Sorghum market integration in Ghana

Abstract

The study sought to examine the variability and trends in sorghum supply and prices, factors affecting volumes of sorghum traded, and whether the sorghum market was integrated. To achieve the set objectives, primary and secondary data were used. A random sample size of 160 respondents, including 20 per cent sorghum grain itinerant traders, 43 per cent wholesalers, 17 per cent retailers, and 20 per cent consumers were interviewed in selected markets in Northern and Brong Ahafo regions in Ghana. These markets were selected by production and utilization levels, and accessibility as well as potential for sorghum market expansion. Monthly observations over the period 1990-1999 on sorghum prices at the wholesale level for the selected markets were used for the market integration analysis. The study adopted various analytical approaches, including the basic Ravallion model with some modifications and the Error Correction model, to test for sorghum market integration. The study showed that the actual marketing of sorghum was organized by many individual private traders with no barrier to market entry. Factors affecting volumes of sorghum traded are variable and location specific. These factors include transportation difficulties, limited supply, inadequate capital, lack of finance, number of sellers and buyers, risk of price changes, and quality deterioration. The study established lack of short-run integration in 75 per cent of the sorghum market pairs studied. The price adjustment mechanism between local market and reference market was relatively slow, but markets were integrated in the long run. This could be attributed to lack of an adequate market information system at the rural markets, and possibly transportation difficulties. It was recommended that the efficiency of the sorghum marketing system needed to be improved by strengthening the market information system