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Middlemen not cause of high food prices - GAWU

BY: Ama Amankwah Baafi
Prof John Gatsi, Dean of Business School, UCC
Prof John Gatsi, Dean of Business School, UCC

The General Secretary of the General Agricultural Workers Union (GAWU), Edward Kareweh, has debunked claims by the head of the National Food Buffer Stock Company (NAFCO) that the activities of the middlemen in the agricultural sector have created artificial shortage of foodstuffs in the country.

He maintained that the middlemen cannot be blamed for the current situation where food prices are at an all time high.

“This is not new anyway. The activities of the middlemen are at the core of trade. But for them, there will not be trade at all. The question we have to ask is, if they have been operating all these years, why is it that they were not influencing prices the way it is now and why today? So, it means it is not an issue of blaming somebody for what we have failed to do,” he said in an interview on June 27, in reaction to claims that the current food shortages and high prices was the doing of middlemen in the country.

He said that the middlemen are business people who operate based on demand and supply.

According to Mr Kareweh, “NAFCO is also a middleman because the middleman here is not only about the natural human being but even companies are also in the middleman business”.

“NAFCO buys produce at a cheaper price, stores it and releases it unto the market when prices go up, likewise any other company that operate like NAFCO,” he argued.

“The problem with NAFCO is that it does not have the money to buy the foodstuffs and store. Anyone who is given that job and is not given money cannot work because you cannot go and take someone’s produce and come store it against lean season. So, the thrust of the matter is that those companies are not having the resources. They are only there in name. The problem is that NAFCO has no money to buy the foodstuffs and store. You can’t blame them when you have not given them the resources to work,” he said.


Role of middlemen

Touching on the role of middlemen in the agric value chain, Mr Kareweh said they are the liaison between the consumer and the farmers or producers. But for them, the producer will not be able to locate where the consumer is to be able to send his produce to them and for the consumer, and vice versa.

“We need to recognise the important role of the middleman in the agric food chain. They could also make serious loses- they also observe the market trend to the extent that when they buy at the time of harvest at a cheaper price, they help the farmers not to incur losses, or else their produce would rot.

“They buy at that time and they now have to process and store until the time prices are rising then they will also bring it to the market to make some margin of profit to pay their cost of transportation, storage and other cost,” he said.

Mr Kareweh noted that prices even at the farm gate are high, coupled with other cost that has to be incurred before the foodstuff get to the consumer.

“So just like we are blaming the middlemen, if government thinks that there is food and the middlemen are causing artificial shortage, they should go to the farms, buy the foodstuffs and come put in the market for us. Government can mobilise vehicles in partnership with the private sector transporters who are ready to do that so that they can go to the rural areas, buy the food and bring it to us in the towns and cities,” he said.


Economist take

For his part, an economist, Prof. John Gatsi, blamed the situation on poor and uncoordinated food marketing chain in the country.

He said middlemen are playing a very important role in trying to ensure that food items get to the urban centres for consumption.

Prof. Gatsi, who is also the Dean of the Business School at the University of Cape Coast, blamed the rise in the cost of food items on importation that is generally affected by depreciation and price build up in the country.

He said even though middlemen may be profit oriented, they are also hugely impacted by the effect of fuel price increases and transport fares increases.

“So, if you single them out as the main cause of food price increases, then it means that we are not following what the Ghana Statistical Service (GSS) is telling us. The GSS says that fuel is the driver of inflation and for that matter, food prices and so if we forget this then we are overrating the influence of middlemen in terms of food prices in the country,” he said.

He said NAFCO should have a role to play; just that its structure is not being managed effectively- it is not able to buy food and store in huge quantities across the country.

Prof. Gatsi also called for more investment in infrastructure for the preservation of food.

“Infrastructure for the preservation of food is limited in the country and so we cannot expect the NAFCO to play that role to mitigate prices until we invest more in those infrastructure. It is only then that we can use them, as a means, to moderate prices,” he said.

He emphasised the need to invest more in food storage, saying: “We need to invest more in agric commodity infrastructure that can store them and should also be well coordinated. Individual farmers may not be in position to store food and wait for sometime before they sell, but we should have both the private sector and the government invest in these infrastructure to keep food for a long period of time and release during lean season to moderate prices,” he said.