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Journal of Agricultural & Food Industrial Organization

Ed. by Azzam, Azzeddine

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CiteScore 2016: 0.70

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1542-0485
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Cartels and Rent Sharing at the Farmer–Trader Interface: Evidence from Ghana’s Tomato Sector

Guyslain K. Ngeleza / Elizabeth J.Z. Robinson
Published Online: 2013-05-22 | DOI: https://doi.org/10.1515/jafio-2012-0011

Abstract

Itinerant traders provide an important route for West Africa’s farmers’ to get their perishable produce rapidly to the distant urban markets. But these farmers often accuse the traders of offering “unfairly” low prices while preventing direct access to these markets. Using Ghana’s tomato sector as a case study, we provide the first detailed exploration of the interface between Ghana’s farmers and traders, combining a theoretical model with novel empirical data on daily sales prices and tomato quality. We find that although the prices traders pay farmers are lower than prices in the urban markets, taking into account transport costs, these prices are higher than farmers receive from the local rural market. Our article suggests that policymakers would do better to focus on opening up access to the urban markets rather than on strengthening farmers’ bargaining power with the traders, which restricts market volumes further and harms farmers unable to sell to traders.

Keywords: arbitrage; agriculture value chains; trader cartels; Ghana

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About the article

Published Online: 2013-05-22


Limited processing is a typical characteristic of many agricultural markets in developing countries (see Sexton 1990).

For more detail on arbitrage condition, see Buccola (1985), Ravallion (1986), Sexton, Kling, and Carman (1991), Stigler and Sherwin (1985).

When data were collected, one Ghanaian cedi (GHS) was equivalent to US$0.71.

Table 6 in the Appendix presents results of a simple OLS of our model specifications. While in terms of significance the OLS results are similar to the results in the instrumental variable regressions, they are smaller in magnitude.

See Fafchamps, M. and R. V. Hill. 2005 for similar methodology.

See, for example, http://www.irinnews.org/Report.aspx?ReportId=83980.


Citation Information: Journal of Agricultural & Food Industrial Organization, ISSN (Online) 1542-0485, ISSN (Print) 2194-5896, DOI: https://doi.org/10.1515/jafio-2012-0011.

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