Organic Pineapple Farming in Ghana - A Good Choice for Smallholders?

Abstract

The growth of organic food and drinks sector, higher than that of the conventional market, creates niche market opportunities mainly in developed countries. Organic certification is promoted in developing countries as a valuable export alternative, as well as a solution to environmental and health problems related to chemical input use. Organic products earn a premium price on the international market compared to conventional products. Hence, shifting from conventional to organic production might be an opportunity for small-scale farmers to reap high returns from their investments. Since switching to organic production requires adjustments of production techniques as well as the costs of the certification itself, several aspects need to be considered when determining its profitability. Using the pineapple sector in Ghana as an example, this paper sheds light on the feasibility and profitability of organic small-scale production. The literature so far has looked income effects on small scale farmers and price premia at consumer level. We provide the missing link between these papers by showing how the premium for organic produce at the farm level is formed, how it translates into profits and how it develops along the value chain. In doing so, the paper also has to set a focus to the specific conditions in Ghana, where the pineapple industry, once flourishing, has faced a crisis after 2005. With regard to donor efforts to bring back smallholders into export production, it is central to know if this is a viable possibility in Ghana. Analyzing costs and price formation along the fresh pineapple value chain, we find that production for the export market is a realistic option for both organic and conventional small-scale pineapple farmers. Second, the results suggest a positive effect of switching from conventional to organic production when competing on the global market for pineapple. Among smallholder farms, organic production is more advantageous than conventional production. Our findings also suggest that a considerable share of the organic price premium is passed from retail level to Ghanaian farmers. Nevertheless, other factors such as contract enforcement costs and standard compliance may hinder farmers from successfully participating in export markets.