Agriculture and the business of selling and buying the food grown in Africa now accounts for nearly half of the continent’s economic activity. A recent publication of the World Bank Institute, estimates that Africa’s agricultural market is worth $310 billion U.S Dollars and has the opportunity to grow to $1 trillion U.S Dollars by 2030.
These projections indicate that agriculture offers the greatest prospects for a three-fold increase in the GDP of Ghana. Clearly making agriculture one of the key sectors and drivers of the Ghanaian economy.
It therefore holds true that Ghana can not experience economic growth and structural transformation without the emergence of a productive agricultural sector. But notwithstanding the demonstrated contribution and potentials of this sector, successive governments have over the years relegated it to secondary levels behind other less sustainably impacting sectors like oil and gas.
With the recent publication, agriculture comes to limelight as a potential vehicle for creating employment and improving the GDP growth rate of the country from 4.8 per cent to the desired eight per cent.
Recent discussions
There have been recent discusions about agriculture declining in its contribution to GDP. This is only natural because as economies grow the demand for food products in comparison with other commodities decrease.
As we speak agriculture still provides for a substantial proportion of the people who remain the key target of poverty reduction interventions.
It is not suprising that all of Ghana’s policy blueprints since independence expected agricultural sector to drive our economic growth but clearly this has not been the case. It is expected that with current economic challenges, an efficient agricultural sector could increase incomes, boost jobs, and reduce cost of living while building a shared prosperity for the sub-saharan Africa.
Today Brazil and Thailand export more food products than all of Sub-saharan Africa put together. Sub-saharan Africa despite being home to half of the world’s fertile and cultivate land, gets the smallest of produce from crops globally. Consequently, Africa spends $ 3.5 billion U.S Dollars per year and more to food imports alone. Ghana, imports half the rice we eat and pay top dollar for it.
This adverse trend is a manifestation of the underperformance of the agricultural and other related sectors.
A clear evidence of this is seen in the myriad challenges that the proposal for an agribusiness revolution in the country has had to endure. A significant percentage of Agribusinesses are unable to maximise their potential because of erratic border policies and poorly functioning input markets for seeds and fertilizer. In many parts of the country, farmers have difficulties accessing inputs, capital, and finance for irrigation.
Though the country produces more rice than any country in Africa, it does so at a sufficiently high cost. The Government levies 40 per cent tariffs and other fees on imported rice thereby pushing up the prices for consumers and straining the sector’s performance.
Ghana’s agribusiness entreprenuers and small scale farmers are undoutedly overburdened by these overwhelming difficulties.
Interventions
There is need for greater intervention in developing the informal value-chains constituted by these farmers and linking them with the formal ones.
In this way, farmers would benefit from the booming markets for agricultural products around the world . Ghana has the potential to become a major exporter of fresh food products to the E.U ahead of Kenya and Ethopia.
This is currently not happening because small scale farmers are unable to meet the stringent conditions that are been placed on these products at the EU.
The situasion calls for supporting farmers to do business in this environment by giving them managerial skills that can assist them to make that transition to the global market.
The Business and the Public Services Schools of the Ghana Institute of Management and Public Administration (GIMPA) are currently running customised training programmes that practically equip agribusiness entreprenuers and public sector managers with the requisite skill to turn around the Economy.
In addition to training, Government must continue to empower farmers and enterprenuers in the agricultural sector through sustained public-private investment and strong public-private partnerships.
In April this year, the President His Excellency John Mahama called for investments in agriculture thereby emphasing the need for PPPs.
But while pointing to the need for PPPs, government must also take a second look at the entire value chain for five specific commodities; rice, maize, cocoa, soyabeans and yam but most especially rice. Ghana happens to be one of Africa’s leading importers and consumers of rice, increasing rice production to meet local demand will not only reduce the imports but ginger consumption of local rice.
For this to occur, more capital is needed together with greater investment in irrigation and easing restrictions on access to land to help reduce the high cost of rice production.
It must be emphasised that one of the greatest challenges to Ghana’s promising rice industry has more to do with imports and food prices than the so-called rising threat of climate change.
Our success in cocoa and rice must inspire investment in other non-traditional agricultural exports as well. Especially, the ones that over time, have proven to be consistent foreign exchange earners.
Earlier reports
Contrary to earlier reports of a failing non-traditional agricultural sector, census data reveals that non-traditional export earnings over a period of 1996-2011 have risen from an average of U.S $ 69 million per year to U.S $ 165million.
For government to earn more from these areas, much needs to be done in certain critical areas of management.
Cocoa is undisputedly sub-sahran Africa’s most important crop and Ghana by virtue of being the largest African cocoa producer must continue to command leadership by upgrading technology and management in order to improve the sector’s responsiveness to low yields occasioned by ageing cocoa trees and farmers.
Ghana should emulate various approaches that developed countries like the U.S and Japan by investing massively in agriculture and agribusiness. Government would have to stop paying lip service to resolving challenges in agriculture.
Farmers and producers are interested in a comprehensive approach to the question that agriculture has posed since independence.
Undoubtedly, our country is at the cross roads requiring a dynamic agricultural sector that can work side by side with government in an increasingly urbanised middle-income economy through partnerships.
By investing in the Agricultural Sector, businesses in Ghana can tap into the regional and global food market, making food available all year round and also boost exports.
Government deserves ample commendation for bending every effort to strengthen local export performance in the country. Over the past decade, Ghana has been one of the world’s fastest growing economies.
Rising exports
Rising exports supported by favourable internal conditions have been key drivers of the growth since 2004. This has helped to create more jobs and foreign exchange for the country than any other sub-saharan country. A feat that many African countries over the years have tried to emulate in various sectors of their economic growth.
The expanding economic sector can be seen in the visible change in the country’s urban settings, physical infrastructure like roads, Energy and a number of socioeconomic indicators such as access to education and reduction in child mortality in rural communities.
One of the challenges, we have seen in the last few months though is weak performance in the export sector. This is important because it is a reflection of the country’s compettiveness in the global economy.
The power of export earnings in attracting and continuing investments is significant. Resolutely, agriculture inspite of the country’s vast mineral and oil resources continues to be a major foreign exchange earner contributing an annual average of about 40 per cent of all export revenue over the period 1997-2013.
Following the depreciation of the cedi in recent months, export growth has slowed and gone negative in certain vital areas which must be of great concern to us.
Exports have the potential to be a critical factor of economic growth, improving export performance and competitiveness should therefore become the central focus of government.
Looking at data from census reports, there is a very sharp contrast of a strong performance over the past decade with a very weak performance in the last year. Government must re-open our export agenda and support the import of capital equipment for agricultural commercialisation and agribusiness.
Way forward
For Ghana to reach full middle income status, its important to maintain high economic growth through its very promising agricultural sector.This means that government must promote private sector development and ensure a competitive foreign exchange range through export of agricultural products.
The country’s export basket is characterised by agricultural products and services. Ghana has a low export index as a share of GDP among popular middle-income countries in the world. The country is currently doing 12 per cent as against 17 per cent as a share of GDP.
Government can overcome these challenges by adding value to existing agricultural product exports through branding and quality improvements. Improving access to reliable power supply, credit and foreign exchange are also key to the stabilisation of the economy.
For agribussinesses to flourish, government must ease bottlenecks and trade logistics at the ports to ensure timely and cost-effective shipping of agribusiness containers.
The writer is a lecturer at the GIMPA Business School.
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