Smallholder Ghanaian rice farmers’ preferences for a joint venture inclusive business model : A thesis submitted in partial fulfilment of the requirements for the Degree of Master of Commerce

Abstract

This study employed a discrete choice experiment method to understand farmers' preferences for the attributes of a joint venture (JV) model, estimate their willingness to participate in the model and determine the broader factors influencing their willingness to participate. The data were attained from a survey conducted with 250 Ghanaian smallholder rice farmers. The Multinomial, Mixed and Latent Class Models were estimated with the data. The results indicated that the majority of the respondents were willing to participate in a joint venture model. Farmers who preferred the JV structure appeared favourable to a model that had no or minimal levels of investment (despite the lower profits and dividends), where voting and decision rights were not proportional to their investment. They also preferred not to comply with any quality specifications. However, they were more dissatisfied with the idea of complying with a less strict quality standard that is associated with a lower premium. They preferred a flexible pricing system, disliked delayed payments, and would prefer to make cropping decisions with other farmers from their producer group rather than with strategic partners or buyers. The results from the latent class model found two classes that best-captured the preferences’ heterogeneity. Class 1 represents 45% of the respondents who are less likely to adopt the JV model. Farmers in this segment were relatively less educated, older, had shorter rice farming experience, have larger farm sizes, had no experience with contractual arrangements, never had invested in purchasing processing equipment but were adept in adopting new production practices. The second class represents 55% of the sample who were more willing to participate in the JV model. This group was relatively more educated, younger, had more experience with rice farming, had smaller farm sizes, had experience with contracts, had invested in purchasing processing equipment, but rarely adopted new production practices. This study explores a joint venture model as a potential way to address the quality issues associated with locally grown rice. This is because it includes farmers in processes further along the value chain (milling, packaging, value addition, or transformation), they are embedded in but are currently excluded from.