KWAME NKRUMAH UNIVERSITY OF

SCIENCE AND TECHNOLOGY

College of Agriculture And Natural Resources
(Faculty of Agriculture)

Department of Agricultural Economics, Agribusiness and extension

Presentation of Thesis Proposal

Topic: Analysis of Cowpea Marketing in The Upper

West Region of Ghana.

ZUOBOG, PHILIP NERI

MPhil. Agricultural Economics
PG5302711
18th January, 2013
 Outline of the Presentation
1. Introduction.
2. Problem statement.
3. Research questions.
4. Objectives.
5. Hypothesis.
6. Justification/significance of the study.
7. Literature review.
6. Methodology.
7. Conclusion.
8. Reference.
 1.0 Introduction
1.1. Agriculture is a source of livelihoods for an
estimated 86 percent of rural people. It
provides jobs for 1.3 billion smallholders and
landless workers, “farm-financed social
welfare” when there are urban shocks, and a
foundation for viable rural communities
1.2. Agricultural production is important for
food security because it is a source of income
for the majority of the rural poor.
 introduction
1.3. Of the developing world’s 5.5 billion people, 3
billion live in rural areas, nearly half of humanity.
Of these rural inhabitants an estimated 2.5 billion
are in households involved in agriculture (World
Development Report, 2008).

1.4. In much of Sub-Saharan Africa, agriculture is a

strong option for spurring growth, overcoming
poverty, and enhancing food security
 introduction
1.5. Historically, Ghana has depended directly or
indirectly on agriculture and this has been the
driving force of the economy.
1.6. The contribution of agriculture to National GDP
in 2011 stood at 25.6% (MOFA, 2012).
1.7. The crop and livestock sub-sectors contributes
the biggest share to the total agricultural
contribution to National GDP The crop and
livestock sub-sectors contributed about 19.3% of
the 25.6% of the total agricultural contribution to
National GDP (MOFA, 2012).
 introduction
1.8. Cowpea [Vigna unguiculata (L) Walp] is a major
and important grain legume widely grown in Sub-
Saharan Africa.
1.9. Cowpea is mostly grown in the savanna
regions of northern Ghana and is considered by
MOFA as a food security crop.
1.10. Ghana has been self-sufficient in cowpea over
the last decade with production outstripping
consumption. However, it has been established
that Ghana imports about 10 000 t of cowpea
annually (Langyintuo et al., 2003)
 introduction
1.11. Without convenient marketing systems,
boosting up of production does not stimulate
farmers to increase outputs at household level
in particular and at national level in general
 2.0 Problem statement
2.1. Agricultural Marketing plays an important role
in economic development as it stimulates
production, avoids unnecessary fluctuation in
output and prices and reduces costs of
production.
2.2. In Ghana, more emphasis is usually placed on
policies to increase food production with little or
no consideration on how to distribute the food
produced efficiently and in a manner that will
enhance increased productivity.
 Problem statement
2.3. In Ghana, Cowpea [Vigna unguiculata (L) Walp]
is a major and important grain legume grown
mostly in the northern savannah regions and
widely consumed throughout the country.
2.4. It is currently a food security crop (MOFA,
2010)
2.5. 244,900ha of land nationally is under the
cultivation of cowpea with per capita
consumption of about 5kg (MOFA, 2012)
 Problem statement
2.6. An effective marketing system would ensure
that products are available for consumption
throughout in the right quantities and quality.

2.7. In presence of varying consumption needs, and

preferences, the question is how effective the
cowpea marketing channels are as it regards
offering proper service outputs or the right
services in relation to consumer preferences.
 Problem statement
2.8. Cowpea is marketed locally by various agents in
the upper west region.

2.9. An efficient marketing system would also ensure

fair distribution in benefits.

2.10. But with current research directed mostly

towards yield improvement and to some extend
export markets, there is inadequate information on
price spreads along the marketing channel while the
distribution of costs and benefits amongst
participants is not established in the upper west
region.
 PROBLEM STATEMENT
2.11. Efficient and interlinked markets likely ensure
that prices in different markets will move
together. This has not been established in the
cowpea markets in the upper west region.

2.12. In addition, little is known on the factors that

may cause differences in market prices, the price
transmission mechanisms between the different
markets and whether the spatially separated
cowpea markets are integrated and if so, to what
degree?
 3.0 Research questions
3.1. What are the major cowpea marketing
channels in the study area?

3.3. What are the marketing cost and margins for

cowpea in the upper west region?.

3.4. Are the markets for cowpea in the region

integrated?
 4.0 objective
General objective
The main objective of this study is to conduct a detailed investigation of
the present marketing system of cowpea in the upper west region so as
to analyze marketing efficiency

Specific objectives

4.1. To identify the existing marketing channels for cowpea in the region.

4.2. To estimate the marketing cost and margins of cowpea producers and
other market intermediaries.

4.3. To determine the cowpea market structure and conduct.

4.4. To evaluate the marketing performance of cowpea in the region.

4.5. To develop policy recommendations to enhance cowpea marketing.

 5.0 Hypothesis

5.1. There are no significant differences in margins

among the different players along the cowpea
marketing chain.

5.2. The District markets and Techiman as a central

market for cowpea are not integrated.
 6.0 Justification for the study
• This study will generate useful information in order to
formulate cowpea marketing development projects and
guidelines for interventions that will improve the
efficiency of cowpea marketing system.

• The potential users of the findings will be farmers

(producers), traders, government and non-government
organizations, that have interest in improving cowpea
marketing system.

• Researchers who want further investigation on cowpea

marketing will use the result from this study.
 7.0 Literature Review
7. 1. Literature will be reviewed around the
following areas below:
7.1.1 Basic concepts of market.
7.1.2.Marketing and marketing system.
7.1.3 Market Channel.
7.1.4 The approaches and methods to evaluate
the efficiency of agricultural markets.
7.1.5 Production trend and consumption.
7.1.6 Other empirical studies.
8.0 Methodology

i
 7.1 Study Area
8.1.1 Four Districts in the Upper West Region.

8.1.2 Namely: Lambussie-karni, Nandowli,

Sisaala East, Jirapa.
 8.2 Data and sampling procedure
8.2.1Primary and secondary data.

8.2.2 Farmer level and market intermediaries.

8.2.3. Multi-stage sampling will be used at various

stages of the research.

8.2.4 Purposive sampling of the four Districts.

8.2.5 Sample random sampling of the communities,

producers and the market intermediaries.
 8.3 Sampling frame
8.3.1The sample frame will be all farmers who
grow cowpea either as a monocrop or
intercrop with other crops in the selected
communities.

8.3.2 Market intermediaries will involve all who

deal in the buying and selling of cowpea in the
study area.
 8.4 SAMPLE SIZE
Producers Rural Commission Wholesaler Retailers Total
Assemblers Agents

60 20 5 10 20 115
 8.6 Data collection
8.6.1 primary data will be collected using
pretested structured and semi structured
questionnaires through formal interviews.
8.6.2 secondary data will be from MOFA and
other published works.
8.6.3 Observations, focus group discussions and
other RPA Tools will also be employed
 8.7 Methods of data analysis
8.7.1 Two types of analysis:

8.7.1.1. Descriptive analysis.

8.7.1.2. Econometric analysis.

 8.8 Data Analysis
8.8.1 Market structure Analysis

8.8.2 Market conduct Analysis

8.8.3 Marketing margins Analysis

8.8.4 Marketing costs Analysis

8.8.5 Market integration Analysis

 8.9 Market structure Analysis
8.9.1 Market concentration measure
r
C =  Si r = 1, 2, 3, ........., r
i 1
Where:
• C- is concentration ratio, Si- is market share of
the ith firm and
• r- is the number of largest firms for which the
ratio is going to be calculated.
8.9.2 Barriers to entry
 7.10 Market Conduct Analysis
7.10.1 Pricing behavior :- who set prices?,
factors considered in setting prices, etc)

7.10.2 Buying and selling practices :- source of

products, distribution channel, formal and
informal producer and marketing groups)
 8.11 Estimation of Marketing Costs
This will be estimated using the formula below:
X i Qi
AMCi 
Qi
where :
AMCi is the Average marketing cost of a specific unit quantity.
Qi is quantity handled during the latest transaction
for each agency.
Xi is different types of marketing cost at the latest
transaction incurred by each agency.
All cost will be calculated this way except commission charges.
 Commission Charges
Sp  Rc
Cc 
Qm
Cc is commission charges,
S p is sale proceeds of cowpea marketed,
R c is represents rate of commission
Qm is quantity marketed.
 8.12 Marketing margins
• The following formulae will be used to calculate
various margins:

PS
GM m   100
SP
Where GM m is Gross marketing margin earned by a specific agency.
PS price spread availed by the agency.
S P is the sale price of the agency.
 Net Marketing Margin
NMM = Ps - Mc
Breakdown of consumer's cedi (BDCC)
NMM
BDCC =
Rp
where :
NMM is Net Marketing Margin,
Mc is marketing cost,
Rp is retail price
 8.13 Co-integration
8.13.1 Three steps will be followed:

8.13.1.1 Testing stationarity of the price series

8.13.1.2 Testing long-term price integration with co-

integration analysis

8.13.1.3 Testing short-run integration: measuring

speed of adjustment.
 Testing stationarity of the price series
The Augmented Dickey-Fuller Procedure will be
applied to test for stationarity of the price variable.
Specification:
Yt =  0 + 1Yt 1 +   t Yt 1 +  t
where
Yt is the first difference of prices in market Y.
Yt 1 is the lagged price of cowpea in market Y.
 0 and 1 are parameters to be estimated.
 t is the error term.
 Testing long-term price integration
with co-integration analysis
Specification
Yt =  +  Xt + Ut
where
Yt and Xt are commodity prices of a homogenous good(cowpea in this case)
in two different spatially seperated markets at time t.
 and  are parameters to be estimated.
if the two markets are perfectly spatially integrated, then  = 1.
Meaning price changes in one market is fully reflected in the alternative market
 8.13.1.3 Testing short-run integration:
measuring speed of adjustment
ERROR CORRECTION MODEL
Specification:

Yt =  0 + 1X t +  2U t 1 +  t
where:
 is the first difference operator,
 t is random error term
Ut 1 = Yt 1 -  -  Xt 1
ECM states that Yt depends on Xt and also on equilibrium error term,
while absolute values of  2 decide how quickly equilibrium will be restored ( speed of adjustment)
•
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 END OF PRESENTATION

THANK YOU ALL AND GOD BLESS YOU.