AbstractGhanaian markets reveal dif

Abstract
Ghanaian markets reveal differences between local and imported dressed chickens regarding quality attributes.
Based on the hypothesis that products have utility bearing attributes whose value partly determine their price, this
study identifies the attributes which influence price, consumer’s choice and consumption of local and imported
chicken in Ghana using a hedonic price regression model. Fifty consumers from Kumasi and time series data
from 2001 to 2010 were used to establish the preference between local and imported chicken and to analyze price
trends using a growth model. The findings indicate that consumers are willing to pay premiums for imported, non
fatty and tender attributes of chicken. Prices of local chicken are about 57 percent higher but the volume of
imported chicken has a faster growth rate. Bridging the price gap is anchored on higher and cost minimized
production as well as paying attention to differences in attributes between the two products.
Keywords:Hedonic price, dressed chicken, Kumasi
1. Introduction
Chicken is one of the major sources of animal protein all over the world (Barbut, 2002). Its protein content ranges
from 22-25 grams per 100grams portions depending on the parts being considered (Ensminger, 1986). The
product is therefore considered as an alternative to most red meat and is widely eaten across the globe including
Ghana.
Following the adoption of economic liberalization policies in early 90s and the better access to the international
markets, the socio-economic situation of the chicken industry in Ghana has changed considerably.
Despite an increasing demand of chicken in Ghana, domestic producers are not in a good position to meet this
demand. According to FAO (2009), the world produced 79.3 million metric tons of chicken meat in 2008 with
China, Russia, United States of America, Brazil and Japan being the world’s leading producers. Out of this,
Africa produced 3.4 million metric tons with Ghana contributing just about 0.9 percent of Africa’s production.
Ghana’s average chicken production of about 8,500 metric tons between 2005 and 2011 is about 10% of local
demand at the period. This was not the case from 1980-1990, when about 80 percent of the available chicken meat
and eggs in the country were supplied locally. Domestic contribution to chicken consumption has since 2000
dropped from 72% to 10% in 2011 with the imported chicken gaining more competitive edge in most markets in
the country. This situation led to the quadrupling of poultry imports from 20,752 metric tons in 2002 to 98,000
metric tons in 2011 metric tons (Flake and Ashitey, 2008). The decline in domestic production has been attributed
to high cost of production (feed, additives, energy) (Flake and Ashitey, 2008). While poultry farmers in Europe
and elsewhere produce at relatively lower cost of inputs, their counterparts in Ghana face great challenges in
terms of inputs costs. According to Asuming-Brempong, Osei-Asare and Anim-somuah (2006), production cost
for chicken in Ghana in 2005 was ¢17,376 per bird, and farmers were selling a bird at ¢21,000. In 2005, a locally
produced or grown broiler was sold at GH¢ 2.80/kg whereas the same product from Europe were selling at only
GH¢c1.60/kg (Asuming-Bremponget al., 2006). This is about 57 percent lower than the local product. According
to the same study, the prices of imported chicken products were between 25- 30 percent lower than the cost of
production in Ghana.
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This has led to what many have described as “dumping” of chicken in the country due to the lower prices of the
imported chicken. Atara, (2005), seems to have confirmed this with the statement “if traders sell their product in
Africa, it is because the price is higher than the price offered by pet food producers in Europe”.
Though there are still local broiler chicken producers in the country, their products face great competition from
the imported ones due to trade liberalization across the globe. Over 30 percent of imports of poultry products into
West Africa come to Ghana (Christian Aid, 2005). The country relies mostly on USA and other European
countries to augment the chicken produced by domestic farmers. Asuming-Bremponget al., 2006 also show that
thighs make up 50 to 90 percent of imports of dressed chicken.
Currently, chicken consumption in Ghana is between 75,000- 90,000 metric tons every year. The high
consumption rates have not been achieved without foreign contributions. For instance, out of about 80,000 metric
tons of chicken consumed in 2009 in Ghana, 80-85% was imported (FAO, 2010). Different studies have offered
different explanations to the decline in the local production and the corresponding increment in importation
(Asuming-Bremponget al., 2006, Flake and Ashitey, 2008). Part of the reason could be the preference of
Ghanaians for the imported product.
There are different factors that influence preference of consumers for a product and these factors are grouped
differently in the literature. Kahn (1981) as cited in (Agbekpornu, 2005) grouped these factors into intrinsic and
extrinsic factors. According to Kahn (1981), intrinsic factors of a commodity that influence choice include; color,
texture, flavor and freshness which make up quality and quantity. Extrinsic factors are the environment,
advertisement and merchandising, and time or seasonal variations. He further notes that, the extrinsic factors are
related to the food item but not physically and could also include the price, country of origin and for some items,
the brand name. Randall and Sanjur (1981) also writing on factors influencing food preference, have proposed
three categories in a model as: individual, food and environment. Gains (1996) also hypothesized that, any foodrelated
behavior is as a result of the interaction between the food itself, the consumer and the context or situation
within which the interaction takes place. He then concludes that it is important that food manufacturers
understand who might buy their product, what potential buyers perceive the product to be like and where and
when they might consume it. It can be deduced from this literature how significant the attributes or characteristics
of a product are in consumption surveys as well as product price determination.
A careful observation of the Ghanaian markets reveals some differences in the quality attributes of local and
imported dressed chickens. For instance, while local dressed chickens are mostly whole chickens and fresh, the
imported ones are available as whole and parts (wings, thighs, gizzard packs and chicken breasts) and are frozen.
Based on the hypothesis that products have utility bearing attributes and that the value of those attributes partly
determine the price of the product, this paper identifies which of these factors have significant influence on price
and therefore drive chicken consumption in Ghana. The paper addresses the following questions:
 What is the consumers’ preference between local and imported dressed chicken?
 What are the trends in prices of both local and imported dressed chicken in the market?
 What are the different characteristics of dressed chicken that influence choice and price?
 To what extent do these characteristics affect the price of dressed chicken in the market?
1.1 Objectives of the Study
The main objective of the paper is to determine the quality characteristics of dressed chicken that influence
consumers’ preference and how these affect the prices of chicken.
The specific objectives are; to describe trends in prices of both local and imported chicken from 2001-2010,
identify and rank the characteristics of dressed chickens that influence choice and consumption and price for that
matter, and finally quantify the effects of factors that influence chicken price in Kumasi market in Ghana.
2. Methods
2.1 Data and Sampling
Both qualitative and quantitative data were used for the study and these were both primary and secondary data.
The primary data was collected using structured questionnaires.
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Simple random sampling technique was used to select 50 consumers in the Kwame Nkrumah University of
Science and Technology community. The sampling frame for data collection of the research included: lecturers,
students, workers and sellers in the community. The stratified simple random sampling technique was used where
consumers were randomly selected from each group. Time series data on prices from 2001-2010 was also
obtained from Ministry of Food and Agriculture (MoFA).
2.2 Method of Data Analysis
The first objective of assessing trends in the prices was achieved with a growth model and descriptive statistics
were also used to analyze the variation in price trends.
The growth model is specified as:
Where Pl and Pi are price of local and imported chicken respectively, al and aiis the price at the initial year for
local and imported chicken respectively, bland bi are the growth rates of prices of local and imported chicken
respectively and T is time period. µl and µi are the respective error terms. The models were estimated using
secondary data of prices over a ten year period (2001-2010)
To identify and rank the characteristics that affect consumers’ preference for dressed chickens, a list of attributes
of dressed chicken identified from literature and through observation in the market was presented to consumers
for confirmation and ranking. The ranking of factors and degree of agreement among consumers was ascertained
using the Kendall’s coefficient of concordance test. The Kendall’s test is mostly used rank constraints or problems
from the most pressing to the least pressing and then measure the degree of concordance among respondents
involved. The factors were ranked using the numbers, 1, 2, 3….., n from the most influencing factor to t