CONTRIBUTION OF VALUE ADDITION IN AGRICULTURE TO DEVELOPMENT: CASE OF THE OIL PALM INDUSTRY IN KWAEBIBIREM DISTRICT, GHANA

ABSTRACT

This study examined the contribution of value addition in agriculture to socio-economic development with reference to the oil palm industry in Kwaebibirem District. The specific objectives addressed in this study were to: determine the character of the activities that generate value in the oil palm industry; find how the process of value addition contributes to development, especially in terms of employment and income; and analyse the wider policy implications for agricultural development.

The study was based on information generated from field work conducted in five communities in the Kwaebibirem District. Quantitative and qualitative methods were used to elicit data for the study. For qualitative method, interviews, focus group discussions, and observation were used to derive information from actors in the oil palm value chain. Quantitative method involved the use of questionnaire to generate information from 110 oil palm processors. Statistical Package for Social Scientists (SPSS) version 20.0 was used to generate descriptive statistics, test for correlation, conduct ANOVA test and multiple regression analyses. The Net-Profit approach is also used to analyse the average income generated by processors.

Result shows that value addition activities are undertaken from the Oil Palm Research Institute (OPRI) to the final consumption of oil palm products. At OPRI, improved planting material called „tenera‟ was produced in commercial quantities and supplied to farmers and nursery operators in the district. Small and large scale producers of the oil palm add value to the crop by applying fertilisers, herbicides, pesticides and other value adding materials. Harvested fruits were sold to small scale processors or large scale mills. Small scale processors add value to the palm fruit by: leaving it to ferment for some days before processing; production of different types of palm oil, namely, „dzomi‟, „ngo paa‟ and „samina ngo‟; and the recovery of kernels from pressed palm cake andfibers. It was realised that processing of kernel by small scale producers has been transformed from the traditional mode of winnowing, roasting, grinding and boiling of kernel paste to the use of modern equipment such as the combine digesters, „hofers‟ and ovens. It was also revealed that the large scale mill owned by GOPDC has a well-built vertical chain of production whiles, the small scale sector have their production chain disconnected at various stages.

Findings from the questionnaire survey shows that the average income generated from adding value to 1 tonne of fresh fruit bunch and kernel through processing were GHȼ 375.72 ($ 143.88) and GHȼ131.64 ($ 50.41) respectively. The benefit cost ratio of 2.17 and 1.73 for processing palm fruits and kernels respectively revealed that processing palm fruits and kernels is a profitable value addition strategy. In addition, processors employed an average number of 8-10 people to process 1 tonne of palm fruit and kernel in a small scale mill. Subsequently, the study established that whiles value addition is contributing to increase income and employment; it has also been associated with the growth of other industries in the district. The implications of this study are that value addition in agriculture has the ability to increase income, reduce: rural unemployment; underemployment; rural urban migration; rural poverty; reduce waste in agriculture productions.