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Assessing the profitability of small scale local shea butter processing: Empirical evidence from Kaleo in the Upper West region of Ghana

2018; Cogent OA; Volume: 4; Issue: 1 Linguagem: Inglês

10.1080/23311932.2018.1453318

2331-1932

Theophilus Tweneboah Kodua, Jacob Ankamah, Mary Addae,

Cocoa and Sweet Potato Agronomy

This paper assesses profitability of small scale local shea butter production in Ghana. The study used cross-sectional data from 110 sampled shea butter processors randomly selected from Kaleo in the Upper West region of Ghana. Profitability methods such as gross margins, net incomes and net returns on investments of production units were employed to evaluate the profitability of shea butter producers. Simple linear regression model was also employed to estimate identified determinants of profitability using gross margin as the dependent variable. The results showed that shea butter making in the study area is profitable with positive average values of gross margins, net incomes and net returns on investments. Access to market information, access to credit, length of production cycle (time), savings, experience and household size were found to be significant determinants of gross margin. It is recommended that existing producer groups/cooperatives where members interact to gain understanding of the market trend besides, negotiations on prices and other terms of trade should be strengthened to attract more members, prioritize business-development through routine training and also explore market opportunities both locally and internationally. Furthermore, microcredit and financial institutions should develop low cost lending models in order to provide affordable credit to small scale local shea butter processors in Ghana.