is used), farm inputs and operating expenses far exceed the cost estimates used by the commodity pricing committee. In their view, miscalculation of growers operating costs results in underestimation of the government's minimum guaranteed price for maize. Maize assemblers and wholesalers also complain that when the government sets the minimum guaranteed price, it does not consider geographic locations and transportation costs. Maize growers in remote farming areas, therefore, ask for the minimum guaranteed price regardless of the location of their maize stock and the cost of transporting maize to urban centers. In their view, therefore, the minimum guaranteed price is often overstated for maize stock in rural areas. Accordingly, maize wholesalers would like to be represented on the commodity pricing committee to provide an input into the pricing decision. Investigation into the make-up of the Committee On Agricultrural Commodity Prices in 1985 shows that only one maize grower represented maize growers and distributors on the Committee on Agricultural Commodity Prices in 1985, on a committee of seventeen people. Discussions with the farmers' representative show that farmers are represented on the committee but are not listened to. In one maize growers 181 words, "the committee is dominated by bureaucrats and agro- politicians.” A review of the Committee's membership as shown in Appendix C, clearly shows an over—representation of government officials and other interest groups. Services of Agriculture Development Banks and Co-operative Banks: Field study interviews indicate that the majority of maize growers, wholesalers and retailers do not have access to Agriculture Development Bank and Co-operative Bank loans. Barriers to bank loans for these maize marketing operators include: 1) complete lack of knowledge concerning how to obtain such loans 2) inability to post collateral required by the banks for the loans, and 3) fear of owing the government by taking the bank loans and not being able to pay back the loan. In the latter case, most small-scale maize marketing operators fear that, given the risky nature of maize production and marketing, they might not be able to pay back the loans and might end up losing all their personal properties or and up in jail. Bank officials are also reluctant to give such business operators loans for these same reasons. Large-scale maize growers, however, are able to use their farm lands and equipments as security for bank loans. Besides, they are well established in their business areas 182 that banks can easily locate them when the loans become due. Agriculture Development Banks and Co-Operative Banks in Ashanti Region, therefore, do not offer much financial services to most maize marketing operators in the region since the majority of maize growers and distributors are small-scale operators. This situation also reduces maize assemblers, wholesalers and retailers ability to buy maize due to lack of adequate working capital. Low volume maize purchases by private maize distributors sometimes leave the Ghana Food Distribution Corporation the only viable buyer in the marketplace. This market situation results in depressed market prices -and hurts maize growers. The banks certainly need to find an effective way to serve small-scale food producers and distributors, if they are to serve the essential business objectives for which they were established. Radio and Newspaper Information Sources: Radio and newspapers are two important sources of information in Ashanti Region, and Ghana as a whole. Unlike television (which is a luxury item for the urban population), radios and newpapers are affordable communication medium in many households in urban and rural Ghana. A large portion of information produced for the general public therefore reach the Ghanaian population through these communication medium. Government 183 food policies, control-prices, and other important food production and marketing programs are transmitted through radio and newspapers. Among the many radio programs that Radio Ghana, in cooperation with the Ministry of Agriculture, had developed and did broadcast to food producers and distributrors in Ashanti Region in 1986 were: 1) "Radio Badwa" (Rural Radio Forum in Akan); Broadcast time: 6:45-7:15 p.m. - Sunday 2) ”Kuayg Mu Adwen" (Questions and Answers from Farmers and Answered by Agriculture Experts); Broadcast time:7:45-8:00 - Sunday 3) "Adwuma, Adwuma" (Ministry of Agriculture Information and Discussion of Farmers Problems and New Farm Methods); Broadcast time: 6:30-7:00 p.m. - Saturday 4) "Qbra ye Bgna” (Women's Magazine - on how to help their husbands); Broadcast time: 6:15-6:45 p.m. - Tuesday. These radio programs discuss, among other things, maize production and marketing issues and problems. An important objective of this study was to determine the size of newspaper readership, radio ownership, and useage by maize marketing channel operators in Ashnti Region. Table 17 shows the responses of maize growers, wholesalers and retailers to the question on the use of these information sources. Whereas radio is the most important source of external information (among the three mediums of communication, i.e. newspapers, trade association information sources and radio) for maize growers, trade 184 ketug manly m Amciatim my Radio Institu- Progrars Regularly % % % % whim (ions 23 21.5 58.5 58 130 Naiza unle— ID 63 66.7 63.4 30 salers Ibiza lbtailers 3 97 31 30 7O 185 association information sources is the most important communication medium for maize wholesalers. Maize retailers, on the other hand, find radio and trade association information sources equally important. The table shows that newspapers are not important sources of market information for maize marketing channel operators in Ashanti Region. Field study interviews show that newspapers are not readily available to the majority of maize marketing channel operators. Besides, the information content of Ghanaian newspapers offer little information on maize marketing activities Tables 18 and 19 show chi-square tests of independence in ownership of radio sets that work and listenership to food production and marketing radio programs in Akan (the major local language). The chi-square tests on the two tables show that there is sufficient evidence that type of marketing institution is not independent of marketing operators ownership of radio sets, and listenership to food production and marketing programs on radio. Thus, radio set ownership and listenership to radio programs vary with type of marketing institution. A close study of Table 18 shows that 59% of maize growers and 67% of maize wholesaler own radio sets while only 31% of maize retailers own radio sets. Similarly, 186 Table 18 Chi-Square Table Showing Radio Set Ownership of Maize Marketing Channel Operators Type of own Radio Does not Marketing that Works Own Radio Sample Institution % % Size Maize Growers 59 41 129 Maize Wholesalers 67 33 30 Maize Retailers -- 31 69 70 118 111 229 x2 = 16.89306; d.f. = 2, Significance = .0002 187 Table 19 Chi—Square Table Showing Maize Marketing Channel Operators Who Listen to Radio Programs "Radio Badwa" and/or "Kuay9_Mu Adwen" Type of Listen to Listen to Never Marketing Program Program Once Listen Sample Institution Once weekly Monthly to Program Size % % % Maize Growers 45 16 39 123 Maize Wholesalers 47 17 36 30 Maize Retailers 23 7 70 70 85 30 108 223 x2 = 19.10816, d.f. = 4, Significance = .0007 188 Table 19 shows that maize growers and wholesalers listen to maize production and marketing programs more often than maize retailers. For the majority of maize growers in Ashanti Region whose rural trade associations are poorly organized and whose movements around the country are greatly restricted by farming activities, radio programs provide their major source of information about life in the rest of the country. Maize growers who can afford to purchase battery operated radio sets regularly listen to radio programs that have some relevance to their farming activities and rural life. Field study interviews reveal that maize growers who do not listen to these radio programs either have no access to radios or the timing of the radio programs conflict with other activities they perform. For example, most of the radio programs listed in this chapter are mostly broadcast in the evenings on weekends. Discussions with maize growers indicate that although the majority of farmers are at home on weekends, they usually would be involved in family discussion, attending village meetings, funerals or religious_meetings. The timing of the radio programs, therefore, do not sometimes fit the activity schedules of some farmers. 64% of maize wholesalers interviewed in the study said they listen to radio programs on food production and marketing regularly. Most food markets in Ashanti Region 189 close at 6:00 p.m. and this gives most wholesalers adequate time to get home and listen to the radio programs. Although the majority of maize retailers live in urban centers and could have access to radio sets, the study shows that few of them own radio sets or listen to radio programs on food production and marketing. Field study interviews show lack of interest on the part of most maize retailers to listen to such informative programs. To the majority of maize retailers, these radio programs have no relevance to their marketing activities. In summary, information production and transmission efforts of public organizations are potential sources of useful market information for maize marketing channel operators in Ashanti Region. However, lack of active participation on the part of information users in the development of market information, lack of proper education and motivation in the use of information provided make public market information sources less credible and useful to maize marketing operators in Ashanti Region. Maize production activities receive fair amounts of information support services from public organizations. Little attention, however, is paid to the marketing of maize by these public organization. The coordination of marketing functions of the maize market system becomes a major problem due to lack of accurate and relevant market information from the public sector of the economy. Public information 190 development and transmission activities, if they would achieve their expressed objectives, would need some major policy and structural changes to make information outputs relevant and credible. In the next chapter, attention will be given to critical evaluation of the structure and role of government- sponsored co-operative associations and market unions in the development and dissemination of market information. Co- operative associations need this attention because they could be important change agents, in the search for improvement in the development of information resources for maize marketing channel operators. CHAPTER SIX INFORMATION SERVICES OF TRADE CO-OPERATIVE ASSOCIATIONS Trade co-operative associations have had long active history in pre-independence and post-independence eras of Ghana. The dominant trade co-operative association in Ghana, over the years, has been Ghana Farmers Co-operatives. This is due to the importance of cocoa production in Ghana. For many years, Ghana was the world's largest producer of cocoa (until the early 19803 when the Ivory Coast began to surpass Ghana in output). Cocoa farmers' outputs have supported Ghana's foreign trade and currency development. Ghanaian farmers, over the years, have therefore played important economic and political roles in the development of Ghana. Ghana's post-independence farmers co-operative association programs have continued to pay more attention to the production and marketing of cash crops like cocoa, coffee, cotton, etc., which earn foreign exchange to support Ghana's foreign trade, than to food crops. It was not until the past two decades that, with the rapid movement of large numbers of people from rural areas to Ghana's major towns and cities in search of work opportunities, resulting in the 191 192 development of large population centers in Ghana, and frequent droughts and famines, that the government began to pay significant attention to food crop production. Thus food producers and distributors in Ghana are now organized into co-operative associations to: 1) pool together trade association members' limited operating resources so they can function effectively 2) enable the government to identify food production and marketing groups and to direct essential support services to them, and 3) develop bargaining power in securing social and political recognition necessary for the survival of the industry. Figure 10 shows the present organizational structure of the Ghana Federation of Agricultural Co-operatives (Gafacoops). Ashanti Region has ten co—operative administrative districts. Co-operative associations under Gafacoops are organized into crop association groups. Maize growers and distributors in Ashanti Region are therefore organized under the Cereals Co-operative Association, with the trade name--Ashanti Region Maize Growers and Distributors Co-operatives. The co-operative association of each maize marketing institution has an elected chairperson and an executive committee. Field study interviews show that local chapters of Gafacoops have been organized for maize growers and wholesalers in Ashanti Region. Maize retailers in the region however 193 Figure 10 Organizational Structure of Ghana Federation of Agriculture Co-operatives (Gafacoops) Gafacoo National 0 cc, Accra L Ashanti Regional Office 1 i l 10 Administrative DiStrict Ofices 1 Crop Associations Cereals Root Crops Citrus / Fruits Tree Crop - Cocoa. coffee. etc. Oil Palm InduStrial Crops Vegetables Poultry and Life Stock Fisheries 209°.“9‘9'5‘9‘Nt‘ Source: GAFACOOPS. Ashanti Region Office. Kauai. 1986. 194 had not been organized by Gafacoops at the time of the study. People and businesses in Ashanti Region's cultural setting are traditionally organized into social groups. Every social or trade group in Ashanti Region has a chief or queen, and elders (executives) who coordinate the group's activities. Market queens and kings are traditional leaders of trade associations in Ashanti Region. The purpose of such social groups is to provide support and protection for members of the groups. Maize growers, wholesalers and retailers in Ashanti Region, over the years, have had traditional market trade associations or unions functioning side—by-side with government sponsored co-operative associations. Field study findings show that among maize growers and wholesalers in Ashanti Region, government sponsored co- operative associations (Gafacoops) and traditional market trade associations have been merged into one organization. Maize growers co-operative associations in the region are co-ordinated by chief farmers. A chief farmer is the leader of farmers in a farming community. Maize wholesalers, on the other hand, have a chairperson who heads the government sponsored co-operative association, and a market queen who heads traditional market trading activities. Both leaders are selected by popular votes of the association members. Field study interviews show that a wholesaler co-operative 195 association chairperson represents the association at official regional, district or local government administrative meetings, and also carries out other managerial functions that are government-related. The traditional market queen, on the other hand, supervises selling activities in the marketplace, including maintenance of clean physical facilities in the marketplace. She also represents the association at meetings with traditional chiefs in cities and towns. Market information received by wholesalers cooperative associations chairpersons and market queens are passed on to association members at regular association meetings. Maize retailers in Ashanti Region, as noted earlier in this chapter, are organized under traditional maize retailers associations or unions. The associations activities are coordinated by market queens. Retailers market queens perform their managerial duties with the help of executive committees. The market queens represent their associations at government administrative meetings and also at meetings with traditional chiefs and local authorities. Discussions with Ashanti Region Gafacoops senior officers show that the regional co-operative headquarters was in the process of organizing maize retailers in the region. Figure 11 shows maize production and marketing information outputs from public organizations transmitted through Gafacoops information networks. As discussed 196 earlier in the study, Gafacoops is the public organization that coordinates the organizational and management activities of maize growers, wholesalers and retailers in Ghana. It is also commissioned to perform facilitating functions such as assisting members of cooperative associations in securing essential operating inputs, financial services, education of its members about their operational responsibilities in the marketplace and helping them solve other social and industry problems. Gafacoops receives much of the information that it transmits to its cooperative associations from other public organizations. From national and local government administrations it receives government food policies and market regulations which it passes on to its cooperative association members. Gafacoops creates the forum for the Ministry of Agriculture's information services on modern farming practices, field assistance in production processes, government minimum guaranteed prices, and other important pieces of information to maize marketing institutions. Other public organizations such as Cooperative Banks, Agriculture Development Banks, Grains Development Board, Ghana Food Distribution Coorporation, Radio Ghana and others are encouraged by the government to transmit through Gafacoops' information networks, their information services 1197 mama—aem .e.ucc:.u- mzc_p<~_zcc . .mmoucaa =o_au:e raga e. muceamvmme c-o.i . cc.ueu=cu uu_u0eaa a=_e;c~ cause: . e¢=e5=c_ac<-ic >aem.g_: m .uau .m=c_ae_:aoe cease: . mac—uc_:aoa ace au._ca secs .u>co . mac—5332.52 ..—>8 d