Learning from ICT-based market information systems roles in African food chains: A Ghanaian pineapple supply chain case study Abstract Using Ghanaian experiences in pineapple supply chain development, the aim of this paper is to investigate the using Market information Systems for designing a co-innovative ICT-based approach for African food quality improvement for stakeholders’ better market access. Using primary and secondary data from different chain value chain actors and support institutions, the research found that the Information and Communication Technologies can constitute a potential tool for pineapple quality conservation, timely market access and an updated market information channel to reduce post-harvest losses. Lessons learnt from this case study can help designing further research on co-innovative intervention strategies needed for policy making and agribusiness development in African countries. Key Words: Market access, ICTs, Information Systems, Innovation, quality 1. Introduction Over the last 25 years, agricultural incomes in sub-Saharan Africa have on average grown by less than 1% per year, the lowest rate in the world and significantly less than any other region (ONE, 2011). Sub-Saharan Africa is already seriously off track in meeting the Millennium Development Goals to halve hunger and poverty by 2015. High food prices in local and global markets and difficulties to meet buyers and consumers’ quality demand will likely delay this progress even further. Pineapple is one of the commodities with high potentials to generate income through local, regional and international markets access. However, quality demand for pineapple fruit and processed products on international market is being significantly changing in the last decade. The observant buyer in the EU will have noticed that pineapples have shrunk in recent years. They have also become sweeter, juicier and more yellow. This is because the type of pineapple being sold has changed from the Smooth Cayenne variety, predominantly supplied by Ghana and Côte d’Ivoire, to the MD2 variety developed in Costa Rica (Fold and Gough, 2008, Barrientos et al. 2009). From the mid 1980s to the mid 1990s, consumer enthusiasm for fresh fruit and vegetables grew and sea transport techniques with container cooling systems were developed (Friedland, 1994). Costa Rica and Honduras increased their exports of fresh pineapples to the US, with Costa Rica increasingly dominating in the latter half of the 1980s (Fold and Gough, 2008). Exports from Costa Rica stagnated in the early 1990s but grew dramatically from the mid 1990s reaching approximately 700,000 tonnes in 2004. Costa Rica has thus come to dominate the global supply of fresh pineapple. Up to the late 1990s, the EU market was dominated by pineapples from West Africa especially from Côte d’Ivoire. Production in Côte d’Ivoire started to fall after the turn of the century but West African supplies to the EU have remained relatively constant due to increased export from Ghana. 1 The last decade has been traumatic for the Ghanaian pineapple industry. The European demand for the traditional Smooth Cayenne variety disappeared in a short time and simultaneously the requirement for EUREP GAP certification became widespread. As consequence, smallholder export of pineapples has closed down. There are now only eight significant exporting where five years ago there were over 40 active exporters (Jaeger, 2008). The smallholder pineapple sector has been hit particularly hard because they were reliant on exporters supplementing their own production to make up volumes. As these players were unable to maintain a market presence in the switchover there were no buyers for the smallholder output. Further, MD2 requires substantial use of more inputs. It was the speed of withdrawal of demand for Smooth Cayenne that hit the Ghanaian industry hard. Earlier market surveys had indicated that in a comparison of Ghanaian and Central American (Costa Rica) products, importers were less concerned about the variety than the performance of the Ghanaian exporters and the quality on delivery. European imports of whole pineapples from Ghana have fallen from 44,000 tonnes in 2003 to 35,000 tonnes in 2007 and 40,000 in 2010 (Fig1). Set against this scene are some positive developments: the roll out of MD2 is largely done and material is widely available at a manageable cost, the production protocols are better understood, 100% of exports are GlobalGAP certified, Blue Skies are buying and cutting increasing quantities of pineapple. In 2011, Blue Skies exports of 5,000 tonnes of pineapples equate to 15,000 tonnes of whole fruit. One of the major implications of this situation is that the smallholder sector can regroup around the traditional varieties (smooth cayenne and sugarloaf) to supply the local market and mostly the processing factories as the juice yield of smooth cayenne is significantly greater than MD2. The present research aims at investigating the Ghanaian experiences in pineapple supply and how is the MIS using to convey information toward formers. The focus of the investigation was to ascertain: (1) how is the pineapple supply chain organized, (2) what are the importance and role of farmers’ organizations (3) what are the existing institutional supports and environment enabling conducive and efficient contract arrangements, and (4) what are the roles ICT in market information system and pineapple chain development. 2. Study context and justification Pineapple production in Ghana is characterized by smallholder involvement in a non-traditional export chain (Takane, 2004). The smallholders, however, ran into problems a few years into the new millennium as competition from MD2 eroded the demand for Smooth Cayenne. Production therefore transferred increasingly into the hands of large commercial companies who had the capital to invest in the necessary cooling and packing facilities for MD2 (Danielou and Ravry, 2005). As consequence, for the smallholder farmers to be reintegrated in export – switching form Smooth Cayenne to MD2 – they have to settle contract arrangements with the large commercial companies in Ghana in order to cope with large investment needed. We select the Ghanaian pineapple supply chain with a main purpose of looking at the best practices in terms of the chain coordination the institution environment, transaction attributes, as well as quality issues and quality enforcement mechanisms. Moreover, the Ghanaian pineapple supply chain is now experiencing through esoko a market information system (MIS) using mobile to convey and receive market information toward farmers. Lesson learnt from this case 2 study will serve as proxy to identify co-innovative governance mechanism for quality improvement and high value market access of pineapple in Benin. The major adding value of the present study to the literature is that it contributes to highlight the roles and contributions of ICTs in agricultural food quality conservation and losses reduction, which are less emphasized until now by authors. Lessons learnt from the Ghanaian case study will help recommending strategic interventions for further research and policy intervention in African countries especially in Benin for agrifood chains improvement. 3. Overview on Ghanaian pineapple sub-sector Ghana’s main horticultural export products are pineapple, cashew, papaya, banana, mango, yam, and vegetables and to a small extent fresh cut flowers. Growth in the horticultural subsector is led by pineapples, the exports of which showed remarkable improvement from 9,754 tonnes in 1992 to 35,174 tonnes in 2001, resulting in an increase in foreign exchange earnings from a low of USD4.4 million in 1992 to USD22.1 million in 2004 (Danielou and Ravry, 2005). The growth in pineapple production has been due to favourable growing conditions. The quality of pineapples varies. They are mainly marketed in Europe, where consumers have shifted their preference towards an MD2 variety against the Smooth Cayenne produced in Ghana. 3.1. Private Sector Collaborative Organizations The landscape of trade and industry associations has changed since 2003 with the appearance of new groups and the decline in health of others. Overall, there needs to be rationalization: the capability and potential of the clusters would be greatly enhanced by broadening the scope and tackling problems that are common to all those interested in horticultural exports. It is clearly inefficient to maintain separate secretariats and their overheads. 3.2. Umbrella Groups The National Horticultural Task Force (NHTF) was established in 2003 as a broad-based private sector led group representing produce and marketing organisations, public sector institutions and the donor community. The NHTF maintains a website to share information on business opportunities, regulations, markets and technology. The NHTF has been instrumental in promoting the National Quality Assurance Scheme leading to the definition of the Ghana GAP standard. The Federation of Associations of Ghanaian Exporters (FAGE) acts as an umbrella group for the various trade associations and continues as the private sector institution for export development. To some extent, the NHTF seems to have taken over the role of FAGE in the horticultural sector. Membership of the Horticulturalists’ Association of Ghana (HAG) is declining and the association now counts about 35 members. The role of HAG is even less clear now than five years ago, although the stated aim is to promote Ghana on the horticultural map of the world. The association seems to be repositioning itself to organize group export. 3 3.3. Farmer Associations The Seafreight Pineapple Exporters’ of Ghana (SPEG) is now in poor shape. In 2004 there were some 40 companies actively exporting pineapples, and membership dues and per pallet charges for sea-freight gave the organization healthy revenue. By 2008 there are no more than 12 active exporters; the General Manager reported that of 26 members only a third had paid their dues from the start of the year. Reserves, which had been building until 2006, are now used up and the overhead of offices and 10 employees are burdensome. SPEG had assisted in the switch over to MD2 pineapples with $2mn loan from the Government of Ghana. SPEG members travelled to Costa Rica to research the MD2 variety and its production, and brought back plantlets for growing and multiplication. Using the tissue culture laboratories of Bomarts Farms, Tongu Fruits and the research station at Binari the plantlets became widely available at a subsidized price. The loan has yet to be repaid, with an average of $30,000 per member owed. SPEG insist that they should participate in the management of the refurbished Shed 9 at Tema. To this end a Memorandum of Understanding was signed in 2007 with Golden Exotics to develop the management of the facility. SPEG has made no progress since in resolving the issues that prevent the opening of the shed, indeed it is not obvious that efforts have been made in this direction. This raises the question of whether the general membership is interested in the refurbished facility. The future role of SPEG is unclear. GTZ, through the MOAP programme, are assisting in redefining a strategy for the organization. The changes in SPEG must mirror the radical changes that have taken place in the Ghanaian pineapple industry. 3.4. Pineapple processing Three companies now dominate the pineapple export trade: Compagnie Fruitière of France are the largest producer with their investment in Golden Exotics in Ghana, HPW of Switzerland acts as a marketing umbrella for five Ghanaian producer/exporters, and Blue Skies of the United Kingdom process some 15,000 tonnes of pineapples at Nsawam for export as fresh cut product. In 2007, over 80% of pineapples destined for export, either whole or processed, were handled by these three companies (Danielou and Ravry, 2005). There has been a major decline in other players in the market. There remain a handful of SPEG members, such as Koranco and Chartered Impex, still operating independently in the fresh pineapple export trade. The switch in demand to MD2 and the imposition of GlobalGAP as a requirement dealt a further blow to companies already struggling to compete against the Central and South American suppliers. Their demise highlights the difficulty of outgrower-based exporters competing in the fresh produce market: not only are the efficiencies of the grower exporters hard to match but the performance and agility standards are challenging when co-ordinating different suppliers. 3.5. Pineapple marketing The major change at the port, and an important achievement of HEII, is the refurbishment of the fruit export shed at Tema, Shed 9. Cold storage for up to 1360 pallets has been installed. The major works were completed in May/June 2007 but the facility has yet to be used. As at April 4 2008 there were still some minor works in progress (construction of access steps and a toilet block) but the facility was ready to use, and, indeed, had been for nine months. Since the mid-1990s, when sea-freighting of pineapples from Ghana began, Shed 9 at Tema port has been used as the export shed for offloading, palletising, controlling and holding of pineapples. The refurbishment of Shed 9 became a key component of HEII. Plans incorporated improved ventilation throughout with a cooling facility at one end in addition to reefer container handling, stuffing and plugging capability. As the concurrent programme of developing MD2 production moved on, so it became apparent that there would be a much bigger need for cold storage at the port, particularly with the development of incoming investors such as Compagnie Fruitière and their banana production. The HEII plans were amended to convert the whole of the space at Shed9 into cold storage (in eight units of about 500m2 each), and the budget was expanded by cancelling some other projects within HEII. Among those infrastructural components sacrificed were the planned alterations for Kotoka International Airport (air-freight of pineapples was likely to decline) and the up-country post harvest centres. Shed9 is now a world class fruit export terminal. It remains shut, however, while the management and financing of this facility is debated by the stakeholders. As for the air freighting limited cold storage is sometimes available but cannot be relied on so product is generally delivered in a relatively short window before loading can take place. Any mishaps or traffic on the roads will therefore be penalised by missing the flight. The MiDA programme has a component for upgrading facilities at the airport, but it is not certain that this will go ahead. It would be interesting to assess the scale of losses at the airport: on some occasions consignments must be written off when heavy rain interrupts re-packing or palletizing, but more frequently there is simply deterioration in quality that impacts on the reputation and the return to the exporter “personal communications”. 4. Methodology 2010 2008 2006 2004 2002 2000 1998 1996 1994 This study is carried out through a desk review of existing secondary sources of information covering small scale agriculture and a wide range of pineapple value chain related services and actors including staffs from ICTrelated service with proven Figure 1: Ghanian export trend experiences and initiatives. The 80000 secondary data were collected from 70000 libraries, national public and private research and development institutes 60000 including Universities, ministry of 50000 AIR (T) agriculture (MoFA, MAEP), NGOs 40000 (GIZ, Helvetas) and famers’ SEA (T) 30000 organization (POs) office. Primary TOTAL 20000 data was collected through field visits 10000 to institutions in Ghana and Benin. 0 Individual and group interviews with key informants in the main pineapple production area where undertaken. The Source: Data collection 2011 primary data was collected form chain actors in Grate Accra, Eastern and 5 Central regions (N’sawam, Awutu, Breku) in Ghana using an interview protocol. These area were selected as the main pineapple producing areas in Ghana. Respondents include farmers, farmers’ association leaders, and key informants from the ministry of agriculture, NGOs, exporters (SPEG, HPW), traders (local market), processors (Blue Skies, HPW), research and quality control services (PPRSD, Horticultural department of MoFA), development project leader (EMQAP) market information service providers (Esoko-Ghana) input dealers and distributors (AgroGate, AGLOW). A non-probability sampling approach was used as the respondents were selected in a non-random manner using a convenience sampling techniques1. Following thus approach, respondents are selected upon their experience in production and trading activities, the production area, pineapple variety produced or processed, the membership (or not) of a pineapple farmers. This combination resulted in a heterogeneous sample. 5. Finding and discussion 5.1. Market information systems using mobile phone in agri-food chains Several studies examine the macroeconomic impact of ICT. Roller and Waverman (2001) analyze 21 advanced countries over 20 years (1970–90). They find a causal nonlinear relationship between telecommunications infrastructure investment and economic performance, where impact increases once countries pass a certain threshold of telecommunications access. Qiang and Pitt (2004) find that ICT has made a significant contribution to economic growth across a wide range of countries research that finds that broadband is an important factor in social transformation Figure 2 Mobile Cellular Subscriptions in Sub-Saharan Africa, and improved service provision, 1998–2008. particularly in rural areas, and that Source : World Bank 2010 mobile broadband services are particularly well suited for improving the economic well-being of poor people (Lobo, Novobilski, and Ghosh 2008). Countries that do not develop effective broadband infrastructure may therefore be failing to capitalize on some of their economic growth potential (Gaasbeck and Kristin 2008; Tolkoff 2007). 1 One justifiable use of a convenience sample is for exploratory purposes, that is, to get different views on the dimensions of a problem, to probe for possible explanations or hypotheses, and to explore constructs for dealing with particular problems or issues. See Marshall (1996) and Ferber (1977) for more detail on convenience and judgment sampling techniques 6 The success of mobile communication has been very scalable, with large and small countries experiencing rapid increases in network coverage and access Contribution of innovative MIS to pineapple quality improvement In most African countries, the mobile phone has facilitated farmers and several entrepreneurs linkage and easy access to markets (Bertolini, 2004). The direct impact of the valorization of the mobile phone use can significantly lead to a remarkable reduction in transaction costs, broadened trade networks, and mostly products quality conservation through transport market search time saving and importantly the reduction of the number intermediaries. Considering cellular phone applications such as the SMS as the most important emerging ICT applications in Africa, the study in Ghana showed that several advantages can be inferred from the promotion this innovative technology. This finding comes to confirm results from previous studies in African countries such as Kenya, where the National Agricultural and Livestock Extension Programme in 2008 have successfully experienced the use of mobile phone-based information service through the National Farmers Information Service. This has allowed providing extension information to farmers using audio format in both English and local languages (such as Kiswahili). Other cellular phone applications include the provision of market information and electronic trading platforms, where farmers and traders access information on commodities being (or to be) sold, their prices and the identity of their buyers and extension messages, such as Tradenet.biz (Munyua et al., 2008). In Senegal, women are also using telecentres linked to the internet via mobile phones to access market prices (Hafkin and Odame 2002). The mobile phone is a used as an electronic money transfer channel. For instance, in Kenya the M-Pesa service is an affordable and speedy option for money transfer from one person to another, using SMS. In essence the phone subscription acts as a bank account and as a debit card and is being applied in the agricultural sector to pay farm workers, and purchase farm inputs. In Ghana, the ministry of Agriculture in collaboration with esoko service platform and local companies that provide market information, a service that uses SMS for information delivery. In Ghana as well as in Senegal, farmers can subscribe to real-time information on agricultural product (fruits such as pineapple, fish, and cereals) via their cell phones. Likewise, fishermen in Ghana and in other parts of the continent are using mobile phones to communicate information on where to fish and where to supply their harvests, and also to obtain information on prevailing weather conditions and prices, among others. However, the major challenges experienced by farmers using mobile phones are due to their low literacy level to read and send SMS in both local and official languages coupled with the lack of infrastructure such as electricity to charge phones. Esoko experience in MIS: a case study Esoko is an agricultural market information platform. It is a response to the explosive growth of cellular services in Africa. Managed on the web and delivered via mobile, individuals, agribusiness, government and projects use Esoko to collect and send out market data using simple text messaging. The Esoko platform provides automatic and personalized price alerts, buy and sell offers, bulk SMS messaging, stock counts and SMS polling. A private initiative based in 7 Accra, Ghana, Esoko was built and is supported by a team of over 60 local developers and support staff. Along with the technology, Esoko has a partner support program focused on capacity building and financial sustainability, with an emphasis on market data enumeration and business development services. Transactions costs for farmers and traders have also fallen by $2–$150 per transaction by significantly reducing the role of middlemen or cutting them out altogether. It has also transformed mobile phones into a market bulletin increasing their utility beyond voice and text. Esoko has succeeded mainly because it uses open source software, enabling it to scale up, tailor business services to local needs, use affordable mobile telephony, offer free listing of services, allow sending of and receipt of text messages in several languages, provide real-time commodity prices, and provide direct access to markets worldwide. Like all businesses, farming is based on having the right information at the right time. Farmers need to know what crops to plant that will yield the best return on their investment of time and money. They need to know the right techniques required gaining good yields and they need to know what fertilizers and pesticides to apply to manage their crops. They need to know where to source inputs, advice and credit. Above all, they need to know where and when to buy. Farming is knowledge rewards those that are integrated into markets and value chains, and punishes those that aren’t. And although it’s all too easy to underestimate knowledge that farmers already have, the asymmetry of information throughout agriculture has unfairly rewarded some and excluded others. This deficit also works in reverse. Too often large buyers or processers are faced with the risk of an uncertain supply. Not having information about what’s being grown where and in what quantity means that large agri-industry (agribusiness) will not invest in the factories and mills that run the risk of standing idle for a day for lack of supply. Due to the poor infrastructure of roads, electricity and information, communities remain at risk. They are not integrated appropriately into the value chain. Surplus markets often remain unaware of deficit markets, even within the same country. Buyers spend so much reaching their farmers they often lack the margins to pay a good price. And politicians are not immune: faced with food security alerts and lacking real market intelligence, short term policies can be reactive and counter productive. For the last forty years governments have been successful in collecting information from markets, but have failed to find the speed and channels to deliver it to the public in a time that makes it commercially valuable (Esoko, 2011). Data resides in Ministries in capitals, and too few examples exist where such data initiatives have helped beyond the domain of policy planning. For the first time, an information and telecommunications infrastructure is reaching into rural communities across the continent. Riding across the top of this popular wave is a range of pioneering services that seek to address opportunities that for too long have remain unsolved. For the first time, market information can be collected by individuals anywhere and sent cheaply, instantly, to central databases. Smart software can turn that data into personalized packaged market alerts that can be forwarded and stored in the pockets of farmers everywhere. For the first time, farmers are getting information that is current, relevant, and actionable. Businesses are benefitting too, by saving thousands of Euros in transport, advertising and communication, through simple but powerful SMS based solutions that can penetrate deep into rural communities that were otherwise out of their reach or too expensive to manage. Value chains have grown, while at the same time shortening the time and cost of linking the people within them. 8 Esoko provides a steady and accurate supply of public data on prices, offers and profiles. This data is available to any mobile phone or Internet user anywhere in the world, in real time Organizations can register their members to receive private SMS alerts on critical updates about their activity. SMS alerts are sent out either as-they-happen (offers to buy & sell) or on specific days of the week (prices). Other feeds (public or private) will be offered to subscribers like weather, forex, extension advisories, inventory, forecasts, transport, traceability, disease and more to come in 2012. 6. Conclusion Findings of the present study have shown that the cellular phone have become important tools in improving small-scale agriculture in rural areas. Esoko have shown an important experience in African countries in getting market information to famers at right time. The study also found that one of the direct impact ICT valorization using mobile phones is the reduction in transaction costs, broadened trade networks and facilitated, and mostly products quality conservation by saving transport and market search time and also the reducing of the number intermediaries. Lesson learnt from this case study may be of high importance in developing and promotion pineapple quality conservation and market access in Beninese pineapple supply chain. Therefore, there is an important need to assess Benin what are existing infrastructures and intuitional organizations and facilities that are need to implement such an innovative ICT use in market access (so called co-innovation). 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