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Small-Scale Seed Provision in Ghana: Social Relations, Contracts and Institutions for Micro-Enterprise Development

Research reports

A large number of small-scale enterprises growing, dealing and marketing seed emerged during the economic reforms of the 1980s in Ghana. The enterprises are dynamic and able to produce and market seed, despite limits on the availability of capital. This paper examines the nature of small-scale maize and cowpea seed enterprises in the two regions of Brong Ahafo and Ashanti and describes how actors in the system learn about seed quality and the trustworthiness of people they are dealing with. It explores how farmers get access to seed and how they obtain information on what they are buying and whom they are dealing with.

The growers interviewed in the study accounted for 25 per cent of formal seed production in Ghana in 1997. Finance for seed production comes from the grower. s personal income, loans from friends or family and, in a few cases, from banks. Credit given by seed dealers is also important. There are no legal contracts, so credit arrangements are based on trust, social pressure and coercion.

Seed dealers range in size, managing between one and four stores. Some also play a wholesale role, working through agents who take seed on credit. Seed dealers buy from a number of growers and obtain information on seed supply from sources including Ministry of Food and Agriculture seed inspectors acting unofficially. Growers and dealers must find ways to acquire the latest price information as prices can change at short notice when demand is high. Half of the dealers buy some of their seed on credit. Growers give credit to dealers especially if there is a reciprocal agreement involving the dealers financing the grower, but needs to be built up before credit is offered. Dealers known to growers sometimes act as guarantors for other dealers.

The case of seed enterprises in Ghana throws light on how entrepreneurs obtain information and how they build up trust based on working relations, existing links and intermediaries. Public policy needs to consider the social and economic factors underpinning the seed industry. Enterprises can reduce the transaction costs of obtaining information by building links with other enterprises. The strategies and the social capital they draw on is shaped by pre-existing knowledge, networks and social contacts. Transaction costs can be reduced by making information available to seed enterprises. Government workers, especially seed inspectors play an important, though unofficial, role in brokering information.

Fergus Lyon and Seth Afikorah-Danquah