GHANA YAM MARKET, SUBSECTOR AND VALUE CHAIN ASSESSMENT. Final Study Report. 13 th May Prepared for: The Bill and Melinda Gates Foundation

Transcription

1 GHANA YAM MARKET, SUBSECTOR AND VALUE CHAIN ASSESSMENT Final Study Report 13 th May 2011 Prepared for: The Bill and Melinda Gates Foundation Prepared by: Mennonite Economic Development Associates 155 Frobisher Drive, Suite I-106 Waterloo, ON N2V 2E1, Canada T: (519) F: (519) E:

2 GHANA YAM MARKET, SUBSECTOR AND VALUE CHAIN ASSESSMENT Table of Contents 1.0 Executive Summary Summary of Findings and Recommendations Key Findings Recommendations Intervention Options Offering the Best Potential Impacts Yam Seed Supply Chain Model Information-based Improved Yam Production Practices Packages Business Development Strategy Assistance to CRI (and other NARIs?) Baseline Data Research Empirical Research to Quantify Factor Effects on Yam Yield Empirical Research to Quantify Effects of Factor Change on Yam Yield Study Objective, Questions and Tasks Questions Tasks Study Methodology, Schedule and Limitations Methodology Schedule Limitations Yam Ware Production to Market Chain Picture Overall Yam Ware Output Yam Ware Sector Map and Value Chains Observed Population of Yam Farmers Yam Ware and Yam Seed Distribution Key Features of the Ware Output Supply Chain Seasonality of Ware Prices Access to Ware Trade Markets Length of Ware Supply Chain Time to Market Farmer Ware Trader Relationships... 15

3 5.3.6 Ware Storage and Spoilage Increasing Yam Ware Output Cash Shortages Seed Supply Shortages Low Quality Seed Hired Labour Management Practices Stakes Shortages Fertilizer Inputs Soil Fertility Ware Storage Practices Seed Treatment Harvest Practices Spacing Practices Most Promising Options to Increase Output Certified Seed Supply Chain Improved Yam Farming Practices Packages Introduction of Ridge Ploughing Investment in On-Farm Storage Export Development Fertilizer Product Supply Chain Yam Farm Profitability Modeling Generic Yam Farm Profitability Model Impact of Yam Farm Gate Pricing on Profitability Yam Wholesaler Profitability Yam Ware Market Scan and Assessment (Question 1) Yam Seed Production to Market Chain (Question 2) Current Situation and Practices SWOT Analysis of CRI / RTIMP Clean Seed Supply Practices Performance Requirements Solution Options Preferred Seed Supply Solution SWOT Analysis of Preferred Seed Supply Solution... 41

4 9.7 Preliminary Economic Viability Analysis of Preferred Seed Supply Solution Estimated Seed Supply Impact of One 10 Acre Seed-tuber Grower Yam Ware Perishability and Storage (Question 3) Yam Varieties and Introduction (to farmers) by NARS (Question 4) Key Features of CRI s Current Practices SWOT Analysis of CRI s Current Yam Varieties Introduction Practices Discussion of Opportunities to Improve on Current Practice List of Figures Figure 1 Yam Growing Locations and Markets Visited... 8 Figure 2 Major Wholesale Market Centres, Ghana... 9 Figure 3 Growth in Ghana's Fresh Yam Ware Output Figure 4 Yam Ware Exports to Europe and North America Figure 5 Yam Ware Sector Map Figure 6 Seasonality of Yam Ware Prices Figure 7 Generic Yam Ware Value Chains Figure 8 Production Level Constraints to Increasing Yam Ware Output and Value Figure 9 Effect of Low Seed Quality Figure 10 Effect of Inadequate On-Farm Ware Storage Facilities/Practices Figure 11 Effect of Hired Labour Management Practices Figure 12 Effect of Inadequate Seed Management / Ware Harvesting Practices Figure 13 Effect of Seed Spacing / Plant Staking Practices Figure 14 Most Attractive Options to Increase Ware Output and Value Figure 15 Yam Ware Tuber Pricing, Kintampo Figure 16 Yam Wholesaler Price Mark-Up Rates Figure 17 Yam Exporters, FAO Stat. Relative Export Value ($/MT; Ghana = $728/MT) Figure 18 Current Yam Seed Distribution Figure 19 Certified Yam Seed Multiplication / Distribution Model Envisaged List of Tables Table 1 Portion of Yam Ware Output Growth Explained by Population Growth Table 2 Non-Price Benefits of Trading Relationships Table 3 Generic Milked Yam Production Model Table 4 Derivation of Seed Cost Table 5 Generic Milked Yam Profitability Model Table 6 Domestic Yam Ware Demand Growth Estimation Table 7 Regional Export Demand Growth Estimation Table 8 Aggregate Demand Growth Estimation Table 9 Global Yam Production, Table 10 Top Yam Producing Countries, Table 11 SWOT Analysis of CRI - RTIMP Clean Seed Supply Practices... 38

5 Table 12 Key Features and Limitations of Yam Seed Multiplication Options Table 13 SWOT Analysis of Preferred Seed Supply Solution Table 14 Estimate of Seed Tuber Production Costs, Tissue Culture versus Vine Multiplication Table 15 Potential Seed Supply Impact Table 16 SWOT Analysis of CRI's Current Yam Varieties Introduction Practices List of Annexes Annex 1 Annex 2 Annex 3 Annex 4 Annex 5 Annex 6 Annex 7 Study Terms of Reference Visit Schedule and Contacts Examples of Specific Ware Value Chains Observed Examples of Specific Yam Seed Value Chains Observed Preliminary Detailed Costing for Tissue Culture-based Certified Seed 24th March 2011, Kumasi Validation Workshop Participants List Literature References

6 GHANA YAM MARKET, SUBSECTOR AND VALUE CHAIN ASSESSMENT 1.0 EXECUTIVE SUMMARY The Bill and Melinda Gates Foundation (the Foundation) engaged Mennonite Economic Development Associates (MEDA) to conduct a tailored value chain assessment of Ghana s yam sector. This study was carried out in March 2011 with the much appreciated assistance of UKbased Natural Resources Institute (NRI) and the Crops Research Institute (CRI) based in Kumasi, Ghana. The methodology consisted of mainly qualitative key informant interviewing of yam farmers, traders and experts, review of available quantitative descriptive data and triangulation of various observations and insights across multiple sources to establish a reasonable degree of confidence in these and the findings stemming therefrom. This included a stakeholder s validation workshop held on 24th March and attended by 29 individuals representing yam farmers, traders and wholesalers and other experts knowledgeable of the yam sector. The findings reflected in this report have been utilized to strengthen the methodology and precision of a yam sector development proposal by the International Institute for Tropical Agriculture under funding consideration by the Foundation. Study findings are presented in Section 2. This study addressed four questions of interest to the Foundation, presented in Section 3. Section 4 profiles the methodology. Section 5 portrays the yam value chain and features salient to this study s interests. Section 6 analyses constraints to improving yam sector performance. Section 7 estimates yam farming profitability. Lastly, section 8 to 11 discuss and respond to the four questions of concern to the Foundation. Overall, this study finds that the most promising options to improve yam sector performance are: (1) establishing a commercially-based certified yam seed supply chain, through which new yam varieties and, indeed other seed and plant products might also be distributed; and, (2) promotion of improved yam farming practices packages to encourage farmers to adopt no cost and low cost techniques to improve yam yield, quality and to reduce spoilage rates. MEDA wishes to express its appreciation to the Foundation for the opportunity to provide the assistance reflected in this report and, as well, to Professor Ulrich Kleih, Marketing Economist, Food and Markets Department at NRI and to Dr. Emmanuel Otoo, Yam Breeder and Head of the Yam Programme at CRI for their respective expert subject contributions, insights and sheer hard work in assisting MEDA to carry out this assignment.

7 2.0 SUMMARY OF FINDINGS AND RECOMMENDATIONS 2.1 Key Findings The central findings pertaining to the subjects of study interest (refer to Section 3) include: Question 1: The potential for higher value processed yam food products to drive yam production and income growth for yam farmers in Ghana is extremely limited. Such value addition is essentially now non-existent. Consumers prefer fresh yam. While it ought to be possible to establish consumer demand for new, higher value processed yam food products, such would remain low volume niche markets and have little if any meaningful impact on the yam farming sector as a whole. That said, yam farming appears very profitable and domestic, regional and international market demand for fresh yam ware appears robust and to be expanding. This is driven by the combined effects of population growth, rising per capita incomes and improving road transportation and mobile communications infrastructures. Section 5 and 8 elaborate this finding. Question 2: It should prove feasible to establish a commercially viable high quality, and potentially certified, yam seed supply chain in Ghana based on tissue culture methods at a seed price that yam farmers will prove willing to pay. This finding is based on analysis of yam seed demand conditions (farmers, wholesalers), of current yam seed quality and of the economics of various yam seed multiplication alternatives. The specific model elaborated in this report is comprised of three stages: (1) tissue culture laboratory production and growing of plantlets under semi-controlled conditions yielding a breeder seed (average weight 2 grams; uniform size and shape); (2) mechanized planting and multiplication of this breeder seed by commercial subcontract farmers, this yielding a 150 gram yam seed tuber; (3) commercial distribution of these seed tubers in branded sack packaged form through yam ware wholesalers and yam seed/ware wholesale markets. Section 9 discusses this finding. Question 3: Though yam ware spoilage rates are widely considered to be on the order of 30%, the distribution of yam ware storage losses across farmers, intermediary traders, retailers and final consumers has not been reliably assessed. Anecdotal reports obtained in this study consistently indicated that the bulk of loss occurs on farm while yam ware is still owned by farmers, that farming families mitigate this loss by consuming a large proportion of it and that traders rarely hold yam ware long enough to experience loss greater than 10%, a cost of doing business that is ultimately born by farmers and retailers through traders purchasing and sales pricing tactics. While farmers do appear to bear the brunt of spoilage losses, no viable improved storage technology solutions currently exist. The best prospects for reducing such losses lies with (a) improving how farmers and their hired labour handle yam ware (to reduce damage that leads to spoilage), (b) farmers adopting no cost and low cost opportunities to improve on-farm yam ware storage conditions (shading, stacking, air circulation, no ground contact) and, (c) introduction of high quality seed (theoretically offering higher resistance to infestations that cause actual spoilage). Section 11 discusses these opportunities. Question 4: Dozens of yam varieties are grown in Ghana, with consumers in different locales preferring different varieties and, correspondingly, farmers and traders endeavor to respond to these geographically differentiated preferences. Anecdotal reports indicate that farmers are keen to experiment with new varieties. Both the Ministry of Food and Agriculture (MOFA) and the Crops Research Institute (CRI) work closely with Ghana Yam Value Chain Study. Final Report May page 2

8 small groups of farmers to identify potentially attractive new varieties, run comparative growing tests of these as well as testing of potentially superior growing methods. This work is very selective and modest in scope relative to the far broader scale sector-wide need, is dependent on sporadic project funding and, in CRI s case, is driven by researcher interest and is not a strategic investment as such to strengthen the yam sector. This is not surprising given that development of the yam sector, in contrast to cassava, has not been deemed a priority in national policy, and so attracts little funding. While CRI may have the technical ability to generate and release new yam varieties, this cannot presently be achieved on a significant scale for two reasons. First, CRI s capacity is tailored to small scale research; it lacks the physical and financial resourcing that would be needed to supply large enough quantities of an improved yam variety to achieve a significant level of availability in the market. The second constraint, perhaps because CRI views itself as a research body rather than as a supplier per se, a selfsustaining yam seed supply chain (e.g.: seed multipliers) linking CRI (as a source of improved varieties) to the marketplace is absent. Even if CRI had the internal capacity to supply adequate quantities of new material, MOFA is currently the only third party with any seed multiplication capacity deployed. 1 Section 11 of this report discusses this situation in further detail along with a potential solution. 2.2 Recommendations Intervention Options Offering the Best Potential Impacts Identified and discussed in Section 6.12, the most promising yam sector development opportunities, in approximate order of potential impact versus cost of implementation are: Establish a commercially-based supply chain for certified yam seed (also serving as a sustainable channel for introducing and disseminating new varieties). Advantages: o Pre-emptive investment minimizes disease burdens and losses; o More cost-effective than end-of-pipe disease mitigation measures; o Strategic value: establishes efficient channel for introducing improved yam varieties; o Once running, the same channel might be used to supply other roots/tuber/seed/plant materials (e.g.: cassava, grain, oil seed, bean, staking plants). Disseminate information-based Improved Yam Production Practices Packages aimed at persuading farmers to embrace easily adopted no cost and low cost opportunities to reduce pest/fungal transmission, improve yields, reduce post-harvest losses and earn higher average farm gate prices. Introduce ridge ploughing (profitable for tractor owners; reduces land preparation costs and increases planting densities and yields for farmers). Identify and promote low cost yam ware storage technologies (to reduce on-farm spoilage. Regional export development (promotional assistance to spur further demand growth). Introduce fertilizer products formulated for yam production (enhance yields, encourage sedentary yam farming) Yam Seed Supply Chain Model A commercially-based supply chain to multiply and distribute certified yam seed appears to be feasible in Ghana. The main elements of the recommended supply chain (ref: Section 9) are: 1 MOFA s current yam seed multiplication capacity is just 4 hectares. MOFA estimated that, despite substantial sustained investment, its certified maize seed supply chain currently supplies no more than 10% of the annual quantity of maize seed planted by farmers nationally (source: the Inspection Division, Plant Protection and Regulatory Services Directorate, MOFA, Kumasi). Ghana Yam Value Chain Study. Final Report May page 3

9 CRI (and/or a private laboratory) apply tissue culture technology to produce disease-free breeder seed plantlets which are grown in bedding plant trays under appropriate semiregulated screen-house conditions to yield a 2 gram foundation seed of uniform size and shape; Foundation seed is sold to commercial seed multipliers. Using mechanized planting, overhead spray irrigation (and, potentially, also mechanized harvesting), multipliers grow foundation seed to a 150 gram weight seed tuber; and, Bagged, branded and bar-coded, the 150 gram seed tubers are on-sold to yam ware and yam seed traders and wholesalers for resale to farmers Information-based Improved Yam Production Practices Packages This study identified numerous opportunities to improve the profitability (through yield gains, higher average quality, lower spoilage) of yam farming were farmers to adopt no cost or low cost improved practices. Achieving this is largely an information and communications challenge. Fortunately, there are numerous opportunities in Ghana to reach farmers with the information needed: o Exploit available mass-audience communications media: television (MOFA); radio local call-in shows (supported by the Ghana Farm Radio Network); newspapers serialized content timed to be published at seasonally appropriate times; flyers and leaflets; and SMS subscription services for yam growing tips ; and, o Exploit word-of-mouth communications: yam traders and wholesalers interact weekly with the farmers they buy from; farmers talk to each other locally and at markets; all have a mutual self-interest in sharing information about better ways to grow yam Business Development Strategy Assistance to CRI (and other NARIs?) This study did not have an opportunity to assess CRI s current capabilities, but anecdotal evidence collected suggests that CRI would benefit from an injection of commercialization thinking. Publicly-funded research institutions such as CRI are often only weakly-linked to markets (e.g.: as suppliers); public funding enables decisionmaking to be decoupled from otherwise having to heed and serve the interests of a paying clientele. At the same time, public funding may be constrained or unstable, limiting the research that can be pursued. CRI has ambitions to develop a commercial wing. Recommended options include: o Short term business strategy and planning consultancy / advisory services aimed at assisting CRI to craft a sound game plan to leverage its applied research competencies to generate commercializable products desired by a paying market; and, o Establishing a staff position at CRI mandated to pursue business development. This staff would understand markets, have business development credentials and the ability to forge partnerships with the private sector and strengthen project funding proposals to include seed support for commercialization before these are submitted to donors Baseline Data Research Baseline data is needed to both focus project activities in important yam trading locations and to establish the starting point for tracking future project impacts on the yam sector. The project should invest modest resources to establish current availability of summary quantitative descriptive data on yam sector performance, including: Ghana Yam Value Chain Study. Final Report May page 4

10 o Approximate annual quantities of yam ware exported to regional (inland markets), ideally disaggregated by yam variety (white yam, water yam), by export destination market (Niger, Burkina Faso, etc.) and by point of export (Kintampo, etc.) 2 ; o Seasonal yam ware wholesale pricing by variety and by market, correlated with the quantities traded at each market. Esoko ( a new private venture in Ghana, tracks agriculture commodity wholesale prices and sells this information on a subscription basis; o Yam disease and pest prevalence by locations of interest; and, o Seasonal yam seed availability by variety, by yam seed market location and characterized by qualitative indicators of quality Empirical Research to Quantify Factor Effects on Yam Yield Many factors affect yam yield. This investigation quickly discovered that reliable quantitative data defining the impact of each factor is non-existent. While acknowledging the difficulties associated with attribution, even under controlled growing conditions, it is difficult to judge where best to target scarce development resources prudently without such data. Supporting empirical research to quantify the effects of various factors of production on yam yields and on yam ware post-harvest storage losses would be a valuable investment Empirical Research to Quantify Effects of Factor Change on Yam Yield Similarly, it would be useful to ensure that the quantitative monitoring and evaluation frameworks are pursued to gauge the effects of interventions aimed at resolving one or more factors now adversely affecting yam yield. For instance, what will be the impact of certified, virus-free yam seed on yields and post-harvest storage shelf life (losses)? Data portraying the significance of viral loads on yam production yields and post-harvest performance is scarce, yet considerable effort and resources will be expended to establish a virus-free yam seed source. The working hypothesis is that virus-free yam seed will perform better. Generating data to gauge the extent to which this is true should be a key objective of IITA s project. 2 Yam ware trade and export data (raw data) may be available on paper from tax offices based at regional markets and/or at border crossing points. If so, it would need to be compiled in electronic form for analysis. Ghana Yam Value Chain Study. Final Report May page 5

11 3.0 STUDY OBJECTIVE, QUESTIONS AND TASKS This study was commissioned to obtain additional information and understandings needed to refine and complete project design and proposal revisions for a forthcoming yam sector development initiative in Ghana and Nigeria by a consortium led by the International Institute for Tropical Agriculture (IITA) to be funded by the Bill and Melinda Gates Foundation (the Foundation). 3.1 Questions Yam is a widely consumed staple food high in nutrient value. Possessing robust short term postharvest storage characteristics (4 6 months), yam is an important food security and income generation crop, in part as it may be stored, traded and consumed during dry, off-season hungry months when production of other crops is not possible. The Foundation wished to identify opportunities to expand availability of yam and posed four study questions: (1) potential to develop new higher value yam products in final markets [hypothesis: expanding market demand would induce expanded yam production and thus raise incomes for yam farmers over time]; (2) assessment of potential and how to introduce new yam seed multiplication technology into the yam sector [hypothesis: better yam seed technology would alleviate current yam seed supply constraints and enable production to expand and thus raise incomes for yam farmers]; (3) investigate storage stage of yam production (seed storage; on-farm post-harvest storage (seed and yam for resale)) and storage in the output supply chain en route to markets) [hypothesis: alleviating any prevailing storage constraints would improve functioning of the yam production to market chain and contribute to improving yam farmers incomes]; and, (4) assessment / identification of strategies/capabilities needed for NARS to effectively introduce new yam varieties to yam growing sector [hypothesis: superior new yam varieties would strengthen productivity (better yield/lower unit production costs; improved disease/pest resistance; improved post-harvest storage longevity; wider range of products in end markets), this leading to improved income earning opportunity for yam farmers]. 3.2 Tasks To obtain a general overall understanding of the yam production to market chain: - Sub-sector mapping and identification of constraints and leverage points which, if acted upon, may lead to expanding business opportunities for small yam farmers (overlays: fresh yam cost/price allocation along the supply chain; fresh yam volumes traded; support markets eg: sources of yam seed; storage capabilities; post-harvest loss estimates; end-markets supplied; numbers of yam farmers involved) - Value chain mapping (eg: who are the main players, business profiling, quantities handled, share of product quantity in final markets, numbers and sizes of farms, intermediaries). - Fresh yam distribution, market structure and governance (eg: flow of fresh yam across market locations; terms of trade; which actors have the most influence). - Identify target small farmers current position in the sector (i.e. which markets are they currently serving) and informally benchmark their current capabilities and practices of against that required to increase their supply to markets and/or to supply new markets; Ghana Yam Value Chain Study. Final Report May page 6

12 For question 1 - Rapid market opportunity scan and assessment: global, regional, domestic; fresh yam products (accounting for varieties), and product derivatives (eg: yam flour; yam paste; processed final yam products such as chips). - For question 2 - Mapping of current yam seed input supply and characterizing this (eg: yam seed cost to farmers as a percentage of average yam prices earned; supplier sources and proximity to yam seed suppliers; timing of yam seed procurement; supply availability conditions) - Benchmarking current yam seed supply conditions, this serving as the basis on which any other yam seed supply solution would be evaluated by yam farmers - Yam seed multiplication models (eg: technically what is involved; what the business model would look like capital costs; production costs; risks; advantages for yam farmers over current yam seed supply options) For question 3 - Specific investigation of the role of storage (eg: whether it is a constraining factor) of yam seed, yam harvested. - Benchmarking of yam storage function (eg: how important is storage in relation to: supply of yam seed, timing of post-harvest sales for yam farmers eg: prices fluctuate in markets, so timing of sales may be important; time-to-market eg: feasibility of in-transit storage may be important to tapping more distant markets; cost/value of storage eg: intermediaries in output markets may use their own private storage capacity and working capital to buy yam when prices are low and sell when prices have risen their business model for making money) For question 4 - Specific investigation of the role of yam varieties in end-markets (eg: consumer preferences, supply shortages, product shelf-life tend to drive up prices and thus the attractiveness of some markets over others). How important are yam varieties to market success? - What is the scope for yam varietal breeding to solve problems observed in the yam production to market chain? - How does the National Agriculture Research System (NARS) now handle introduction of new varietals? Strengths and weaknesses of this? Synthesis Analysis and identification of solutions and interventions to address key constraints, with identification of commercial service providers more effectively integrate producers into higher value markets. Ghana Yam Value Chain Study. Final Report May page 7

13 4.0 STUDY METHODOLOGY, SCHEDULE AND LIMITATIONS 4.1 Methodology This study was a rapid, qualitative assessment of prevailing conditions in the yam sector (not a quantitative survey). Literature review, descriptive data compilation and analysis, key informant interviews and focus group discussions were applied to quickly portray and understand current condition and practices and assess these in relation to the study questions. Where possible, information obtained was triangulated across two or more sources. The study s terms of reference is in Annex 1. The three person interdisciplinary study team included: Dr. Emmanuel Otoo, Ghana s leading yam crop scientist, from the Kumasi-based Crop Research Institute (CRI), Ulrich Kleih, an agriculture economist from UK-based Natural Resources Institute, and Nigel Motts, an agriculture value chain development specialist with Canada-based Mennonite Economic Development Associates (MEDA). A stakeholder seminar held on the 24 th March validated the preliminary findings of the study team and added further insight. On the 25 th -26 th March, IITA s project consortium and Foundation representatives revised the objectives and activities of the project proposal in light of study findings and recommendations. 4.2 Schedule Following preparatory desk-based literature review, the field portion of the study occurred in Ghana between 8 th and 24 th March Figure 1 identifies the yam producing areas and the yam ware and yam seed markets visited. Annex 2 details the visit itinerary. The timing of the field study coincided with end of the January-to- March yam seed planting period, with newly prepared yam mounds (whether seeded or still awaiting seed) much in evidence. Figure 1 Yam Growing Locations and Markets Visited 4.3 Limitations While study objectives were accomplished, the depth and breadth of sub-sector and value chain analysis was constrained in several ways. Foremost, it was quickly discovered that, apart from national yam output data presented below, summarized descriptive quantitative data Ghana Yam Value Chain Study. Final Report May page 8

14 characterizing yam wholesale markets, regional export trade of yam and yam production was not available. Yam ware quantities traded by variety at key markets was not available, and general data on farm numbers by farm size (acreage) and by region/district was also unavailable. This limited the extent to which this study could map out relevant features of the yam sector and its performance. Second, many varieties of yam are grown, and the production cost, storage and market characteristics vary according to variety. Further, it was found that different local names may denote the same variety and farmers may not be able to clearly distinguish one variety from another at times. Given the short duration of the field mission, the overall impact of this complexity means that this report conveys a selective and approximate picture and the reader should limit the confidence placed in this study s findings to being approximately right (based on reason) rather than consider it broadly representative of the full range of all yam production and value chain patterns in existence. Figure 2 Major Wholesale Market Centres, Ghana A further limitation related to the travel distances involved which prevented the study team from visiting all major yam growing regions. A visit to significant yam growing eastern portions of Brong-Ahafo and Northern Regions (Tamale) had to be cancelled in favour of ensuring sufficient time could still be given to investigating the economics of yam seed generation based on tissue culture and vine multiplication methods.3 This notwithstanding, the study team did visit the significant Kintampo wholesale market, the main trade centre for yam ware destined for regional cross-border export markets to capture an impression of the significance of such trade as it had not been gauged by others prior to this study. Finally, understanding the study team s travel limitations, Foundation representative Loretta Byrnes visited the Tamale area on behalf of the study team and profiled yam sector conditions and practices there. Her findings were considered when preparing this report. 3 The original itinerary included a clockwise route via Kumasi, Ejura, Techiman, Kintampo though Tamale east to Yendi and south through Bimbla and crossing Lake Volta by ferry into Kwahu North District in Eastern Region and from there back to Kumasi. After learning that the ferry service was not operating, travel to Tamale and east from there was abandoned in order to avoid losing two days of time retracing the route back to Tamale and from there to Kumasi (in order to travel south and east to Kwahu North). Ghana Yam Value Chain Study. Final Report May page 9

15 5.0 YAM WARE PRODUCTION TO MARKET CHAIN PICTURE 5.1 Overall Yam Ware Output This section profiles the current status, trends and structure of the yam ware and yam seed subsectors. This establishes the context in which the study questions are examined. Between 2000 and 2009, aggregate annual national yam ware output rose by 72% to nearly 5.8 million metric tons (MT) (Figure 2) and land area planted under yam rose by 45% to nearly 380,000 hectares (940,000 acres). 4 Figure 3 Growth in Ghana's Fresh Yam Ware Output Clearly, this growth in yam ware output is being absorbed by the market at large. It is helpful to consider what accounts for this robust rate of growth in market demand to gauge the prospects for continuing demand growth. While explanatory data is incomplete, some insight can be gained and is provided below. Source: Agriculture in Ghana, 2009, table page 8. Domestic population growth has and continues to average approximately 2% annually. Between 2000 and 2009, the national population grew by 4,969,674. Based on a 106kg per capita annual consumption rate (342kCal per day per person), natural population growth in Ghana explains approximately 22% of yam ware output growth. Table 1 Portion of Yam Ware Output Growth Explained by Population Growth Year change Total Population 18,412,247 22,901,000 23,381,921 Change in Population 4,488, ,921 4,969,674 Per Capita Consumption, kg/yr Additional Consumption demand,mt 474,857 50, , % Actual Growth in Yam Output, MT 1,532, ,000 2,415,000 Yam Output per Capita, kg Disposable incomes are also rising in Ghana. In 1992, 50% of the population had incomes at or below the national poverty line. By 2006, the poverty rate had fallen to 28.5%. 5 By implication, a rising proportion of the population can afford to consume larger quantities of higher value foods, 4 Statistics, Research and Information Directorate (SRID), Ministry of Food & Agriculture, 5 Source: World Bank, Development Research Group, Country Poverty Assessments, Ghana. Ghana Yam Value Chain Study. Final Report May page 10

16 fresh yam falling into this category. Yam plays a central role in Ghanaian traditions and culture and is widely considered as a symbol of status and wellbeing. Yam is a substitute for cassava, considered a poor person s food. As rising incomes permit, consumers choose to increase their yam consumption. Growth in Gross Domestic Product (GDP) offers a rough proxy for changes in per capita consumption demand due to changes in disposable income. Since 2000, annual real GDP growth (net of inflation) in Ghana has ranged between 3% and 7.3%, averaging 5.6% annually during this period. 6 Such growth may explain 60-65% of yam output growth. Exports to Europe and North America, currently running at MT per year and growing at 7.7% annually, equate to less than 0.3% of the total annual yam output. Figure 4 Yam Ware Exports to Europe and North America Regional yam exports appear to be significant, perhaps more so than generally assumed. While aggregated data on cross-border yam trade may be available from the Ministry of Food and Agriculture or regional tax offices, such trade does appear to be significant and growing. Anecdotal reports during focus group discussions indicate that 15%-20% of annual yam traded at the Kintampo wholesale market is exported inland; weekly exports of 130,000 yam tubers by just one of the two main yam market associations operating at Kintampo market equate to 17,000-34,000 MT exported annually for this association alone. 7 The remaining 13-18% of yam output growth between 2000 and 2009 may be largely explained by rising regional yam ware exports, particularly water yam, to Mali, Niger, Burkina Faso and Togo. This may, in turn, be explained by improvements in road infrastructures, mobile communications combined with natural population growth and GDP growth in neighbouring countries. Section 8 discusses the implications of the yam ware demand patterns observed. 5.2 Yam Ware Sector Map and Value Chains Observed Figure 4 portrays a simplified picture of the yam ware sector. While a wide range of specific yam ware value chains exist, Figure 4 shows the generic value chain patterns observed. 6 Source: CIA World Fact Book. 7 Based on 2.5kg-5kg tuber weight and 52 weeks/year. Ghana Yam Value Chain Study. Final Report May page 11

17 Figure 5 Yam Ware Sector Map Annex 3 contains examples of specific ware value chains observed Population of Yam Farmers Anecdotal reports assert that the vast majority of Ghanaian farmers farm 2 acres or less (all crops combined). An approximate number of small farmers involved in yam growing can be estimated. In 2009, total national yam output was 5,778,000 MT with an aggregate yield of 15.3 MT/hectare. 8 Assuming that a typical farmer plants no more than half his or her fields under yam (roughly 1 acre), the 2009 national harvest may have involved over 900,000 farmers (each growing 1 acre of yam) countrywide. For comparative purposes, the estimated number of small farmers in the major yam growing central belt of the country is approximately 1,056,000 households (a subset of an estimated total of 1,911,000 rural households nationally). 9 These are 2009 data; the number of farmers involved today can be expected to be somewhat higher Yam Ware and Yam Seed Distribution A handful of wholesale markets play a central, though not an exclusive, role in yam ware distribution. Yam ware aggregated in district level assembly markets is trans-shipped through major regional wholesale markets to final domestic and regional export destinations. Rapidly improving road infrastructures permit mature yam ware to be shipped across the full breadth and length of the country, some markets such as Kintampo serving as major clearing points for export of water and white yam to regional export markets. 8 Source: Agriculture in Ghana, Based on 2010 rural population data by region, the proportion of households defined as rural by region, the varying average number of persons per household by region for Ashanti, Brong-Ahafo, Eastern and Northern regions. Data sources: Agriculture in Ghana, 2009 and Ghana Yam Value Chain Study. Final Report May page 12

18 Observation: The combination of few regional wholesale markets, expeditious road conditions and mobile communications suggest that a newly introduced certified yam seed (planting material) could be rapidly distributed on a commercial basis to large numbers of willing buyers (e.g.: yam farmers). This contrasts with the current practice of relying on the Ministry of Food and Agriculture (the national budget) to fund and distribute free yam seed on a very limited basis to a fortunate few farmers. 5.3 Key Features of the Ware Output Supply Chain Seasonality of Ware Prices Many factors influence wholesale pricing of yam ware: season, location, ware variety and the seasonal availability of each (and the substitutability of one variety for another from a consumer perspective), ware size, ware condition, the overall supply and demand conditions on any given trading day and the degree of competition amongst buyers and sellers on any given trading day. Illustrated in Figure 5, seasonal fluctuations of ware prices are substantial. 10 The May-August peak price period coincides with the harvest of early maturing varieties of white yam, including Pona. Farmers and traders alike attempt to capture high season prices. Farmers, in need of cash, will often milk their then still immature yam tubers at high season and supply a 2kg-3kg ware to the market and capture the high season prices. 11 Immature yam ware has a short shelf life and, unlike mature ware, cannot be stored for extended periods. Farmers less in need of mid-season cash, may choose not to milk and grow their yams to full maturity and harvest at the end of the growing cycle in October-November. Undamaged mature ware harvested at the end of the growing cycle can be stored for as long as 6-8 months (depending on variety, quality). This allows farmers and traders who have adequate financial resources to stockpile yam ware when seasonal prices are low and release ware onto the market when prices are on the upswing. 10 Note that the price levels reflected in Figure 5 reflect average (eg: consolidated) wholesale prices for yam as determined in each of the markets indicated. These prices do not reflect the actual range of price variation of yam ware based on differences in variety, ware size and time of day. The main point of Figure 5 is to illustrate the general price seasonality pattern. 11 At the end of the growing cycle, a yam plant that has been milked will yield a sett, a root mass which is typically divided into 3-6 pieces (depending on the quality of the sett) and used as yam seed for the next cropping season. This practice carries forward an accumulating viral load, pests and fungi which progressively reduces yam yields in over successive cropping cycles, eventually obliging farmers to obtain new seed stock. Seed replacement every five years was cited as a norm (and recommended by the Ghana Crops Research Institute). Ghana Yam Value Chain Study. Final Report May page 13

19 Figure 6 Seasonality of Yam Ware Prices Source: The Foundation is interested in improving yam seed availability and in improving yam farmers incomes. Yam farmers income levels substantially depend on selling milked yam during high season. Observation: Farmers lacking timely access to seed plant late and miss out on this market opportunity and thus experience reduced incomes. Anecdotal reports by farmers frequently pointed to difficulties in buying good quality seed in a timely manner. A range of factors influence the storage duration of yam ware, its physical condition over time and thus its value in the market. This is discussed in section Access to Ware Trade Markets Yam wholesale markets offer a range of benefits (at a price) to farmers located nearby and to ware buyers. For farmers nearby who have a means of transport benefits include: access to a competitive pool of buyers; access to sales agents who can help the farmer earn a better price; and, often, access to in-kind value chain finance in the form of yam seed on credit supplied by the ware traders they sell to. For buyers, benefits include: convenient access to a wide range of ware (quality, size, variety, condition and price) to choose from; stable and reliable year round source of supply; access to a competitive pool of vendors; and time savings. 12 Access to yam wholesale markets is regulated by yam marketing associations, the members of these dominated by women yam traders based at each market. Association members include commissioned agents and wholesalers. Agents earn commissions from farmers who wish to sell their ware at these markets. Buyers (wholesale/retail) pay a market access fee based on the size of truckload (measured in number of ware tubers) purchased or sold. Wholesale members 12 Buying directly at the farm gate involves considerable time, transport expense and logistical arrangements which are partly avoided by sourcing ware at wholesale markets. Ghana Yam Value Chain Study. Final Report May page 14

20 of these associations purchase at the farm gate using hired trucks and on sell to retailers/exporters wishing to buy at the market. While ware wholesale markets are an important intermediation channel, this study also found that ware buyers (wholesalers and retailers) also bypass ware markets entirely. Thus, parallel ware supply channels exist. The number of yam ware wholesale markets and the respective market shares of each channel (e.g.: wholesale markets; wholesale traders bypassing wholesale markets) is unknown. However, both of these can be exploited when introducing quality yam seed Length of Ware Supply Chain Yam ware trade is organized to minimize the number of times the product is traded as portrayed in Figure 4 and Figure 6. This minimizing the time and expense associated with loading and transporting bulky yam ware and its susceptibility to spoilage due to handling-related damage once in the supply chain. Figure 7 Generic Yam Ware Value Chains The dominant domestic value chain pattern consists of three links: the farmer one intermediary wholesale trader the retailer. Note that yam ware sales agents are also involved in ware trade at wholesale markets. However, these agents earn a commission on sales and do not purchase, take physical possession of and resell ware as such. Thus, the physical handling and transfer of ware is limited to the three links. Exporting involves an additional intermediary (eg: an import agent / wholesaler in the destination country whether in the UK or in Mali) Time to Market The length of time the product spends in transit between the farm gate and the consumer is also minimized. This practice reduces economic loss due to product spoilage while it is in transit following removal from the farm gate. This study found that ware is primarily stored on farm (eg: at the farm gate) by the farmer rather than in the output supply chain. Intermediary wholesalers typically buy and on sell their ware within a few days. Ware markets in specific locations operate 2-3 days each week. Wholesalers typically aim to buy and collect ware at the farm gate the day prior to the first weekly market day and to have sold their ware by the last of the weekly market days. Wholesalers unable to sell off their inventory within this period may, at worst, have to hold it until the market days the following week. Thus, at worst, a wholesaler may hold their ware for up to 10 days. Observation: Loss risks borne by wholesalers due to ware spoilage in the output supply chain are thus minimized Farmer Ware Trader Relationships The nature of trading relationships influences the scope of opportunity for bringing about improvements in the ware and seed chains. For simplicity, two kinds of trading relationship are Ghana Yam Value Chain Study. Final Report May page 15

21 distinguished here: opportunistic, price-based trade; and more stable trade relationships based on price plus other considerations. The latter category is an ongoing repeat trading relationship between the farmer and the buyer in which both derive non-price benefits important to each (in addition to either receiving or paying a satisfactory price). Table 2 highlights a range of nonprice benefits that may be associated with ware trading. These benefits characterize some of the value chains observed during field work (Annex 3). Table 2 Non-Price Benefits of Trading Relationships Non-price benefits Stability and predictability Sales convenience Minimize transport cost Yam seed procurement and financing Quality Storage of offseason sales Market information Other procurement or assistance Yam Ware Farmer Assured repeat sales at fair prices. Reduced risk. Farm gate price earned may be higher than selling at a market. Buyer buys at farm gate, saving the farmer time. Buyer pays for cost of transport to market and may load right from farm field if this is accessible. Supplied by ware buyer from a distant location not accessible to the farmer. Supplied on credit by the ware buyer. Buyer is a source of useful market information. (eg: which variety to plant next year). Buyer may buy and deliver other inputs (eg: pesticide, herbicide) on request. Buyer may be a source of emergency finance. Yam Ware Buyer Assured repeat purchases at fair prices. Reduced risk. Farm gate price paid may be lower than buying at a market. Farmer harvests ware and has it ready for collection when buyer arrives at farm gate. Knowledge of which varieties of ware will be available from specific farmers and locations first right of purchase. Buyer selects for quality, avoids buying poorer quality ware that will spoil before it can be resold. Buyer losses due to spoilage are minimized as farmer stores ware and bears storage losses prior to sale. The essential difference between the price only and the price plus categories of trading relationship is that with the latter, the farmer and the buyer each have a vested interest and benefits from the business success of the other party. This is not the case when the terms of exchange are price-based and opportunistic (eg: farmer and buyer unlikely to trade again). Stable trading relationships are evident in both channels identified in section At wholesale markets, some buyers customarily purchase from the same vendors each week, often prearranging their purchases by mobile phone. As noted in section 5.3.2, many wholesalers, retailers choose to bypass trade markets and buy at farm gate. To minimize the risks, time and costs of procurement, some buyers purchase from locations they are familiar with, often their home region and some of these prefer to purchase from the same set of farmers from year to year. To be sure, other buyers prefer to purchase opportunistically at the farm gate, not knowing where or who they will buy from ahead of time. Ghana Yam Value Chain Study. Final Report May page 16

22 Observation: Stable farmer-buyer trading relationships in both channels can be leveraged to introduce, promote and achieve improvements in the yam sector. For example, such buyers will benefit from promoting and supplying certified, improved yam seed and from promoting and sharing information about improved yam production, yam harvesting and yam storage methods. And, such farmers, knowing they ve got an assured buyer, will tend to heed and adopt what they hear from such valued trading partners Ware Storage and Spoilage It is observed that the yam ware distribution is organized around the need to minimize inventory (ware) losses in the output supply chain. Yam ware passes through the fewest number of hands possible and in the shortest period of time feasible. This minimizes the probability and the potential value of any losses incurred. As explained, traders also tend to buy ware immediately prior to resale, further shielding themselves from inventory loss risks (passing this onto the farmer). Section 10 discusses the potential for improved storage solutions to have a significant near-term impact on ware output. Ghana Yam Value Chain Study. Final Report May page 17