Value Chain Analysis of Dry Chili Pepper in the Ada West District of Ghana

Abstract

Chili is a highly profitable vegetable crop cultivated by majority of rural farm household and it contributes more than half of the income of the farmers. The study considered the value chain analysis of dry chili pepper and its related activities in the Ada West District of Ghana. Primary data was collected using well-structured and pre-tested questionnaires administered to 182 respondents. The respondents included 105 chili pepper farmers, 42 dry chili pepper wholesalers and 35 dry chili pepper processors. The first objective of the study identified the various actors involved in the dry chili pepper value chain, their respective roles, and existing linkages. The actors identified are chili pepper farmers, wholesalers, retailers, processors of dry chili pepper with female participants dominating all stages of the value chain except the farming stage. Also, support institutions such as financial institutions, government institutions and NGOs were identified. Farmers cultivate chili pepper, process into dry form, sell to wholesalers who then sell to processors and/or retailers; processors process the dry chili pepper into the chili pepper powder then sell to retailers. Support agencies provide services such as transport, finance and technical assistance across all stages of the chain. The second objective assessed the value added and gross margin per cedi of operating cost at main actor stages of the value chain. Farmer’s added value of GHS18.49, wholesalers added a value of GHS11.27 and processors added a value of GHS13.73. Gross margin per cedi of operating cost was GHS0.94, GHS0.52, and GHS0.25 for farmers, wholesalers, and processors respectively. The power relation that existed within the chain was analysed as the third objective. Wholesalers and processors were scored the highest and lowest, respectively in terms of bargaining power, profit, and protection from competition and information concentration. The value chain is perceived to be dominated by wholesalers, who dictate the quality, quantity, and price of dry chili pepper, due to their access to information and high bargaining strength. Farmers ranked “high incidence of pests and diseases” and “high cost of input”, as the two most important constraints and “poor agronomic practices” as the least pressing constraint. Wholesalers and processors ranked “lack of working capital and seasonality” of dry chili pepper as the two most pressing constraints and “non-governmental support” as the least pressing constraint. There are several challenges that actors along the chili pepper value chain face. The study recommended that all stakeholders both governmental and non-governmental agencies along the chain should take all actors along the chain into consideration during policy interventions. Farmers and processors should be encouraged to form associations/organizations at respective stages of the chain to increase their participation, improve information flow and bargaining power as well as financial institutions should aid in addressing these challenges.