Knowledge Bank

The objective of this study was to analyze the horticultural sub-sector in Ghana. Specifically, the study documented and evaluated the current and potential role of the horticultural sub-sector as the expansion of non-traditional exports (NTEs) is promoted to relieve foreign exchange scarcity. Horticultural crops are defined as all fruits and vegetables as well as root crops, flowers, and ornamental crops. Pineapples, vegetables (Asian-type and others), and yams received particular attention because of their promising potential for expansion and hence their strategic importance in contributing to the country's agricultural export diversification policy. This study utilized the modified agri-business subsector framework established by researchers at the Ohio State University to determine the marketing arrangements, the nature of the firms, and the coordinating mechanisms chosen to facilitate the flow of commodities in the horticultural subsector. Under the modified subsector approach, fmancial and informational markets are specifically included when analyzing the physical flow of commodities. Transaction cost theory is used to analyze how asset specificity, uncertainty, and access to finance and information are the major determinants of institutional arrangements in production and marketing. The results revealed that several heterogeneous participants are involved in financing and marketing horticultural products in Ghana. The financial arrangements used in the subsector are dominated by self-finance with funds obtained from friends and family, retained earnings from other businesses, or participation in informal groups such as susu clubs or susu collectors. Supplier credits flow freely from the fanner all the way to the importer. However, formal finance is confined almost exclusively to well established large exporters. While finance is a constraint for many exporters of horticultural products in Ghana, it is not as large a constraint as the lack of infrastructure, research and development, and adequate government policies which contribute more towards giving exporters the competitive edge required in world markets. Ghana's recent impressive economic performance is still dependent on a continued increase in agricultural exports. The horticultural subsector appears to offer good prospects for continued growth and foreign exchange earnings once the major constraints have been eliminated.