Gross margin of smallholder palm fruit processors with non-allocable inputs in Assin north and south districts in Ghana

• Published in: Journal of agriculture and food research 2021-09, Vol.5, p.100177, Article 100177
• Main Authors: Djokoto, Justice Gameli, Zigah, David Esela
• Format: Article
• Language: English
• Subjects: Crude palm oil; Gross margin; Joint production; Oil palm processing
• ISSN: 2666-1543; 2666-1543
• DOI: 10.1016/j.jafr.2021.100177

Gross margin, as a measure of profitability has been associated with an enterprise and for a single product. The determinants of the gross margin have also been investigated using multiple regression. Whilst attempts have been made to model joint production, this has not been the case for gross margin for joint production. Further, multiple regression analysis is inadequate in modelling the gross margins of joint production. In this paper, we contribute to the literature by estimating gross margin for a joint product, decomposed the gross margin into the respective joint products and investigated the drivers (and constraints) of the joint product gross margins by use of multivariate multiple regression. Using data on smallholder palm fruit processing in Ghana, collected using a pretested questionnaire, we have shown that, attention must not be on the gross margin of the major product alone, in a joint production environment. Gender (being female), number of years of formal education, experience in palm oil processing and credit explained the joint product gross margin. Government, NGOs and other development partners should encourage females to stay longer in the formal school system and enhance credit opportunities to smallholder palm oil processors. The gross margin of the complete set of the joint product must be considered. We showed that failure to account for the minor product would underestimate the gross margin. The outcome is useful for computing profit margins in a joint production environment. Also, it assists the manager in identifying what factors to tweak to increase the profit margin for the joint product. [Display omitted] •Gender and credit of palm-oil processers explained the joint-product gross margin.•Years of formal education and experience explained the joint product gross margin.•These determinants can be used to increase the profit margin for the joint product.•The gross margin of the complete set of the joint product must be considered.•Accurate gross margin can be estimated by accounting for the minor product.