Ghana’s agricultural sector is dominated by small-scale farmers, who make up 80% of the farming population. The reliance on smallholders presents challenges for food distribution because crop output is geographically dispersed across the country’s different ecological zones and results in high levels of post-harvest loss as food is transported from the farm to markets. According to the World Food Programme in its July 2017 “Ghana Zero Hunger Strategic Review”, 40% of the country’s food output is lost during the post-harvest process, notably during the distribution phase.
Today, food distribution happens largely through private-market mechanisms, with food passing from producers to consumers through a network of middlemen. There are challenges in the timely and accurate processing of produce payments to farmers when they sell their product, and the distances between producers and markets results in high spoilage rates, which impacts both the end-consumer and the farmer.
Distribution
Prominent agriculture researchers in the country, including Joseph Teye of the University of Ghana, have highlighted that a focus on production inputs at the expense of food distribution networks has compounded the problem. “There is a malfunction of the food distribution subsystem and this affects the production,” Teye told local press in April 2018.
Government officials are working to address shortcomings in Ghana’s food distribution network. Under the marketing pillar of the flagship Planting for Food and Jobs (PFJ) sector development programme, GHS11m ($2.4m) will be spent between 2017 and 2020 on activities such as constructing new and upgrading existing food warehouses, and linking smallholder farmers to one another and distributors further up the agricultural value chain to increase their access to markets.
Further, the National Food Buffer Stock Company (NAFCO) – a semi-autonomous government agency within the Ministry of Food and Agriculture set up in 2010 with a core mandate to protect farmers from losses resulting from increased production – purchases excess production output from farmers and manages the national network of government-owned silos used to house grain stocks. In 2018 NAFCO contracted 562 suppliers to distribute food to school children across the country who were benefitting from free tuition.
Digitising Payments
There is an opportunity to improve last-mile food distribution through digitisation and by leveraging technology, including through mobile money. Three companies offer mobile money services in Ghana: MTN, Vodafone, and AirtelTigo. Combined, they had 22m total registered users as of July 2018, and some are partnering with major agri-businesses to improve the payment process for key transactions. For example, when the US agri-business Cargill received approval to become a licensed buying company (LBC), it partnered with e-zwich, Ghana’s national switch-and-card payment system, and mobile money operators MTN and AirtelTigo to develop a purchasing model in which all payments to producers are made digitally. Through the digital system, MTN and Cargill partnered to register smallholder cocoa farmers, who then received technical assistance via text message from Cargill experts throughout the growing season. At harvest time the farmers can take their produce to the Cargill LBC procurement centres, where the cocoa beans are weighed and quality checked by Cargill purchasing officers. If the beans are accepted, the purchasing officer immediately pays the farmer into their mobile money account. The immediate settlement is beneficial to the farmer.
If Ghana is to reach the UN Sustainable Development Goals, it must tackle food distribution challenges and minimise wastage during transportation. Officials will need to appropriately incentivise farmers to take their product to market and reduce the delays and blockages between food producers and end markets. The efforts to secure the food distribution network are already under way, and officials hope they will have a positive effect on the agricultural sector in the years to come.
