By TBY | Ghana | May 22, 2018
The government needs to do more to develop a comprehensive strategy to support all stakeholders in Ghana's agriculture sector.
When asked which sector offers the highest return on investments in the long run, all Ghana’s private sector had a unanimous answer: agriculture. Indeed, the primary sector has remained a central driver of Ghana’s economy and employs 35.95% of the active labor force, as revealed in a recent report by the Ghana Statistical Services.
However, over the past several years, the sector’s anticipated growth came up short, and its contribution to national GDP has remained low compared to the service sector. All this is in spite of increased production levels of key crops and Ghana’s natural competitive advantage, as few countries in the world can match Ghana’s soil fertility, year-round sunshine, and crop quality.
In order to capitalize on its natural resources, the government has launched Planting for Food and Jobs, a policy that seeks to promote growth in food production and create jobs across the country. This policy represents the first step in the right direction to develop the majority of the sector’s stakeholders; however, it neglects the broader, systemic challenges of the agribusiness world.
On the one hand, Planting for Food and Jobs seeks to tackle the most critical challenge inhibiting productivity of small-scale farming, which makes up a large majority of farm holdings; as much as 90% of farm holdings in the country are less than 2ha in size. Mechanization of the farming process is long overdue in Ghana and streamlining the bottom of the value chain by incorporating significant agri-tech in seed tracking, land preparation, irrigation, harvesting, storage, and packaging has definitely the benefit of improving production and attracting youth into the sector. This would lead to considerable enhancements of the socio-economic aspect, raising the bar of industry’s average competitiveness. However, despite affecting a significant portion of farmers, this is only one piece of the puzzle. Empowering individual farmers and connecting small plots of land under a larger scheme is unlikely to give the agribusiness sector the much-awaited boost it needs. Issues such as compliance, access to the regional Economic Community of West African States (ECOWAS) market, and the newly implemented 14.5% VAT tax still force major agribusiness players to take a conservative stance aimed at increasing efficiencies to defend market share.
Lack of effective post-crop management schemes to handle the quantity produced is an issue that needs to be addressed. Poor transport infrastructure has forced the nation to be a net importer of various basic foods and has put knock-on pressure on the local currency.
Reversing this trend requires a holistic approach that allows established players to expand their business, penetrating more sophisticated markets such as the US or Europe. After all, their quantity and quality of products offers by far and large the most untapped potential for investors, producers, suppliers, and retailers.
The government urgently needs to find equilibrium in addressing Ghana’s agricultural challenges. Delays in implementing policies that assist larger players and stakeholders further down the supply chain may push the whole sector to a stall.
Many of TBY’s discussions with business leaders in the sector highlight the opportunities to advance the sector. In addition to stronger communication between the government and the private sector, Takoradi Flour Mill’s Operations Manager Michel Ghajar told TBY that investors need data to make the best decisions for the industry: “Moreover, an investor needs to know where to allocate funds and what the risks are.”
HPW Fresh & Dry’s CEO Maik Blaser also mentioned the opportunities for Ghana’s agriculture sector to link to the renewable energy sector. At one end, Blaser noted the potential for solar power to reduce energy costs of processed agri-food products. Agri-waste, in contrast, could be a source of renewable energy as biomass.
Striking a balance between smaller and bigger players in Ghana’s agri-sector to create a more far-sighted plan will definitely not be an easy task but will be an equally urgent one.