This paper investigates the roles of industrial cluster on the efficiency of rice milling and the improvement of milled rice quality. The data were obtained in Kumasi area, central Ghana because the enhancement of domestic rice production is a urgent policy issue in this country, but little attention has been paid to the roles of clusters in post-harvest processing and marketing. Among 63 rice millers interviewed in the Kumasi area, 24 millers form a few clusters in the city of Kumasi, while others are scattered over 25 satellite towns around Kumasi, which enables us to examine the effect of the cluster. Regression analyses reveal that rice millers in the Kumasi clusters tend to adopt more advanced technology, and that the innovation increases milling efficiency and improves 1 milling quality. Moreover, it is found from the estimation of price determination functions that in the Kumasi clusters milled rice price is affected by milling quality namely the content of whole grain, while in the rural areas there is no clear relationship between milling quality and the price. This indicates that the clusters, probably because of the concentrated transactions, will foster informal quality grading system, which is critical for the market development. Therefore, the clusters in post-harvest industry will benefit not only the industry itself but also traders and producers, and in consequence will stimulate agricultural production.


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