A new agricultural study has revealed that smallholder farmers still face many challenges in markets.
These have come about because the interventions to improve market access for the farmers have not been effective.
The “Smallholder Farmers Voices in Policy Discourse-Market Linkages Study, Ghana Report” by the African Centre for Energy Transformation (ACET) identified that market reforms have also not delivered the needed results.
During a virtual validation workshop on October 13, 2020, the Engagement Manager at ACET, Mr George Boateng, said the study sought to analyse food systems and market challenges and weaknesses and propose recommendations for improving agricultural markets for smallholder farmers.
He outlined the key issues impacting smallholders to include the high transaction cost, information and price asymmetry and the role of “middlemen”.
“Diet shifts and urbanisation are impacting the ability of smallholders to participate in markets. They might not benefit in the longer run,” Mr Boateng said.
“The advent of supermarkets and formal markets has raised concerns about the exclusion of smallholders from these supply channels. Street foods, which have traditionally linked smallholders to urban markets, are upgrading and starting to cut-off smallholders,” he added.
An analysis of the profit variations and source of livelihoods for smallholders showed that Ghanaian farmers have a high market orientation with 84 per cent of output marketed.
Profit margins can also be very high for farmers in new major urban areas and home processing has a huge potential as an extra source of income.
Role of middlemen
It emerged that about 42 per cent of farmers were pre-financed by traders; a quarter got extension services from traders.
Although the farmers value such services, they will probably prefer local markets mainly due to better prices.
Traders on the other hand will prefer to buy at the farm gate rather than buying from farmers at the local markets.
As a way to promote labour-saving technologies / farm mechanisations, Mr Boateng said the government could extend subsidised credit to larger farmers to acquire equipment and in return, they could provide mechanisation services to smallholder farmers, which would be widely available and affordable.
“Storage is a challenge and, therefore, simple and cost-effective storage technologies are needed. Hermetic bags are cheap and very cost-effective for storing small quantities of produce and for that matter more advocacy is needed to diffuse the technology,” he said.
He said the adoption of information communication technologies (mobile phones and radios) in rural areas and platforms such as Essoko and Farm Radio International provided information and connected farmers to markets.
Improving market access
Among the policies he outlined to improve market access for smallholder farmers include the promotion of demand driven research and development, and innovation with technical and financial support.
“Facilitate the organisation of farmers. Facilitate trade financing on value chains: empower traders to play a bigger role, especially as credit providers and extension support to farmers,” Mr Boateng said.
“Provide grants to big farmers/suppliers with links to supermarket chains to establish out-grower models: Pilot first. Invest in bankable business models: Hybrid processing. Industrialisation policy is critical here,” he added.