Agriculture catching up the modern era - African Business Magazine
Agriculture catching up the modern era

Agriculture catching up the modern era

Most of Ghana’s agricultural output is produced by small-scale farmers, although a few large estates are also important players. This sector not only provides employment and broad-based income, it has tremendous potential for expansion and diversification. But the country is still lagging behind African best practice in the industry and needs to catch up rapidly. Report by Neil Ford.

While the Ghanaian economy is enjoying strong growth and the emergence of a substantial oil and gas sector, the government is making all the right noises about ensuring that this growth is broad based. It is seeking to avoid the mistakes of Nigeria and other oil producers in the region by enabling the agriculture sector to match growth in the wider economy. This would spread the benefits to rural areas, slow down the pace of urbanisation and create the millions of jobs that the mining and oil and gas sectors just cannot deliver.

Cocoa production is perhaps the most important element in the Ghanaian economy. It is one of the biggest sources of export revenue, employs more people than any other industry and provides employment in areas that do not benefit from other substantive forms of economic activity. In addition, production tends to be controlled by small-scale farmers, so the economic benefits are shared around more fairly than in many other agricultural sectors, particularly as fair trade cocoa is playing an increasingly important role, both in Ghana and within global cocoa production in general. Ghana is the world’s second-biggest cocoa producer after neighbouring Côte d’Ivoire and although output varies from year to year, the general trend is upwards. The Ghana Cocoa Board, which is usually known as Cocobod and which acts as the industry regulator, had set a target of producing 830,000 tonnes during the 2013–14 harvest but now appears confident that it will break through the 850,000 barrier.

This is partly the result of favourable weather but the acreage under cultivation is increasing as farmers expand their cocoa production. Sales from 1st October until 2nd January were 22% higher than over the same period last year. Despite this good news, the industry has been affected by external problems in recent months. Cocobod is currently owed more than $200m by international cocoa traders, although it is not clear if this is a recent or a longstanding problem. In addition, a strike by Ghanaian cocoa carriers held up exports to such an extent that Dutch trader Continaf estimates that there is a backlog of between one and two months.

Cross-border cocoa smuggling remains a problem in the region. Many farmers or traders in Ghana and Côte d’Ivoire smuggle their produce across their common border in order to benefit from differing levels of regulated prices and currency fluctuations. In addition, during the long Ivorian civil conflict, many Ivorian farmers took their cocoa across the border into Ghana because of easier access to ports. This smuggling makes it difficult to provide wholly accurate production figures.

The 18% decline in the value of the Ghanaian cedi against the US dollar over the past year has seen the direction of smuggling flow from Ghana into Côte d’Ivoire. Cocobod is paying a fixed rate of C3,392 ($1,407) a tonne this harvest season, while its Ivorian counterpart changes its price in line with international wholesale prices, although it guarantees a minimum price of $1,540 a tonne.

Reports in Ghana suggest that about 50,000 tonnes of beans crossed the border between 1st November and the end of January. Cocobod chief executive Stephen Opuni commented: “The national security anti-smuggling taskforce will start patrolling the borders to ensure that any form of cocoa smuggling is stopped.” Such promises have been made every harvest for many years but it is difficult to defend the long border between the two countries. West Africa, incorporating Côte d’Ivoire, Ghana, Nigeria and Cameroon, accounts for more than two thirds of global cocoa production.

More accurate information on the agricultural sector as a whole should be provided by the agricultural census that the government has planned for 2016. The census will be undertaken by the Ghana Statistical Service (GSS) with support from the United Nations’ Food and Agriculture Organisation (FAO).
The results of the survey should help the government to plan and support the sector more effectively. Farmers in Ghana, as elsewhere in Africa, are already benefiting from much better access to information, including on prices, through the mobile telecoms revolution. The Ministry of Food and Agriculture plans to use the results of the census to provide information directly to farmers regarding yields and the benefits of different fertilisers, among other factors.

Another problem facing the sector is as old as agriculture itself: post-harvest loss, whether through rotting, insect depredation or rodents. The United States Millennium Challenge Corporation is investing $547m over five years in 10 agribusiness centres around the country that are designed to reduce post-harvest losses by 20-30%. Each centre will offer marketing and processing facilities, as well as drying and storage services for bulk crops.

An innovative ownership model has been developed, with a large private sector company taking a 50% stake in each one, with the remaining equity held by a cooperative of 1,000 small scale, local farmers. The private investor in each case has been required to buy the land, provide start-up capital and complete a business plan in return for its equity share. It is expected that each centre will operate on a for-profit basis.

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Written by African Business Magazine

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