Even as Ghana’s oil and gas industry continues to expand, the agricultural sector remains a vital contributor to economic activity, employing more than half of the working population. The country cultivates a rich array of staples and cash crops, and is the second-largest producer worldwide of cocoa.
The government has in recent years prioritised greater use of machinery, as well as hybrid seedlings and fertiliser. Even so, the process of modernising the sector has been slow and Ghana’s agricultural value chain remains largely underdeveloped. Yield density is lower than average and most production comes from small, family run farms overseen by an ageing population of farmers. Small-hold farms do allow for improved quality in certain crops, like cocoa, but the ability of the sector to scale up is limited.
By The Numbers
The sector experienced a year-on-year growth rate of 4.6% in 2014, according to the Ghana Statistical Service (GSS), compared with 5.7% in 2013 and 2.3% in 2012. This was lower than the targeted 5.2%, and down from the earlier estimate of 5.3%. However, the sector remained the second-fastest-growing part of the economy, behind only services (5.7%).
Ghana has 14m ha of agricultural land, according to the Ministry of Food and Agriculture (MoFA), with 7.8m ha under cultivation and 6.2m currently uncultivated. Cocoa, the country’s major cash crop (see analysis), is planted on about 1.6m ha of land, followed by maize with about 1m ha under cultivation. Up to 3m people in Ghana are employed in the cocoa industry. Despite attempts at land modernisation, smallholder farms of less than 3 ha continue to make up about 90% of agricultural producers.
According to the GSS, the agriculture sector accounted for 20.5% of GDP at current prices in 2014, down slightly from 23% in 2013 and 23.6% in 2012. By segment, production of crops was the largest part of the sector, and the economy as a whole, with a 16.9% share of GDP. Cocoa was the largest single contributor among crops, accounting for 2.2% of GDP in 2014. Other than cocoa, important crops include fruits, cereals, grains, cotton, cassava and yam, while the government is trying to promote livestock and fishing. Livestock represented 5.9% of the agricultural sector’s GDP, and 1.3% of total GDP in 2014, while fishing made up 5.5% of sector GDP. Forestry and logging, meanwhile, account for 11.8% of the sector.
Ghana’s agricultural exports remain dominated by cocoa, providing up to 75% of agricultural export earnings – $1.9bn in the first three quarters of 2014 – but in recent years the government has attempted to diversify and promote non-traditional exports, including fish and horticultural products like bananas, tomatoes, citrus and chilli peppers. In 2013 the Ghana Export Promotion Authority launched a National Export Strategy to double revenue for non-traditional exports by the end of 2017. Achieving this goal will be aided by regional integration under ECOWAS, which can boost potential for export growth to neighbouring markets. “Exports are increasingly an opportunity, and from July onwards the Common External Tariff (CET) agreement will help the agriculture sector,” Amit Agrawal, senior vice-president of West Africa for Olam, told OBG. The CET is a single tariff rate agreed to by all members of the ECOWAS Customs union on imports from outside the region.
MoFA is the primary government body overseeing the sector, while a specialised agency, the Ghana Cocoa Board (COCOBOD), was created in 1947 to oversee cocoa-related production and trade. Further to this, the Ghana Investment Promotion Centre (GIPC) coordinates domestic and foreign investment activity, while the Ministry of Fisheries and Aquaculture Development, which was established in 2013, is charged with overseeing the fishing industry as a whole.
A National Food Buffer Stock Company was established in 2010 to reduce post-harvest losses, build up emergency reserves for staple crops and ensure price stability. MoFA’s 2015 budget statement included funds to establish a Cotton Development Authority to explore potential within the domestic cotton industry, particularly in the north, where income levels are lower. The agency was inaugurated in April 2015.
Guiding the development of the agricultural sector is the Food and Agriculture Sector Development Policy (FASDEP II) and the Medium-Term Agriculture Sector Investment Plan (METASIP) 2011-15. FASDEP II focuses on modernising the sector, while maintaining sustainable best practices for production and boosting incomes for poor farmers. METASIP aims to achieve annual growth of at least 6% in the sector, with a contribution of 10% from the national budget and an increase in yields of an average of at least 50%.
MoFA has also rolled out a series of programmes to promote industrial growth, including the Fertiliser Subsidy Programme (see analysis); the Block Farming Programme, which aims to provide large blocks of arable land for the planting of select commodities; Agricultural Mechanisation Centres; and the Irrigation Development Programme, whose focus is to encourage irrigation among farmers.
According to UN Food and Agriculture Organisation (FAO) estimates, these programmes combined account for 85% of the agricultural sector’s national budget. In addition, as part of its 2015 budget statement, MoFA highlighted plans to increase storage capacity for strategic crops like rice, maize and soya beans and establish additional training programmes to improve technical skills among those working in the agricultural sector. The targeted efforts are certainly needed: a lack of storage capacity, for example, has led to high levels of wastage – in some cases, as much as one-third of the total harvest – in West Africa, and Ghana is no exception.
According to the FAO, agriculture in Ghana is largely rain-fed and subsistence-based, with rudimentary technology used to produce 80% of total output. One of the major objectives of FASDEP II is the modernisation of the agriculture sector. As of early 2015, 89 agricultural mechanisation service centres (AMSECs) had been established across Ghana to increase rural access to mechanised services for smallholder farmers. According to the latest budget, a further 41 AMSECs will be added in 2015.
The AMSECs act as credit facilities, assisting private sector companies with purchasing agricultural machinery like tractors and planters at a subsidised price. The equipment is then made available to farmers at an affordable rate. In February 2015 the government announced that it had received a $150m line of credit from the government of India for the agricultural sector, which will be channelled into the AMSEC programme. A 2012 evaluation report carried out by a group of independent consultants, with support from the International Food Policy Research Institute, found that the AMSEC programme had increased the average area mechanised by farmers from about 5.3 acres in 2008 to 7.8 acres in 2010. A thousand trucks have also been imported into the country, to be dispersed to the AMSECs to assist with harvest transportation, while efforts have been made to help the private sector construct warehouses in major rice-and maize-growing regions in an attempt to reduce post-harvest losses. Cold storage facilities have also been set up at Nyanyano, Kumantey, Elmina and Takoradi to improve fish storage.
A major part of Ghana’s push towards sustainability in agriculture in recent years has been increasing yields in existing staple crops such as rice and maize. In September 2013 the National Seed Policy was established with the aim of consolidating the seed market and enhancing the usage of high-quality seeds. Some regions have shown that with the right programme in place there can be a significant increase in yield density.
According to Emmanuel Dzameshie, project coordinator for the Volta Region at Africare, a development organisation which maintains a focus on Africa, the NGO’s efforts to promote the use of integrated soil fertility management has been able to increase maize yields from 1.5 tonnes per ha to 3.8 tonnes per ha since 2011, with cassava yields growing from 9 to 15 tonnes per ha over that time.
“Supply chains are very important to ensure a viable agro-industrial sector. For example, for cassava to serve as a substitute for imported commodities, not only would the country have to increase upstream production to meet demand, but it would also have to improve infrastructure downstream, as cassava must be consumed or processed within 30 days,” Michel Ghajar, managing director of Takoradi Flour Mill, told OBG.
In March 2015 scientists from Ghana, Uganda and Nigeria met to develop disease-resistant, high-yielding yam seeds. The pilot project, funded in large part by a $3.5m grant from the Bill and Melinda Gates Foundation, aims to improve productivity for around 3000 smallholder farmers in the three countries. However, there has been a pushback against any increase in the use of genetically modified (GM) crops, with Ghana one of the few African nations that has allowed the introduction of GM foods. In February 2015 Food Sovereignty Ghana, a food advocacy group, sued the MoFA and the National Biosafety Committee over the commercialisation of GM rice and cowpeas. An Accra Fast Track High Court has halted production and sales of GMOs until after it rules on the case.
Access To Funding
One of the biggest barriers to the growth of the sector has been access to loans for farming, with banks reluctant to lend money for agricultural purposes. According to the World Bank’s “Agribusiness Indicators” report from 2012, the share of agricultural loans in the portfolios of commercial banks in 2010 was just 6.1%. Yet this was an improvement from 2008, when the share was just 4.3%. In 2011, to help overcome the reluctance of banks to offer loans, the government established a collateral registry, subsidised by the central bank, to provide information about assets for the purpose of lending and borrowing. The registry acts as a record of assets used as collateral, with banks able to confirm their existence and take possession in the event of a default.
In 2015 the US Agency for International Development (USAID) Financing Ghanaian Agriculture Project announced it had reserved $500,000 for Eximguaranty Company Ghana (Exim Ghana) to use to subsidise the cost of credit guarantee premiums on loans from financial institutions to rice, maize and soy agribusinesses. Also in 2015 the European Investment Bank announced it was providing €10m to UniBank Ghana to support small and medium-sized enterprises, focusing on investments in agriculture.
Maize remains the most important cereal crop in Ghana, and it is the mainstay of most people’s diets. It accounts for 62% of total grain output, compared with 16% for rice, 14% for sorghum and 8% for millet, according to the US Department of Agriculture (USDA) Foreign Agricultural Service, and it is also used for poultry and livestock feed. Around 1m ha of agricultural land is planted with maize in Ghana, with production in 2014 estimated at 1.5m tonnes, a slight rise on 1.24m tonnes in 2013. BMI Research estimates that maize production in Ghana will grow to 1.9m tonnes by 2018/19. However, maize producers struggle with low yields due to limited levels of mechanisation, as well as post-harvest losses.
For the agricultural year starting October 2014, 200,000 ha of land was being cultivated for rice, with an average yield of around 2.6 tonnes per ha. Ghana’s annual rice production stands at 290,000 tonnes, just 30% of total rice consumption in the country, according to the USDA. The government is trying to counter this by, in part, increasing yields by introducing higher-yield and disease-resistant varieties. Six main varieties of rice are grown in Ghana, with the most common being Jasmine 85, an early-maturing and high-yield rice. Some 85% of domestic rice produced is grade 5, with no grade 1 rice – the highest quality – currently produced domestically. Per capita rice consumption in Ghana between 2012 and 2014 was estimated at between 32 kg and 35 kg.
Wheat, meanwhile, is still almost wholly imported into Ghana, with consumption expected to be around 325,000 tonnes for 2014/15, according to the USDA, up from 225,000 tonnes in 2013/14. Estimated per capita consumption of wheat in Ghana is about 13 kg, with wheat primarily sourced from Canada and the US, which account for 60% of the market share, according to the USDA, with other imports coming from Argentina and Europe. There are currently five wheat-milling companies in Ghana, able to process 2650 tonnes per day if working at full capacity, though most of them operate at around 70% capacity.
With Ghana importing most of its rice and all of its wheat, there are many opportunities for investors. “Rice is imported in huge quantities so there are great opportunities for serving the domestic market,” Manikam Saalai, managing director of Arima Farms Ghana, told OBG. Arima Farms has recently leased 7000 ha of land in the north of the country, which it has started to cultivate for rice production. “It has taken us two years to reach this stage, to discuss with the community, survey and prepare the land, and mechanise. Right now it is a very poor yield, at 0.6 tonnes per acre, but by the third season we expect yields to reach 2 tonnes of rice per acre,” Saalai said.
Ghana’s livestock industry surpassed its 2014 target of 5.1% growth, increasing by 5.3%. However, it will need to continue to grow at that rate or higher to keep up with overall demand and far surpass that in order to reduce overall reliance on imports. In a speech in November 2014, the FAO deputy regional representative for Africa, Lamourdia Thiombiano, said that across the continent livestock demand would likely increase by eightfold by 2050 due to growing populations in urban areas and rising incomes. He added that in order to meet the projected demand the sector would need to grow by 5-6% annually. Per capita consumption of poultry in Ghana increased from 4 kg in 2010 to 6.6 kg in 2012, according to the FAO.
The government is focused on growing the domestic poultry industry, and in May 2015 it inaugurated the Ghana Broiler Revitalisation Programme Steering Committee with the aim of establishing a full value chain for the sector, from day-old chicks to feed, immunisation drugs and overall infrastructure. According to official statistics, poultry numbers in Ghana (including guinea fowls) increased from 63.7m to 68m in 2014. In 2013 broiler meat consumption was 175,000 tonnes, of which just 10,000 tonnes was produced domestically, as per USDA figures.
There are currently less than 20 large-scale poultry companies in the country, according to a report on the sector by the Embassy of the Netherlands, with 95% of poultry producers, over 1500 in total, small to medium in scale. A major challenge to the growth of the industry remains the low prices of imported poultry. As recently as 1993 the country supplied 80% of its own poultry needs, according to MoFA figures, but with changing eating habits and the proliferation of cheap imports the industry has struggled.
In 2015 the government, through MoFA, said that it would make GHS39m ($10.8m) available to revamp the sub-sector. This announcement followed a warning from the Ghana Poultry Farmers Association of a possible shortage of poultry produce in the country owing to a ban on imports from the US and Nigeria, which was implemented on health and safety grounds. Burkina Faso was added later.
The fishing subsector decreased in value in 2014, down 5.5% against 2013 figures. Despite the popularity of dishes like grilled tilapia, it remains limited in size, accounting for just 5.5% of sector GDP in 2014, and worth approximately GHS1.28bn ($355.2m). The Ministry of Fisheries and Aquaculture Development (MoFAD) was established in January 2013 to oversee the subsector. In 2013 domestic demand for fish was estimated at over 968,000 tonnes, with Ghana’s fish production meeting just 50% of that. In July 2013 the MoFAD launched an $85m Ghana National Aquaculture Development Plan, the country’s first blueprint for the sustainable development of the aquaculture industry, with a concrete target of increasing production of cultured fish from 27,000 tonnes in 2012 to 100,000 tonnes by 2016. The government is predicting that the development of the fishing sector could create up to 220,000 jobs.
Work is also under way on a Fisheries College, to be affiliated with the University of Cape Coast, which would provide professional and technical training. However, delays have slowed the project down since ground was broken in 2012 and as yet, there is no firm date regarding the college’s completion date. Meanwhile, the government is working on an insurance scheme for those employed in fishing, to “transfer the liability of damage of working tools and payment of compensation in the event of accidents from the public sector”. A pilot scheme was rolled out in 2014.
Nuts & Fruits
The five top non-traditional agricultural exports in Ghana at present are cashew nuts and oil seeds, shea nuts, fresh or chilled tuna, pineapples and bananas, according to a 2015 report by the African Centre for Economic Transformation, with cashew nuts and oil seeds alone accounting for $155.6m, with an annual growth rate since 2008 of around 100%.
Horticultural products have played an especially important economic role, with pineapples, mangos, bananas, pawpaw, tomatoes and citrus fruits grown for both the domestic and export markets. “The main opportunities in agriculture today are in subsectors like semi-tropical crops for export – butternut squash, passion fruit and Legon 18 peppers,” said Richard Adjei, the principal investment promotion officer at the Ghana Investment Promotion Centre.
Companies like Golden Exotic Ghana, established in 2006, export bananas internationally. With 30,000 ha under plantation, the company supplies roughly 95% of Ghana’s domestic needs and aims to export 55,000 tonnes of bananas in 2015, almost the equivalent of the country’s total exports of 62,000 tonnes to the eurozone in 2011. Domestic banana production more than doubled between 2005 and 2011.
Citrus production has risen steadily in the last two decades, and in 2013 the country produced 710,000 tonnes, up from 671,000 tonnes in 2012, according to the FAO. In 2013, 24.3 ha of land were being used for citrus farming. A trilateral cooperation scheme between MoFA, Germany’s GIZ and Israel’s International Development Agency is targeting the doubling of Ghana’s citrus yield, which stands at 20 to 25 tonnes per ha against an industry average of 70 to 80 tonnes in countries like Brazil, Spain and Israel.
Pineapple exports slumped in the early 2000s, as foreign consumers moved away from the Smooth Cayenne pineapples traditionally grown in Ghana towards the MD2 variety. Exports have since recovered, increasing from $10.6m in 2008 to $19.2m in 2013, but pineapple farmers are still struggling, with exports to European markets declining from 71,000 tonnes in 2004 to 40,000 tonnes in 2013.
Stephen Mintah, general manager of the SeaFreight Pineapple Exporters of Ghana, told the local press that in order to revamp the pineapple industry the government must adopt a strategy that actively promotes the production of the MD2, or Golden Yellow, variety of pineapple, which is useful for boosting exports and local processing. Indeed, Ghana’s share of the EU market has dropped from 10% to 3%, according to Mintah. Despite this, there remains significant potential to boost pineapple exports.
The government is trying to attract young Ghanaians to take up farming, particularly in the cocoa sector. The average age of a cocoa farmer is 55, according to the Financial Times, and one of the main challenges for the sector is encouraging a new generation to stay in or move to the countryside to take up farming. In 2014 the government introduced incentive packages to support young people interested in cocoa farming under the Youth in Cocoa Farming Initiative.
“We are looking at the 20-to-40 age group to become more involved,” Godfried Oduro-Baah, a research manager at COCOBOD, told OBG. “There is a problem with an ageing population and we are looking at youth involvement. We have incentives and subsidies in place, and we are are supporting farmers for their initial three-year establishment period.” For example, in January 2015 local media reported that around 13,000 young people aged between 18 and 40 had gone into cocoa farming in the Central, Ashanti, Eastern and Western regions.
According to the GIPC, while Ghana has a potential irrigable area of 346,000 ha, only 10,000 ha has been developed. This highlights the need to focus on irrigation projects, given that the agricultural sector remains largely rain-fed. “Ghana has abundant rainfall, but there are not yet enough irrigation projects to harness it properly,” said Agrawal. He also stressed the need for improved road networks in rural areas. “There needs to be better roads and available water resources. Private companies cannot invest in infrastructure, it needs to be provided by the state, but the government is going through crises with electricity and the currency and is not really able to deal with this,” he added.
In late 2014 the government announced a threeyear, $450m package to rehabilitate roads in the cocoa-growing areas of the Ashanti, Brong-Ahafo, Eastern and Western Regions under the Cocoa Roads Rehabilitation Project funded through COCOBOD (see Transport chapter). By improving the roads it is hoped that producers will be able to get their produce to buyers more quickly and efficiently. “The roads in some areas are so bad that it makes moving the cocoa difficult. It also encourages smuggling. The bad roads make it harder for farmers to connect to buying centres,” Oduro-Baah told OBG.
The agricultural sector is a key pillar of Ghana’s economy, yet it remains underdeveloped and retains subtantial potential for growth. Major products like pineapple and bananas could promote a rebound in exports. Given the focus of stakeholders on increasing mechanisation, enhancing self-sufficiency to reduce imports of staples like rice, and improving storage, there is expected to be solid growth in the medium term.