Public and private sectors roll out plans to boost agricultural production

 

Agriculture is fundamental to Ghana’s economy and employs almost 50% of the population. Although its share of GDP has decreased in recent years, it continues to be vital to the country’s growth. The government is focused on increasing the production of non-traditional products, expanding processing capacity, and attracting private investment.

By The Numbers

The Ghana Statistical Service (GSS) reported that agriculture saw a year-on-year growth rate of less than 1% in 2015 compared to 4.1% in 2014, and 5.1% in 2013. The sector fell well behind the industry and service sectors, which grew by 9.1% and 4.7%, respectively. Agriculture declined to 19% of 2015 GDP, a figure that was down significantly from 30.8% in 2010. Crop production accounted for 73% of the agricultural share of GDP, while livestock, fishing, and forestry and logging made up 9.5%, 7% and 10%, respectively. Despite a decline relative to other sectors, agriculture continues to employ around 45% of the workforce.

Roughly 157,000 sq km, or 69% of land is used for agriculture. Cocoa accounts for 1.7m ha and cereal production also utilises 1.7m ha. Small-scale farms averaging 1.2 ha and employing manual labour or basic technology make up 80% of agricultural production. However, while less than 15% of Ghana’s farms are considered large scale, they produce roughly 50% of cash crops, exports and livestock.

According to the Food and Agriculture Organisation of the UN (FAO), maize is the most widely consumed and produced staple crop in Ghana, and maize production accounts for between 50% and 60% of total cereal output.

Consumption of rice has increased 24% over the last five years, and the government is focused on promoting domestic production to keep pace with demand (see analysis). According to the Ministry of Food and Agriculture (MoFA), Ghana’s main cash crops include cocoa, cotton, coffee, rubber, palm oil, and coconut. These crops are typically grown on medium to larger-scale farms.

Trade

The Ghana Export Promotion Authority (GEPA) and Ghana Export Trade Information Centre are the primary institutions responsible for trade information and services in Ghana. Agricultural exports continue to be dominated by cocoa and cocoa products, which made up just under 30% of total exports in 2014. The cocoa sector employed 800,000 Ghanaians and accounted for over 67% of income in cocoa producing households in 2014.

Although agriculture makes up a significant portion of Ghana’s economy, the country still imports a number of staples in order to meet domestic demand. In 2014 Ghana imported more than $1.6bn worth of agricultural products including $329m of rice, $155m of poultry meat, and $123m of wheat.

Since 2014, the Ministry of Trade and Industry (MoTI) has stated its priority of establishing institutions and creating marketing campaigns for Ghana’s key agricultural products, in order to promote investment and increase consumption of domestic products. Eddy Nartey, financial controller at cocoa manufacturer Barry Callebaut Ghana, told OBG that the devaluation of the cedi has hurt farmers’ ability to import necessary products. “Devaluation of the cedi has been worst for farmers. Medium and largescale farmers must import some materials like spare parts for machinery, which are purchased in foreign currency. Then, they sell their products in local currency so it is affecting their purchasing power.”

ECOWAS recently established a Common External Tariff (CET) in order to support free trade and bring greater integration to the region. Under the CET, trade will be divided into five tariff bands. Goods will either receive a 0%, 5%, 10%, 20% or 35% import tax. By setting standard tariffs, ECOWAS hopes to decrease smuggling and prevent dumping. The Ministry of Finance and Economic Planning told local media that domestic agriculture would continue to be protected under the ECOWAS CET as 55% of agricultural products will be placed in the 20% or 35% bands and no agricultural product will be in the 0% band. The implementation of the CET in Ghana officially commenced in February 2016.

Oversight & Planning

Strategic policy development for Ghana’s agricultural sector falls primarily within two frameworks. The Food and Agriculture Sector Development Policy II (FASDEP II) focuses on long-term development (2007-15) within the industry, while Ghana’s Medium-Term Agriculture Sector Investment Plan (METASIP) serves as the investment and implementation framework (2011-15). Together, they were designed to improve food security, increase employment opportunities, and reduce poverty. These documents lay out a plan to achieve 6% annual growth and committed 10% of the yearly budget to the agricultural sector. Additionally, the government published the Ghana Shared Growth and Development Agenda II focused on agricultural modernisation for the 2014-17 period. The government has yet to publish the updated versions of these strategy documents, however, Benjamin Adjei, head of programmes at the FAO, told OBG, “Ghana is decentralising. Agricultural investment plans and data collection will occur at the district level so each zone can develop a tailored programme.”

Oversight of Ghana’s agricultural sector falls to a number of ministries and agencies. MoFA is the primary office responsible for coordinating policies and programmes related to livestock and crops other than cocoa. The Ghana Cocoa Board (COCOBOD) supports production and marketing of Ghana’s most lucrative agricultural commodities, namely, cocoa, shea nuts and coffee. Ghana’s Agricultural Research Institutes under the Ministry of Environment, Science, Technology and Innovation is in charge of agricultural research, and the Agricultural Development Bank (ADB) provides financing for projects. The national budget for agriculture has consistently increased between 2011 and 2016, averaging $36.1m annually. The figure has increased dramatically in recent years, reaching GH412m ($106.3m) in 2015 and GH502m ($129.5m) in 2016.

MoFA has implemented a number of national programmes to support agriculture including the Fertiliser Subsidy Programme, Block Farming Programme, Agricultural Mechanisation Services Enterprise Centres (AMSEC) and the Irrigation Development Programme. In June 2016 Alhaji Mohammed Muniru Limuna, then-minister of food and agriculture, declared the need for an updated agricultural census and said that some of the ministry’s data is too old to be useful for operational purposes.

Cereals

Cereal production in Ghana primarily consists of maize, rice and sorghum. Aggregate cereal production in 2015 amounted to approximately 2.7m tonnes and consisted mostly of maize (roughly 1.7m tonnes), rice (330,000 tonnes), and sorghum (248,000 tonnes). In 2014 maize utilised 1.6m ha of agricultural land, making it the most widely grown cereal in Ghana. Maize output declined around 4% between 2014 and 2015 and 6% over the last five years. Due to climate change and decreased rainfall, the Brong-Ahafo region, widely referred to as Ghana’s bread basket, experienced a significant decrease in maize production of 40% to 50%. The substandard 2015 season emphasised the need for improved irrigation systems to replace Ghana’s primarily rain-fed agricultural sector and prepare for the effects of climate change.

According to the US Department of Agriculture (USDA), wheat consumption has grown over 24% in the 2010-15 period. Despite increased demand, domestic production is essentially non-existent. In 2015 Ghana imported roughly 675,000 tonnes of wheat. Domestic consumption of rice continues to increase and it is now one of the most widely consumed commodities in the country. Despite this increased demand, domestic production has not kept pace and Ghana is required to import over 60% of the country’s rice (see analysis). Ghana consumed 980,000 tonnes of rice in 2015, and yet only produced 330,000 tonnes, or roughly 34%, domestically. This substantial gap was filled by imported rice.

Non-Traditional Products

The MoTI is introducing tax exemptions and regulatory allowances to incentivise domestic production and the export of non-traditional products. As of April 2016 the GEPA had already trained 1120 horticultural farmers and 1750 groundnut farmers to better target the European market. These policies are intended to increase non-traditional exports to $5bn within five years. Some of these products include cashew nuts, pineapple, bananas, mangoes and shea nuts.

Cashews are the main non-traditional agricultural export in Ghana, making up 54% of the subsector and generating around $276m annually. Roughly 88% of cashew farms are relatively small, ranging between 0.8 and 3 ha. Local media reports that up to 95% of Ghana’s cashew production, approximately 68,000 tonnes, is exported in raw form.

Domestic processing of raw cashews has decreased from a high of 17,600 tonnes in 2004 to 2500 tonnes in 2015, and reports suggest that the country is operating at only 5% of its processing capacity. Bernard Walker, consultant at the Rene Group told OBG, “Ghana, as of today, does not have a duty for raw cashew nuts (RCN) being exported so Indian buyers purchase Ghana’s RCN, process them in India and export to the EU and US. Processing companies in Ghana can’t compete. Local media reports that in Brong-Ahafo, 11 of 12 processing plants have been closed.”

In early 2016 the MoTI placed an interim ban on the export of RCN during the main harvesting season, which takes place between January and June. The interim ban decision was made in order to help promote domestic value addition as outlinedunder the National Export Development Programme.

Pineapple

Ghana’s share of global pineapple exports has decreased from 10% in 2004 to 3% in 2014. According to the GEPA, 34,000 tonnes of fresh pineapple was exported in 2014 totalling $18m, down from $19.2m in 2013. Many farmers complain that they are unable to increase production due to a lack of capital and an inability to purchase inputs like fertilisers. Although the government has increased subsidies over the past few years, many rural farmers say they have not seen any relief. In addition to demand for increased access to affordable inputs, the government is also under pressure to sign the Economic Partnership Agreement with the EU. Failure to sign the agreement would result in a 19.4% tariff on pineapples exported to the EU. Stephen Mintah, general manager of Sea-Freight Pineapple Exporters of Ghana, said that over 20,000 workers in 21 exporting companies would be at risk of losing their jobs if the agreement is not signed.

While the segment has been shrinking, some companies like pineapple exporter Gold Coast Fruits are receiving financial interest from the private sector. Gold Coast received an investment from Injaro Investment Advisors to increase the volume and quality of pineapples grown and collected for export. They currently produce around 55 tonnes per ha, 45 tonnes of which are exported. This investment should enable the company to increase exports to markets in the MENA region.

Livestock & Poultry

The livestock industry recorded the highest growth of any agricultural segment in 2015, expanding by 9.3%. While commercial poultry and pig farms are the primary income earners, other livestock is also raised to supplement income on traditional farms. Stakeholders in the livestock and poultry industries are looking to finalise a draft of Ghana’s Livestock and Animal Production Bill, in order to improve regulation in the industry, cut imports and increase local production.

According to the USDA, poultry production in Ghana has increased by almost 50% since 2010. Commercial poultry is primarily concentrated around the Greater Accra and Ashanti regions, and in 2014 there were less than a total of 20 large-scale poultry companies in the country, most of which produce eggs. In 2015 some 55,000 tonnes of broiler meat was produced and yet only accounted for 30% of domestic demand.

According to Walker, there is a significant amount of domestic demand for imported chickens, which are less expensive. He told OBG that, “Ghana’s poultry industry collapsed because of the high cost of feed. Soy and maize are the primary components of feed for poultry. Since Ghana doesn’t produce enough of either, it is expensive to purchase, making imported chicken relatively cheap.”

In 2014 MoFA, in collaboration with the Ghana National Association of Poultry Farmers, launched the Ghana Broiler Revitalisation Project in order to support local capacity across the value chain, including hatcheries, feed mills and processors. This 10-year project was intended to reduce meat imports by 40% by 2016. However, an outbreak of avian influenza in 2015 distracted policymakers from this goal. The outbreak has affected a number of countries in the region and the most recent case of the disease was reported in October 2016. While government officials report that the number of cases is decreasing, by August 2015 the government had totally banned the import of day-old chicks and a number of other poultry products.

Fisheries

According to the GSS, Ghana’s fishing sector grew 5.3% in 2015 and was the second fastest growing agricultural segment. The industry is overseen by the Ministry of Fisheries and Aquaculture Development (MoFAD), which reported that in 2015, 70% of Ghana’s total fishing output came from marine production, a further 20% from inland production and 10% from aquaculture.

According to the Sustainable Fisheries Management Project (SFMP), “the growth seen in 2015 might not continue. Fish stocks are rapidly decreasing and SFMP told local media that current fishing pressure – the number of boats and fishing trips – on small pelagic fish stocks in Ghana is estimated at 0.74, well above the acceptable level of fishing pressure estimated at 0.4”. The fishing mortality on annual catch rate for small pelagic is 0.74, but this is a 35-year low, and anything above 0.4 is indicated as overfishing. Moreover, it has also been reported that government officials are allowing Chinese vessels to unofficially operate in Ghanaian waters.

As a consequence, the European Commission has threatened to place a ban on fish exports from Ghana if illegal fishing practices are not more closely monitored. MoFAD is considering options to more strictly enforce current laws and additional regulations that might help the fish population recover.

Improving Productivity

A reliance on manual labour and rain-fed agriculture is leading to lower than optimal production in a number of agricultural segments. Over the past few years the government has implemented a series of projects in an attempt to address some of these issues and has specifically named agricultural modernisation as one of four priorities in the annual budget. According to the World Trade Organisation, in 2014, there was approximately one tractor for every 1500 farmers and the US Agency for International Development reported that 25% of food harvested is lost due to poor harvesting techniques.

Many farmers are not able to access mechanised equipment that would help them increase production and avoid harvest loss because of the capital necessary to secure such technology.

Starting in 2007 the government of Ghana established the AMSEC to provide credit for private companies to purchase subsidised machinery and rent it to rural farmers at reasonable prices. In May 2016 Abdul-Nashiru Issahaku, the governor of the Bank of Ghana, announced, among other things, that $100m had been flagged for improving technical assistance insurance and bank rates. In April 2016, at the third annual Ghana Agribusiness Investment Summit, senior MoFA representatives said that providing credit and regulatory incentives for mechanisation, commercial agriculture and value-added products were the focus of the government.

Mechanisation might also help address the issue of Ghana’s ageing farming population, which now averages 55 years of age. This is a problem as life expectancy in the country ranges from 55-60. Moreover, Ghana’s reliance on rain-fed agriculture is also hindering its productivity. Ghana has faced drought and erratic rain patterns in recent years, which has been an obstacle to increasing production. There are 19,000 ha of irrigated farmland in Ghana, almost 60% of which is operated by the government.

The FAO reported that there are currently 22 public irrigation schemes in Ghana, most of which are used for growing rice. However, the largest schemes – including the Kpong, Tono, Vea and Afife irrigation schemes — are used for both rice and vegetables. The Ghana Irrigation Development Policy has outlined plans to irrigate another 5000 sq km of land, leaving approximately 96% of cultivated land without a reliable water source.

Yielding Better Results

Due mainly to low soil fertility and poor seed varieties, Ghana is struggling to increase crop yield. Average fertiliser use in Ghana is only 7.4 kg per ha compared to 35.2 kg per ha in Côte d’Ivoire. In 2008 the government implemented the fertiliser subsidy programme in order to increase fertiliser use and boost productivity. While the programme helped some farmers, the policy has had relatively low penetration rates. As of 2015, 54.8% of households still did not use fertiliser. The policy has also been widely criticised for not reaching targeted groups and for, at times, being purchased at a subsidised rate and then smuggled to neighbouring countries to be resold at a higher price. Some studies suggest that phasing out fertiliser subsidies would be harmful while others argue that they should be more effectively paired with a clear plan for equitable distribution.

Ensuring availability and access to registered quality seeds is another approach to increase yield. The government is considering accomplishing this through the controversial Plant Breeders Bill. This law, if implemented, would guarantee patenting of seeds and require farmers to purchase seeds directly from producers. Many farmers are opposed to the bill claiming that genetically modified organisms alone will not affect the yield of crops and that this law could expose them to legal challenges.

Climate Change

Agriculture has recently become a part of Ghana’s debate on climate change. Temperatures are projected to increase across all agro-ecological zones, causing unpredictable and varied rain patterns. Estimates predict that, primarily because of Ghana’s reliance on rain-fed farming, the country’s real GDP will contract by 12% by 2050 due to the effects of climate change.

In 2013 the National Climate Change Policy was approved and is estimated to cost $9.3bn between 2013 and 2020, $950m of which will be dedicated to developing climate-resilient agriculture. The government has also pledged to reduce carbon emissions in the cocoa sector by 45%.

Land Challenges

In Ghana, land access is a major challenge. Around 80% of land belongs to traditional local authorities or individual families. In Ghana, most land is leased or rented over an agreed-upon period of time before being returned to the customary authority.

Under the constitution, foreigners are not allowed to own land in Ghana but can lease land under 50-year renewable contracts. Negotiating these agreements can often be a protracted process due to disagreements among land-owning family members or a number of individuals claiming ownership over the same land.

A number of private sector players have expressed the concern that they might pay one titleholder to lease land and then be challenged by another titleholder in the future. This challenge is most pronounced in the northern regions of the country where there is considerably less urbanisation and traditional land tenure is still well entrenched.

Outlook

Ghana’s agricultural sector continues to be a critical component of the country’s economy. While low levels of mechanisation and the effects of drought and climate change are threatening to slow or curtail the growth of the sector, the government’s commitment to investing in technologies and establishing new policies to protect and support the industry, if implemented and rolled out correctly, are promising. With a number of crops and segments performing well below capacity, there is ample opportunity for greater investment and modernisation from private sector players. and professionalisation Agricultural enterprises typically require large tracts of land, making Ghana’s convoluted land tenure discouraging for foreign investors. A number of companies have elected to work with smallholder farmers rather than establishing large-scale enterprises to avoid the leasing process. As of 2015 foreign investors have leased around 600,000 ha of land for agriculture. The government has been working to remedy these issues since 2003, when it initiated the Land Administration Project intended to officially register all land available in Ghana, secure tenure on state and customary land and enforce the right of women to own and inherit property.

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The Report: Ghana 2017

Agriculture chapter from The Report: Ghana 2017