COMPETITION REFORMS IN KEY MARKETS
FOR ENHANCING SOCIAL AND ECONOMIC
WELFARE IN DEVELOPING COUNTRIES
PROJECT FOR STAPLE FOOD (MAIZE)
SECTOR IN GHANA
Presented by
Selorm Ayeduvor
1
OUTLINE OF PRESENTATION
•
•
•
•
•
•
•
Introduction
Motivation of the Study
Objectives of the Study
Methodology of Primary Research
Analysis of Secondary Data
Results and Discussions
Conclusions and Recommendations
2
INTRODUCTION
• The project is being implemented by CUTS
with support from DFID (UK) and BMZ
(Germany), facilitated by GIZ (Germany). Two
sectors have been identified for study and
exploration under the CREW project in the
staple food sector and the transport sector.
3
MOTIVATION FOR THE PROJECT
• The purpose of the project is to assess the
state of competition in the selected sectors
and countries.
• Especially focusing on the impact that past
and existing public policies, regulations,
private sector business practices, institutional
arrangements and other factors have had on
consumer and producer welfare.
4
MOTIVATION CONT’D
• Specifically, the goal of the project is to better
demonstrate measurable benefits from
effective competition reforms in Developing
Countries (DCs), for ensuring long-term
support for competition.
• Further, the project would be implemented
guided by the following objectives:
5
OBJECTIVES
• To enhance international understanding of the
benefits from, and best practices in,
effectively implementing competition regimes
in developing countries.
• To develop and test a methodology (with
indicators) for assessing the efficacy of
competition - regimes in achieving impacts on
developing country consumers and producers.
6
OBJECTIVE CONT’D
• To advocate to national stakeholders and
international development partners for according
greater importance to competition policy and law
issues, in the national development agenda.
• To sustain the momentum on fast-tracking
competition reforms, gained from stakeholder
awareness, understanding about the benefits and
participation in related process in developing
countries.
7
METHODOLOGY OF PRIMARY RESEARCH
Study Area: Three Regions were selected Accra, Brong Ahafo and
Ashanti for the study. The locations are selected based on the levels
of production and consumption of maize.
Sample Size and Sampling technique: A total of 140 maize farmers
(70 from Techiman and 70 from Ejura) in Brong Ahafo and Ashanti
Region respectively and a total of 90 consumers were randomly
selected and interviewed from the three regions. The regions were
however purposively selected for the study.
Method of analysis: Descriptive statistics such
percentages, line graphs, bar charts were used
response of farmers. The logit models were
awareness of farmers about government policies,
programmes.
as means and
to analyze the
used to study
regulations and
8
PRODUCTION OF MAIZE
Distribution of Maize Production by Region (2000-2012)
Regions
Central
Agro-Ecological
Output
Zones
(MT)
Semi‐deciduous
%
Area (Ha)
Yield (MT/Ha)
192,069
13.68
104,984
1.83
405,377
19.77
176,825
2.29
205,419
13.59
154,613
1.33
570,350
26.22
244,922
2.33
209,353
8.73
139,214
1.50
rainforest
Eastern
Semi‐deciduous
rainforest
Ashanti
Semi‐deciduous
rainforest
Brong-
Forest savanna
Ahafo
transition
Northern
Guinea savanna
9
MAIZE PRODUCTION CONT’D
• Maize area, Production and Yield trends in Ghana (1990-2012)
10
MAIZE PRICES
Descriptive statistics of Regional nominal wholesale maize prices
(2002-2008)
Statistics
Greater Accra
Central Eastern Ashanti B/Ahafo
Northern
Mean
28.87
29.61
27.65
25.95
21.86
21.05
Standard
Deviation
Minimum
13.68
13.53
11.91
13.16
11.43
11.40
10.59
8.65
9.03
7.96
6.75
8.40
Maximum
82.00
75.65
64.56
78.16
60.39
56.67
Coefficient of
var
Count
47.38
45.71
43.06
50.73
52.27
54.16
84.00
84.00
84.00
84.00
84.00
84.00
11
MAIZE PRICES
Descriptive statistics of Regional nominal wholesale maize prices (2009-2012)
Statistics
Greater Central Eastern Ashanti
Accra
B/Ahafo
Northern
Mean
74.94
76.65
68.39
72.11
55.27
46.85
Standard
Deviation
Minimum
22.80
22.51
26.20
23.40
17.29
11.48
45.50
41.81
4.90
43.33
32.05
32.44
Maximum
151.00
137.86 123.48
128.98
93.28
74.35
Coeffient of var
30.42
29.36
38.31
32.46
31.28
24.50
Count
48.00
48.00
48.00
48.00
48.00
48.00
12
MAIZE PRICE CONT’D
National average wholesale maize price (2002-2012)
Average Wholesale Price Trends for Maize
1000
900
800
PRICE(GH)
700
600
500
Nominal
400
Real
300
200
100
0
2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012
13
PROCUREMENT OF MAIZE
• NAFCO’s mandate consist of guaranteeing an assured income to
farmers by providing a minimum guaranteed price and ready
market for farmers in order to reduce post-harvest losses
• Purchasing, selling, preserving and distributing food stuffs in
times of crisis
•
employing a buffer stock mechanism to ensure
stability/balance in demand and supply
• expanding the market share/demand for food grown in Ghana
by selling to state institutions such as the military, schools,
hospitals, prisons.
14
PROCUREMENT CONT’D
• acting as a foreign exchange earner as increased food production
resulting from MOFA’s interventions
• and storage by NAFCO will afford the country the opportunity to
export surplus food items when the local food requirement has
been met.
• The target quantities for 2012 for maize were 15,000 Mt of white
maize and 15,000 Mt of yellow maize; 15,000 Mt of paddy rice;
1,000 Mt of soya.
• The Emergency Government Stocks include: 10,000 Mt of white
maize; 10,000 Mt of milled rice; 1,000 Mt of soya.
• The share of these stocks in an estimated production of 1.7
Million Mt is around 3 percent.
15
MARKETING AND DISTRIBUTION
Maize Consumption and Utilization
• Food balance sheet for maize in Ghana (2006-2012)
2006
2008
2009
2010
2011
2012
Gross Biological Production (MT)
1,189,000
1,470,000
1,620,000
1,871,695
1,683,984
1,949,897
Available for Human
Consumption* (MT)
832,000
1,029,000
1,134,000
1,310,187
1,178,789
1,364,928
Total Imports of Commodity (MT)
-
-
34,000
18,000
15690
151,258
Total Exports of Commodity (MT)
-
-
150
10,000
15000
20,000
1,024,000
1,167,850
1,400,167
1,298,927
1,614,086
43.60
43.80
43.80
45.00
43.8
1,052,100
1,060,967
1,088,430
1,134,858
115,750
339,199
210,497
317,819
16
Total Supply of Commodity (MT)
Per Capita Consumption
(Kg/Annum)
Estimated Net Consumption of
Commodity-ties (‘000MT)
Net Deficit/ Surplus (MT)
43.8
972,000
-140,000
5,000
• Availability and Access to Food Outlets
Region
Total market places
2008
2009
2010
2011
Average per District
2012
5yrs Av 2008
Ashanti
802
806
1755
1789
BrongAha
228
228
236
238
204
Eastern
171
174
218
277
Greater
Accra
97
101
49*
160
167
64*
Northern
1196 1269.6
2009
2010 2011 201
2
5yrs Av
30
32
58
59 44.3
226.8
8
8
11.0
285
225
10
10
10.0
50*
49
69.2
10
10
4.9
5.0
4.9
6.96
65*
97
110.6
8
8.3
3.2
3.3
4.9
5.54
11
44.88
9.3
9.46
13.0 13.6
11.32
17
Fertilizer Import and Consumption in Ghana
Fertilizer Imports in Ghana (2000-2012)
Year
NPK
M. of
Potash
Urea
SOA
SSP
&TSP*
Nitrate*
Pot.
Cocoa
Sulphate Fert.
Others
Total
2000
14,902
141
4,510
23,165
600
180
43,975
2001
49,287
2,500
4,147
22,628
700
1,586
80,848
2002
800
n.a.
18,484
20,047
1,656
n.a.
n.a.
n.a.
901
41,888
2003
18,890
500
23,440
25,715
n.a.
7.35
n.a.
19,500
4,027
92,807
2004
18,223
250
822
7,688
1,850
95,312
72,000
25,000
2,588
223,733
2005
38,978
4,540
1,000
15,000
1,000
157
135
12,000
18,496
91,306
2006
84,907
9,072
19
19,090
99
52,601
103
n.a.
23,988
189,879
2007
87,388
4,962
109
17,458
504
52,823
321
n.a.
26,029
189,594
2008
18,873
13,773
8,853
4,172
15,440
64,085
371
n.a.
61,463
187,030
2009
197,631
25,028
15,007
4,616
66,501
110
n.a.
n.a.
26,293
335,186
2010
30,560
11,521
16,079
12,077
52,117
236,547
n.a.
n.a.
130,314
489,215
2011
139,128
12,363
10,387
46,222
72,976
75,292
1,004
24,192
50,779
432,343
2012
2,923,30
4
31,950
43,384
83,840
78,355
267
n.a.
n.a
201,432
3,362,53
18
2
Fertilizer Subsidy Budget, Volume, and Cost
ITEM
2008
2009
2010
Agric Budget(000GH₵)
97,131
202,632
255,886
Subsidy amount
20,654
34,417
30,002
% agric budget
21.3%
17.0%
11.7%
Total volume of fertilizer
subsidy
43,176
72,795
91,244
Disbursement method
Coupon
Coupon
Waybill
25
25
27
39
Subsidy amount 26
26
18
37
% subsidy
51%
51%
38%
49%
Farmer pays
26
26
25
34
Subsidy amount 26
26
16
38
% subsidy
50%
50%
39%
47%
Farmer pays
16
16
18
53
Subsidy amount 18
18
16
18
% subsidy
53%
52%
47%
34%
51%
51%
42%
NPK
UREA
SOA
Yearly average subsidy
Farmer pays
2011
2012
78,700
120,300
Waybill
Waybill
19
ANALYSIS OF PRIMARY DATA
20
PRIMARY DATA ANALYSIS
Policies, programmes and regulations identified
are:
1.Fertilizer subsidy programme
2.Seed inspection and certification
3.National seed policy
4.National food buffer stock company(NAFCO)
21
MAIZE PRODUCTION
Land holding and land under cultivation
• The average land under cultivation of the
respondents in the study area was about 2.14 ha;
however this ranges between 0.4 ha to 12 ha in
the area.
• The total land holding of the 140 farmers was
547.7ha while the total land under cultivation
was 297.1ha which means the proportion of
farmers land holding under cultivation of maize is
about 54.24%.
22
Quantity and trend of maize production
• The production of maize increased from 358.5Mt in
2009 to 825.69Mt in 2013 this represent a growth rate
of about 24.8% per annum in the two Regions
TOTAL OUTPUT
900
800
700
600
500
TOTAL OUTPUT
400
300
200
100
0
2009
2010
2011
2012
2013
23
• Production level of maize (2009-2013)
700
600
PRODUCTION(MT)
500
400
Ashanti
Brong Ahafo
300
200
100
0
2009
2010
2011
2012
2013
24
FERTILIZER
Availability of fertilizer
Response of farmers
Source of supply of fertilizer
Government (24.3%) Private (75%)
Both(0.7%)
Change in source of supply
from public to private
Yes(14.3%
Reliability of supply
Very good (25%) Good (56.6%) Neutral (14.3%) Bad(6%)
Time of supply
Within time (72.1%)
No (85.7%)
Beyond time (27.9%)
Change in availability in supply Yes positive (23.6%), yes negative (35%) no(41.4%)
Government policy
responsible for the change
Fertilizer subsidy programme
25
FERTILIZER CONT’D
AVERAGE USAGE OF FERTILIZER
• NPK- 133.8 Kg/ha
• SOA- 105 Kg/ha
AFFORDABILITY
Response of farmers
Rank of affordability
Very expensive
Expensive (21.4)
Neutra l(0.7%)
(77.9%)
Change in affordability
Yes positive (9.2%), yes negative (72.9%) no (17.9%)
Degree of change in
Very high degree (37.9%) high degree (34.3%)
affordability
Government policy
responsible for the change
Fertilizer subsidy programme
26
FERTILIZER CONT’D
Trend of fertilizer prices from 2009 to 2013
Prices of fertilizer used by farmers (2009-2013)
60.00
Average Prices
50.00
40.00
NPK
30.00
Ammonia
Urea
20.00
10.00
0.00
2009
2010
2011
2012
2013
27
FERTILIZER CONT’D
Quality of fertilizer
Response of farmers
Rank of quality
Very good (58.6%)
Good (40.7%)
Neutral(0.7%)
Change in quality
Yes positive (17.6%), yes negative (31.4%) no (50%)
Degree of change in quality Very high degree(9.4%) high degree (62.5%) high
degree (28.1%)
Government policy
Not able to identify any government policy
responsible for the change
28
FERTILIZER CONT’D
Factors affecting awareness of fertilizer policy
Variable
Marginal Effects
Fertilizer usage
.05899
Farm size
Standard Error
z
P>z
0.01225
2.22
0.026**
.0054359
0.156792
0.16
0.875
Farm type
.092985
0.647092
0.71
0.478
Region
-.211925
0.436585
-2.2
0.028**
Sex
.0187825
0.595367
0.15
0.884
Age
.0050151
0.022002
-1.03
0.304
Education
-.049677
0.336099
-0.67
0.503
0.027622
1.16
0.247
Farming experience
.0070856
Fertilizer source
.2556671
0.500264
2.17
0.003***
Income
.2506433
0.165175
-1.8
0.072*
0.96
0.336
Constant
Number of obs
1.39139
140
LR chi2(13)
18.42
Prob > chi2
0.0012
Pseudo R2
0.5122
Log likelihood
-181.918
29
SEED MAIZE
Response of farmers
Source of seed
Government (7.1%), private (22.9%), own seed(70%)
Choices in terms of Availability of Many option (47.9%), no option(21.4%), few option(30.7%)
seed
Ranking of option available
Very good (37.1%), good(47.9%), neutral(11.4%) bad(3.6%)
Changes in availability of seed
Yes, positive (15.7%), yes negative(9.3%), no (75%)
Affordability of seed
Very expensive (18.6%), expensive(17.1%), Affordability(32.1%),
Cheap (15%) Very Cheap (17.1%)
Changes in affordability
Yes , Positive(10.7%), yes , Negative(32.1%) no change(57.1%)
Quality of seed
Very good(38.6%), Good(45.7%), Neutral(13.6%), Bad(12.1%)
Changes of quality of seed
Yes, positive(13.6%) yes ,negative(9.3%), no(72.1%)
Government policy
Not able to identify any government policy
30
SEED MAIZE CONT’D
Factors affecting awareness of seed policy
Variable
Region
Sex
Age
Education
Household size
Farming experience
Income
Seed usage
Seed source
Constant
Number of obs
LR chi2(13)
Prob > chi2
Pseudo R2
Log likelihood
Marginal Effects
-.2015774
-.1292945
-.0025377
.1484688
-.0046713
.0011758
0.317061
.0081371
.2915738
140
23.41
0.0053
0.6275
-168.1867
Standard Error
0.459119
0.580594
0.026084
0.304935
0.069313
0.026279
0.942062
0.070622
0.593313
2.246958
Z
-2.54
-1.15
-0.56
2.82
-0.39
0.26
1.95
0.67
2.26
-0.07
P>z
0.011**
0.251
0.573
0.005***
0.696
0.796
0.041**
0.505
0.024**
0.945
31
CREDIT
Availability
Response of farmers
Source of credit
Government (24.3%) Private (75%)
Both (0.7%)
Rank of the choice available
Many options (10%), few options (35%), very few option
(16.4%) no option (38.6%)
Change in source of credit
public to private
Yes (5.7%)
No (94.3%)
Rank the source of credit
Very good (19.3%)
(5.7%)
Very Bad (13.6%)
Good (43.6%) Neutral (17.9%) Bad
Change in availability in supply Yes positive (6%), yes negative (2%) no (92%)
Government
policy Not able to identify any government intervention
responsible for the change
32
CREDIT CONT’D
Affordability of credit
• With respect to affordability, about 41.29% ranked the
credit available as very expensive, 13.6% said it was
expensive, 14.3% ranked affordable, 19.3% ranked
cheap while the remaining 11.5% ranked very cheap.
• The total credit that the respondent received was GH₵
4,080.00 in 2009 to about GH₵10,480.00 in 2013
however this amount dropped to GH₵7,080.00 in 2014.
• The interest charged according to the farmers ranged
from 4% to 12% per month depending on the source of
credit.
33
PROCUREMENT CONT’D
• Existence of Government Support Price
Response of farmers
Satisfaction
price
of
base Very satisfied (1.4%) satisfied
Neutral (2.1%), Not aware (84.3%)
(12.1%)
Awareness of price Aware (10.7%) no aware (89.3%)
setting mechanism
Information about base Always informed
(3.6%),
sometimes
price
informed (8.3%) hardly informed (87.9%)
Source of information Government (12.6%), private (5.9%), media
about based price
(1.7%), not application (79.8%)
34
PROCUREMENT CONT’D
• Sales information, Sales pattern and payment terms
• Average selling price of maize in 2014 is about GH₵ 100/120 Kg
however prices of maize range between GH₵ 55/120 Kg to about
GH₵ 130/120 Kg.
Response of farmers
Option of selling
Yes (63.6%) No (36.4%)
Rank option of buyer available
Many option (42.4%) few option (42.4), very few
option(12.4%) no option(3%)
Source of selling
Middle(62.9%) local traders (21.4%),any available
buyer(11.4%), agro-firms(2.1%) others source(2.2%)
Place of selling
Major market (65%), homes or farm gate(35%)
Distance from home
21.4km
Network
entities
of
procurement Very good ( 25.7%), good(52.9%) neutral(13.6%), bad(7.8%)
very bad(0.7%)
Price determination
Market price (90%), negotiation (10%)
Observe Change in price
Positive change(57.3%),
change(18.6%)
negative
change(21.5%)
35
no
PROCUREMENT
900
800
PRODUCTION(MT)
700
600
500
TOTAL OUTPUT
400
OUTPUT SOLD
300
200
100
0
2009
2010
2011
YEARS
2012
2013
36
MARKETING & DISTRIBUTION
Monthly Consumption
AVERAGE
MONTHLY
CONSUMPTI
ON
1-20
21-40
41-60
FREQUENCY
56
17
15
PERCENT
Monthly Expenditure
AMOUNT
SPEND ON
MAIZE
FREQUENCY
PERCENT
1-20
59
65.6
21-40
15
16.7
41-60
13
14.4
61-80
2
2.2
101-120
1
1.1
TOTAL
90
100
62.2
18.9
16.7
61-80
1
1.1
121-140
1
1.1
TOTAL
90
100
37
MARKETING & DISTRIBUTION CONT’D
• The preferred staple by consumers
2.2%
1.1%
5.6%
13.3%
77.8%
RICE
MAIZE
YAM
CASSAVA
PLANTAIN
38
MARKETING & DISTRIBUTION CONT’D
Response of farmers
Source of maize
Open market (84.4%), private (15.6%)
Private entities you buy Grocery / retail (70%), farmers/co-operative
maize from
(14.4%), wholesale (2.2%)
Changes in Price of maize
Increase (88.9%), Decrease (8.9%), No change
(2.2%)
Degree of change in price Very high (34.8%), high (47.2%), low (18%)
Aware of quality standard
Yes (14.4%), No (85.6%)
Mechanism
of
setting Aware (3.3%), not aware(96.7%)
dispute due to poor quality
Government policy
Not able to identify any government policy
39
CONCLUSION
Based on the major findings from the study, the following conclusions are drawn
PRODUCTION
Maize production has increased from 2009 to 2013 While Cost of inputs used in
production have also increased over time. Private entities are the major source of
fertilizer to the farmers. NPK is the main fertilizer used the farmers
•
•
Though there are efforts to subsidise fertilizer for farmers, it prices have increased
consistently over time
•
Fertilizer is mostly not available to farmers though the quality has improved
•
The statistically significant factors that affects the farmers awareness of fertilizer
policies are: Region, fertilizer usage, income and source of fertilizer
Seed prices have also increased over the period .Though there are efforts to
improve availability and affordability of seeds, farmers still rely on their own seeds.
There have been any significant improvement in the quality and availability of
seeds. The statistically significant factors that affect awareness of seed policy are:
Level of education, region, income and seed usage
•
40
CONCLUSION CONT’D
• Majority of the farmers are credit constrained
• Interest rate and credit delivery have been
fluctuating over time.
PROCUREMENT
• Majority of the farmers are not aware of the
price setting mechanism by NAFCO. Most of
the farmers sell produce to middle and market
queens
41
CONCLUSION CONT’D
MARKETING AND DISTRIBUTION
Though there have been some improvement in
the availability of maize, the quality has not
improve whiles the price continue to rise. Most
consumers also buy their maize from open
markets
42
RECOMMENDATIONS
• It is therefore recommended that Ghana Government should
facilitate distribution of subsidized fertilizer and credit
facilities at lower interest rates to farmers. This will help
reduce the cost of production of maize.
• The communication of government policies, programmes and
regulations be enhance by various agencies responsible. This
will enhance farmer awareness , improve their participation
and benefits derived from them.
• It also recommended that government establish retail shops
in the country in order to reduce price of maize through
competition.
• NAFCO should intensify their activities to ensure that prices of
maize are stabilized and also reduce postharvest losses.
43