By
TBY
| Ghana | May 05, 2016
Ghana's steady economic growth over the last decade has fueled a new demand among the rising middle class for consumer-orientated food products such as poultry, beef, dairy, and prepared foods. Although these foods can be produced in Ghana, the scale of agricultural activity is yet to meet demand.
Food processing, naturally, plays a major role in Ghana’s economy. Major food crops are maize, rice, millet, guinea corn, cassava, yam, and plantain (banana). Although production is widespread, it is on a very small scale, and does not even nearly meet local demand. Of course, there are a few exceptions, with companies like Blue Skies, which process fruit for export to European supermarkets, and large processing companies like Benso Oil Palm Plantation, Guinness Ghana Breweries, and Golden Web.
Over the years, the government has implemented policies incentivizing adding value to raw agricultural products; for example, the volume of cocoa beans processed locally has doubled over the last decade. However, with the falling price of cocoa, as well as timber and gold—Ghana’s primary exports—the country has been forced to explore new markets and diversify its revenue stream.
Much work remains to be done. Ghana remains heavily reliant on imports and agricultural imports in 2014 totaled $1.8 billion, according to the UN Annual Exporter Derived Data. The main imports were rice from Thailand and Vietnam, and palm oil and sugar from Southeast Asia.
In 2013, Ghana’s total exports valued $18.8 billion. In terms of agricultural products, 27% was from cocoa beans ($5.02 billion), 2.1% from cocoa paste ($391 million), 1.2% was from coconuts, brazil nuts, and cashews ($22.4 million), 0.37% was from tropical fruit ($68.5 million), and bringing up the rear was animal products, which made up 0.22% ($50.6 million). In comparison, Ghana imported $188 million worth of chicken in 2014.
So far, Ghana has been fairly successful in boosting export figures for pineapple and cashew nuts, as well as handicraft items and textiles. One of the main problems is that crop production lags behind the needs of agribusiness. The country is now prioritizing the development of strategies to boost productivity to meet rising local demand, reducing reliance on imports, and developing an environment for agribusiness.
One such strategy is the brainchild of Ghana’s minister of food and agriculture and the US’ deputy agriculture secretary. Numerous reports have highlighted the need for Ghanaian farmers to improve the health and quality of their poultry stock as a way of increasing income for the individual farmer and meeting local demand. In November 2015, the two announced a pair of Food for Progress agreements targeting agricultural development and trade within Ghana’s poultry and soybean sectors.
The agreement will be affecting producer groups and operators to improve feed quality and veterinary services for chickens. As part of the initiative, the American Soybean Association will be tasked with educating producers on the importance of high-quality feed and improving the industry’s capacity to test feed. The two agreements have a combined value of $58.1 million and will be operating over the next five years.
The problem, however, is larger than the reach of two initiatives. Underinvestment in agricultural inputs such as fertilizer, seed, and labor is driving low crop yields in Ghana. In many cases farmers and producers lack the capital necessary to purchase these inputs and strengthen the value chain.
There is a pressing need for processing companies along the whole food chain. Inputs such as fertilizers and pesticides run parallel with processing companies’ need for raw agricultural products like maize, yams, cassava, palm oil, mangos, cashews, coconuts, and traditional vegetables like tomatoes and peppers. At the other end of the chain, there is a need for machine manufacturers to supply cold chain equipment, for example, and processors and manufacturers for packaging materials.
There are already some incentives in place, with a custom duty exemption for agricultural and industrial plant machinery. There are also tax rebates available for manufacturing industries located in regional capitals. As well as reducing unemployment figures, the government hopes that such incentives will encourage the private sector to come in and develop the infrastructure of an increasingly demanding nation.
