The small ruminant production system in Northern Ghana: A value network analysis

The quest to determine if the small ruminant enterprise is capable of creating value in Northern Ghana led to the use of value network analysis to assess, describe and analyze a small ruminant enterprise model. The value creating linkages were mapped out first as linear relationships. Social network methods and analysis (SNA) tools were then employed to determine the pathways of value exchanges and collaborative relationships among the various units of the small ruminant enterprise as well as the potential for a web of value chains. Actual and potential market dynamics that promote a small ruminant value system were evaluated.

Social network analysis conducted provided both visual and mathematical analysis of the collaborative relationships and the flow of knowledge and resources between people, groups and organizations involved in the small ruminant value network. The introduction of animal health care services to small ruminant farmers increased the volumes of marketable animals by 22% which consequently projected the total market value up by 34%. Measures that will shorten the value system have the potential of increasing the total market value of the system. Consequently when such measures are taken, additional measures should be taken to redistribute margins so as to prop up the incomes of the farmers.

Introduction

The study of farming systems provide an insight into management and entrepreneurial systems that are currently being practiced within socio-economic constraints. Just as Shennan et al (1991) arrived at a conclusion that the wide range of management options available to farmers may lead to farms approaching a continuum rather than falling into distinct systems so does the socio-economic structure of input and output markets of farmers may lead them into a value system.

There are various definitions for the term value chain but they all show the separation of a business system into series of value-generating stages (see Porter 1985, Kaplinski and Morris 2001 and Recklies 2001 for more details). The value chain model is a useful analysis tool for defining the core competencies of enterprises and the activities in which competitive advantages can be pursued (NetMBA 2006).

A farm’s value chain is part of a larger competitive agricultural system and enterprises that is made up of value chains of upstream suppliers of inputs and downstream channels and customers of primary and processed products. Porter (1985) refers to this series of value chains as a value system. From the value system analysis, a farmer or group of farmers who exhibit a high degree of vertical integration would be well placed to coordinate upstream and downstream activities. Farmers or group of farmers with lesser degree of integration are however not left out. They can also achieve better coordination by having contractual agreements with suppliers and entrepreneurs in the various channels downstream.

In reality, the traditional notion of a linear value chain may not exist in an agricultural system driven by the market. In place of this would be a value network described as web of social and technical resources interrelated to create value (Allee 2002). Such is the depiction of what pertains in the Tolon-Kumbungu district of Ghana where the small ruminant industry has great potential to expand if a value network system is consciously developed as a food security strategy. The outcome of this would be a sustained growth in income and improvement of the livelihoods of farm households and entrepreneurs engaged in small ruminant value networks.

This study was conducted to visualize the various pathways of small ruminants’ knowledge flow and value addition opportunities in the study area. The resultant diagrams and their analyses would give an insight to what is actually happening in the enterprise; show where more value can be realized and what to do to improve incomes of farm households and other entrepreneurs involved or to be linked to in the various value chains that are interlocked in a value network.

Materials and methods

The value network analysis was used to assess, describe and analyze the small ruminant enterprise model to determine if the enterprise is capable of creating value in the Tolon-Kumbungu District and its environs of the Tamale metropolis and the Savelugu-Nanton District of the Northern Region of Ghana. The value creating linkages were mapped out first as linear relationships. Social network methods and analysis (SNA) tools were then employed to determine the pathways of value exchanges and collaborative relationships among the various units of the small ruminant enterprise as well as the future of the ensuring web of value chains (see Hanneman and Riddle 2005, and Krebs 2006 for more details).

Business transactions, knowledge flow, benefits and support between actors were recorded as non-directional data.

Primary activities and support activities were defined during the analysis of the value network.

Actual and potential market maps were drawn with the Market Mapping Software V2.1 (2006) and the small ruminant market dynamics were evaluated.

Results and discussions

A firm’s successes in developing and sustaining a competitive advantage depends not only on its own value chain but also on its ability to manage the value system of which it is part (NetMBA 2006). The chain which is made up of a series of activities that create and accumulate value culminates in the total value of the small ruminant value network through a series of actors (Figure 1).

Figure 1. Small ruminant value network in the Tolon-Kumbungu District, Ghana

Each actor builds market relationship with others in the network and within their respective units. The whole enterprise can be split into primary and support activities based on Porter’s (1985) model. Let us first look at the interactions among the actors as shown in Figure 1.

Small ruminant farmers in eight (8) communities in the Tolon-Kumbungu District constitute the reference point thus representing the roots of the value network. They are weakly linked upstream to input dealers who sell veterinary drugs, ear-tags and formulated feed supplements. This weak relationship with the input dealers reflects in the inputs stocked in their shops. Most input dealers operating in the communities and their environs do not sell veterinary drugs and formulated feed for small ruminants. Their reasons are that farmers do not patronize them and that veterinary technicians visiting farmers come along with their own stock of drugs. Nonetheless, there is the potential to develop the local veterinary drug and animal feed supplement market since some farmers do patronize larger retail shops in towns and cities for the same kinds of inputs.

The level of knowledge flow among farmers and between them and R&D specialists need some improvement. Most farmers did not realize the benefits from routine vaccinations and deworming until demonstrations were carried out in their communities and nearby ones. Hitherto, farmers under declare the number of animals they owned when veterinary technicians come around for routine vaccinations and deworming, which nevertheless, are free.

The current developments have led to the introduction of the Community Livestock Worker (CLW) concept into a market-oriented approach to livestock management. Capacities of veterinary technicians are being strengthened and linkages between them and veterinary drug wholesalers being facilitated so that the technicians can act as retailers as they ply their trade. They could also sell feed supplements and other inputs. The community input shops owners could also be empowered with knowledge about feed supplements so that they may retail them along side crop production inputs – their main retail commodities.

Although livestock production is secondary to crops in the area, traditionally, it is a major source of cash to farm households. It plays an important role in the farm household’s risk management (Nyamadi 1998) and it is sold whenever cash is needed. The 1999 Household Baseline Survey of the district indicates that more than 80 % of the households interviewed (a sample of six hundred households) owned small ruminants (sheep and goats) Most of these households stated that they keep their animals on a free-range basis during the day (District Monitoring and Evaluation Team 1999). The proportion of households in the district owning livestock, and husbandry practices have seen little change since the survey.

Activities on composting as part of an integrated soil fertility management approach introduced in the area (Clottey et al 2006) led to some households housing their animals and feeding them with protein-rich supplements and mineral licks with the aim of increasing the amount of manure harnessed. The introduction of appropriate housing and supplementary feeding led to a marked increase in livestock populations in the target communities. This formed the basis of developing a value chain out of the small ruminant enterprise of their farming system.

The market channels of small ruminant farmers in the study area are through butchers to itinerant traders acting on behalf of abattoirs and food vendors. Some of the itinerant traders retail the animals at the weekly markets of Kumbungu, Gbullung, Nyankpala, Kpatinga and Tamale. In the latter case, the customer of the itinerant trader is not fixed unlike the former arrangements with the abattoirs and food vendors.

The need to arrange for markets outside the community is paramount to the goal of increasing household incomes of small ruminant farmers since meat consumption in the communities is very low. An increase is registered only during festive occasions and the performance of funerals of prominent community members. A potential link outside the community to consume small ruminant products is the leather works artisans located at Hausa Zongo, a suburb of Tamale. Such a link may not be direct from small ruminant farmers but rather through the butchers in the community and at the abattoirs located in Tamale.

The value-adding activities along the small ruminant value chain can be generically grouped into primary and support activities according to Porter (1985 and 1998) and Recklies (2001). In analyzing these activities what determines the costs and value added are identified for each value activity at each node of the continuum. The main task of the support activities is to ensure free flow of information, services and products between the individuals, groups and organizations that constitute the small ruminant value system made up of a network of value chains.

Using a simplistic approach, the primary activities in the small ruminant value chain would be grouped under the headings provided by Porter (1985 and 1998) viz: inbound logistics; operations; outbound logistics; marketing and sales; service.

Under the inbound logistics for this value chain would be the supply of feed, breeds, and veterinary drugs. The provision of these inputs to small ruminant farmers can be organized into a whole enterprise composed of sub value chains. The organization of the input supply chain for the small ruminant production stage has the potential to create jobs in the communities and its environs thus leading to increasing incomes of the peri-urban dwellers.

The raising of the sheep and goats by farmers come under operations. The individual operations at the farm level include breeding, fattening and daily husbandry chores associated with livestock production.

Actions under outbound logistics are conducted by the butchers and itinerant traders who approach or are invited by the farmers. This is a well organized group, traditionally cast in the frame of a cartel. About fifty individuals were identified during our initial survey of the study area in August 2006. Twenty-two of them were butchers.

Itinerant traders and butchers as well as food vendors undertake the marketing and sales activities in the small ruminant value chain. Itinerant traders sell live animals to household for food or for breeding purposes whiles butchers and food vendors trade in meat to customers.

Activities that fall under service include: transportation of inputs, live animals and carcasses to the market; health care by veterinary services; and training by the R&D specialists. The R&D specialists operating in the area come from the Animal Research Institute (ARI), Savanna Agricultural Research Institute (SARI), University for Development Studies (UDS), Opportunities Industrialization Centers-Ghana (OIC) and the Ministry of Food and Agriculture (MoFA). These organizations are local partners of the International Center for Soil Fertility and Agricultural Development (IFDC).

The support activities in a value chain system are broadly group under the following headings: procurement; technology development and transfer, human resource management and administrative infrastructure management. These activities are performed at every node of the value system and across it.

Procurement is done by the input dealers in the communities, the farmers, butchers, itinerant traders, food vendors and households. What they procure would change accordingly across the value system as value is added. For example as the farmer is procuring vet drugs, the food vendor at the periphery of the value network would be procuring meat.

The R&D specialists mentioned above will get themselves occupied with technology development and transfer to keep the value system competitive. Their individual activities will span the whole network supporting the enterprise with innovations. This group is referred to as the Business Development Services (BDS). The group undertakes human resource management as well as administrative infrastructural management. They may also be involved in arranging procurement terms for the actors the value addition system.

The main preoccupation of the BDS in managing the human resources in the value system has so far been in the area of equipping farmers with production skills as well as strengthening farmers’ and traders’ groups. These activities overlap into the domain of administrative infrastructural management where training activities of small holder farmer groups, veterinary technicians and trader groups have included planning, financial management and the provision of quality services and goods. The traders, vet technicians and farmers using the knowledge gained have reported increase in sales and productivity.

The members of the BDS are also to facilitate the establishment of links between the nodes of the small ruminant value system and financial institutions to promote access to credit facilities. Viability of the small ruminant value system is essential for attracting meaningful financial support. The following analysis of the market dynamics in the small ruminant enterprise in the study area provides for justification.

The 38 small ruminant farmers involved in the study had a total sheep live weight of 18.52 MT. The survey results estimated that about 42.86% of the animals survive to be sold under current husbandry practices however with the introduction of veterinary services to the farmers, the survival rate increased to 65% by the end the year.

The actual market map of the small ruminant value system (Figure 2) showed that the existing value addition relationships add between 65-77% of value depending on the pathways chosen.

Figure 2. Actual market mapping of the small ruminant value system of surveyed farmers 2006

The pathways are either the farmers selling directly to food vendors or through butchers to the food vendors. However with the introduction of animal health care services to the farmers, the potential total value of the small ruminant value system increases by 34% by the time the meat gets to consumers (Figure 3).

Figure 3. The potential market map of the small ruminant value chain
when veterinary support services are rendered, 2006

This potential total value could still be raised with the adherence to proper housing conditions and a more intensive feeding regime. The losses through trauma as the animal lie on roads or are hit for destroying crops in the communities will drastically be reduced through confinement. Improved sanitation and ventilation in the pens would also create conditions where feed intake will increase whiles reducing losses in feed administered. This will lead to rapid daily weight gains making the animals reach marketable sizes in relatively shorter periods, thus increasing the rate of culling.

The key to increasing incomes of farm families dependent on small ruminants is in increasing the volumes presented on the market and the frequency of presenting marketable animals downstream to actors in the value system. This can be achieved by coordinating the activities of the actors in primary and support processes mentioned above. The major thrust must be targeted towards identifying and strengthening the entrepreneurial capabilities of the actors involved in the primary processes viz farmers, input dealers, butchers and food vendors.

When farmers sell directly to food vendors the total small ruminant market value increased by about 3%, similar increments could be made through activities that will shorten the chain upstream towards input supplies (drugs and feed).

Conclusions

Acknowledgement

This study was funded through the Strategic Alliance for Agricultural Development in Africa Program between DGIS (the Netherlands) and IFDC-Africa. The authors are grateful to farmers and the entire communities of Bognayili, Garishegu, Gumo, Kpilo, Libga, Naapagyili, Nwogu and Mbanayili all in the Tamale metropolis,Tolon-Kumbungu and Savelugu-Nanton Districts of the Northern Region of Ghana.

References

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District Monitoring and Evaluation Team 1999 District level Household Baseline Survey Tolon-Kumbungu District. Community Based Development Programme. Tamale, Ghana.

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Recklies D 2001 The Value Chain. Recklies Management Project GmbH. www.themanager.org

Shennan C, Drinkwater L E, van Bruggen A H C, Letourneau D. K. and Workneh F 1991 Comparative study of organic and conventional tomato production systems: An approach to on-farm systems studies. In B J Rice, ed. Sustainable agricultural research and education in the field. National Academy Press, Washington DC, USA, pp 109-132

The small ruminant production system in Northern Ghana: A value network analysis

V A Clottey, K O Gyasi, R N Yeboah, A Addo-Kwafo and F Avornyo***

Abstract

Introduction

Materials and methods

Results and discussions

Conclusions

Acknowledgement

References

The small ruminant production system in Northern Ghana: A value network analysis

V A Clottey, K O Gyasi*, R N Yeboah**, A Addo-Kwafo*** and F Avornyo***

Abstract

Introduction

Materials and methods

Results and discussions

Conclusions

Acknowledgement

References

V A Clottey, K O Gyasi, R N Yeboah, A Addo-Kwafo and F Avornyo***