The African Financial Review July-August 2014 | Page 55

Europe as a case study. The analysis is set up with a development
perspective since organic products in general and organic
pineapple in particular are niche markets that exhibit premium
prices. As a result, organic production is currently promoted as
a valuable agricultural alternative for developing countries. Our
results imply that the conventional market acts as a price leader
for the organic one. While prices for conventional pineapple
are independent of organic prices, organic price movements are
responding to their conventional counterparts. However, our
analysis indicates that organic prices only react to changes in
conventional prices if these changes are sufficiently large, outside
a tolerance range. In addition, this range does not change over
time. Hence, despite an expanding organic niche, market
integration does not increase. Our observations also do not show
an upward or downward trend for the organic price premium in
the pineapple market. When there is neither more integration,
nor a declining price premium to be observed, while the organic
market is expanding faster than the main market, this happens,
according to theory, only when the core market expands faster
than supply. One important implication of this observation is the
potential for the scalability of the organic market. Accordingly,
these results suggest that organic production can indeed be a
profitable alternative for small farmers in developing countries,

Developing countries with a significant share
of smallholders in production such as Ghana,
the support for diversification of exports
towards niche markets (for example or v