Profitability and choice of marketing outlets: evidence from Ghana's tomato production

Abstract

PurposeThe study analyzed the profitability of tomato farmers and determinants of farmers' choice of marketing outlets (wholesaler or retailer) in Ghana.Design/methodology/approachA two-stage sampling technique was used to collect data from 100 tomato farmers in Ghana. Analytical tools which include descriptive statistics, gross margin analysis (GM), profitability ratios and binary logit model were employed.FindingsProfitability analysis indicates that farmers who supply to wholesalers have gross margin of Gh¢7.86 (US$1.67) per 25 kg crate, while farmers who supply to retailers recorded a major loss of Gh¢5.36 (US$1.14) per 25 kg crate. The result suggests that farmers selling to wholesalers are better off than farmers supplying to retailers. The binary logit regression analysis reveals a positive relationship between farmers' choice of marketing outlet (wholesaling) and age of respondents, quantity of tomato sold and cost of labor for production. A negative relationship also existed between farmers' choice of marketing outlet and weighted average selling price and household size.Research limitations/implicationsThe results call for policy efforts to provide an enabling environment for more extension education and establishment of farmer associations to make marketing information for price development among farmers available.Originality/valueThe choice of marketing outlet greatly influences profitability of tomato production. This study examines the performance of the various tomato marketing outlets in Ghana.