Role of risks in surviving the global market: evidence from the pineapple sector in Ghana
The high-value horticulture sector has received attention in recent years as a means to reduce poverty in developing countries. However, the highly perishable nature of horticultural products, limited extent of domestic processing sectors in developing countries, and intense competition in the global market are factors that possibly serve to marginalize small-scale producers. The objective of this paper is to examine the role of such risks in the expanding pineapple sector in Ghana and provide some evidence to determine whether this sector can benefit the poor. We used primary panel data from 250 farmers collected in Ghana's export pineapple production area in 2007 and 2012. We conducted a simple game to elicit farmers' risk preferences and examined whether their risk preferences matter to survival in this sector. We found that risk preferences indeed affected farmers' behavior. The probability of exiting the market was higher for farmers with higher Risk-Aversion Indices. The risk of exiting also increased after the sector experienced a serious exogenous shock, e.g., the cultivar shift of popular pineapples consumed in developed countries from 'Smooth Cayenne' to 'MD2'. We found that, after this shock, the probability of farmers abandoning pineapple production increased. Together, these findings suggest that, to promote smallholders' participation in the horticulture sector, it is not sufficient simply to offer technical assistance programs. Any promotion policy should be combined with support mechanisms to mitigate the presence of risks in this sector, such as by developing the processing sector.
Suzuki, A. (2016). Role of risks in surviving the global market: evidence from the pineapple sector in Ghana. Acta Hortic. 1128, 221-228
survival analysis, hazard model, risk preferences, smallholder farmers, sub-Saharan Africa