Cartels and Rent Sharing at the Farmer–Trader Interface: Evidence from Ghana’s Tomato Sector

Abstract

Abstract Itinerant traders provide an important route for West Africa’s farmers’ to get their perishable produce rapidly to the distant urban markets. But these farmers often accuse the traders of offering “unfairly” low prices while preventing direct access to these markets. Using Ghana’s tomato sector as a case study, we provide the first detailed exploration of the interface between Ghana’s farmers and traders, combining a theoretical model with novel empirical data on daily sales prices and tomato quality. We find that although the prices traders pay farmers are lower than prices in the urban markets, taking into account transport costs, these prices are higher than farmers receive from the local rural market. Our article suggests that policymakers would do better to focus on opening up access to the urban markets rather than on strengthening farmers’ bargaining power with the traders, which restricts market volumes further and harms farmers unable to sell to traders.