I have spent the last week in the region around Accra meeting with small-scale pineapple processors.  ADVANCE has six offices, each with about six field business facilitators (FBF).  I have been working with Collins, the pineapple FBF out of the office in Tema, the main port town a half hour outside of Accra, the capital city.  He put together an association of pineapple juice manufacturers who are all buying fresh pineapple directly from farmers in the area, processing them in small factories with a single assembly line and a few employees.  There is a actually a huge market for fresh fruit juice in the country.  Ghanaians have become more health-conscious in the last few years and are increasingly opting for 100% fruit juice instead of synthetic products.

These pineapple processors have a strong market demand.  They have customers who bring their own bottles and private label their juices with these processors.  In addition, the processors have their own labels and sell to hotels, restaurants, and markets as far as six hours away.  They get their pineapples from multiple different sources.  Some have their own farms and all have relationships with local producers.  They even buy product from the big exporters to the European Union, who have specific quality standards that, if not met, result in the pineapples being rejected.  The processors buy up this excess at a low cost and turn it into juice.  The problem with this arrangement is that the major exporters are also juicemakers themselves, so these processors are effectively buying their raw materials from their largest competitor, which makes for a tenuous relationship, at best.  For now though, the businesses are doing well.  There is one major constraint, however: bottles.

There are no glass manufacturing plants in Ghana, so these processors buy used bottles from companies that collect discarded bottles of Vitamilk and other drinks.  They typically hire two women to wash the glass bottles, strip them of their labels, and pack them into crates.  But bottles are expensive here.  A crate of 24 bottles costs 2.60 cedis.  Once the crates have been filled with juiced, labeled, and corked, they are sold for 7 cedis, which gives you an idea of the thin margins here.  There is, however, a solution to this problem.  Burkina Faso, Ghana’s Canada, also consumes a lot of Vitamilk, but their juice processing industry is much less developed compared with Ghana.  There is an enterprising businessman at the Ghana-Burkina border who buys up all of the used bottles from Burkina and imports them into Ghana.  It is cheaper to buy them at the border (1.50 to 2 cedis per crate), but the minimum order size is 600 crates.  And here is where it gets dark.

If you want to buy from this gentleman at the Burkina border, you have to get there early in the morning to buy his stock.  Why?  Because whenever a new shipment comes in from Burkina a certain major multi-national drink manufacturer that will remain nameless buys up the entire stock of bottles and proceeds to crush them all.  By doing that, the company creates an insurmountable bottleneck (pun intended) in the processing…process.  So the machines remain idle until these small-scale processors get enough capital from sales to buy more bottles and make more juice.  By sabotaging this crucial step in the manufacturing process, this drink-maker neutralizes its most vulnerable competitors in a tactical maneuver that would make The Greek proud.  For those who do not know the Greek, he is the leader of an international crime syndicate in the show “The Wire.”  Here is a description:

Despite his calm appearance, the Greek is cunning and ruthless, and only interested in facts that make him more money. Series creator David Simonhas said that The Greek is an embodiment of raw unencumbered capitalism.[2] Anyone interfering in this process is eliminated immediately, and he prefers to leave victims headless and handless to hinder identification.

It is important to remember that the invisible hand of the market is indiscriminate and the realities of capitalism can be cold and brutal.  But, this is no time to despair, or to throw up our hands and curse the corporate puppeteers controlling the world.  After all, Ghanaians are becoming more health-conscious.  So we’ve got the market.  It’s only a matter of time before we make it big.

"Business. Always business."


Josh

"Josh Weinstein is a visionary. I read his blog every day." - Bono

2 thoughts on “Small-Scale Pineapple Processors Discover Ruthless Capitalism”

Adolf Agbodza · September 15, 2012 at 5:25 pm

I want to make a small scale pineapple juice business. I need equipment and advice.

Yusufu Maganga · December 9, 2013 at 8:16 am

Please, may you supply me with information on the small scale pineapple processing equipment

Stanhope Isaac Amoah · February 11, 2016 at 3:14 am

please my name is Isaac Stanhope amoah, service personnel in the central region .
my life has been service to people and this has been my driven force, I have planned to have a PINEAPPLE FARM with the little money I have saved from my national service allowance. it my dream to be an entrepreneur to become financially independent, create jobs and awareness to the unemployed graduates and service personnel .
my mission is to raise the best tasting and finest quality pineapple fruits in the local community and to become the leading producer of pineapple fruits.
my business plan is set, I need funds to put my plans into action . I will be happy to hear from your office
I can be reached on 0542884733.
thank you

Leave a Reply

Your email address will not be published. Required fields are marked *


*

Related Posts

Development Economics

Corruption in a Trump Presidency

In December 2009, I moved to Philippines just before the presidential election.  Like most of the former leaders of the Philippines, the outgoing president, Gloria Macapagal Arroyo, was exiting under a cloud of scandal.  The Read more…

Development Economics

Racism in America

I. Introduction In August of 2014, a police officer shot dead Michael Brown, a black teenager from Ferguson, Missouri, blowing the lid off a debate about racism in America. Protesters filled the streets, yelling “Hands Read more…

Development Economics

Why Do Some Countries Have It So Bad?

Open a newspaper today and you’ll be bombarded with a panoply of terrible news. Ebola is ravaging West Africa, with a projected 10,000 new cases per week and the possibility for 1.4 million people infected Read more…