The interview findings show that OPRI began breeding Tenera (known locally as Agric Abɛ), which is a hybrid of Pisifera (non-fruit bearing palm) and Dura (fruit-bearing palm). Both are found locally in Ghana. OPRI’s agronomy, pest and disease control divisions provided
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farmers with a breed that ensures improved yield. This is because in the early 1960s the Ghanaian government established the Oil Palm Research Institute (OPRI) to tap into the production of new palm fruit breeds offering higher yields. The introduction of a new breed was aimed at bringing commercial gains from palm, which had been cultivated in Ghana since the latter part of the 19th century. In the following extract, the head of the research institution explains the formation of the institute:
The Oil Palm Research Institute, formally [part of the] West African Institute for Oil Palm Research, which was based in Ibadan, Nigeria was established in 1961... And as an institute from the very start the basic thing was… the basic objective of that time was to provide improved oil palm material for farmers. And it was noted that because oil palm is indigenous a lot of people were doing anything... So anywhere they see it they take it as a plant, so this was to get improved materials so that when they plant it is no longer a hobby ... You are not tending some wild growth behind your house. But you are doing a business (Palm case 14; Kwaebibirem, 2014).
According to Palm Case 14, establishing the OPRI research centre to produce high-yielding palm fruit led to the proliferation of palm cultivation by indigenes of Kwaebibirem and its environs. The head of OPRI explains below that, although the value chain was not initially considered under the research, the palm fruits attracted large-scale processing businesses such as the Ghana Oil Palm Development Company (GOPDC) and others to begin operation in the 1970s to take advantage of this high-yielding Tenera breed. Since then, several businesses have been set up that buy fruits from farmers to run their operations.
Processing was not thought of as part of the agriculture. It is because they were left out completely. So it is just recently that this value chain system started cropping up at the Ministry of Agriculture. Formerly, they were not looking at things from the value chain point of view. They will take a crop and look at how to produce a lot more of it. Once they have finished, that is their objective. Oil palm, “Oh we’ve been able to increase production from this ton to that ton” and then it’s finished. But they were not looking at what happens to the fruits that you help produce. But the cultivation led to several businesses including GOPDC setting up their processing units in Kwaebibirem (Palm case 14; Kwaebibirem, 2014).
Farmers who cultivated the palm soon realised the immense benefit of the end product and began to look for means to process these fruits in large quantities, the Palm Processing Association secretary explains. These farmers sought machinery to process the abundant palm fruits which led to a proliferation or spin off of locally manufactured extractor machines:
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Initially, it was for research into palm oil; later they realised the benefits in the cultivation thereof, so many people in Kwaebibirem, realising the benefit of these palm fruits, cultivated them extensively. They cultivated not only for consumption, but because of the end products such as palm oil. Therefore, a lot of people began to develop machines to extract these essential palm oils (Palm case 7; Kwaebibirem, 2014).
Over 300 processing businesses are currently registered or unregistered and located in the cluster (BAC, 2014). The data shows that oil palm cultivation is dominated by small-scale farmers (80%) whose output is distributed between large- to small-scale processing units within the cluster. These farmers are either independent or contracted in an out-growers system. Findings also show that small-scale palm processing businesses account for over 80% of the total number of processors in the cluster (MoFA, 2014).
Oil palm production in Ghana has considerable local demand and an equally significant sub- regional market demand. The work by Angelucci (2013) ‘Monitoring African Food and Agricultural Policies’ and the Government of Ghana’s (2011) ‘Master plan on the palm oil industry in Ghana’ have shown that the total domestic demand far outweighs Ghana’s production capacity. As a result, the palm oil trade balance has always been negative. The total volume of palm oil produced in Ghana has, however, increased over the last decade (MoFA, 2012), the main market for oil palm exports being via neighbouring countries including Togo, Ivory Coast, Mali, Nigeria and Burkina Faso. Other markets include the United Kingdom, Spain and the Netherlands (Angelucci, 2013).
Emergence of the pineapple processing cluster
The emergence of the pineapple cluster is also primarily attributed to government intervention to promote the cultivation of fruit crops in the Nsawam municipality. The head of the agronomy division at the Ministry of Food and Agriculture points out that the municipality is located along the Akuapem-Togo range, which receives the high rainfall required for the cultivation of such fruit as oranges, pineapple, mangoes and pawpaw. The findings from the interview show that the conduciveness of the location for fruit cultivation and its closeness to Accra, the nation’s capital, led the government to demarcate the municipality in the 1950s. Among other fruits, smooth cayenne and sugar loaf were the dominant breeds of pineapple cultivated in large quantities, which prompted the government to establish the Nsawam Cannery – a large-scale processing unit that processed fruits, garden
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eggs and snail (Fukunishi, 2013). The Nsawam cannery became the first fruit processing company to be established in the municipality, in 1963.
The MoFA regional director of trade explains that it was not until the 1970s that, as part of a policy directive, the Nsawam municipality was classified as a ‘free-zone area’. This tax incentive offered interested farmers capital to begin the cultivation of fruit crops, particularly pineapple. It was around this period that the export of pineapples by air freight began. This boosted the large-scale cultivation of pineapple and other fruit crops for both local and external markets. The MoFA regional director of trade explains that, at the turn of the millennium, the dominant crop cultivated became ‘MD2 pineapple’. This was largely attributed to the other two breeds (smooth cayenne and sugar loaf) being easily perishable and having lower international appeal.
European markets used to import pineapples from South America but the relative proximity of Ghana to many European countries has helped to boost exports of the MD2 strain from the West African country (the MoFA director of trade explained). The situation has led to the establishment of several large- and medium-scale pineapple plantations, especially within the Nsawam municipality. This has also led to the establishment of over 500 small-to-medium plantations in the municipality that offer raw materials to support the operations of processing businesses. The head of the agronomy division of the Ministry of Food and Agriculture of Ghana explains that the rising number of fruit farmers over the last two decades and the relative proximity to the ports and the nation’s capital have led to an increase in the number of processing firms located in the area – in order wards clustering:
A lot of fruits is cultivated here but mostly the municipality is noted for pineapple farming ... I think the information we [have] indicate[s] that fruit cultivation has been rising since the 1990s... There has been a complete shift from the indigenous pineapple to MD2, which had a huge effect on farmers, but generally fruit cultivation has risen... [and]... this is helping to support all the processors within the municipality (Pineapple case 9; Nsawam, 2014).
The export of fruits from Ghana, particularly fresh fruits, began in the 1970s and this has also been attributed to the emergence of infrastructure and transport, such as the establishment of an airline industry in Ghana. For instance, Fukunishi (2013) explains that the emergence of the airline industry supported air freighting of fresh pineapples to Europe. The regional director of trade explains that there is also a rising demand for fresh fruits in the Ghanaian
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market. As a result, fruit cultivation in the Nsawam municipality is a commercial activity and farmers aim at selling it to exporting businesses or processing firms.
Summary and discussion
The findings show that businesses’ location in the palm and pineapple clusters is primarily influenced by access to labour, raw materials and market. These factors vary in terms of the mean rankings computed for the two clusters (see Table 5.1). Both business clusters were unanimous in their rankings of the top three reasons for locating their business in the district/municipality, with access to raw materials being the most important reason for the fruit processing businesses to locate in the clusters. The quantitative findings on the emergence of businesses in the two clusters have been linked to access to raw materials, labour and markets. The alternative evidence from the secondary data and key informant interviews shows the critical role played by the public sector institutions in the emergence of the two clusters. Interviews and secondary data show that the public sector and its institutions assisted in creating an enabling environment for the cultivation of the crops, the abundance of which attracted processing businesses to locate in the area. These two sets of evidence complement each other in explaining the history behind the location of these two clusters in the region.
This raw material-based clustering activity is influenced by the type of crop and the extent of demand for the product and yet has been ranked as the important reason for businesses locating in the two clusters. The higher ranking for raw material reasons for location has been noted by agro-based clustering literature (Weijland, 1999; Perez-Aleman, 2005; Clarke and Ramirez, 2014), and it sits well with the key informant interviews and secondary information on the historical antecedents of the two clusters. Like most agro-processing businesses in most developing economies, they are purposefully established to rely on the raw materials and the results from this study are therefore to be expected and corroborate the work on resource-based clusters.
Likewise, labour supply is ranked as the next important reason for locating businesses in the cluster despite the relative difference in the cost of labour supply within the two clusters. The arguments of the theory on agglomeration (Krugman, 1991) appear to have ignored an essential part of labour pooling in their assumption, since there may be competing labour pooling by other sectors unrelated to the cluster. The findings show that other factors
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unrelated to the clustering activities may influence the pooling effect of labour on the cluster. A case in point in the report was the issue of the expansion of the capital, Accra, which is threatening the supply of cheap agrarian-based labour and influencing the cost of pineapple cluster operations.
Table 5.1: Importance of business location in the district/municipality
Cluster Importance
Palm Pineapple Total
Mean
Total Rank
Mean Rank Mean Rank
Access to raw materials 4.94 1 4.47 1 4.86 1
Access to labour 4.65 2 4.18 2 4.57 2
Access to buyers/markets 4.60 3 3.88 3 4.47 3
Access to machinery and technology 3.00 5 3.29 4 3.05 4 Access to specialist business advice/info 3.01 4 3.12 5 3.03 5
Access to credit 2.23 6 2.88 6 2.34 6
Note: Total N =99 (Pineapple, n = 17; Palm, n =82)
The third ranked reason for fruit processing businesses’ locating in the clusters is access to buyers/market. The cluster theory postulation that increasingly demanding home customers will cause businesses to upgrade and differentiate products for both domestic and international market may have to be revised (Porter, 1998). This is because, whereas the principle is related to the palm cluster, whose operations have been extended to the sub- regional markets, the increasingly demanding home customers only attracted and encouraged the establishment of exporting ventures in the pineapple cluster, whose focus is not the domestic markets. As a result, the market conditions in the cluster were not very essential to these businesses who had already established their international marketing networks – ‘born global cluster’. It is not surprising that these processing businesses in the pineapple cluster scored access to market relatively lower in terms of the mean value (see Table 5.1).
This section has comparatively identified and examined a variety of factors that motivated the emergence of processing businesses within the clusters. The case studies were found to be mostly influenced by access to market, access to labour and access to raw materials in the location of fruit processing businesses. However, the emergence of the farming activities, which is responsible for the availability of essential raw materials, ranked higher in Table 5.1, has greatly been influenced by public sector support. These factors rest well within the discussions in spatial theory (Krugman, 1999; Porter, 1998) but have unique differences, as has been discussed above.
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