COST STRUCTURE AND RETURN ON INVESTMENT IN APICULTURE FOR HONEY AND BEE WAX PRODUCTION IN THE...

AHMED ABOUD MAY 2014

COST STRUCTURE AND RETURN ON INVESTMENT IN APICULTURE FOR HONEY AND BEE WAX

PRODUCTION IN THE MAMPONG ASHANTI MUNICIPALITY OF GHANA

1.0 INTRODUCTION

1.1 Background of the study

Agriculture continues to be the largest sector of Ghana's economy, employing about 52% of the labour force and contributing in recent years,

an average of about 39% of GDP. Ghana’s population distribution is varied across the 10 administrative regions and eco-zones with 68% and

32% living in the rural and urban areas respectively (IFAD, 2012; FAO, 2006). The agricultural sector policy points out the need for enhanced

growth in employment and incomes through the promotion of small scale income generating activities such as Apiculture (MoFA, 2010).

Apiculture (beekeeping) is the management of colonies of bees in hives (structure for housing bees) for the production of honey and other hive

products as well as for the pollination of crops. Groups of hives are called apiaries, and a beekeeper may also be called an apiarist or apiculturist

(Morse, 2009).

Wild honey hunting, an age-old practice, is being discouraged due to its environmentally destructive nature. Instead, modern

beekeeping is receiving greater attention, especially from development oriented non-governmental organisations and private enthusiasts have

supported farmers under various poverty alleviation and conservation projects to go into beekeeping enterprises. Modern methods are much

more labour saving, sustainable and produce high quality honey (Akinnusi et al, 2009). Types of modern hives include; Langstroth and Top bar.

The latter is commonly used by apiarists in Ghana and is cheaper.

Honeybees are a subset of bees which belongs to the genus; Apis, primarily distinguished by the production and storage of honey and the

construction of perennial, colonial nests from wax (Engel, 1999). Honeybees managed by apiarists are grouped into stinger and stingless bees,

but the stinger bees are commonly kept due to their relatively higher productivity (Akinnusi et al, 2009). The most common domesticated specie

of honeybee is the Western honeybee (Apis mellifera) which is believed to have originated from eastern tropical Africa. Amongst the different

species and races of honeybees kept, the West African honeybee, (Apis mellifera adansonii) is better adapted to the tropical conditions of Ghana

(Ntenga, 1969).

Ahmed Aboud

DEPARTMENT OF AGRICULTURAL ECONOMICS AND

EXTENSION EDUCATION

UNIVERSITY OF EDUCATION, WINNEBA

MAMPONG ASHANTI, GHANA

ABSTRACT

The study investigated the return on investment committed to apiculture (beekeeping) for honey and bee wax production in the Mampong

Ashanti Municipality of Ghana. In pursuit of the investigation, twelve apiculturists (beekeepers) were identified and interviewed with the

aid of well-structured questionnaire. The study examined their socioeconomic characteristics, constraints militating against the venture,

determination of how production inputs were acquired, the cost structure of honey and wax production and the return they obtain on their

investment. Descriptive statistics as well as total cost and return on investment models were used to analyse the data collected. Descriptive

analyses revealed that majority (75%) of the respondents had received tertiary education and 75% were new to the venture with experience

of 5 years and below. All the respondents managed only top bar hives and operated on part-time basis. Personal savings was the main source

of capital for 61.1% of the respondents and majority (45%) of the respondents acquired locally improvised equipment for their apiary

operations. Respondents were faced with problems such as, inadequate equipment, lack of technical assistance, absconding of bees, lack of

capital among others. The cost analyses revealed that, variable costs made up the bulk (79.58%) of the total cost. An average capital

investment of GH¢870.18 generated a gross revenue of GH¢3,316.00 per harvest, giving a return on investment of 2.81 (281.10%). Based

on the findings, apiculture is economically profitable in the study area and should therefore be considered by government as a tool for

employment creation and poverty reduction. Financial institutions must be enlightened to consider apiculturists for loans. Establishment of

apiculture research centers and input shops would also encourage more apiarists.


Honey production is the main driving force behind beekeeping. Honey is a sweet, thick and glutinous juice collected from beehives and usually

found in cells of the honey comb. Some marketable by-products of honey production include bee wax, propolis, royal jelly, honeybee venom,

pollen and crop pollination (Akangaamkum, 2010).

Bee wax serves as an important ingredient in the preparation of wax print, candles, water-proof agent for wood and leather as well as an

ingredient in ointments, medicines, soaps and polish. Propolis is a gummy substance made from tree sap that has anti-bacterial properties. Royal

jelly contains many growth hormones and is considered medicinal, tonic or aphrodisiac in various parts of the world. Honeybee venom is

extracted for the production of antibodies. Pollen collected by honeybees is believed to be a valued health food which enhances the body’s

ability to fight allergies. Honeybees are very important in the pollination of most crops. (Akangaamkum, 2010; Corby, 1994).

Honey is the most popular natural sweetener in the world and the global trade in bee products is worth millions of dollars every year. The

growing number of herbal, pharmaceutical and cosmetic industries in Ghana as well as the increasing health awareness campaigns which

highlights the benefits of honey as food may be partly responsible for the increasing demand and price of honey and the other by- products both

locally and in the international market. The European Union (EU) in 2011, qualified Ghana to join other African countries who have also

received the accreditation to export honey to the EU market. The international market for honey is growing and Ghana is expected to help fill

the supply gap in Africa (BGN, 2011).

The country’s agro-ecological conditions are considered suitable for the production of honey in all regions. However, study reveals that, the

transitional agro-ecological zones have recorded relatively higher yields in apiculture with 34kg per hive as against the national average yield

of 14kg per hive (Akangaamkum, 2010). Mampong-Ashanti lies within the transitional agro-ecological zone between the rain forest of the

south and the Guinea Savanna of the north of Ghana (MOFA, 2013). This infers the potentials of Mampong Ashanti for sustainable apiculture.

The apiculture sub-sector has the potential to promote livelihood by providing opportunities for reliable alternative incomes, poverty reduction

employment creation, foreign exchange, key inputs for the development of allied industries (pharmaceutical industries etc.) and enhance

environmental conservation (Akangaamkum, 2010).

1.2 Statement of Problem

The beekeeping industry in Ghana has however, failed to attract adequate public sector support and has largely remained a hobby among a

few interested farmers. This may be largely due to the general lack of information on the sub-sector which poses a challenge in demonstrating

the true business potential of the industry. The SNV Ghana (2010) research report, identified the general absence of an entrepreneurial and

business approach to beekeeping as one of the key challenges and constraints which need to be resolved if its full potential is to be realized.

Information on the cost structure and average returns on investment in the venture could serve as primary grounds towards adopting an

entrepreneurial and business approach to beekeeping.

In order to meet the ever increasing demand for honey, there is the need to educate the society about the profitability of modern beekeeping.

This is essential because, it is generally believed that, human beings are rational and would be interested in such innovations whose adoption

will improve their welfare. This has necessitated the undertaking of a study to find the average cost at which beekeepers in the Ashanti Mampong

municipality incur in setting up and managing apiculture and the profit they make in terms of return on their investment into the venture.

The study seeks to address the following research questions;

1. What are the socio-economic characteristics of beekeepers in the study area?

2. How are inputs and equipment acquired for beekeeping in the study area?

3. What are the constraints that militate against modern beekeeping for honey in the study area?

4. What are the costs incurred and returns derived from beekeeping in the study area?

1.3 Objective of the study

The main objective of this study is to outline the cost structure of beekeeping in the study area and determine the return on investment the

beekeepers obtain on the average.

To achieve this objective, the study is to investigate the following specific objectives;

1. To examine the socio-economic characteristics of beekeepers in the study area


2. To determine how inputs for beekeeping are acquired in the study area.

3. To examine the constraints that militate against beekeeping for honey in the study area.

4. To determine the cost structure and average return on investment in a ten-hive apiary by beekeepers in the study area.

1.4 Justification

At the end of the study, prospective apiarists will be provided with information on average cost and return on investment they commit to the

venture. This shall provide an insight into the profitability of the venture. It would also serve as a planning and forecasting guide towards an

entrepreneurial and business approach to the venture.

This shall provide information on the economics of beekeeping to potential investors as well as loan/credit providing institutions.

3.0 RESEARCH METHODOLOGY

3.1 Introduction

This chapter provides information on methods employed to achieve the specific objectives. The chapter provides a brief description of theoretical

framework which serves as the basis for selecting the method to achieve the specific objectives of the study, method of analysis and method of

data collection.

3.2 Study Area

Mampong Municipality is located north-east of Kumasi, the Ashanti Regional capital. It is bounded to the north by Atebubu District in the

Brong Ahafo Region, east by Sekyere Central, south by Sekyere South and Ejura-Sekyedumasi to the West. The Municipality covers a total

land area of 782km2 with 69 settlements, 58% being rural. Mampong is the capital. The Municipality is fairly drained by several streams and

rivers, notably, Afram and Kyirimfa.

The Municipality is part of the savannah transitional zone of Ghana, with the vegetation being savannah woodland, with patches of tall elephant

grass to the north and mixed patches of dry forest and grassland to the South. 80% of land area is used for small-scale farming. There are 4

forest reserves covering a total area of 111.59km2. These are the Abrimasu, Aboma, Offin Headwater and Ongwami reserves. The mean annual

rainfall is between 800 and 1500mm and is bimodal and fairly distributed. Stools, families or clans control land in the Municipality. The

acquisition of such land is normally done through the chief. Majority of the farmers are tenants who pay rent, 12% of them are involved in the

share cropping system (i.e. the “abusa” system) (MOFA, 2013).

3.3 Research Design

The study employed an explorative and descriptive research designs in carrying out field survey to investigate and gather data for the realization

of the research objectives.

3.4 Sources and Methods of Data Collection

Purposive community sampling method was employed to select target communities. For the purpose of the survey and according to the

municipal agricultural development unit’s classification of areas where bees are kept, the following communities were selected; Mampong, Kofi

Sarpong, Kyekyewre, kyirimfasu, Nsuta, and Kofiase. Snowball sampling method was adopted to locate as many respondents as possible.

Twelve (12) beekeepers (respondents) were located from the six (6) selected communities for the study since there were inadequate information

as well as very low level of beekeeping practices in the study area. Primary data were collected through the use of well-structured questionnaire

containing open and close ended questions.

3.5 Socioeconomic and demographic characteristics

Data collected on the demographic and socioeconomic characteristics of beekeepers include; sex, age group, marital status, education level,

beekeeping experience (years), mode of operation, other occupations, membership of beekeeping association, source of information/update,

types and number of bee hives owned.

Descriptive statistics such as tables, pie and bar charts, frequency counts and percentages were employed to analyse the socio-economic and

demographic characteristics of respondents.


3.6 Acquisition of inputs and equipment for apiculture

To achieve this objective, information was sort on the acquisition of input including; capital, land, labour and equipment for beekeeping using

a well-structured questionnaire.

The data was analysed with the aid of statistical tools like frequency distribution, percentages and charts. Deductive conclusions were drawn

for each case to explain the results.

3.7 Estimating cost

Information was sort from respondents and the market on quantity and cost of input required for setting up and managing a ten-hive apiary.

These include cost of bait (bee wax), labour, smoking material (wood shavings/saw dust), bee suit, head veil, rubber gloves, rain boot, smokers,

knife, sieve, wax extractor and so on.

The Total Cost Model (TC model) was used to estimate both the fixed and variable costs involved in establishing beekeeping in the study area.

Fixed costs do not change with changing production level in the short run while variable costs change with the level of production (Mansfield,

1990). This objective was achieved by estimating the fixed costs, variable costs and the total cost. The share of each cost element in the total

cost was also calculated.

3.7.1 Estimating Total Cost / Amount Invested

The total cost was estimated by summing up the total fixed and variable costs incurred in honeybee keeping in the study area. It is given as;

TC = TFC + TVC (Eqn. 3.1)

Where, TC = Total cost

TFC = Total fixed cost

TVC = Total variable cost

3.7.2 Total Fixed cost

They are cost incurred whether or not production has taken place. For this study, the fixed cost will consider depreciation of the fixed items at

the present year. The fixed cost component in the apiculture include: Smoker, Protective clothing (bee suit), hand (rubber) gloves, protective

footwear (rain boot), a simple knife (hive tool), a hive brush, bee hive and others. The Total Fixed Cost (TFC) is given as;

�� = � ��

��

(Eqn. 3.2)

Where: TFC = Total Fixed Cost

Dj = Unit depreciation on fixed item j

Yj = Quantity of fixed item j

m = Number of input used

Depreciations on fixed assets were determined by straight-line depreciation method. This provided its cost for the present year (First year of

production). This is given as;

Depreciation per year, d = (�� )

�� (Eqn. 3.3)

Residual value of the asset after its useful lifespan was estimated at 20% of the actual cost of asset and the useful life was estimated at

5 years.

3.7.3 Total Variable Cost


Variable costs are all costs that change in roughly direct proportion to the level of activity. Variable costs are usually avoidable when the

enterprise is dropped or discontinued and they can be controlled directly. These affect decision making. For the purpose of this study, the major

variable costs associated with beekeeping was the cost of bait, smoking material, transportation, two unit of labour and others. Total Variable

cost (TVC) is given as;

TVC = Cost of labour + Cost of bait + ……… + Cost of transportation. (Eqn. 3.4)

�� = � ��

��

Where, TVC = Total Variable Cost

Vj = Unit cost of the variable input j

Yj = Quantity of variable input j


3.8 Estimating Returns

Output data were collected on yield and selling prices of honey and bee wax from beekeeping. The prevailing prices of honey and bee wax were

computed by determining the mean of respondents’ selling prices and various market prices of honey and bee wax in the study area.

3.8.1 Total Revenue (TR) / Gross Return (GR)

This is the total value of the entire beekeeping enterprise’s output if they dispose off all their products at the farm gate prices. The outputs

considered in this study were; honey and bee wax. The gross return in monetary terms were assumed to be the Total revenue which is the

quantity of honey and bee wax (Q) measured in liters, multiplied by the prevailing price (P) of a unit of honey and bee wax in GH¢. The Total

revenue equation is given as;

�� = � � !�"

��

(Eqn. 3.5)

Where, TR = Total Revenue

GR = Gross return

Pi = Prevailing market Unit Price of Output i

qi = Quantity of Output i

n = Number of output produced

3.8.2 Gross Margin (G.M)

This is the difference between the gross revenue and the variable cost.

�. $ = � � !�"

�� − � ��

��

Where, G.M = Farm Gross Margin (Eqn. 3.6)

Pi = Market Unit Price of Output i


qi = Quantity of Output i

Vj = Unit cost of the variable input j

Yj = Quantity of variable input j


n = Number of output produced

3.8.3 Net Returns (NR) / profit

This is given as;

NR = TR – TC (Eqn. 3.7)

Where, NR = Net Returns

TR = Total Revenue

TC = Total Cost

3.8.4 Estimating Return on Investment

The return on investment model (ROI model) or ROI metric was used to estimate the return on investment in beekeeping in the study area as

given by (Gittinger, 1982). The return on investment (ROI) equation is given as:

ROI = &'�&(

&( × ** = +'&( × ** (Eqn. 3.8)

Where, ROI = Return on investment

TR = Total Revenue

TC = Total cost

CI = Capital Invested

NR = Net Return

4.0 RESULTS AND DISCUSSIONS

4.1 Introduction

This chapter presents and discusses the empirical results of the study. First is a description of the socio economic background of the

respondents. This is followed by how the inputs for beekeeping are acquired; constraints militating against apiculture and then, the cost

structure and returns made by beekeepers on their investment into apiculture in the study area.

4.2 Socioeconomic and demographic characteristics of respondents

Data was collected from twelve (12) respondents of diverse socioeconomic characteristics through questionnaires. An analysis of the socio-

economic characteristics of these beekeepers for honey and bee wax production in terms of their gender distribution, age group, marital status,

Education level, years of experience in beekeeping, mode of operation, other occupations, membership of beekeeping associations/groups,

source of information/update on beekeeping, number and types of modern bee hives is presented in this study.

4.2.1 Age group of respondents

The age group of respondents is represented in table 4.1 below. The modal age is shown to be 30 years or less as well as 31-40 years. Both age

groups represents 33.3% each. Again, 25% fall within 41-50 years whiles 8.3% falls within 51-60 years of age. This reveals that, about 66.6%


of the respondents falls within the age group, 40 years or less. This conforms to a priori expectation that young farmers tend to show interest

in new innovations.

4.2.2 Gender distribution of the respondents

The sex distribution of the respondents is represented in table 4.1 below. Only one of the respondents was a female, representing 8.3% and

male, 91.7%. This may be due to the fact that, women might be scared away from this business because of the age long fear of being stung by

bees.

4.2.3 Marital status of the respondents

The marital status of respondent is represented in table 4.1 below. Out of the total number of respondents, 58.3% are married, 25% are single

whiles 16.7% are divorced. This may mean that majority of the respondents in the study area have family responsibilities.

4.2.4 Educational background of the respondents

Table 4.1 below shows that 75% of respondents had attained tertiary educational status. 8.3% had attained up to

secondary/vocational/technical level of education whiles 16.7% of the respondents had no formal education. This will enhance the ability of

the beekeepers to understand easily various technical operations involved in modern beekeeping.

Table 4.1: Socioeconomic characteristics of respondents1 (Age group, gender distribution, marital status and educational level).

Variable Frequency Percentage (%)

Age group

30 years and below 4 33.3

31-40 years 4 33.3

41-50 years 3 25.0

51-60 years 1 8.3

Gender distribution

Male 11 91.7

Female 1 8.3

Marital Status

Married 7 58.3

Single 3 25.0

Divorced 2 16.7

Educational Level

No formal education 2 16.7

Secondary/Technical/vocational education 1 8.3

Tertiary education 9 75.0

Source: Field survey, 2014

4.2.5 Respondents’ years of experience as beekeeper

From figure 4.1 below, 50% of the respondents had less than 3 years’ experience in modern beekeeping. 25% had 3-5 years of experience,

16.7% had 6-10 years of experience in beekeeping whiles 8.3% had 11-20 years of experience. This shows that, most beekeepers in the study

area were relatively new in the business.


Figure 4.1: Respondents’ years of experience as beekeeper beekeeper


4.2.6 Respondents’ mode of operation as beekeeper

From table 4.2 below, 100% of the respondents operated beekeeping on part-time basis, they were engaged in other farming and non-farming

businesses/occupations. 35.3% of the respondents were engaged in teaching/lecturing, 17.6% in crop farming and 11.8% were engaged in

trading, artisanship, animal farmers and as students each. This attests to the fact established by Akangaamkum, (2010) that, beekeeping is a

supplementary economic activity that can provide alternative income and create employment.

4.2.7 Respondents’ membership of beekeepers’ associations/groups

Table 4.2 below shows that 91.7% of the respondents did not belong to any beekeeping association/group whiles 8.3% belonged to a

beekeepers’ group. There is therefore a need to create and to increase awareness and participation of beekeepers in associations/groups. This

will enhance the availability of inputs needed in modern methods of honey production.

Table 4.2: Socio-economic characteristics of respondents2 (Mode of operation, other jobs and membership of associations/groups).


Mode of operation

Part-time 12 100.0

Full-time 0 0

Other jobs/occupations ***

Trading 2 11.8

Below 3 years

50%

3-5 years

25%

6-10 years

17%

11-20 years

8%

YEARS OF EXPERIENCE


Artisanship 2 11.8

Crop farming 3 17.6

Student 2 11.8

Teacher/Lecturer 6 35.3

Animal farming 2 11.8

Membership of beekeepers’ association

Yes 1 8.3

No 11 91.7

Source: Field survey, 2014;

*** Multiple responses were allowed

4.2.8 Source of information/updates on modern beekeeping

From figure 4.2 below, 38.5% of the respondents got latest information/updates of beekeeping from fellow beekeepers. 34.6% got

information/update from the internet, 23.1% got updates from textbooks/journals whiles 3.9% got updates from extension agents. This is in

line with the fact that, there is a general lack of information on the sub-sector which poses a challenge in demonstrating the true potential of

the industry (SNV Ghana, 2010).

Figure 4.2: respondent’s source of information/updates on modern beekeeping


*** : Multiple responses were allowed

4.2.9 Types of modern bee hives managed by respondents

As shown in table 4.3 below, data from the survey indicated that, 100% of the respondents kept only top bar bee hives. This might be

connected with the high cost of langstroth bee hives though they produce higher yield and are much more sustainable for apiculture.

0

5

10

15

20

25

30

35

40

Fellow

beekeeper

Text

books/Journals

Extension

agent

Internet

38.5%

23.1%

3.9%

34.6%

Pe

rce

nta

ge

SOURCE OF BEEKEEPING INFORMATION***


4.2.10 Number of bee hives managed by respondents

Table 4.3 shows that, 58.3% of the respondents owned less than 6 bee hives, 25% owned between 6-10 hives, 8.3% owned between16-20

hives and more than 20 hives each. This result is in line with the fact established by SNV Ghana Report, 2010 that, the beekeeping industry in

Ghana has, however, failed to attract adequate public sector support and has largely remained a hobby among a few interested farmers. This

may also be due to lack of support in terms of technical assistance and improved equipment.

Table 4.3: Socio-economic characteristics of respondents3 (Types and number of hives managed).


Type of modern hives used

Top bar hive 12 100.0

Langstroth hive 0 0

Top bar and Langstroth hives 0 0

Number of bee hives managed

Less than 6 hives 7 58.3

6-10 hives 3 25.0

16-20 hives 1 8.3

More than 20 hives 1 8.3


4.3 Acquisition of inputs for beekeeping in the study area

This section discusses how inputs for production are acquired including; capital acquisition, land acquisition, labour acquisition and the

acquisition of equipment. These make up the major factors of production. Each of these inputs have financial value. An analysis of the

primary data collected from the respondents with respect to the above variables is presented in this section.

Figure 4.3: Respondents’ source of capital



61.1%

5.5%

16.7% 16.7%

0

20

40

60

80

Personal savings NGO supports Loans/Credits from

financial institutions

Borrow from

friends/Family

Pe

rce

nta

ge

Source of capital

SOURCE OF CAPITAL***


4.3.1 Capital acquisition

Availability of capital to the beekeepers is important to the enterprise because everything used is the production is acquired with money. As

shown in figure 4.3 above, 61.1% of the respondents deployed their own personal savings as capital, 16.7% acquired capital in the form of

loans from financial institutions, again, 16.7% acquire capital by borrowing credit from friends or family member whiles 5.5% acquired

financial support from Non-governmental Organizations (NGO). This implies that investment into the apiculture enterprise in the study area is

largely dependent on personal savings of the interested beekeepers. There is inadequate external support in terms of financing from financial

institutions or NGOs.

Figure 4.4: Respondents’ means of land acquisition



4.3.2 Land acquisition

From figure 4.4 above, seven (7) out of the 12 respondents of the study, operated beekeeping at their backyards making up 36.8%. 31.6% of

the respondents perched on someone else’s farm/land for free. 15.8% of respondents used their personal owned land for beekeeping. 10.5% of

respondents paid rent on land used for beekeeping, whiles 5.3% shared their yield with land owners. This implies that, majority of beekeepers

in the study area depended on other people’s land for production, confirming that cost may be incurred in land acquisition. Amongst them,

only 10.5% directly paid for land use.

Figure 4.5: Respondents’ source of labour

Rent/Lease

10.5

Share yield

5.3%

Free perching on

someone's

farm/land

31.6

Freehold land

15.8

Backyard space

36.8

LAND ACQUISITION***




4.3.3 Labour acquisition

From figure 4.4 above, it was observed that, 56.3% of the respondents acquired labour from friends or family in the form of free help. 37.5%

served as their own source of labour whiles 6.2% hired an additional labour at a fee. This implies that beekeeping at the study area, on a

considerable scale requires an additional labour which may attract a cost.

1.3.4 Equipment acquisition

Modern beekeeping is a new and specialized activity that require certain unconventional equipment for its activities. These equipment are

uncommon in our part of the world. From figure 4.6 below, the study revealed that, 45% of the respondents acquired locally improvised

equipment by local craftsmen within the municipality. 25% of respondents borrowed the equipment from fellow beekeepers. 20% bought

limited equipment from specialized agricultural input shops whiles only 10% were able to afford to import these equipment from overseas.

The inaccessibility to/cost of acquiring these specialized equipment could partly account to the low level of farmer’s participation in

beekeeping as business.

0

10

20

30

40

50

60

I do everything myself I get free help from

friends/family

I hire one additional

labour at a fee

37.5

56.3

6.2

Pe

rce

nta

ge

s

Land acquisition

LABOUR ACQUISITION***


Figure 4.6: Respondents’ source of equipment



4.4 Constraints militating against beekeeping in the study area

Results from the study reveals as shown in figure 4.7 below that, 15% (majority) of the respondents faced inadequate equipment and

experience absconding of bees each as major constraints militating against beekeeping. 14% of the respondents found lack of technical

assistance as a major constraint militating against their beekeeping business, for 13% of the respondents, it was lack of capital, for 11%, the

constraint was pest and disease, for 9%, it were inadequate marketing of their output and lack of processing facilities each, for 8%, it was the

aggressive and stinging nature of the bees, for 5%, it was issues of bush burning and for 1% of the respondents, the major constraints was theft

issues. This implies that the three major constraints common to most beekeepers in the study area were inadequate equipment, absconding of

bees and the lack of technical assistance.

Figure 4.7: Constraints militating against beekeeping in the study area

Source: Field survey, 2014; *** : Multiple responses were allowed

0

5

10

15

20

25

30

35

40

45

From agric

equipment/input

shops

Import from

overseas

Improvised by

local craftsmen

Borrow from

fellow

beekeepers

20%

10%

45%

25%

Per

cen

tage

Equipment acquisition

EQUIPMENT ACQUISITION***

Inadequate

equipment

15%

Lack of capital

13%

Pest and

diseases

11%Lack of technical

assistance

14%

Theft

1%

Bees

aggressiveness

8%

Absconding of

bees

15%

Bush burning

5%

Inadequate

marketing

9%

Facilities

9%

CONSTRAINTS MILLITATING AGAINST

APICULTURE***


4.5 Outline of the cost structure of managing a ten-hive apiary for honey and bee wax in the study area

The incurred cost was grouped as either variable or fixed costs. The minimum, maximum and average cost composition per hive is presented

in table 4.4 below. Percentage cost composition of each cost item is indicated. Total cost (TC) was derived using equation 3.1 (Eqn. 3.1).

The fixed cost items were depreciation on the fixed input used. Straight line depreciation was used to derive the fixed cost for the present year.

Residual value and useful life of fixed cost items were estimated at 20% (0.2) of its cost and 5 years respectively. Depreciation (d) was

derived using Equation 3.3 (Eqn. 3.3). Total fixed costs (TFC) were derived using equation 3.2 (Eqn. 3.2)

The variable cost items considered included expenses on labour, bait (bee wax), smoking material (saw dust) and transport. Labour cost

included charges on setting/mounting bee hives, seasonal harvest and honey extraction. Two units of labour were hired. Transportation cost

included cost of conveying hives to the apiary and conveying harvested output from apiary to the beekeepers home/extraction center. Total

Variable cost (TVC) was the sum of all variable cost items which was derived using equation 3.4 (Eqn. 3.4).

From table 4.4 below, it was observed that, the total variable cost made up the bulk of the total cost of production, representing 79.58% whiles

total fixed cost made up the remaining 20.42%. This high level of the variable cost shows the flexibility of the business. The labour cost

accounted for about 57.46% of the total cost. This is followed by expenditure on bait which accounted for 16.76%. Out of the total mean unit

fixed cost of GH ¢323.18, cost of smoker was the highest, with a mean of GH¢ 76.43, followed by cost of a Kenyan top bar (KTB) hive with a

mean cost of GH¢ 61.67 per unit. Then the cost of wax extractor which amounted to a mean of GH¢ 32.00.

Table 4.4: Cost structure of apiculture for honey and bee wax per harvest per year.

Cost items

[C]

Min.

unit

cost

(GH¢)

Max.

unit

cost

(GH¢)

Mean

unit

cost

(GH¢)

Mean unit

depreciation,

[d =,-�../ (,-)

0 123 ]

(GH¢)

Qty

[n]

Total mean

depreciation [d

× n]

(GH¢)

Percentage

Total cost [

-4- × 100]

(%)

Fixed Cost, (FC)

Bee suit/costume 15.00 75.00 26.67 4.27 2 8.53 0.98

Head shield/veil 15.00 30.00 17.50 2.80 2 5.60 0.64

Rubber gloves 10.00 15.00 12.00 1.92 2 3.84 0.44

KTB Hive and Stand 50.00 100.00 61.67 9.87 10 98.67 11.34

Smoker 65.00 100.00 76.43 12.23 1 12.23 1.41

Rain boot 15.00 25.00 18.67 2.99 2 5.97 0.69

Knife/hive tool 4.00 10.00 5.75 0.92 1 0.92 0.11

Sieve net 5.00 10.00 5.83 0.93 1 0.93 0.11

Wax extractor 25.00 40.00 32.00 5.12 1 5.12 0.59

Hive brush 5.00 10.00 6.08 0.97 1 0.97 0.11

Touch light 5.00 10.00 7.08 1.13 1 1.13 0.13

Six set of buckets 18.00 30.00 23.50 3.76 1 3.76 0.43

Land (1 acre) 20.00 50.00 30.00 30.00 1 30.00 3.45

Sub-total (TFC) 252.00 505.00 323.18 76.91

177.68 20.42


Variable Costs, (VC)

Bait (bee wax) 10.00 20.00 14.58 14.58 10 145.83 16.76

Smoking material 1.00 5.00 2.67 2.67 10 26.67 3.06

Two units of Labour 40.00 80.00 50.00 50.00 10 500.00 57.46

Transportation 15.00 30.00 20.00 20.00 1 20.00 2.30

Sub-total (TVC) 66.00 135.00 87.25 87.25 692.50 79.58

Total Cost, (TC)

[TC=TFC + TVC]

870.18 100.00

Source: Field survey; April, 2014

4.6 Total Revenue / Gross Return

Output from one seasonal harvest of honey and bee wax with prevailing prices of each product is presented in table 4.5 below. Minimum,

maximum and average honey output per hive were 8L, 23L and 12.83L respectively. Those of bee wax were 1kg, 3kg and 2 kg respectively.

The prevailing (average) prices of honey was GH¢20.00 per litre and that of bee wax was GH¢37.50 per kilogram (kg).

Table 4.5: Revenue from apiculture for honey and bee wax

Output Minimum Maximum Mean

Honey Output

Quantity of output, q1 (L) 8.00 23.00 12.83

Average farm gate price/litre, P1 (GH¢) 20.00 20.00 20.00

Unit returns from honey (GH¢) 160.00 460.00 256.6

Bee wax Output

Quantity of output, q2 (Kg) 1.00 3.00 2.00

Average farm gate price/Kg, P2 (GH¢) 37.50 37.50 37.50

Unit returns from bee wax (GH¢) 37.50 112.50 75.00

Returns per hive (GH¢) 197.50 572.50 331.60

Number of bee hives 10 10 10

1,975.00 5,725.00 3,316.00


Total Returns, (TR) (GH¢)

Total cost of production, (TC)

(GH¢ 870.18)

Net Returns, (NR)=TR-TC, (GH¢) 1104.82 4854.82 2445.82

Return on Investment,

ROI = &'�&(

&( × ** 126.96 557.91 281.07

Source: Field survey; April, 2014

As shown in table 4.5 above, equation 3.5 (Eqn. 3.5) was used to derive Total Revenue (TR) or Gross Returns (GR). At average farm gate

price, a beekeeper managing a ten-hive apiary could earn about GH¢ 2,566.00 and GH¢ 750.00 from the sales of honey and bee wax

respectively. This would accumulate to an average gross revenue of GH¢ 3,316.00.

4.7 Gross Margin

The gross margin for the ten-hive apiary enterprise was calculated using equation 3.6 (Eqn. 3.6). This was calculated as the difference

between the gross revenue and the variable cost. For the ten-hive apiary, average gross margin per harvest was GH¢ 2,623.50.

4.8 Net Returns

The net return as derived using equation 3.7 (Eqn. 3.7), is the difference between the gross revenue and total costs. The average net returns

per harvest on investment in a ten-hive apiary for honey and bee wax as shown in table 4.5 above, was GH¢ 2,445.82 as shown in table 4.5

above. The returns was positively signed. This is an indication that beekeeping enterprise is lucrative and profitable.

4.9 Return on Investment

From table 4.5 above, it is shown that, the average gross return on investing GH¢870.18 was to the tune of GH¢ 3,316.00 which was

generated from farm gate sales of average yield of 128.3L of honey and 20kg of bee wax. Using equation 3.8 (Eqn. 3.8), at minimum and

maximum yield, return on investment was 126.96% (1.27) and 557.91% (5.58). At an average yield, return on investment committed to the

establishment and management of a ten-hive apiary was determined to be 2.81 or 281.07%; meaning, every GH¢1.00 invested in beekeeping

in the study area, generated GH¢2.81. Therefore it is economically profitable to establish apiaries in the Mampong Municipality of the

Ashanti region.

5.0 SUMMARY, CONCLUSION AND RECOMMENDATIONS

5.1 Introduction

This chapter presents the summary, conclusion and possible policy recommendations that would make this project’s impact to economic

growth.

5.2 Summary

Beekeeping in Ghana has in recent times taking a paradigm shift from mere hobby and subsistence production to commercialization. This is as

a result of increasing global, national and local demand for honey, bee wax and other by-products of beekeeping. Beekeeping is a viable and

sustainable business that can create employment for the youth and reduce rural poverty in Ghana. Beekeeping is, to a large extent, a

supplementary economic activity that can generate alternative income. It can be practiced by young, old, male or female. Input and

equipment can be acquired locally.

In Mampong and surrounding communities, the average cost of setting up and managing a ten-hive apiary for honey and bee wax per annum

amounted to a tune of GH¢ 870.18 and the gross and net returns recorded were GH¢ 3,316.00 and GH¢ 2,445.82 respectively. For beekeepers


to keep themselves in a growing business, they must militate against credit and equipment acquisition problems, acquire technical training and

maintain good hive management practices to prevent absconding of bees.

The return on investment in a ten-hive apiary in the study area was 2.81 or 281%, meaning, for every GH¢1 invested returned GH¢2.81.

5.3 Conclusion

The main objective of the study was to outline the cost structure and estimate the average return on investment committed to beekeeping for

honey and bee wax in the Mampong Ashanti Municipality.

The analysis of socio-economic characteristics of beekeepers showed that the majority (66.6%) of respondents were 40 years and less. The

study also showed that women had not shown much interest in the enterprise, only one respondent was female. Majority (75%) of the

respondents had received or were receiving tertiary education. Also, beekeeping practice is new in the study area as majority (75%) of the

beekeepers had 5 years or less experience in the business. All the respondents operated beekeeping on a part-time mode. Majority (38.5%) of

the respondents got information/update of the enterprise from fellow beekeepers, (34.6%) got information from the internet. All the

respondents in the study area kept only top bar hives. Majority (58.3%) of the respondents kept less than 6 hives, 25% kept between 6-10

hives whiles 16.6% kept 16 or more hives.

In terms of input acquisition, Majority (61.1%) of the respondent deployed their personal savings as the only source of funding for their

apiculture business, 16.7% acquired loan from financial institutions and another 16.7% borrows capital from friends/family, whiles 5.5%

acquired support from non-governmental organizations. In terms of labour, majority (56.3%) of the respondents acquired free labour from

friends/family, (37.5%) act as their own and only source of labour whiles (6.2%) hired additional labour at a fee. Majority (45%) of the

respondents acquired locally improvised beekeeping equipment by craftsmen, 25% of respondents borrowed equipment from fellow

beekeepers, 20% bought limited equipment from specialized agricultural input shops whiles only 10% were able to afford to import these

equipment from overseas.

In terms of constraints, 15% (majority) of the respondents lacked adequate equipment and experience absconding of bees each as major

constraints each, militating against beekeeping. 14% of the respondents were challenged by lack of technical assistance as a major constraint

militating against their beekeeping business, for 13% of the respondents, it was lack of capital, for 11%, the constraint was pest and disease,

Furthermore, the cost and return analysis revealed that on the average, variable cost constituted 79.58% of the total costs. This low level of the

fixed cost component has implication on the flexibility of the enterprise. The average cost incurred in setting up and managing a 10 hive

apiary for the present year was GH¢ 870.18 as against a gross revenue of GH¢3316.00. Gross margin was estimated as GH¢ 2,623.50, whiles

a net return of GH¢ 2,445.82 was obtained. A return on investment of 2.81 (281.07%) was obtained.

5.4 Recommendations

Based on my findings, in order to increase and sustain apiculture, the following recommendations will be useful.

1. Extension agents should be trained and equipped on modern beekeeping methods and encouraged to disseminate information to

members of the public or farmers that are interested in the enterprise.

2. Women should be encouraged into the enterprise by providing the modern equipment needed to safeguard practitioners from bee

stings.

3. Beekeeping input/equipment shops should be established to provide essential beekeeping equipment to the public.

4. Financial institutions should be enlightened to consider modern beekeepers as farmers when loans are granted.

5.5 Limitations of the study

Directives and information from the Municipal Agricultural Development unit led to the selected communities from which only twelve (12)

respondents were identified. Some respondents kept bees as hobby or on subsistence level therefore did not keep adequate records on the

actual cost and economics of beekeeping.

In estimating total revenue, not all the marketable products of beekeeping were accounted for since most beekeepers in the study area only

kept bees for honey and bee wax only.


There may be variations in terms of the sizes of bee hives kept by respondent therefore yield of honey and bee wax may vary.

There were wide variations in transportation cost incurred by respondents since distance from apiaries to beekeeper’s home/processing center

varies from one respondent to another.

The study could not ascertain whether all inputs were bought at the municipality. The cost of input may vary from place to place. There was a

wide variation in cost of inputs since the respondents might have bought their inputs at different times and from different locations at different

prices.

REFERENCES

Adu-Dapaah, H. K and Oppong-Konadu (2002). Agricultural Production in four major districts in Ghana: Farming practices and production

constraints. Ghana Journal of Agricultural Science, 35, 11-22.

Aidoo, K. S (2005). Bees for Development Honey Trade. A Workshop held in Dublin, Ireland in August 2005 and organized by Sasakawa

Centre, University of Cape Coast. 1-4.

Akangaamkum, A. D., Agbenorhevi, M., Okudzeto, C. (2010). The Honey Industry in Ghana: An Overview, Synthesis report. Netherland

Development Organization (SNV-Ghana). Accra- Ghana.

Akinnusi F. A. O., Annor S. Y., Borketey-La E. B., Kwenin W. K. J. (2009). Non-Traditional Agriculture Production. WILAS Press Limited,

Kumasi-Ghana. Pp 93.

BGN (Business Guide News) (2011). Ghana Ships Honey to EU. The Business Guide News. http://www.businessguideghana.com/?p=4945.

November 15, 2011. Accessed: March 14, 2014. 02:57 GMT.

Blackiston H. (2014). Time and commitment for beekeeping. How to know if you’d make a Good Beekeeper. Beekeeping for Dummies, 2nd

Edition. http://www.dummies.com/how-to/content/how-to-know-if-youd-make-a-good-beekeeper.html. Accessed: March 19, 2014. 20:59

GMT.

Bradbear N. (2004). Beekeeping and Sustainable Livelihoods. Agricultural Support Systems Division. Food and Agriculture Organization of

the United Nations, Rome. ISBN 92-5-105074-0 ISSN 1810-0775.

Collison, C. H., Maryann F., Dewey C. (2004). Beekeeping Basics. University Park: Penn State Cooperative Extension, 2004.

Corrigan B. (2011). Apis mellifera. National Biological Information Infrastructure (NBII). Encyclopedia of Life.

http://eol.org/data_objects/13451158. 2011-10-26 14:19:30 UTC. Accessed: March 17, 2014. 09:17 GMT.

Engel M. S. (1999). The taxonomy of recent and fossil honey bees (Hymenoptera: Apidae: Apis). Journal of Hymenoptera Research 8: 165–

196.

FAO (2006). Country Pasture/Forage Resource Profiles, Publishing Policy and Support Branch, Office of Knowledge Exchange, Research

and Extension, Food and Agriculture Organization. Viale delle Terme di Caracalla, 00153 Rome, Italy.

Ghana districts (2014). Physical characteristics, Mampong Municipal Assembly, Ghana Districts. Home:

http://mampong.ghanadistricts.gov.gh/aboutus.php?id=4811. Accessed: March 19, 2014. 07:46 GMT.

Ghana pundit (2009). Reducing Poverty through Beekeeping. http://ghanapundit.blogspot.com/2009/09/reducing-poverty-through-

beekeeping.html. Published: Saturday, September 19, 2009. Accessed: March 22, 2014. 23:32 GMT

Gibson C. H. (1995). Financial Statement Analysis: Using Financial Accounting Information, 6th Edition. South Western College Publishing,

Ohio.

Gittinger J. P. (1983). Economic Analysis of agriculture Project, 2nd Edition. EDI John Hopkins University Press, Baltimore.

GNA (2012). Ghana exports honey to Europe. Business News of Saturday, 4 February 2012. Ghana Web.

http://www.ghanaweb.com/GhanaHomePage/NewsArchive/artikel.php?ID=229262. Accessed: March 18, 2014. 01:54 GMT.

IFAD (2012). Republic of Ghana Country Programme Evaluation. Independent Office of Evaluation. Document of the International Fund for

Agricultural Development. Report No. 2433-GH. ISBN: 978-92-9072-313-4. IFAD Printshop, Rome, Italy.


Kaur B. (1998). Evaluation of selected training course organised by Punjab Agricultural University, Ludhiana. Ph.D. Dissertation, Punjab

Agricultural University, Ludhiana. India.

Kumar P. (2000). Present status, problems and prospects of beekeeping in Ludhiana district of Punjab, M.Sc. thesis, Punjab Agricultural

University, Ludhiana. India.

Mansfield E. (1990). Microeconomics Theory. 8th edition. North publishers. London.

McConnel C., Brue S. and Barbiero T. (2002). Microeconomics. Nithian Canadian Edition. McGraw-Hill Ryerson. Canada.

MiDA, (2010). Investment opportunity in Ghana: Maize, soya and rice. A publication of Millennium Development Authority (MiDA) in

conjunction with the United States Millennium Challenge Corporation. 2010-12-11. http://mida.gov.gh/site/wp-

content/uploads/2010/07/Food_Grain_BOM_Final_Draft2.pdf. Accessed: March 19, 2014. 09:59 GMT.

MoFA (2010). Medium Term Agriculture Sector Investment Plan (METASIP) 2011 – 2015. Ministry of Food and Agriculture (MOFA), ISBN:

978 - 9988 - 1 - 4656 – 6. Accra, Ghana.

MOFA (2013). Land tenure. Mampong Municipal. Ministry of Food and Agriculture, Ghana. http://mofa.gov.gh/site/?page_id=865.

Accessed: March 19, 2014. 07:05 GMT.

Morse, R. A. (2009). Beekeeping. Microsoft® Student 2009 [DVD]. Redmond, WA: Microsoft Corporation, 2008.

Ntenga, G. (1969). The Honeybee of Tanzania, Apis Mellifera Adansonii”.

http://www.apimondiafoundation.org/foundation/files/1969/G.%20NTENGA.pdf. Apiacta 1, 1969. Accessed: March 17, 2014. 10:50 GMT.

Okali, C. and Sumburg J. (2012). Quick Money and Power: Tomatoes and livelihood building in Rural Brong Ahafo, Ghana. Paper prepared

for the conference; Young people, farming and food, 19-2 March, 2012, Accra-Ghana.

Robinson, E. J. Z and Kolavalli S. L. (2010). The case of tomato in Ghana: Marketing Working Paper, no. 20. Ghana: development and

strategy Governance Division, IFPRI.

Ruffin and Gregory (1990). Principles of Economics. 4th edition Scott, Fonsman/little rown Higher Education. London, England.

Shinde, S. G. and Phadke, R. P. (1995). Beekeeping in India: History, present status and future. Indian Bee J. 57:31-37.

SNV Ghana (2010). The Honey Industry in Ghana: An Overview. Synthesis report. Netherland Development Organization (SNV-Ghana).

Accra- Ghana

Subbey, V. (2009). Baseline Studies on Honey Sub Sector in Ashanti, Brong Ahafo and 3 Northern Regions. TRAX Ghana. Bolgatanga, UER

Ghana (West Africa)

ThinkTank, smallstarter (2013). From Honey to Money – Why African entrepreneurs should be interested in the beekeeping business. Small

Business ideas, success tips and inspiration for African Entrepreneurs. http://www.smallstarter.com/browse-ideas/agribusiness-and-

food/beekeeping-and-honey-business. Saturday, 29 June 2013 15:44. Accessed: March 14, 2014. 02:23 GMT.

Thompson I. (2012). Honey: World Production, Top Exporters, Top Importers, and United States Imports by Country.

http://worldtradedaily.com/2012/07/28/honey-world-production-top-exporters-top-importers-and-untied-states-imports-by-country/.

28/07/2012. Accessed: March 17, 2014. 18:31 GMT.

TRAX Ghana (2009). Baseline Studies on Honey Sub Sector in Ashanti, Brong Ahafo and 3 Northern Regions. TRAX Ghana. Bolgatanga,

UER Ghana (West Africa).

COST STRUCTURE AND RETURN ON INVESTMENT IN APICULTURE FOR HONEY AND BEE WAX PRODUCTION IN THE...

Documents

Transcript of COST STRUCTURE AND RETURN ON INVESTMENT IN APICULTURE FOR HONEY AND BEE WAX PRODUCTION IN THE...