KWAME NKRUMAH UNIVERSITY OF SCIENCE AND TECHNOLOGY, KUMASI COLLEGE OF ART AND SOCIAL SCIENCES.

FACULTY OF SOCIAL SCIENCES DEPARTMENT OF ECONOMICS.

IMPORTATION OF POULTRY PRODUCTS (BROILERS) AND THE IMPACT ON POULTRY INDUSTRY IN GHANA: CASE STUDY: DARKO FARMS

By

DZISAM DOROTHY 4509310

ALIDU ELIZABETH 4502410

NUAMAH IMELDA NADIA 4515510

ACHANA CHRISTIANA KALOU 4499210

AFESIA JOSEPH HALIFAX JUNIOR 4500810

A DISSERTATION SUBMITTED TO THE DEPARTMENT OF ECONOMICS,

KWAME NKRUMAH UNIVERSITY OF SCIENCE AND TECHNOLOGY

IN PARTIAL FULFILMENT OF REQUIREMENTS FOR THE AWARD OF A

BACHELOR OF ARTS DEGREE IN ECONOMICS.

MAY, 2014

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ACKNOWLEDGEMENT

Our greatest and profound gratitude and appreciation goes to

our maker the Almighty God, who by His grace and mercy made

this project a success. Our lips will forever sing His praise.

Also our appreciation and thanks goes to our project supervisor

Professor Joseph OheneManu for his immeasurable guidance, support

and time given to us. Thank you so much.

Our sincere heartfelt thanks go to our family and friends who in

diverse ways have helped in making our project a success. Thank

you all for you prayers.

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DEDICATION

This dissertation is dedicated to God Almighty whose boundless

grace, mercy and favour saw us through to the successful

completion of the dissertation. Also, we dedicate this

dissertation to our beloved parents, siblings, and friends and

loved ones for their support and prayers throughout the

duration of this dissertation and to our critics we say thank

you. Finally, to all who helped us in one way or the other, we

say thank you very much and God bless you all.

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ABSTRACT

Ghanaians love poultry products especially broilers. The

consumption of chicken usually peaks during festive occasions

like Easter, Christmas and New Year. However, the once vibrant

poultry sector in Ghana has been affected negatively in recent

times by the increasing importation of poultry products in the

country just as the problem identification stated.

According to the EPAR briefs No. 83, May 2010, imports of

poultry products have increased almost 400% since 2000,

growing at an annual rate of 57%. Again, according to ISODEC,

2004, Ghana imported 26,000 tonnes of chicken in 2002, mostly

from the EU. Two years later, the figure had almost doubled to

about 40,000 tonnes.

The USDA’s Ghana Poultry Report Annual 22013 reported that

Ghana’s domestic poultry sector has been on the decline,

supplying only about 10% of the total poultry demand in the

country. It also states that in the last 5 years, USA poultry

exports to Ghana have increased to reach between 24 to 31 per

cent of the market demand.

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This research therefore seeks to identify the challenges and

prospects of the poultry sector most especially of poultry

farms in the Kumasi Metropolis. This dissertation employs the

use of regression, t-test, bar and pie charts and line graphs

in establishing the relationship between importation and

output and also the cost of production and output.

Over the years, the government’s support for the sector has

significantly reduced. In addition to that, Ghana’s domestic

producers are disadvantaged in the pricing as compared to

their foreign competitors. More so, Ghana is now the third

highest importer of chicken according to USDA.

In conclusion, several recommendations were therefore made to help

revive and maintain the poultry industry. Among the

recommendations was the accurate documentation of the business

activities to enable researches in their work towards helping the

industry. Also, it was recommended that subsidies from Government

should be made available to the poultry farmers. Then again, the

farmers can also form a union to come together annually or

semiannually to review and deliberate on what they can do

themselves to help sustain the poultry industry. Finally, it was

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recommended that the domestic consumers can also contribute their

part for the sustainability of the poultry industry by being

patriotic and consume the locally produced broilers.

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TABLE OF CONTENTS DECLARATION .......................................................................................................................ii

REFERENCE ........................................................................... Error! Bookmark not defined.

APPENDIX I

APPENDIX II

LIST OF TABLES

Table 1 1 classifications of respondents and sample size ....................................................................... 7

Table 2 1 Sub-sectors under the three main sectors of the economy………………………………………………..17

Table 3 1 US Poultry Exports to Ghana in Quantity and value…………………………………………………………28

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Table 3 2 Leading Chicken Imports in Africa (‘000 tonnes) ................................................................ 30

Table 3 3 Age of Respondents .............................................................................................................. 32

Table 3 4 Percentage of respondents on the trend in importation ......................................................... 37

Table 3 5 Compilation of regression results ......................................................................................... 41

LIST OF FIGURES

Figure 2 1 Structure of the poultry industry in Ghana. ......................................................................... 12

Figure 2 2 Conceptual flow diagram of the sectors of the Ghanaian Economy.................................... 19

Figure 3 1 US Poultry Exports to Ghana …………………………………………………………………………………………29

Figure 3 2 Gender of Respondents ........................................................................................................ 31

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Figure 3 3 Growth of the Poultry Industry ............................................................................................ 33

Figure 3 4 The causes of growth level in the poultry industry. ............................................................. 34

Figure 3 5 choice of poultry meat ......................................................................................................... 35

Figure 3 6 Factors that affect the purchase of poultry meat .................................................................. 36

Figure 3 7 Trends in Importation .......................................................................................................... 37

Figure 3 8 type of business firm............................................................................................................ 38

Figure 3 9 type of poultry meat used .................................................................................................... 39

Figure 3 10 firms’ engagement with local poultry

farms ............................

..................................

........ 40

ABBREVIATIONS AND ACRONYMS

GDP - Gross Domestic

Product

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USAID - United States

Agency for International Development

NGOs - Non-Governmental

Organisations

FAO - Food and

Agriculture Organisation (Ghana)

GoG - Government of

Ghana

GBC - Ghana

Broadcasting Cooperation

EPAR - Evans School

Policy Analysis and Research

SRID - Statistics

Research and Information Directorate

MOFA - Ministry of Food

and Agriculture (Ghana)

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ISODEC - Integrated Social

Development Centre

USA - United States of

America

EU - European Union

BICO - Bicontrol

Technologies

FAS - Federation of

American Scientist

WTO - World Trade

Organisation

IEPA - Interim Economic

Partnership Agreements

FSG - Food Security

Ghana

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GNAPF - Ghana NationalAssociation of Poultry Farmers HPAI - Highly Pathogenic

Avian Influenza

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CHAPTER ONE

INTRODUCTION

1.1BACKGROUND OF STUDY

Agriculture in Ghana consists of a variety of agricultural

products such as food and commercial crops, livestock and

poultry and many others. It is an established economic

sector, and provides employment on a formal and informal

basis. Currently the economic contribution of agriculture to

Ghana’s Gross Domestic Product (GDP) is 22.7%. However,

Ghanaian agricultural output has consistently fallen since

the 1960s.

(Agriculture in Ghana-Wikipedia).

Poultry is the raising of domesticated birds such as

chicken, ducks, turkey, geese, guinea fowl, ostrich and many

more, which are kept mainly for their eggs and meat or

feathers. The poultry industry has contributed a lot to the

global economy through the production of meat, eggs, as well

as feathers for consumption and further production;

employment of labour which serves as a source of income; and

foreign exchange.

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The poultry industry has contributed greatly to the economy

of Ghana. However, the economy still relies heavily on

poultry imports although Ghana has the potential to be self-

sufficient in poultry production .According to Flake and

Ashitey (2008), the poultry industry in Ghana grew rapidly

during the 1980’s and 1990’s, developing into a vibrant

agricultural sector and supplying about 95% of chicken meat

and eggs in the country; this was due to the government’s

initiative in the 1960’s to promote commercial poultry

production as the greatest potential for addressing the

acute shortfall in the supply of animal protein. The growth

of the poultry industry was initially slow, due to irregular

supply of imported day-old chicks and other inputs, and

frequent outbreaks of poultry diseases which discouraged

potential farmers.

Between 1996 and 2002, estimates available show that poultry

production grew at an average annual rate of 11.0%. However,

with trade liberalization, Ghana opened her markets to cheap

poultry products and with the recent withdrawal of tariffs

on poultry imports, the volume of poultry imports increased

and this discouraged domestic production.

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Currently, the growth of the domestic poultry industry

continues to be slow. In 2011/2012, the supply of domestic

poultry (broilers) was 10% of the total market demand. This

is due to the high cost of production (drugs, feed), high

cost and irregular supply of energy and limited knowledge of

modern poultry management. Also, consumption pattern of

poultry products (broilers) is highly skewed towards

imported frozen broilers. In 2012, importation of frozen

broilers accounted for 90% of consumption while the domestic

poultry production accounted for about 10 %.( USDA GAIN,

Ghana Poultry Report Annual 2013)

Moreover, successive governments have failed to come out

with clear policies to protect the local poultry industry,

hence, the flooding of the Ghanaian market with imported

frozen broilers mainly from Brazil, United States of America

and the European Union.

Darko Farms and company limited, which used to be the

largest poultry farm in Ghana with 250,000 birds, now has

100,000 birds due to the problem of high cost in production

( as a result of high cost of raw materials

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especially ,soybean meal ; high energy prices and irregular

supply of energy) ,scarcity of raw materials such as maize;

low consumption of domestic poultry product specifically

broilers and increasing importation of dressed broilers from

countries like Brazil, United States of America and the

European Union.

1.2 SPECIFIC PROBLEM

After the background study, it was identified that the poultry

industry is facing various problems such as high cost of

production, low consumption, high cost and irregular supply of

energy as well as high cost and inadequate supply of raw

materials for feed production. A further study on some selected

poultry farms in Kumasi revealed that the farms are facing

problems such as high cost of production due to high cost of

raw materials, scarcity of raw materials for poultry feed,

increase in importation of dressed broilers from other

countries (like United States of America, Brazil and the

European Union) and low consumption of locally produced

broilers. Among these problems, the major one which was

identified and will be the problem of study for this project is

the increase in importation of dressed broilers.

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Importation is the commercial activity of buying and bringing

in goods from a foreign country. The importation of dressed

broilers into the Ghanaian market has increased by 5%, that is,

from 157,000 metric tonnes in May 2012 to 165,000 in May 2013.

Currently, the domestic poultry industry is supplying only

about 10% of total demand in the country while the imported

dressed broilers contributes about 90% . (USDA GAIN Ghana

Poultry Report Annual 2013). This has led to the decline in

the production of poultry in these farms. For instance, Darko

Farms and Company Limited which used to operate about six (6)

farms now has only three (3) active.

1.3 OBJECTIVES OF THE STUDY

The objectives of the study are:

1. To identify the causes of increasing importation of poultryproducts (broilers) in

Ghana.

2. To identify the effects of importation of poultry products onselected poultry

Farms in Kumasi. 3. To find out possible solutions to the problem of increasing

importation of poultry products facing poultry farms in

Kumasi.

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4. To identify future prospects of poultry farms in Kumasi.

1.4 RESEARCH QUESTIONS

In line with the objectives of the study, the following research

questions will guide the study;

1. What are the factors that cause the increase in theimportation of poultry products

(broilers)?

2. To what extent has this high level of importation affected

the growth of poultry farms in Kumasi and the Ghanaian

economy?

3. What are the mechanisms that can be put in place to resolve

this problem?

1.5 OBJECTIVES AND JUSTIFICATION OF STUDY

The purpose of this study for which the objectives above were

identified is to look at the challenges that importation poses

to the poultry industry and to find possible measures to

overcome them.

The choice to identify the causes of increasing importation of

poultry products (broilers) is due to the fact that the poultry

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industry has seen a decline in the production of poultry

products since 2002. The industry could be said to have

crippled to the extent that some small poultry farms have

collapsed.

Again, the choice to identify the effects of the increasing

importation of poultry products (broilers) is due to the

reduction in the production level of broilers. The effects give

a broader view of how serious the problem of importation of

poultry products is and to what extent it affects some of the

selected farms in Kumasi and it also gives an idea of the

future of these farms.

Moreover, the third objective is to find solutions to reverse the

current problems and to prevent the reoccurrence of these problems

in future.

Finally, identifying future prospects will help the selected

farms in Kumasi to discover their full potential since the

poultry industry can be self-sufficient. It will also help to

find other avenues for the farms in order to stay active or

viable regardless of the challenges the poultry industry in

Ghana is facing.

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1.6 METHODOLOGY

Sources of Data and Data Collection Instruments

Information used for the study was gathered through primary and

secondary data source. Primary data constituted the main source

of information for the study. Questionnaires were administered

as the basis for the primary data. The data focused on the

knowledge of respondents on poultry products, the growth of the

poultry farms and the mechanisms to make them efficient.

Interviews, personal observations and telephone conversations

were also used in the collection of primary data. 100

questionnaires were administered.

In the case of the secondary data source, information was obtained

from journals, briefs, reports, past research and many others.

The researcher used SPSS, Gretl and Microsoft Excel in

analysing the data. Frequency distribution, pie charts, bar

charts, line graph, percentages and descriptive analysis

evaluating increasing importation of poultry products and

prospects of the poultry industry in Ghana were used to examine

the research questions.

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Research Population

Polit and Hungler (1999:37) refer to the population as an

aggregate or totality of all the objects, subjects or members

that conform to a set of specifications. Here the researcher

identifies the target population: the group that the researcher

wants to draw conclusion about once the research is finished. The

target population of a study constitutes the group of persons,

objects or institutions that defines the objects of the

investigation (Patton, 2002). In this study, the population

embraces all persons and institutions involved directly or

indirectly in poultry industry in the Kumasi metropolis. For the

purpose of this study, the target population includes some

selected farms, poultry importing firms, cold store operators,

restaurants, food vendors and consumers. The main reason for the

choice of this sample (target population) is that their

activities have direct or indirect bearings on the poultry

industry. The sample was used due to the scattered nature of the

population. Besides, time constraint and cost involved in dealing

directly with the population accounted for the choice of a

sample.

Sampling and Sampling Techniques

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The process of selecting a portion to represent the entire population

is known as sampling (LoBiondo-Wood & Haber 1998:250; Polit & Hunger

1999:95)

This study tried to infer the impact of imported chickens on

the poultry industry in Ghana using some Poultry Farms in

Kumasi as the case study. To satisfy this objective the study

identified a number of players in the poultry industry who

include producers,

The Classification of respondents and sampling size are determined asfollows.

Based on the non-probability or judgemental sampling techniques

respondents were classified as shown below in table 1.1

Table 1 1 classifications of respondents and sample size

Respondent category Number

Consumers 80

Restaurants 4

Cold Store Operators 4

Chop bar/ Food vendors

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Poultry Farms 5

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TOTAL 100

The classification and the sampling method gave a sample size of 100.

Hypotheses Statements

Two hypotheses are stated for testing as follows:

Importation Hypothesis

H0: Increasing importation is the cause of low output

H1: Increasing importation is not the cause of low output

Production Cost Hypothesis

H0: Cost of production is the cause of low output

H1: Cost of production is not the cause of low output

At the end of the study, the researcher expects to identify the

causes of increasing importation of poultry products

(broilers), its effects on the domestic poultry industry,

possible measures to help solve this problem and to discover

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avenues that will help the farms to stay active for a long time

to come.

1.7 ORGANIZATION

This study will focus on four chapters.

The first chapter entails introduction, background of study,

problem identification, objectives of the study and

justification of objectives. The issues of research questions,

hypotheses statements and expectation and data type and sources

are all subsumed under methodology.

In the second chapter, the researcher will review literature on

the poultry industry in Ghana as well as the causes and effects of

the increasing importation of poultry products (broilers).

Chapter three contains the detailed explanation of the research

conducted for this study. This looks at analysis of poultry

product importation, case study results and analysis and some

challenges of poultry industry. It also includes the analysis

of the data obtained from the field, its interpretation and

discussion.

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The final chapter which is chapter four will contain the summary,

conclusion and recommendations for the study.

CHAPTER TWO

LITERATURE REVIEW

2.1 INTRODUCTION

This chapter provides a historical review of the poultry

industry in Ghana. The chapter also considers a review of

agribusiness and the structure of poultry industry in Ghana,

role of agriculture, importation of poultry products and their

policy implication.

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2.2 BRIEF HISTORICAL REVIEW OF THE POULTRY INDUSTRY IN GHANA

Early poultry production involved many households having backyard

flocks of different chickens. These chickens supplied eggs and an

occasional chicken for festivities.

Poultry production has evolved for so many years. In Ghana,

poultry production has a large component of village poultry

involving local chickens, guinea fowls and ducks kept in an

extensive system by almost all households in the rural areas.

This subsector is practiced by about 66% of the 3.7 million

households in Ghana especially on the Guinea Savannah

AgroEcological zone (northern Ghana).There are about 25 million

free-roaming village poultry in Ghana. They are kept for meat

and eggs and sold for emergency cash needs and also used for

socio-cultural purposes.

Commercial poultry production in Ghana grew rapidly during the

1980-1990’s, developing into a vibrant sector that supplied

about 80 percent of the available chicken meat and eggs in the

country. The development of the commercial poultry industry was

initially slow, due to the irregular supply of imported day-old

chicks, a lack of veterinary drugs and frequent outbreaks of

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diseases. In order to increase growth the GoG removed customs

duties on poultry inputs (feed additives, drugs and vaccines),

and improved access to veterinary services. According to GoG

sources broiler production has experienced a steep decline from

80 percent of the market supply in 2000 to 10 percent in 2010.

This downward trend is due primarily to a very high cost of

production (feed, drugs).

By 2005, commercial domestic poultry production was only able

to meet 34 percent of total demand as most poultry producers

shifted from producing broilers for meat to the production of

eggs .Commercial poultry production in Ghana can be categorised

into large-scale (over 10,000 birds), medium-scale (5,000 to

10,000 birds ) and small-scale ( 50 to5000). (Poultry and

products Brief Annual Ghana, July 2011).

The poultry industry is perceived to be a major contributor to

Ghana’s development through employment creation and the

enhancement of nutrition and food security. The poultry

industry is still facing problems, according to GBC. “ There

are uncompetitive interest rates, lack of high subsidising cost

of maize production and tariffs to enable farmers to compete

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with products coming from other parts of the world” (Mr Cabaña,

2010). The Ghanaian poultry farmer has the capacity and the

modern techniques comparable to others in Europe and Asia. (Mr

Darko).

2.3 THE STRUCTURE OF POULTRY INDUSTRY IN GHANA

2.3.1 SECTORS OF THE POULTRY INDUSTRY

Poultry production in Ghana may be classified into three

categories according to installed capacity, marketing system

and level of integration of its operations. These are

commercial (or industrial), semi-commercial and backyard

producers. The FAO classification includes the level of

biosecurity (Aning, 2006).

1. Industrial and integrated sector

Industrial integrated system with a high level of biosecurity

and birds/products marketed commercially (e.g. farms that are

part of an integrated broiler production enterprise with

clearly defined and implemented standard operating procedures

for biosecurity).

2. Commercial poultry production

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Commercial poultry production system with a moderate to high

biosecurity and birds/products usually marketed commercially (e.g.

farms with birds kept indoors

continuously; strictly preventing contact with other poultry orwildlife).

Commercial poultry production system with low to minimal

biosecurity and birds/products entering live bird markets (e.g.

a caged layer farm with birds in open sheds; a farm with

poultry spending time outside the shed; a farm producing

chickens and waterfowl).

3. Village or backyard production

This system is predominantly comprised of traditional village

poultry (chicken, guinea fowl, ducks, turkeys, doves) raised

mainly to supplement household incomes and to supplement

household meat and egg consumption (Aboe et al, 2006). Village

or backyard production with minimal biosecurity and

birds/products consumed locally. It is mostly situated

everywhere and dominate in remote areas. Birds in this sector

are kept by the free range housing system.

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Figure 2 1 Structure of the poultry industry in Ghana.

Figure 2 above shows how the poultry industry in Ghana is

structured. There are two basic categories; commercial farmers

and poultry keepers. The commercial farmers comprises large-

scale, with a capacity of 10,000 birds and above; medium-scale

with a capacity of between 1,000 and 5,000 birds; and small-

scale with a capacity of between 50 and 1,000 birds. On the

other hand, the poultry keepers are sub-divided into two; semi-

commercial farms which are able to hold between150 and 500

birds; and the backyard/village poultry keepers which sometimes

have no housing at all and may keep between 3 to 200 birds.

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2.3.2 PRODUCTION, CONSUMPTION AND TRADE

Demand for livestock products, including poultry, is expanding

in West Africa as a result of population growth and increased

urbanization. Trade liberalization has had differing effects

on poultry markets in the region, with some countries

experiencing large import flows of frozen poultry from the

European Union and others receiving very little. (Evans School

Policy Analysis and Research (EPAR) of the Bill & Melinda GatesFoundation, EPAR Brief

No. 83, Lead Faculty May 28, 2010). Poultry production in Ghana is mainly a smallholder activity, even

though a few large commercial farms exist. It is an important domestic

source of meat, contributing as high as

25% (same as cattle) of the total domestic meat production between

2000 and 2004. (SRID, MoFA. Accra, 2006).

The domestic production of broilers has reduced drastically

over the years. Meanwhile the production of layer birds has

rather been on the increase, hence, poultry farmers have

shifted from the production of broilers to layers. The

estimated poultry layer count increased by 10% to stand at 23

million in 2012, up from 21 million birds in 2011. Broiler

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birds’ count is over 5million according to industry and GoG

sources. According to USDA report, over 90% of poultry farmers

are raising layer birds for eggs.

The fall in the growth of the domestic broiler production is

assigned to reasons such as high cost of production ( feed,

drugs and so on), inefficient production methods, limited

knowledge of modern poultry management, lack of processing

facilities , and high energy prices, which continues to

increase production cost by over 60%.

In the 1960s, the Government of Ghana identified poultry

production as having the greatest potential for addressing the

acute shortfall in the supply of animal protein and job

creation, and established an integrated poultry project in

Accra.

Within Ghana’s diversified agricultural economy, poultry

constitutes a relatively small subsector. The share of the

poultry industry in agriculture’s contribution to GDP is low.

As a result of low tariffs that render domestic broiler

production uncompetitive, 77 % of domestic demand for chicken

is met by imports, whereas demand for eggs is mainly met by

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domestic supply. The commercial poultry industry in Ghana is

therefore dominated by poultry layers and egg production, which

accounts for more than 95% of all poultry production in the

country. The importance of poultry varies across Ghana. For

example, poultry production is a relatively more important

agricultural activity in the Coastal Zone, contributing 7.7% of

zonal level total agricultural revenue. In terms of national

poultry production, however, the Forest

Zone, which is the most important agricultural production area in

the country, accounts for 39% of all national poultry production.

(Poultry Review Ghana, 2006).

The estimated per capita consumption of poultry products in

Ghana has increased by 33 percent from 4kg meat in 2010 to

6.6kg in 2012, according to the GOG sources. It is being

projected that the per capita consumption may increase to 6.8kg

in 2013. Post forecasts of Ghana’s total poultry consumption

for MAY 2013 is approximately 175,000 MT, up from 167,000 MT in

MAY 2012. Poultry meat (broiler) imports to Ghana in 2012

accounted for over 90 percent of consumption while the domestic

poultry production (commercial and noncommercial or backyard)

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provided only about 10 percent at 10,000MT. According to the

industry, spent layer birds (hens that have stopped laying

eggs) amounts to about 12,000MT, sold throughout the year as

well as during festive occasions. Ghanaians consume mostly

chicken, but also consume guinea fowl, duck, turkey and

ostrich. In Ghana, livestock and poultry meat contributes 40

percent of the national animal protein supply with the rest

coming from fish (FAO report 2010). Consumption patterns of

households in urban areas in Ghana are heavily weighted towards

imported frozen poultry products. The reasons for this trend

are that imported frozen broilers are cheaper than locally

produced ones, it is also processed as already pre-cut, (leg

quarters, thighs and wings). As such, lower price and

convenience of a ready-to-use chicken product has boosted

consumer demand for imported broilers. Furthermore, the rapid

growth in the restaurant, hotel and fast food sectors has

increased demand for imported frozen poultry products.

There are very few studies that have investigated the role of

poultry in rural households’ livelihoods such as income and

nutrition. Blackie (2006) conducted a study on the role of

scavenging local chicken in rural household livelihoods in

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Greater Accra Region. This study found out that the major

reason households stated for keeping chicken was food security,

as chicken provided both meat and eggs. Keeping chicken for

income purposes was a minor reason. This finding could be

attributed to the small average flock size of about 13 birds

per household. In terms of its contribution to household

income, the study estimated that local chicken contributed

about 5.1% on average to the household annual net income.

In a similar study, also conducted in the Accra Plains of

Ghana, Aboe et. al. (2006) found that over 80 % of respondents

kept free ‒range village chicken to supplement their income.

The study found that most households receive income from

chicken sales, which contribute an average of about 15% to

total income.

2.4 THE ROLE OF AGRICULTURE AND AGRIBUSINESS

Agribusiness is the businesses associated with the production,

processing, and distribution of agricultural products.

Agribusiness contributes in so many ways to the development of

rural areas in Ghana. It helps in generating employment and

income. It presents a unique opportunity particularly to NGO’s

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and District/ Municipal/ Metropolitan Assemblies to address

social problems of unemployment and poverty by increasing and

sustaining income levels of farmers and other participants

along the value chain development process. Locally based

agribusiness enterprises in developing countries are typically

small, medium-scale operations in rural areas that either

process raw agricultural materials or provide marketing,

transport, and other services (Kinsey, 1987).

Agribusiness denotes the collective business activities that

are performed from farm to fork. It covers the supply of

agricultural inputs, the production and transformation of

agricultural products and their distribution to final

consumers. (FAO)

2.4.1 AGRICULTURE AND THE ECONOMY

“ Agriculture is that kind of activity which joins labour, land or

soil, live animals, plants, solar energy and so on…”( Jerzy

Wilkin).

It has become increasingly evident in the last few years that

the conception of both economists and policy makers regarding

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the role of agriculture in economic development has undergone

an important evolution (Antwi, Stephen Bodybobton). Attitudes

toward

agriculture changes in relation to the level of development. In

less developed countries, there is a tendency to treat

agriculture as normal life, as a regular or common type of

activity. In highly developed countries, where only a small

fraction of the people is employed in agriculture, there is a

tendency to treat agriculture in a special way. Agriculture

plays a crucial role in the economy of developing countries,

and provides the main source of food, income, and employment to

their rural population.

Contribution of Agriculture in the Economy

The Ghanaian economy has three major sectors; agriculture,

services and industry. The services sector is the largest. It

consists of the “soft” parts of the economy, that is, the

activities where people offer their knowledge and time to

improve productivity, performance, potential, and

sustainability, what is termed affective labour. The basic

characteristic of this sector is the production of “intangible

25

goods”, which include attention, advice, access, experience,

and discussion. The goods may be transformed in the process of

providing the service, as happens in the restaurant industry.

However, the focus is on people interacting with people and

serving the customer rather than transforming physical goods.

The agricultural sector is the primary sector of the economy which

makes direct use of natural resources. This includes forestry,

fisheries, livestock and crop.

The industrial sector, specifically, the electricity sub-

sector, supplies the service sector with power to enhance the

production of its “intangible” or “invisible” goods to some

sub-sectors like hotels and restaurant.

Table 2.1 and figure 2.2 provide the linkages between the

agricultural sector and other sectors of the economy.

Table 2 1 Sub-sectors under the three main sectors of the economy.

Agriculture

Industry Services

Crop Manufacturing Trade

Livestock Mining and Quarrying Hotels and Restaurants

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Fisheries Electricity Transport and Storage

Forestry Water and Sewage Real Estate Services

Construction Public Administration

Education

Health

Information and

Communication

Financial andInsurance

services Business and Other

Services

Activities Other Personal

Service

Activities The sectors of the economy are interrelated in terms of their

functions. The agricultural sector provides food to the service

sector so that they can survive. The service sector also

provides the agricultural sector with training and advice which

enables them to produce quality products and increase their

productivity. This sector also provides “invisibles” or

“intangibles” like banking or financial services which enables

the agricultural sector to have access to credit facilities in

order to expand production and make profit. They also give

27

training to people in the agricultural sector on how to use new

technology and methods to increase productivity; a way of doing

this is by the provision of extension and veterinary services.

The agricultural sector provides raw materials to the

industrial sector to transform into final goods. The industrial

sector also supplies the agricultural sector with implements,

tools and other finished products to increase productivity and

for their survival. This aspect of function is specifically

undertaken by the manufacturing sector. The industrial sector

also provides the services sector with final goods and products

which they need to survive.

The service sector provides training and advice to the

industrial sector. For instance, it does this through the

health sector which is a subsector of the services sector by

teaching them about health and health related problems. They

are also advised on safety measures in the work place.

Figure 2 2 Conceptual flow diagram of the sectors of the Ghanaian Economy

28

2.4.2 ARGUMENTS FOR AND AGAINST POULTRY IMPORTATION

The poultry industry in Ghana is faced with many challenges

that include high cost of production, inefficient production

methods, limited knowledge of modern poultry management, lack

of processing facilities, high cost of energy, the absence of a

law that will ensure the importation of good quality and

disease free fertile eggs into the country and to monitor the

production of quality day-old chicks from domestic hatcheries.

A large increase in import duty does not guarantee an

uncompetitive industry from becoming competitive. The only way

that Ghana can get out of this seemingly impossible situation

is to somehow make its local industry efficient and

29

competitive. This cannot be done by taxing competitors out of

the market but by employing very basic and indeed creative

strategies.

“Over the last five years, chicken imports alone accumulatively

accounted for 74.2% of total meat imports. The Minister for

Agriculture, Mr Clement Humado, stated that the country was

deficient in meeting her meat requirement with the growing

population.”

Many African countries are currently unable to produce enough

poultry broilers over and above the needs of the human

population. Therefore, the intensive poultry industry has

become a liability rather than an asset.

Trade liberalisation policies embarked upon by Ghana during

the structural adjustment era of the 1980s and which have

continued unabated under IEPA, have contributed to the decline

of the cereal and poultry sectors. For instance, it was

observed that EU poultry exports to Ghana have been increasing

steadily within the period of IEPA; warding off competition

from bigger players namely, USA and Brazil. This implies that

the present 20 per cent tariff levels on poultry imposed by

30

Ghana are not adequate to address the issue of unfair

competition emanating from EU imports. This makes trade policy

choices of government of critical importance to poultry sector

development.

The future of local poultry producers is at risk by the

increasing import volumes of extremely low-priced frozen

poultry, partly a result of illegal dumping practices. Dumping

occurs when a country sells a product to other countries for

lower price than it is sold at the home market. For small open

economies such as Ghana, these periods of global oversupply of

broilers can cause a surge in imports that can destroy

profitability for local producers.

The plight of the poultry industry in Ghana comes to the fore

with regular cries for help from the industry, followed by

regular promises from GoG and answered with regular accusations

of insufficient government support. The bare facts are that

imported frozen poultry from USA, Brazil and Europe are

approximately 30% to 40% cheaper than locally produced

poultry.

31

According to FSG, the Ghana poultry industry is screaming for

protectionist policies in the form of higher import tariffs

combined with subsidies on imported feedstock, mostly maize.

Free markets advocates, on the other hand, argue that market forcesshould dictate the direction of the Ghana poultry industry. Under freemarket conditions, those who cannot compete effectively are forced outby those who can. Such a scenario, of course, will lead to the totaldemise of the poultry industry in Ghana.

2.5 IMPORTATION OF POULTRY PRODUCTS

Importation is the commercial activity of buying and bringing in

goods from a foreign country. Importation and exportation are the

defining financial transactions of international

trade.

With an economy dominated by cocoa, it should not be surprising

that in the years following independence there was only limited

policy interest in the poultry sector. In an early assessment

of the economy it was noted that ‘in the last five years, a

poultry industry has grown up outside the larger towns’

(International Bank for Reconstruction and Development 1960).

The poultry industry received some limited attention in the

Nkrumah Government’s eventually futile drive to establish

large-scale, mechanised state farms in the early 1960s (Due

1969; Hinderink and Sterkenburg 1983). Interestingly, at the

32

same time as the state farms were being dismantled, the poultry

industry was identified as a promising area for new investment

projects (International Bank for Reconstruction and Development

1967: 29). Since then the poultry sector has had to weather the

political and economic crises that characterised the first four

decades of the post-independence period. More recently it was

affected by structural adjustment policies and the relatively

strong economic growth experienced in recent years.

The report ‘Global poultry trends 2013’, published by

Thepoultrysite.com in November 2013, highlights rising imports of

poultry meat into Africa, “as the considerable increase in

domestic production fails to keep pace with growing demand”.

According to the USDA Economic Research Service, “the

Africa/Middle East region will likely account for 64 per cent

of the rise in world poultry imports” over the next decade,

with imports into developing countries projected to grow at

3.4% per annum.

The leading African chicken meat importers are South Africa,

Angola, Ghana, Benin and Republic of Congo, with these five

33

countries accounting for almost 80% of sub-Saharan African

chicken meat imports in 2011.

Since 2000, sub-Saharan Africa’s share of total chicken meat

imports has increased from 4% to 10%. As a consequence, “Africa

plays an increasingly significant role in global imports of

fresh/frozen chicken meat.” The largest proportional increase

in chicken meat imports was to Ghana, while the largest

absolute increase in chicken meat imports was to South Africa,

followed by Angola. By 2012, “South Africa’s chicken meat

imports represented some 20 per cent of total market supplies.”

At the end of September 2013, the market effects of these imports saw

the South African government raise the general tariff on five

categories of imported chicken

products.(Agritrade article ‘South Africa selectively raises duties

on five poultry items within WTO...’, 17 November 2013).

Poultry sector trade policy continues to be hotly debated in

Ghana and the wider West African region. In August 2011, Ghana

Business News reported that over 200,000 tonnes of frozen

chicken are imported annually into Ghana from the EU, Brazil

34

and the US. This was a radical change from the situation in

2002 when only 26,000 tonnes were imported, mainly from the EU.

While sources of poultry imports have diversified, it was

reported that Ghana still accounted for almost a third of the

EU’s total frozen chicken exports to Africa. Ghanaian poultry

farmers have continued to express discontent at government

poultry sector policy.

Effects of Importation

The importation of poultry products (broilers) into the country

has varying impact on the relevant poultry players in the

economy. These players are the government, the producers,

wholesalers, retailers and the consumers.

Kwadwo Attah-Owusu, (2013) asserts the effects of poultry importationon government as:

“The unbridled importation of frozen chicken, is one of the

factors which are contributing to the challenges that our

economy is facing now.” The country spends huge amounts of hard

earned foreign exchange to import chicken which can be produced

locally and this may even lead to a budget deficit for the

country. It is estimated that Ghana spent over 200 million US

35

dollars on the importation of frozen chicken in 2012. This

forms about 4.98% and 11.41% of our GDP and total imports

respectively.

The adverse effect of importation on employment cannot be

underestimated. Due to the increase in importation of poultry

products, the local producers have been forced to cut down on

production because the market share for local poultry has

shrank due to the growth in volume of imported chicken which

outpaces that of the domestic supply, hence laying off of many

workers in the poultry industry causing an increase in

unemployment.

The imported chicken heavily affects the price charged by local

producers. The price of a kilo of imported chicken leg quarters

goes for GHC 5.0 to GHC 6.50(USDA GAIN REPORT, 2013) while

local farmers charge higher prices for their produce. This

forces small and large poultry producers to close down or scale

down heavily in terms of production. Worse still,the collapse

or closure of dozens of poultry industries. This is largely

because most poultry farmers in Ghana could not meet their

production cost. A fall in domestic broiler prices is a

36

disincentive for local producers to increase production.

Besides, they have a higher production costs due to high cost

of feeds, electricity and other inputs.

Import surge often stirred the competition between imported

and domestic products led to the fall in domestic price,

especially when the two products are substitutes (Sharma et al.

(2005) FAO briefs). Also the importation of poultry products

(broilers) into the country may generate inefficiency on the

part of the producers since they would be forced to reduce

their prices, hence would result in production of low quality

meat which may not be good for consumption.

Measures to Curb Importation

Improvement in the administration of the permit system; the

permit system would help to monitor the quantity and the

quality of imported poultry products into the country.

Enforcement of laws to regulate the industry in order to curb

importation. For example, the minister of agriculture said that

the existing law stipulates that poultry with high levels of

fats cannot be allowed into the country.

37

Formation of poultry council to regulate the activities of

operators in the industry and also address concerns of poultry

farmers since they will be the mouth piece of poultry farmers.

On the issue of high cost of feed, the ministry of food and

agriculture is facilitating the production of soya beans to be

used alongside the excess maize being produced in the country

in order to reduce production cost. (Mr Clement Humado)

Protectionist policies in the form of higher import tariffs

combined with subsidies on imported feedstock, mostly maize can

help curb importation. Ban of poultry importation as Nigeria

and Kenya has done. Today Nigeria has a vibrant poultry

industry in West Africa and local producers are able to meet

their poultry needs. (The Poultry Site, 2013). Almost all the

Southern African countries apply quantitative import controls,

generally limiting imported products such as poultry. Our

neighbours tightly control their borders to South African meat

imports. Swaziland does not allow any chicken imports, Botswana

and Mozambique hardly make any import permits available and,

though Namibia has been a significant export destination, its

government has now introduced a limit of 600 tonnes of imports

a month, down from 2500 to 3000 tonnes.

38

39

CHAPTER THREE

DATA PRESENTATION, ANALYSIS AND DISCUSSION

3.1 INTRODUCTION

The chapter gives an overview of how data gathered is

presented, the analysis and discussions made by the researcher.

This chapter includes analysis of output function, the growth

of the poultry industry, preference and choice of poultry meat

and economic analysis of results.

3.2 ANALYSIS OF POULTRY PRODUCTS IMPORTATION

The global trade in fresh/frozen chicken meat almost doubled

between 2000 and 2011 when exports reached a record of

12.5million tonnes. Africa’s role in this business is

negligible amounting to only 56,000 tonnes in 2011. Africa

plays an increasingly significant role in global imports of

fresh/ frozen chicken meat. Since 2000, shipments to Africa

have increased nearly five-fold to a record high of 1.25million

tonnes in 2011.Back in 2000, Africa’s imports represented

almost 4 percent of world export but by 2011 this figure had

expanded to 10 percent. The leading importers in 2011 were

South Africa with nearly 3000 tonnes; Angola with 287,000

40

tonnes; Ghana 155,000 tonnes; Benin 104,000 tonnes; and The

Congo 79,000 tonnes. The USDA estimates indicate that South

Africa may purchase almost 400,000 tonnes of chicken meat;

Angola 330,000 tonnes; Ghana 172,000 tonnes; Benin 125,000

tonnes; and the Congo 100,000 tonnes.

In the 1960’s, the Ghanaian government identified increased

poultry production as a way to promote job creation and improve

the availability of animal protein. The poultry industry grew

slowly initially due to irregular access to inputs and frequent

outbreaks of Newcastle

Disease. By the 1970’s, due to removal of custom duties on poultry

inputs and improved veterinary services, many farmers had undertaken

poultry production, particularly in urban areas. Poultry production

declined in the 1980’s due to economic downturn and less availability

of inputs. The industry recovered slightly towards the end of the

1980’s. However, trade liberalization and re-adoption of taxes and

duties on imported inputs have since caused a severe decline.

Imports of poultry products have increased almost 400 percent

since 2000, growing at an annual average rate of 57 percent.

The country’s coastal ports provide an entry point for poultry

41

imports, which may explain why imports have dominated the

country’s market more than in land-locked countries such as

Burkina Faso. (Poultry Market in West Africa: Ghana, EPAR Brief

No. 83, May 2010)

Ghana imported 26,000 tonnes of chicken in 2002, mostly from

the European Union where farmers receive generous subsidies.

Two years later, this figure had almost doubled to about 40,000

tonnes. (ISODEC, 2004)

Highlights of the June 2013, USDA Foreign Agriculture Service reporttitled “Ghana Poultry

Report Annual” sums up the poultry situation in Ghana as follows:

“post forecasts poultry imports for Ghana to increase by 5% to stand

at 165,000 MT in MAY 2013, up from 157,000

MT in MAY 2012. Ghana poultry imports have more than quadrupled

since 2002. Ghana’s domestic poultry sector has been on the

decline, supplying only about 10% of total poultry demand in

the country. In the last 5 years, US poultry exports to Ghana

have increased to reach between 24 to 31 percent of the market

demand. Competition from Brazil and EU origins has also been

increasing.”

42

Currently, US poultry enjoys a price advantage compared to the

others, especially over products with EU origins. For example,

the current cost of US poultry per 10kg box is $22, while the

same sized box of Brazilian and EU is $ 34 and $32

respectively. Ghana continues to be a destination for US

poultry due to this price advantage, a strong relationship

between importers and exporters, and loyalty to US poultry

products.

Table 3 1 US Poultry Exports to Ghana in Quantity and value

Year US Poultry Export (MT)

US Poultry Exports (‘000$)

2002 10,068 4,549

2003 17,377 8,034

2004 15,999 9,741

2005 13,075 9,102

2006 12,045 7,668

2007 16,120 14,591

2008 19,401 21,060

2009 22,858 20,501

2010 30,000 18,662

2011 43,400 33,764

2012 50,000 62,857*

Average 22,758.5 17,275.3

43

Source: Ministry of Agriculture, Poultry Industry, BICO data

*indicates an all-time high US exports

Table 3.1 above shows the trend of US exports of poultry

products to Ghana from 2002 to 2012. US exports to Ghana in

this period averaged about 22,758.5MT for an average monetary

value of about 17,275.3 (‘000$). Ghana continues to be a

destination for US poultry products due to the strong

relationship between importers and exporters. Though US poultry

exports to Ghana has increased generally from 2002 to 2012, it

has been fluctuating. In 2012, US exports of poultry to Ghana

reached an all-time high at approximately $62 million and

almost twice that for 2011.

It can be seen from the table that US exports (in metric

tonnes) declined from 2003 to 2006 after increasing from 2002

to 2003. The decline from 2003 to 2006 was due to competition

from other exporting countries such as Brazil and EU. The US

lost its market share to Brazil due to the light pinkish

attractive colour of Brazilian poultry as well as its

packaging. It has since 2003 increased consistently.

Below is the graphical representation of US poultry exports to Ghana

44

Figure 3.1 US Poultry Exports to Ghana

*2013 FAS/ ACCRA ESTIMATES

Table 3 2 Leading Chicken Imports in Africa (‘000 tonnes)

Country 2000 2006 2007 2008 2009 2010 2011 2012 2013F

South Africa

72 260 239 191 206 240 325 371 395

Angola 49 130 138 171 161 239 287 301 330

Ghana 12 57 75 72 79 109 155 167 172

Benin 40 29 46 67 77 98 104 124 125

Congo 21 23 28 56 58 84 77 93 100

*Source: USDA

45

3.3 CASE STUDY RESULTS AND ANALYSIS

This study adopted the case study approach which is a widely

accepted research strategy. Results and analysis presented in

this section are valid for the case study of poultry production

of Darko Farms and Company.

Yin (1994) defines a case study as an empirical inquiry that

investigates a contemporary phenomenon within its real- life

context, especially when the boundaries between phenomenon and

context are not clearly defined. Yin (1994:13) argues that ‘The

case study allows investigation to retain holistic and

meaningful characteristics of real-life events such as

individual life cycles, organizational and managerial

processes, neighbourhood change, international relations and

maturation of industries.’

Case studies are analyses of persons, events, decisions,

periods, projects, policies, institutions, or other systems

that are studied holistically by one or more methods. The case

that is the subject of the inquiry will be an instance of a

class of phenomena that provides an analytical frame-an object-

46

within which the study is conducted and which the case

illuminates and explicates (Thomas).

In using the case study approach, qualitative and quantitative

(or both) evidence are applied. This study utilised various

data collection methods. These include interviews,

questionnaires and journals but these methods are often

combined. The use of case study method is appropriate because

it helped the researcher to seek a richer understanding of the

key issues and dynamics involved in the importation of

broilers.

3.3.1 DEMOGRAPHIC CHARACTERISTICS OF RESPONDENTS

Gender of Respondents

Figurer 3.2 below shows the gender of consumer respondents with

a majority of 42 out of 80 respondents, representing 52.5% were

males whilst the remaining 38 were females representing 47.5%.

47

Figure 3.1 Gender of Respondents

Source: Researcher’s Field work, April 2014. Age of Respondents

Table 3.3 below gives an indication of consumer age

respondents. The age group between 30-45 recorded the

highest percentage of respondents who consume imported

broilers and this represented 75% of the total number of

consumer respondents since they have the income and can

afford. It was followed by those in the age group of 18-29

representing

18.75% of the total respondents attributed their low demand

to taste and preference. Whereas those between the age group

48

of 46-60 had the least representation of 6.25 % out of the

total number of respondents. According to the respondents,

the reason for this trend is that, those in this age bracket

consume less due to health reasons.

Table 3 3 Age of Respondents

Age

Number of respondents

Percentage (%)

18- 29 15 18.75

30- 45 60 75.00

40-60 5 6.25

Total 80 100

Source: Field work, 2014.

3.3.2 ECONOMIC ANALYSIS OF RESULTS

Growth of Poultry Industry

Respondents were asked about their opinion on the growth of the

poultry industry; whether it was growing, declining or

stagnant. From figure 3.3 below, out of the 80 respondents, 49

respondents representing about 61% were of the opinion that the

poultry industry is declining.

49

23 respondents representing about 29% were also of the opinion thatthe poultry industry is stagnant. The remaining 8 respondentsrepresenting 10% also believed the poultry industry was growing.

The respondents gave the following reasons to buttress their

choice in growth level of the poultry industry; 61% of the

respondents who in their opinion chose declining as the growth

level of the poultry industry mostly attributed it to the

increasing importation of poultry products (broilers) and also

high cost of production due to increasing cost of feed, fuel,

and utilities, just to mention a few. They also gave other

reasons such as unfavourable economic policies and poor

packaging poultry products (broilers). The second highest

number of respondents believed the industry is stagnant solely

due to high cost of production which has affected their sales

and profit margin thus their inability to make economic

decisions such as expansion of their industry. Those who

believed the industry is growing associated it to favourable

government policies which formed about 2.5% of the causes of

the different growth level. They also attributed the growth of

the industry to high demand for local

broilers.

50

Figure 3.2 Growth of the Poultry

Industry Source: Fieldwork, April

2014.

Figure 3.3 The causes of growth level in the poultry industry.

Source: Fieldwork, April 2014.

Preference and Choice of Poultry Meat

51

In response to what type of poultry meat they preferred, 67.5%

of respondents chose imported broilers which were the largest,

and they gave reasons of it being cheap and readily available

on the market as what influenced their choice. 28.8% of the

respondents chose local broiler and cited its freshness and

taste as the reason for the choice. The poultry meat with the

least choice by respondents was spent layer with 3.8% of

respondents citing taste, tenderness and freshness as the

reason for their choice.

Figure 3.4 choice of poultry meat

Source: Fieldwork, April 2014

From figure 3.6 below, majority of the respondents which

represents 62.5% consider the price and size of poultry meat

before making their purchase since every rational consumer

52

wants more for a lower cost. 15% of the respondents purchase

was informed by the taste and colour. To them, taste and colour

represented quality and fresh meat which is from a healthy

bird. Packaging of poultry meat was a factor considered by

11.2% of the consumers since it was what attracted them to

demand the product. Some respondents considered all the factors

considered above as the prerequisite for their purchase while

some considered single factors like only price or size or

colour as a requirement before making a purchase. This was

represented by 11.2% of respondents.

Figure 3.5 Factors that affect the purchase of

poultry meat Source: Fieldwork, April 2014.

Trends of Importation

53

The researcher questioned respondents on their view on the

current trend in importation of poultry products (broilers);

whether it was increasing, decreasing or stable. From figure

3.7 and table 3.4 below, 95 % of respondents believed the trend

in importation was increasing, 3.8 % were also of the view that

the trend in importation was decreasing while 1.2 % said it was

stable.

Table 3 4 Percentage of respondents on the trend in importation

Trend in Importation Percentage of Respondents (%)

Stable 1.2

Decreasing 3.8

Increasing 95

54

Figure 3.6 Trends in

Importation Source:

Fieldwork, 2014.

The Demand for Poultry Meat

Out of 15 firms¸ 4 were restaurants, 4 were cold stores, and 7

were chop bars and other food vendors. Of these, seven

(representing 46.7% of the total number as in figure) have been

in operation for less than 5 years. Five of them, constituting

33.3%, have been in operation for between 5 and 10 years. The

remaining three respondents (20%) have been in operation for

over 10 years.

Figure 3.7 type of business firm

Source: Fieldwork, April 2014

55

Firms and uses were asked of which type of poultry they use for

the running of their business. From figure 3.9 below, out of

the fifteen respondents, only one, representing about 6.7%, run

the business with locally produced broilers because of its

taste and quality. Twelve (representing 80%) of the respondents

run their businesses with imported broilers. The basic reasons

given were that the imported broilers are less expensive

relative to the locally produced ones, which makes doing

business with them more profitable. In addition to this, its

size is relatively larger than the locally produced broiler.

Also, the imported broilers are already dressed, cut, and

neatly packaged, which makes it more attractive and easy to

process. The remaining two of the respondents, constituting

13.3%, however, run their businesses with both locally produced

and imported broilers.

56

Figure 3.8 type of poultry meat used

Soure: Fieldwork, April 2014

Firms Interactions with other Poultry Farms

When asked of whether they do business with any local poultry

farms, only two of the fifteen firms answered yes, which

represents 13.3%. The remaining thirteen firms (representing

86.7%) do not do any business with any local poultry farms. The

reason being that, their products are expensive. This shows

that most firms do not patronise poultry products from the

local producers and this is bad for the growth and

sustainability of the local poultry industry.

57

Figure 3.9 firms’ engagement with local poultry farms

Source: Fieldwork, April 2014

The researcher questioned the firms on their opinions on the

trend of importation of broilers into the country. The

researcher sought to find out whether they think it is

increasing, declining, or stable. 93.3% of the firms said that

importation was increasing and the remaining 6.7% opined that

it was decreasing.

The firms’ opinion on how importation of broilers affects the

local industry was predominantly negative. As high as 93.3% of

the respondents said that the importation of broilers into the

country affects the progress of the local industry whilst the

58

remaining 6.7% were of the view that it does not have any

effect on the local poultry industry. Majority of those who

said importation affected the local industry cited the

reduction in the production and/or the collapse of some poultry

farms as some of the ways the local poultry has been crippled

by the importation of foreign broilers.

3.3.3 RESULTS AND ANALYSIS OF THE OUTPUT FUNCTION

The researcher collected data from selected farms on output,

cost of production, sales and importation to know their

individual impact on output and how their changes jointly

affect output. A regression analysis was conducted and the

following results were obtained:

=15142.1 − . 𝟎 𝟎𝟗𝟏𝟕𝟑𝟐𝑿 𝟐 + . 𝟎 𝟖𝟓𝟐𝟓𝟐𝟏𝑿 𝟑 + . 𝟎 𝟐𝟔𝟗𝟗𝟐𝟒𝑿𝟒

Where,

Y=Output

R2 = 0.853

𝑋2= Cost of Production

² = 0.832�̅�

59

𝑋3=Sales

n =24

𝑋4= Import of poultry products (broilers)

Table 3.5 provides the coefficients, together with standard

errors and t-ratios. The value of the critical t is 2.086.

Table 3 5 Compilation of regression results

Parameters Coefficients Standard error t-ratio

Constant 15142.1 4835.14 3.1317

COST -0.091732 0.0571239 -1.6058

SALES 0.852521 0.0821041 10.3834

IMPORT 0.269924 0.148248 1.8208

Source: Estimation

From the regression above, cost of production is negatively

related to output in that, holding other things constant, as

cost of production increases producers cut down quantity of

output with the aim of reducing cost due to their profit

motive.

Sales on the other hand, is positively related to output.

Holding all other things constant, as sales increase firms

increase their output because current demand for their product

60

is high. High demand drives firms to produce more thus the

positive relationship.

The regression showed a positive relationship between output

and importation implying that, holding other things constant,

as importation of poultry product (broilers) increases output

still increase. However, this is a special case since

increasing importation causes demand of local firms’ product

to fall thus a fall in output.

The test for individual statistical significance of the dependent

variables revealed the following results:

Cost of production of production was statistically

insignificant given that │‒1.6058│falls in the acceptance

region thus we accept H0 and therefore, cost of production has

no impact on output level.

Sales were however statistically significant given that 10.3834, the

t-statistic, fall in the rejection region hence H0 is rejected, and a

change in sales affected the level of output.

61

The importation was statistically insignificant since t-statistic,

1.8208, fell in the acceptance region hence importation has no

effect on output.

The correlation coefficient of the regression (𝑅²=0.853900)

shows that about 85.4% variation in the level of output(Y) is

explained jointly by cost (𝑋²), sales (𝑋3 ) and importation (𝑋4)

and the remaining 14.6% is explained by other factors.

Results of Hypotheses Tests

In testing for the impact of cost of production on output the

following hypotheses statements were made.

H0: Cost of production is the cause of low output

H1: Cost of production is not the cause of low output

From table 3.4, the t-statistic obtained was -1.6058 which is

less than the value of the 𝑐𝑟𝑖𝑡𝑖𝑐𝑎𝑙 , hence H0 is accepted and

conclude that cost of production is the cause of low output.

Even though the result proves that cost of production is the

cause of low output, the coefficient of cost (-0.091732) shows

that the impact is minimal since a unit increase in cost will

cause about 0.092 fall in output.

62

The impact of importation on output was tested by the following

hypotheses statements.

H0: Increasing importation is the cause of low output

H1: Increasing importation is not the cause of low output

The t-statistic obtained for importation was 1.8208 and given

the critical t, H0 is accepted and the researcher has enough

evidence to conclude that increasing importation is the cause

of low output. However, the coefficient of importation shows

that a unit increase in importation leads to about 0.27

increase in output. This positive relationship can be

attributed to the seasonal demand for poultry meat.

3.4 SOME CHALLENGES OF THE POULTRY INDUSTRY

The researcher conducted a survey on some selected poultry farms

on the challenges they face and came out with the following

outcome as enumerated below.

1. Poultry farms face a challenge of finding a source of

funding for their day-to-day management. During the

survey, it came to the attention of the researcher that

63

most poultry farms take loans to run their businesses

which constitute about 90% of their funding. This has been

a challenge over the time due high interest rates on loans

which is crippling majority of the poultry farms. The high

interest charged on loans also have deterred other poultry

farms from expanding their business to meet the current

trends in the demand for poultry products.

2. The researcher also identified that the high cost of feed

input and some other inputs is a very big challenge for

farmers since they are unable to increase the prices of

their produce to meet their day-to-day cost. They are only

able to meet their fixed cost and part of their variable

cost which ends up reducing their profit margin and makes

them reluctant to produce more.

3. The increasing importation of cheap poultry products

(broilers) into the country is threatening the survival of

the local poultry industry it has led to a fall in the

demand and supply of local broilers thus has led to the

shutdown of some of the branches of the farms.

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4. Agreements between government and some foreign countries

tend to cause unfavourable condition for the growth of the

poultry industry in that some loans and grants from these

foreign countries come with strings attached. Some of

these terms and conditions of loans and grants have led to

the flooding of the Ghanaian market with cheap poultry

meat.

CHAPTER FOUR

SUMMARY OF FINDINGS, RECOMMENDATIONS AND CONCLUSION

4.1 INTRODUCTION

This chapter seeks to outline key findings from this research, to

make recommendations and draw conclusions which will help in the

further study of this topic.

4.2 SUMMARY OF MAJOR FINDINGS

Over the years, there has been a surge in the importation of

poultry products (broilers) in Ghana. Imports of poultry

products have increased almost 400 percent since 2000, growing

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at an annual average rate of 57 percent. (Poultry Market in

West Africa: Ghana, EPAR Brief No. 83, May 2010). Consumption

patterns of households in urban areas in Ghana are heavily

weighted towards imported frozen poultry products (broilers).

The reasons for this trend are that imported frozen broilers

are cheaper than locally produced ones and it is also processed

as already pre-cut (leg quarters, thighs and wings).

The researcher found out that increasing importation has

threatened the survival of the local poultry industry. The

increasing importation has led to an unhealthy competition

between local producers and importing firms. This is due to the

price variation between the imported broiler and the local

broiler. Information gathered from the selected farms showed

that output is declining which has led to the lay-off of some

employees.

According to firms and consumers, the price and packaging of

local broilers informs their demand for imported poultry

products. With regards to price, both firms and consumers

prefer imported broilers because they are relatively cheaper.

To firms, this lower price implies lower cost and thus higher

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profit. Packaging of the imported broilers in the view of

consumers and firms is more attractive than the locally

produced ones since imported broilers come in already dressed

and cut form and neatly packaged making it attractive and easy

to process.

The study further revealed that limited number of firms does

business with local poultry farms due to the high cost of their

produce. About 87% of firms who depend on poultry products for

their output do not do business with local poultry farms. This

is basically because doing business with local poultry farms is

costly and thus increases their cost of production. Firms being

profit oriented opt to use the imported broilers which

significantly reduce their cost of production.

The survey conducted gave a general overview that both

consumers and firms perceived the growth of the local poultry

industry to be declining. Firms attested to this, making

reference to their continuous demand for imported broilers.

Poultry farmers confirmed this with the decline in the demand

for their output which is now seasonal in nature.

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Poultry farmers, whose main source of funding is loans from

banks, are faced with the challenge of paying high interests.

As a result of this, most of the revenue acquired from sales is

used to pay back the loans and interests.

4.3 SUGGESTIONS AND RECOMMENDATIONS

The poultry industry in Ghana has the potential and the

capacity to produce to satisfy the local demand of the domestic

consumers but has not been able to achieve this basically due

to the influx of imported frozen broilers into the country. The

government can thus help by instituting high and efficient

tariffs on the imported poultry to help curtail the import of

the frozen broilers into the country. In addition, the

government can again help to sustain the local poultry industry

by subsidising the production of the local poultry producers.

This can be seen in the fact that during the 1980s and 1990s,

due to government’s assistance, the poultry industry was

booming but after that assistance by government were withdrawn,

the industry started dwindling. Therefore, government assisting

by way of providing subsidies will move in the right direction

to help revive the industry.

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Also, the financial agencies in the country can help by making

the acquisition of loans or funds easy to access and this will

thereby help the farmers in running their farms to the best

capacity. Again, the poultry farmers can be educated about how

to acquire and keep records of the funds used in running their

poultry businesses. This financial knowledge in the end will

assist the farmers in bookkeeping and other accounting systems

so as to increase their financial management knowledge thereby

increasing their production.

Furthermore, the poultry farmers can themselves help to boost

the poultry industry by cultivating the habit of dressing their

broilers and ensuring a nice packaging for their broilers to

help attract the domestic consumers to purchase them.

More so, the firms as well as consumers can also help to

revive the industry by engaging in business transactions with

the poultry farmers and also consuming locally produced

broilers as against the imported broiler. This will encourage

the poultry farmers to continue in their production.

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Finally, well established infrastructural facilities such as

roads, water supply, electricity et cetera to help in the

production, transportation and storage of the poultry products.

Most importantly, uninterrupted and cheap power supply should

be provided for the benefit of the poultry industry or sector

and other entrepreneurs in the economy to ensure increase in

production.

4.4 PRACTICAL LIMITATIONS

Most of the poultry farms in the Kumasi metropolis have poor

record keepings and hence delayed the researchers in the

acquisition of information for the project work and also the

country as a whole have poor records concerning the poultry

sector.

Another problem encountered in the field had to do with the

farmers‘ reluctance to cooperate due to suspicion that

disclosing information may lead to increased taxation of their

corporate profit and also due to the decline in production of

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some farms and the mistrust the farmers have on the general

public, it was very difficult to get first-hand information

and this delayed the researchers in their dissertation since

the majority of the project was based on primary data hence

posing as a big challenge in completing the project work on

time.

Transportation cost took away the chunk of our finances since

the farms involved were located far away from campus hence the

consistent travels made to obtain the information ended up

draining our pockets.

Last but not least, we had to skip some lectures to make time

to visit the sites for the needed information for the project

and this affected our studies due to the long distances to the

sites which always leave us tired after returning hence unable

to learn.

4.5 FINAL CONCLUSION

The poultry industry in Ghana not withstanding that of Kumasi

metropolis is still contributing its share to GDP and the

economy as a whole through the creation of employment,

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provision of meat protein, provision of raw materials for

further production and many more. Never the less, its

contribution has seen a decline over the past years and this is

evident from the literature review and the data analysis made

in our chapter three of this dissertation. Poultry farmers in

the Kumasi metropolis production decisions can be concluded to

be informed by cost of production, increasing importation of

frozen broilers, sales of their produce (broilers), and power

supply interruptions among others. These concerns are the major

causes of the plight of the poultry industry in Ghana hence

cries from the poultry farmers to the government, NGOs as well

as the firms and consumers for help. Even though, imports

tariffs have been instituted and also some poultry farms

cultivating maize to support themselves in the area of feed for

the poultry birds, it is not enough thus pragmatic measures

need to be put in place to rescue the poultry industry.

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REFERENCES

• Abebrese, G.O. (2011). Economy of Ghana I (September, 2011),pp.47.

• Adei, D., and Asante B.K. (2012). Research Paper: Challenges and

Prospects of the Poultry Industry in Dormaa District, Department

of Planning, KNUST, Kumasi-

Ghana. Journal of Science and Technology, Vol. 32, No.1 (2012), pp. 104-116.

• Agriculture in Ghana-Wikipedia

• Agal poultry review.ghana (August 2006).

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• Evans School Policy Analysis and Research (EPAR) of the Bill &Melinda Gates

Foundation, EPAR Brief No. 83, Lead Faculty May 28, 2010).

• Ghana Broiler Meat Production by Year (1000MT).

• Ghana poultry and products reports 2011.

• Ghana poultry report annual, Accra (September, 2013).

• Global poultry trend, 2013.

• Poultry Review Ghana, 2006.

• Poultry market in West Africa Ghana, EPAR Briefs No.83, May 2010.

• Pro poor HPAI Risk Reduction Strategies in Ghana, hpairb02 and

hpair03 Ghana report No. 2

• Sharma et al., (2005), FAO Briefs.

• The poultry site, 2013

• USDA GAIN Ghana Poultry Report Annual 2013

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