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Global Donor Platform for Rural Development
About the Platform Knowledge Piece series
The Global Donor Platform for Rural Development commissioned three comprehensive studies to capture Platform members’ knowledge on key issues affecting the delivery and impact of aid in ARD: PKP 1 PKP 2 PKP 3 Policy coherence for agriculture and rural development Aid to agriculture, rural development and food security – Unpacking aid flows for enhanced effectiveness The strategic role of the private sector in agriculture and rural development
The PKPs are the products of extensive surveys of Platform member head office and field staff, visits to country offices, workshops dedicated to sharing findings and refining messages, and successive rounds of comments on drafts. On the basis of each PKP, separate policy briefs will be published. For more information on the PKPs visit donorplatform.org
This working paper is only available electronically and can be downloaded from the website of the Global Donor Platform for Rural Development at: www.donorplatform.org/resources/publications Secretariat of the Global Donor Platform for Rural Development, Dahlmannstrasse 4, 53113 Bonn, Germany Email: firstname.lastname@example.org The views expressed herein are those of the authors and do not necessarily represent those of individual Platform members. All rights reserved. Reproduction and dissemination of material in this information product for educational or other non-commercial purposes is authorised, without any prior written permission from the copyright holders, provided the source is fully acknowledged. Reproduction of material in this information product for resale or other commercial purposes is prohibited without written permission of the copyright holders. Applications for such permission should be addressed to: Coordinator, Secretariat of the Global Donor Platform for Rural Development, Dahlmannstrasse 4, 53113 Bonn, Germany, or via email to: email@example.com. © Global Donor Platform for Rural Development 2011
Platform Knowledge Piece 3: The strategic role of the private sector in agriculture and rural development: Ghana working paper
Contents ....................................................................................................................................................... 1 Executive summary ...................................................................................................................................... 4 Introduction ................................................................................................................................................... 6
Research Questions .................................................................................................................................. 7 Methodology ............................................................................................................................................ 7
Research Approach ...................................................................................................................................... 8
The Approach ........................................................................................................................................... 8 Selection of Crops ................................................................................................................................... 10
The Role of the State in Agriculture in Ghana ............................................................................................ 12
Introduction ............................................................................................................................................ 12 Context of liberalization ......................................................................................................................... 12 Phases of Ghana’s Agricultural Liberalization .................................................................................... 12 Liberalization in the Food Staples, Commercial Crops and Export Crop Subsectors ............................. 14 Liberalisation in Food Staples (Cassava)................................................................................................. 14 The removal of guaranteed prices ..................................................................................................... 14 Removal of monopsony arrangements in procurement and distribution ............................................. 15 Encouraging private agents .................................................................................................................... 16 Farmer Based Organizations .................................................................................................................. 16 Tractor and equipment hirers ................................................................................................................ 16 Disposal of assets ................................................................................................................................... 16 Liberalization in Commercial Crops (Pineapple and Mango) ................................................................. 17 The removal of guaranteed prices ..................................................................................................... 17 Removal of monopsony arrangements in procurement and distribution ............................................. 18 Encouraging private agents .................................................................................................................... 19 Farmer Based Organizations .............................................................................................................. 19 Non-governmental organizations........................................................................................................... 20 Tractor and equipment hirers ................................................................................................................ 21 Disposal of assets ................................................................................................................................... 21
Liberalisation in Export Crops (Cocoa) ....................................................................................................... 22
The removal of guaranteed prices ......................................................................................................... 22 Removal of monopsony arrangements in procurement and distribution ............................................. 22
Platform Knowledge Piece 3: The strategic role of the private sector in agriculture and rural development: Ghana working paper
Encouraging private agents ........................................................................................................................ 24
Farmer Based Organizations .................................................................................................................. 24 Tractor and equipment hirers ................................................................................................................ 24 Disposal of State Assets .......................................................................................................................... 25 Key Lessons Emerging............................................................................................................................. 26
Private Sector Response to Opportunities in Agriculture and Rural Development .................................... 29
Private Sector Activity in Agriculture and Rural Development .............................................................. 29 Stronger Response of FDI to Government Liberalization ................................................................... 30 Sectors where private engagement has been low and impact of policy reform on incomes and employment barely felt ...................................................................................................................... 31 Assessment of Private Sector Response to Agriculture in the Chain Level ............................................ 31 Infrastructure...................................................................................................................................... 31 Research and Development ............................................................................................................... 32 Assessment of the Private Sector Response in the Cassava Value Chain .............................................. 33 Prices ...................................................................................................................................................... 34 Food security .......................................................................................................................................... 35 Assessment of the Private Sector Response in Pineapple and Mango .................................................. 36 Employment and income ....................................................................................................................... 36 Access to goods and services ................................................................................................................. 38 Social empowerment and capital ........................................................................................................... 39 Access to assets ...................................................................................................................................... 40 Assessment of Private sector response in Cocoa ................................................................................... 42 Environmental Impacts (Cassava, Pineapple, Mango and Cocoa) ......................................................... 46 Vulnerability (Cassava, Pineapple, Mango and Cocoa) ...................................................................... 46 Key Lessons............................................................................................................................................. 49
Donor Support to Private Sector Activity in Agriculture and Rural Development ....................................... 50
Donor Support to Agriculture and Rural Development.......................................................................... 50 Donor Support to Agriculture ................................................................................................................. 51 Impact on the Private Sector and Low Income Households............................................................... 60 Assessment of Donor Support to Cassava .............................................................................................. 60 Assessment of Donor Support to Mango and Pineapple ....................................................................... 61 Assessment of Donor Support to Cocoa................................................................................................. 64 Key Lessons Emerging............................................................................................................................. 64
Conclusions ................................................................................................................................................ 66
Summary of Key Messages ..................................................................................................................... 66 How Should the Platform Donor Effectively Engage the Private Sector in Rural Areas? ....................... 67
Platform Knowledge Piece 3: The strategic role of the private sector in agriculture and rural development: Ghana working paper
References ................................................................................................................................................. 69 Appendices ................................................................................................................................................. 72
Agricultural growth contributes to poverty reduction by improving rural incomes, utilizing the productive capacity of poor peoples‟ land and labour assets, providing food and supporting the means of living for both urban and rural poor. Agriculture also stimulates economic opportunities and diversification into the non-farm sector where growth is generally faster, with labour productivity and wages higher. Regardless of the sector‟s immense contribution to Ghana‟s GDP, the incidence of poverty is highest among food crop farmers since the sector is characterized by basic technology and poor support from agencies. Although there has been an overall decline in the incidence of poverty in Ghana from 38.7% in 19981999 to 28.5 in 2005-2006 (GSS, 2006), many poor people in the country are faced with chronic food insecurity, thereby making them more vulnerable. It is generally agreed that appropriate private sector involvement and support is essential to improve the agricultural sector. This involvement and support include the provision of infrastructure, adequate research and development and favourable governmental policies just to mention a few to increase private sector response to the agriculture and rural development sectors. However, the question remains with respect to the kind of opportunities that have been presented to the private sector and the degree to which these private enterprises support the activities in the agricultural value chain. This study aims at improving our understanding of the role played by the private sector in promoting agricultural and rural development and to propose pragmatic ways donors can engage with the sector to yield better outcomes. It also provides background information on the role of the state and private sector involvement in Ghana‟s agricultural sector over the years. Focusing on three key agricultural subsectors: food staples (Cassava), Commercial Production for domestic markets (Pineapple and Mango) and Traditional Exports (Cocoa), the study was carried out in the Eastern and Central Regions of Ghana. The study employed the World Bank (2003) framework on Poverty and Social Impact Analysis (PSIAs) to assess the impact of private sector response in agriculture on rural households. Focus group discussions and questionnaire administration were data collection tools utilized. The results from the field survey revealed that private sector response to the agricultural sector in Ghana is low and limited to few company level investigations. However, the encouragement of private agents to participate in the value chain of these agricultural subsectors yield benefits mainly from capacity building sessions in technical and business management principles to direct financial assistance. Due to the low response on the side of the private sector, interventions in agriculture is yet to boost employment and alleviate the poverty of rural households in Ghana although the survey results indicate that more than 90 percent of members of all households interviewed satisfy food needs with little difficulty. Interventions by development partners (DPs) to agriculture in Ghana are to provide direct and indirect support to the sector. The support measures that are common to agriculture by DPs are budgetary support specifically in the areas of FBO/CBO/CSO development, community-driven initiatives in food security and rural enterprises projects. Furthermore, observations show that, while some development partners and donor agencies were pooling their resources to work towards a common agenda, others prefer to exclusively fund their projects. The impact of some of these projects is not very significant and lacks harmonised and co-ordinated efforts. On the whole, donors support particular agricultural commodities depending on its priority to the national economy and the global market. In effect, the private sector is not the precedence for most agencies; however, these agencies have small components representing a small fraction of the private sector. Despite the limited donor support in this area, both the government and private enterprises have initiated projects which centre on the three key agricultural subsectors (that the study focuses on) but the success of such initiatives have been limited in view of the size and scale of interventions. Based on the findings, the study recommends the following methods of engagement to platform donors: The study suggests that donor support to agriculture should be aligned to national priorities through the GSGDA and other stakeholder consultations. Another suggestion relates to the need
to promote aid delivery through pooled funding in order to reduce transactions costs resulting from unnecessary duplication. It is also suggested that donor support to agriculture should be increased if not doubled at least. Current support to the sector is inadequate and cannot significantly move the sector into a modern and vibrant segment of the economy. A comprehensive and integrated approach to agriculture support as proposed by the MCA compact should be followed by all donors as the piecemeal or less integrated approach seeks to do presently. Platform donors should increase aid to support accelerated development of capacities at all levels as Ghana continues its transition into a high middle income country. Aid should also be targeted at building the capacity of institutions and human resources to effectively manage the transition. Platform Donors should also harmonize their aid procedures in agriculture and other key sectors. According to the 2010 PD Evaluation, the recent pace of harmonization is very slow (also see the Ghana Aid Harmonization Matrix). There should be a shift from project funding towards pooled or programme funding by ensuring that the various projects are aligned with the GSGDA to avoid stand-alone projects. Platform donors who provide lines of credit for onward leasing to rural people, through bilateral relations with the government and/or other agencies, international finance agencies should consider partnering directly with local financial institutions to deliver efficient services to various people in all the value chains to boost the agricultural industry. Aid conditionalities still remain a challenge and the mixture of project, programme and pooled funding has led to a complex aid architecture with its associated high transactions cost. Thus, donors should continually shift from project funding towards programme or pooled funding A successful agricultural programme requires a strong Ministry of Food and Agriculture in addition to providing a strong and comprehensive policy framework that is well integrated with other sectors. Thus platform donors should support the technical capacities of the Ministry of Food and Agriculture including the use of its accounting and procurement systems
Agriculture employs a greater proportion of the labour force in Africa and contributes significantly to GDP in these countries. Like most developing countries in Africa, agriculture is the mainstay of the economy 1 and about 70% of the population is rural. Ghana has a population of about 24 million and the land area is 23.8 million hectares of which 57% is agricultural land (MOFA, 2003). In Ghana, the share of agriculture in GDP has been around 40%and not until recently when services became the leading sector, agriculture was the main economic activity employing about 55% of the working population. Besides, growth in agricultural output over the past five years has been the highest with the bulk coming from cocoa. Despite the contribution of agriculture to the national economy, the incidence of poverty is reported to be highest amongst food crop farmers, and amongst self-employed rural people working in off-farm activities such as trade. Currently, agriculture in Ghana is still being mostly practiced using basic technology; the „hoe and cutlass‟ method, with very minimal processing. The majority of farmers operate barely subsistence farms or receive very low incomes from their holdings. There is also limited use of irrigation and rain-fed agriculture dominates. Investment in the sector compared with other sectors has been low due to a myriad of factors including the high risk, low returns, and long term nature of agricultural finance while banks prefer funding short term investments to mention but a few (Table 1). From Table 1, the manufacturing, services, building and construction sub-sectors were the main areas with the highest investment with Agriculture being the least (2.65%). It is, however, refreshing to note that investment in Agriculture has increased significantly in 2010 accounting for about 27.2% of total investment cost in 2010.
Table 1: Foreign Direct Investment (January 2001 – December 2010) Jan 01 – Dec 10 2010 Sector Projects Inv. Percent Projects Inv. Percent Cost Cost ($m) ($m) Manufacturing 576 7555.80 22.37 60 108.90 8.57 Services 656 1463.30 25.00 143 609.39 47.98 Tourism 210 152.12 5.26 24 6.00 0.47 Build. & 184 2565.71 14.47 30 123.06 9.69 Construction Export Trade 96 50.12 11.84 19 21.41 1.69 Agriculture 124 796.67 2.63 15 345.19 27.18 General Trade 451 1107.40 18.42 85 56.04 4.41 Total 2297 13691.11 100.00 376 1269.98 100.00 Source: Ghana Investment Promotion Centre, 2011
59 87 21 19 4 14 52 256
Inv. Cost ($m) 98.06 210.70 60.55 118.64 1.33 103.77 35.10 628.15
1.95 4.19 1.21 2.36 0.03 2.07 0.70 12.51
A number of factors have contributed to this poor state of affairs and had ensured that the agri-business sector has enable the sector realize its full potential. The factors affecting the agri-business sector include marketing, storage, infrastructure, finance and limited ability to influence government policy. To address these problems, the state has played very active role in agricultural production and marketing in Ghana until the SAP era (liberalization period). The „retreat‟ of the state saw the private sector playing a more active role but the extent to which the change in roles have affected the sector remains to be investigated. The study aims to improve our understanding of the role played by the private sector in
1 According to the 2010 National Housing and Population Census
promoting agricultural and rural development and to propose pragmatic ways donors can engage with the sector to yield better developmental outcomes.
The aim of the study as outlined in the TOR is to improve the effectiveness with which private sector development initiatives in rural areas are supported. The key questions to be addressed are: How has the private sector responded to the „rolling back‟ of direct state involvement in rural areas, and the emergence of other opportunities, and what is the explanation for the different responses observed? What is the impact of this private sector activity on low-income rural households and the dynamism and competitiveness of the agricultural sector? What has determined the success of donors, governments, NGOs and other initiatives to stimulate private sector development? What are the implications of this analysis for the way that Platform members support private sector development in rural areas?
As per the project TOR, the study aims to tackle several wide-ranging issues including: the liberalization of agricultural markets over the recent decades (from the ERP era in the case of Ghana), the private sector‟s response to this policy initiative and the opportunities available in rural areas. Other key areas of importance include understanding the causes of this response, how donor organizations seek to support rural enterprises and ways to improve on the effectiveness of these interventions. In order to study these issues in Ghana, the following approaches will be employed: First, Agricultural value chains in food staples, traditional exports and commercial production for domestic markets was studied using secondary data sources. Second, a detailed value chain analysis of Cassava, Pineapple, Mango and Cocoa was undertaken. Here, the extent of private sector involvement and the role of the state and donors in supporting or impeding outcomes were investigated. The whole chain of the selected products (Cassava, Pineapple, Mango and Cocoa) including R&D, input markets, production, intermediaries, processing and output markets as well as support institutions (policy, technical support, public infrastructure, financial services, and institutions). An earlier study (Quartey, 2007) noted key players or development agencies that are actively involved in stimulating private sector development in the agricultural sector since the year 2000. These players and emerging one have been interviewed accordingly (see Appendix 1). The study also ascertained how public, private and donor actions impact on the chain. This was done using both primary and secondary data from the relevant Ministries as well as micro studies of impact. Thus a selection of key interventions of each of these crops was evaluated using a before and after analysis. It is important to note that a broad view of what constitutes the private sector was employed. This included agricultural producers, indigenous entrepreneurs, corporate bodies as well as international corporate entities.
The Ghana report has four main components as outlined in the RPKPIII project TOR. The first section provides a brief review of the `retreat‟ of the state from agricultural production, financing, marketing, processing etc. Thus, discussions on the `Operation Feed Yourself‟ policies, „State Farms‟, the demise of the Ghana Food Distribution Corporation, Cocoa Marketing Board, Timber Marketing Board, provision of fertilizer subsidies and implements were all discussed. During the liberalization period, price controls which ensured that the urban sector wage worker benefited from cheap food items and subsidies to agriculture were all removed. The state however performed some major interventions particularly in major export crops such as Cocoa. It also continued to provide infrastructure especially feeder roads linking agricultural producing areas and also regulated the marketing of these products. These and many others will be investigated to ascertain whether the state still intervenes significantly in markets for food staples and traditional exports such as cocoa, timber and minerals (gold, diamond, etc). The second part of the study will examine the opportunities that the liberalization has presented to the private sector. This will involve assessing impacts at the chain level (quantity of output, revenue, employment, etc) as well as community level impacts (household income, job creation, access to and affordability of social services such as education, health, etc, household asset building and transfer payments). It is believed that where the private sector has successfully facilitated the development of markets in rural areas this has led to improved livelihood. For example, pineapple exporting company (Blueskies) has developed the pineapple export markets in the Eastern Region of Ghana. It has also promoted the processing of mango and pineapple into juice for export and sale on the local market. This has had significant positive impact on low-income households within the Eastern Region of Ghana. However, there are cases of state and market failure – the Presidential Special Initiative (PSI) on Cassava is a test case of state and market failure. Low income households who went into Cassava production after the Starch factory was set up have had their hopes dashed.
The assumption is that prior to 1980 the state was largely involved in the entire primary and secondary activities of the agricultural value chains in Ghana. The state controlled procurement of inputs, operated farms, processing factories, marketing of commodities, financing and transportation. In short, trade was restrictive. With the introduction of trade liberalization in 1983, an incentive structure has been put together for the private sector to fill the spaces left by the state in the agricultural value chain. The question being answered then is what opportunities have been presented to the private sector? To what extent are private enterprises supporting the activities in the agricultural value chains? Are there nonagricultural enterprises (financial institutions, labour gangs, processing centres, and buying agents)? Have farm households improved their livelihoods (food security, income, housing conditions and assets) due to the support being obtained? Agriculture in Ghana is a rural phenomenon; have rural infrastructure and human resources been developed? How are natural resources being managed by rural communities due to the new role of the private sector? Based on the issues raised it was hypothesized that there is private sector response and significant impact on farm households and communities. In assessing impact on rural households, the World Bank (2003) framework on Poverty and Social Impact Analysis (PSIAs) will be adopted. The PSIA also show that impacts of policies should be evident in employment generation, stable prices, improved assess to goods and service, and assets as well as transfer payments. These assertions guided the data collection and analysis of the study. The guide identifies the impact transmission mechanisms of intervention policies as follows:
Question What is being analysed? What is the welfare measure being assessed? Whose welfare is being analyzed? How are impacts channeled?
Description Likely impact of public, private and donor actions on the chain Likely distributional impacts of income and nonincome dimensions The low income and those vulnerable to impoverishment Through employment; prices (production, consumption, and wages); access to goods and services; assets; transfers and taxes. Markets, legal systems, and the formal rules and informal behavior of implementing agencies, including government will affect real costs and quality of goods and services for the poor. Short, medium or long-run. Short-run losses may result in long-run gains for given groups, or immediate gains may lead to eventual losses- it is complex Have economic agents and institutions been directed on how they are expected to act? Do projects/programmes specify how impacts would be transmitted to households? Which conditions exogenous to the policy has been determined?
How do institutions affect outcomes?
When do impacts materialize?
What are the risks of an unexpected outcome?
Source: Adapted from World Bank, 2003.
The framework below also shows how the value chain is affected through the various initiatives. The lowincome or poor households operate mainly in the production assembling, processing and marketing levels (in red), associating with the private sector directly or indirectly through the government support services.
Figure 2.1: Sustainable livelihoods framework Actors in the agricultural value Functions chain
Export Market Domestic Market
Exporters/ Producers Outgrowers
Small/ Medium scale
Research &Dev’t Extension &Technical
Source: DfID (2000)
The effectiveness of these interventions will be assessed across a broad range of donors (multi-lateral and bilateral) as well as privately funded initiatives such as the Private Enterprise Foundation and corporate social responsibility programmes. Desk analysis of RPKP3 platform donors and other key donors engaged in agricultural support and financing will be undertaken. The sustainable livelihoods framework (SLF) developed by DfID (2000) and the Poverty and Social Impact Assessment (PSIA) framework developed by the World Bank (2003) guided the thinking that shaped the assessment of the role of the private sector in agricultural value chains in Ghana under trade liberalization. The SLF suggests that whenever new structures and processes are put in place they influence both the asset position and strategies of groups that operate in a vulnerable context (Figure 2.1). Eventually, there is transformation and people can cope better with shocks, trends and seasonality because of new levels of governance, policies, laws, cultures, etc.). The result is improved food security, income and general wellbeing as well as reduced vulnerability and environmental soundness.
Selection of Crops
Four crops were selected based on the three categories of agricultural products outlined in the TOR, namely, Food Staples (Cassava), Commercial Production for domestic markets (Pineapple and Mango), Traditional Exports (Cocoa). These crops have been selected in view of their contributions towards the sub-sector output, revenue and employment. Cocoa has been the leading and traditional export of Ghana and the country ranks very high on the international market. The value chain system for cocoa is the most integrated and developed in the sub-region. Pineapple and Mango have both played significant roles in the commercial production sub-category but have played much larger role in the non-traditional exports sector in recent years. Thus, the bring some dynamics to the chain of crops being studied; first as a crop produced for the domestic market and later as non-traditional exports with lots of opportunities for poverty reduction. Cassava is a major staple also selected for the dynamism it can bring; it is a staple that has Presidential Initiatives to develop it into commercially processed product that could be exported to the international market. There is some political economy lessons to be drawn from this crop since it benefited from Government Support but a regime change together with political interventions has brought the major state financed processing company involved some difficulties.
Table 1.1 Crops Selected Agricultural product Food staples Commercial production for domestic markets Traditional exports Crop Cassava Pineapple and Mango Cocoa, Pineapple and Mango
The Role of the State in Agriculture in Ghana
Agriculture in Ghana provides the raw materials for domestic use and for industry. It is recognized as the backbone of the economy because until recently, it contributed more than 35 percent of the national GDP. Since the colonial era, there have been several reforms to ensure that an enabling environment is created to induce its chain participants to perform well. However, a key observation is that, “Ghana‟s agriculture from the colonial era to the 1980s was characterized by restrictive and distortionary policies in the form of price controls, input and credit subsidies, obligatory credit allocations, and heavy state intervention in production, distribution and marketing” (Brooks et al., 2006). Despite state control, by 1982, the sector‟s production had dipped to an all time low; the production of key staples had fallen; the key traditional crop export, cocoa was failing and commodities that could also earn foreign exchange were not being promoted. Cocoa production reached an all-time low of 159,000 tonnes in 1982/83, a mere 17 share of world production, down from the 36 percent in 1964/65 (Amanor, 2005). Like many SSA economies, Ghana adopted an IMF sponsored trade and agricultural reforms in 1983, to create an efficient private sector-driven production to ensure food security and adequate nutrition, regulate inputs and output supplies, and facilitate international and domestic trade (Aryeetey et al., 2000). Ghana‟s reforms to remove price distortions on crops, eliminate subsidies for agricultural inputs and reduce the role of parastatals gained momentum with the introduction of the Agricultural Services Rehabilitation Project in 1987 (Nyanteng and Seini, 2000). From 1990, all the development programmes, policy frameworks, and plans specified the State‟s facilitating role in all activities in the agricultural value chain –procurement, production, post-harvest, marketing and sale. The state‟s lead role in research and development, regulation and public market infrastructure provision has also been specified.
Context of liberalization Phases of Ghana’s Agricultural Liberalization
Ghana‟s agricultural reforms under trade liberalisation can be categorised into three phases, namely, the era of gradual reforms and the period of sustained reforms, and the consolidation era. The era of gradual reforms (1983-1990) dealt mainly with the removal of price distortions within the broad framework of macroeconomic stability in Ghana. Meanwhile, the Era of Sustained Reforms (1991-2000) began with the Medium Term Agricultural Development Program to abolish subsidies on inputs and further reduced state‟s involvement in input and output markets by 2000 (MOA, 1990). Additionally, it was characterized by increased support for selected key institutions and improved rural infrastructure to boost productivity and competitiveness in the agricultural sector. For cocoa, the phase was marked by increased producer prices and improved production and marketing efficiencies in related cocoa activities (Fold, 2002 and Haque and Mukherjee, 2004). Input distribution and parastatal agricultural firms were privatized; the extension services was reformed and processing activities reorganized (Daviron and Gibbon, 2002; Abbot, et al., 2005, Ton et al. 2008). The Consolidation Era (2001-date) permitted some public interventions especially in the cocoa sector, private partnership in inputs and output marketing as well as increased advocacy in the supply chain of agriculture in Ghana. It affirms the long-term economic and social impact of reforms as still uncertain in terms of private sector response to production, marketing, research and development. A major feature of agriculture in the 1970s was the formation of single product development boards such as the cotton, bast fibre, grains, cattle and meat (Nyanteng and Seini, 2000). These boards were to offer incentives, advice and oversee production of these crops. Subsequently, guaranteed price schemes were instituted to protect farmers against income losses due to overproduction or productivity gains. There was
also an upsurge in interest in raising agricultural production to self-sufficiency level. This led to the establishment of the Operation Feed Yourself (OFY) and the Operation Feed Your Industries. The OFY was successful as rice production increased. The 1980s saw the introduction of the Economic Recovery Programme (ERP) which aimed to resuscitate the economy. The main feature in terms of agricultural policy was to increase the producer price of cocoa. The second phase of the reforms (1986-8) emphasized increased productivity and internal price stability in agriculture while the third phase of the reforms was implemented within the context of the Medium Term Agricultural Development Programme (1991-2000). As part of this programme, the guaranteed minimum price of maize and rice were abolished and all subsidies removed including those on fertilizer, insecticides and fungicides. In addition, the procurement and distribution of these inputs were taken from the Ministry of Agriculture and COCOBOD and privatized in order to ensure competition and efficiency. Beginning 2001, a Ghana Poverty Reduction Strategy (GPRS) was implemented to guide overall national development. Private sector as the engine of growth was firmed. The focus of private sector competitiveness was captured as “to ensure accelerated growth through modernized agriculture and led by a vibrant private sector”. To achieve this objective, a strategy to develop the private sector is being implemented which focuses on achieving nine key policy objectives namely: Improving Ghana‟s position in global and regional markets Enhancing efficiency and accessibility of national markets Strengthening firms competency and capacity to operate effectively and efficiently Enhancing government capacity for private sector policy formation, implementation, and monitoring and evaluation Facilitating private sector access to capital Facilitating the removal of institutional and legal bottlenecks Facilitating innovation and entrepreneurship Ensuring accelerated development of strategic sectors Supporting and promoting attitudinal change of the population towards the private sector.
In the light of agriculture under the GPRS II, the sector‟s policies focused on achieving three broad objectives: (i) sustainable increase in agricultural productivity and output to support industry and provide stable income for farmers, (ii) food security for all and increase the access of the poor to adequate food and nutrition; and (iii) the development and strengthening of the requisite institutional capacity to support increased productivity.
Liberalization in the Food Staples, Commercial Crops and Export Crop Subsectors
This section provides a description of how the state has sought to increase private sector participation in specific agricultural subsectors. The subsectors are cassava (food staple), pineapple and mango (commercial crops) and cocoa (export crop). The specific areas of liberalization probed included: (i) the removal of guaranteed prices; (ii) the removal of monopsony (single buyer) arrangements; (iii) encouraging private agents‟ participation in markets; and (iv) the disposal of state assets.
Figure 2: Cassava Production, Product and Processing
Liberalisation in Food Staples (Cassava) The removal of guaranteed prices
Until the 2000‟s cassava had been cultivated mostly at subsistence level with small surpluses sold on the market (Adams, 1957; Ofori et al. 1997). The output and input markets for cassava have been one of the most liberalized because in times where there were price controls, these were usually ignored by farmers and private traders negotiated on prices instead. In the 1970s, a price support scheme was instituted for food crops in Ghana. The crops, including root and tubers (cassava, yam and cocoyam), grains (rice, maize and cowpea), and vegetables (onions) enjoyed guaranteed minimum prices. The government parastatal, Ghana Food Distribution Corporation (GFDC) was established to handle post-harvest and marketing activities. The corporation had processing sites, vehicles, silos, warehouses and retail outlets. Each year, two prices were announced, namely, the producer price and the consumer price. In 1986 the guaranteed market price for consumers was abolished and in 1990 that for producers was also abolished. GFDC continued to be a post-harvest handling and marketing actor; it bought and sold cassava at market prices. In year 2000, the GFDC was liquidated due to under performance. It was estimated that GFDC was purchasing only 10 percent of all harvested produce. Some of the challenges that led to the demise of GFDC included delays in farmer payments and poor logistics management. In addition, there were no contractual agreements with farmers and the quality control was left in the hands of farmers. The larger market had a greater influence during the harvesting period; they required a large range of quality and payment plans. Meanwhile, some traders made advance payments or provided credit and all these challenges joined to threaten the sustainability of the price support scheme. In the early 2000s, a private– public partnership established the Ayensu Starch Factory in Bawjiase in the Central region as part of the Presidential Special Initiatives on Starch and Palm Oil. Consequently, formal outgrower schemes were created and guaranteed minimum prices were determined but persistently low turnover led to the close down of the factory in 2007. Today, the private sector is in full control of all the activities in the food crop value chain in Ghana. However, marketing is still unspecialized partly due to the limited use to which the product has been put and the decline in world price for cassava pellets. In the 1990s, a private company, TC&G Limited mobilized cassava farmers in the Ashanti, Volta, Northern, Eastern and Brong Ahafo Regions to process cassava pellets for export (Al-Hassan and Egyir, 2003) but the company is defunct due to consistent
decline in turnover. Despite these challenges, a wide range of outlets have existed in the cassava marketing system: Farmer open market arrangement: where farmers bringing cassava to the open market for traders to come and buy on mostly cash basis. This appears to be mostly the case at harvest time where traders have very little incentive to go to remote surplus areas. Farmers sell at established market prices for trader to either pay the full cost of the bag and its content or only the cost of the cassava. This marketing chain has evolved to specifically meet the needs of small traders with no transport facilities to collect cassava from farms. Traders Farm Gate: This occurs when traders go to remote surplus villages to look for farmers to buy from them. It often takes place in lean seasons when large traders either directly or through sub-agents procure the products at the farm gate into a central place in the village. They transport the cassava from the central point for sale as wholesalers or to retailers via trucks. A variant of this has been the Farmer agents‟ arrangement where a farmer purchases on a commission basis from many small farmers and assemble them for a trader to eventually transport them to the selling centres. In such instances the farmer-agent meets the transport costs from the farm gate to the assembly point while the trader incurs the cost of transporting from the collection point to the selling point. Farmers - buyer: This evolved in response to glut where farmers have to go looking for traders for their produce. Under such arrangement, the buyer charges the farmers for the transport costs incurred and usually have products procured on credit basis. Outgrower scheme is the situation where large buyers usually give inputs to trustworthy farmers who, upon harvest, sell the produce to them either on credit or cash basis depending on the contractual arrangements. Evidence suggests that contracts are usually not binding as farmers may sell to other traders, depending on their cash needs. Farmer – farmer: is the case where surplus farmers sell their produce to local deficit households in mostly pre-farming seasons and/or rainy seasons where feeder roads are rendered immotorable to transport the commodity out of the area.
Removal of monopsony arrangements in procurement and distribution
Arrangements in procurement of agricultural inputs include that for seed, fertiliser, irrigation, agrochemicals and machines. The multiplication and distribution of cassava cuttings (the seed) was controlled by farmers until interests in research improved after 1980. Otim-Nape (1995) observed that cassava was viewed as an inferior food whose per capita consumption was destined to decline as farmers‟ income increased (Jones, 1959 and Marter, 1978). Cassava has never been produced under irrigation and tractor mechanization technology is not suitable for its production (Nweke, 1979). Weed management has been done manually, although the use of zero tillage (applying herbicides) is a growing phenomenon. Application of fertilizer has been done in cassava maize intercrops only. Hence, the cassava subsector was not significantly influenced when there was state monopoly in the arrangements for input procurement and distribution. At the time of state monopoly the Ministry of Agriculture (now Ministry of Food and Agriculture, MoFA) operated farmer input shops (FASCOMs) to sell imported inputs (pesticides, machines and fertilizer) and certified seed to farmers. Since 1990, private companies (both multinationals and indigenous) have been given licenses to import whatever the market needs. In 2008, the Government of Ghana under its fertilizer subsidy scheme signed MOUs with companies such as Yara and Wienco to import fertilizers for onward sale to farmers. Fertilizers such as NPK, SOA and Urea are sold to farmers at prices 50 percent 2 lower than the actual price . Our field survey (May, 2011) of cassava farm households confirmed that, any input needed for cassava production, processing and marketing could be obtained within a 10 km
2 Fertilizer subsidies were revisited since farmers could not afford them at the prevailing market price while there are visible signs that the sector urgently need a boost in productivity
radius. Bawjiase, Kasoa and Awutu (district capital) were mentioned as key towns where private retailers offered goods and services. There is no difficulty in obtaining these inputs if one had financial resources. A few houses have developed social capital; they are able to obtain cassava cuttings for free (8%) or buy inputs on credit (20%) occasionally.
Encouraging private agents
Private agents have been encouraged to participate in the cassava value chain including the use of Farmer Based Organizations (FBOs), plant pools or machine (tractor and spraying machines) hiring services. The activities engaged in by these entities are discussed below:
Farmer Based Organizations
Farmer based Organizations (FBOs) are made up of private individuals (farmers, traders and processors) who cooperate voluntarily for mutual gain. They have been a phenomenon in agricultural value chains in Ghana for a long time. In the cassava farming system, there is association at the processor level. Thus, Cassava products like `Gari‟ and `Agbelema‟ have individual processors who have formed groups to obtain community spaces for communal processing and storage. Although Cassava farmers‟ associations are not well known, at the market level, traders form informal groups to improve advocacy for shed and stalls or control seasonal price fluctuations but the state has never been in control of such organizations. During the field survey (May 2011), it was observed that the Gari processing association formed in the Bawjiase area in the early 2000s in response to the President‟s Special Initiative on Cassava was not functional. A functional one was observed in Mfafo and this was made up of a community based organization (CBO) engaged in micro financing. The first CBO, named Macrofin, was organized by Plan Ghana to enhance the financial empowerment of community members. The CBO is organized as a rotating savings and credit association. Two other micro finance associations, namely, the Hope and Nyamebekyere MFAs were organized by the Bawjiase rural bank to support interested households.
Tractor and equipment hirers
Tractor hiring services has been controlled by the private sector, particularly individuals within farming communities or neighbouring towns. There have been few state owned companies. The Ghana Heavy Equipment Ltd. (GHEL) is a limited liability company, solely owned by the Government of Ghana. It used to be the Heavy Equipment Division of the erstwhile Ghana National Trading Corporation (GNTC). The company has its head office in Accra, with branches strategically located in Kumasi to cater for the middle zone and Tamale to cater for the Northern zone. GHEL is involved in the sales / services of Earth Moving Equipment, Agricultural Tractors / Implements, Generator sets and Automobiles. Since trade liberalization, several District Assemblies have been enabled by the state to purchase tractors for hiring. In 2008, the GoG purchased and sold tractor on hire purchase to individuals to operate under the plant pool project. Thus, individuals within 10 kilometre radius of each community were offered tractor services. Insecticide and weedicide spraying machines have also received attention in the last two decades due to increased use of weedicide. The cost of purchasing this farm asset ranges from GH¢50.00 (manual) to GH¢1000.00 (motorized). Hence a few farm households have spraying machines which is hired out. Owners usually train and develop the special skill in chemical application and serve as personnel for spraying in the communities. Otherwise, communities depend on the services of personnel from the District Agricultural Development Units (DADU). In Mfafu (a farming community surveyed), three percent of households were well-known for such hiring services. Since households operate small cassava farms (less than 3 hectares), the sprayers are able to serve the majority of households before the activity period passes and no delays were recorded.
Disposal of assets
The Ghana Food Distribution Corporation was liquidated in 2000 and its assets including postharvest handling and processing equipment as well as vehicles were sold, leased or put up for hiring. Private individuals and companies leased the equipments for grain drying and processing. Farmers close to the facilities hired the drying and storage services. The vehicles and retail shops were useful for cassava
haulage and trade. Middlemen, particularly maize traders, who travel from cities to purchase goods to urban centres benefited from the disposed assets. On the contrary, Cassava farmers, traders and processors in rural communities have not gained directly from their disposal; they have gained indirectly from traders who purchased from farmers.
Liberalization in Commercial Crops (Pineapple and Mango) The removal of guaranteed prices
IMF/World Bank liberalization of agriculture in terms of removal of guaranteed prices have affected products competing with subsidized imports (Bertow, 2007). Pineapples and mango are considered as horticultural crops and categorized as non-traditional agricultural commodities. It was only in the early 1980s (Economic Recovery Programme era) that significant exportation of these commodities begun. The incentive framework that was implemented aimed to boost exports in order to promote diversification of the country‟s exports. Thus, policies such as a flexible exchange rate regime, export retention rate increased gradually to 100 percent and capacity building programmes in agronomy and standardization were all instituted. There has never been any price support system for exporters of such commercial crops. In other words guaranteed minimum price has not been a phenomenon in the horticultural value chain in Ghana.
Figure 3: Pineapple and its Processed Products
Removal of monopsony arrangements in procurement and distribution
Procurement of inputs for pineapple and mango producers has always been private sector dominated. Growers, processors and exporters of produce and processed products are private sector companies. Even when the Nsawam Cannery was operational, the state did not control procurement of industrial raw materials for processing and export. Planting materials (suckers and seedlings) were organized by private companies from neighbouring countries, particularly La Cote d‟Ivorie. In the early 1990s, Koranco, Paradise, Combined and Jei River Farms were well known pineapple farms that supplied suckers to individuals and groups (Obeng, 1993). Mango seedlings were produced by individuals trained by the District Agricultural Development Unit.The importation and distribution of specialized fertilizer, pesticides and growth regulators has been organized by private companies such as Dizenghoff, Chemico, Riess and Co., Aglow, Sidalco, K. Badu and Agrimat. These companies have informal and formal arrangements with retailers at the district and community levels to receive stocks on credit or outright purchase for retailing.
Box 1: Blue Skies – Successful Private Sector Response The introduction of the Free zones policy by the government saw the emergence of Blue Skies in addition to support received from a pineapple exporter who helped in the acquisition of the land for the factory. Thus, Blue Skies Ghana Limited was founded in 1998 as a Free Zone Enclave beneficiary, to produce fresh–cut fruit and fresh squeezed juice and fresh fruit salads, with 95 % pure pineapple juice as its main ingredients. Its management comprises of both Ghanaian and British investors. The company employs over 1500 people in Ghana and many others in Egypt, South Africa and Brazil. In Ghana, Blue Skies has a total of over 200 pineapple growers who supply the main raw material for production (pineapple) to the company. The company also organizes periodic capacity building training sessions for the out-grower pineapple farmers in Nsawam and buys all the pineapples grown by them after the main planting season. Officials of the company maintain thatthere is a close relationship between them, the pineapple farmers and the employees who are basically indigenous people from Nsawam and nearby communities in the Eastern region, where the business is located. Most of the farmers it expensive to cultivate MD2 which is a new variety of pineapple compared with the Smooth Cayene or Sugar loaf varieties. It also came to light that, the Export Development & Investment Fund -which was basically set up to provide financial resources for the development and promotion of non-traditional export and trade in Ghana- provided credit support to the pineapple growers to go into tissue culture in order to increase production. The company is committed to adding value at source and supplies to 12 major European retailers such as Mark and Spencer in UK. It also accounts for 5 % of Ghana‟s non-traditional exports, 20% of pineapple exports and 70% of mango exports according to company sources. Blue Skies also supports a supply base in Ghana, of 150 small-holder farms, contribute £2.5 million to the local economy per year through salaries, and is the biggest employer in the Eastern Region of Ghana. Source: Field Survey, 2011
However, despite the fact that the private sector dominates procurement and distribution arrangements in this sub-sector, when there are unfavourable trends or shocks to the sub-sector, the government intervenes, but withdraws quickly for the private sector to take over again. A case in point is a situation that occurred in the early 2000‟s when European demand for traditional pineapple varieties (smooth cayenne) shifted in favour of the MD2. The new variety was multiplied and distributed by the Horticultural Export Industry Initiative (HEII) programme implemented by MoFA. The changeover seriously affected the ability of many producers to grow for export since the new variety required a higher level of husbandry and inputs. The Ministry of Food and Agriculture‟s (MOFA‟s) involvement in the pineapple and mango export industry has been limited to its regulation. The extension services are handled at the local government level by the district, municipal and metro departments of agriculture. Horticultural research is carried out at the Crops Research Institute in Kumasi, the Ghana Atomic Energy Commission in Accra and in some of the agricultural and botany departments of public Universities. Phytosanitary controls, food pest control, pesticide regulations, and seed certification in all crop products are the responsibility of the Plant Protection and Regulatory Services Directorate (PPRSD). The Environmental Protection Agency licenses the import of pesticides. Apart from regulation of procurement and distribution, the government has participated in some targeted activities to assist the pineapple sector. The Ghana Export Promotion Council and Ghana Export Company were established to provide technical support to the private sector actors in the sector. Under initiatives of government and donor agencies, individual growers and exporters receive capacity building packages. The Export Development Fund (EDIF), for instance is aiding exporting companies. When Farmapine was in operation it obtained support in terms of funding and technical assistance from the Cooperative Village Enterprise and the President‟s Special Initiative, which was led by the Ministry of Trade and Industry.
Encouraging private agents Farmer Based Organizations
Farmer based organizations were encouraged as soon as production of the non-traditional crops begun. They were referred to as “outgrowers” since they supplied their good quality produce to exporters or processors. Some of the exporters and processing firms owned large scale farms. They purchase from outgrowers to assure consistent supply and to meet importer volumes. The purchasing companies encouraged the FBOs and provided capacity building programmes for them. National level associations such as Horticultural Association of Ghana (HAG) and Sea Freight Pineapple Exporters of Ghana (SPEG) were also initiated in the early 1990s. By the late 1990‟s the Federation of Association of Ghanaian Exporters (FAGE) had been formed to ensure that farmers and exporters‟ capacities can be strengthened whenever necessary and there will be a forum to voice out concerns of members. As early as 1987, the Pineapple Production Expansion Programme was implemented by the Crop Services Directorate of the Ministry of Food and Agriculture (Table 3.1). Government‟s extension programmes were extended to farmer organizations for dissemination to members and individuals in the larger community. All the donor funded projects that followed in 1991 used FBOs as the key entry points (see table for projects and funding agencies). Hence, many have had to seek legitimization by registering with the Department of Cooperatives or the Registrar Generals‟ Department. These are government bodies mandated to support the registration and auditing of organizations. The cooperative department also inspects stock of its societies, settles disputes and provides education on group dynamics for societies.
Table 3.1 Interventions in the horticultural sector in Ghana Name of programme The Pineapple Production Expansion Programme Agricultural Diversification Project Trade and Investment Programme (TIP) Trade and Investment Reform Programme Ghana Sustainable Horticulture Export Chain Horticulture Export Industry Initiative (HEII) Trade and Investment Promotion for Competitive Export Economy (TIPCEE) Market Oriented Agricultural Programme (MOAP) Export Marketing Quality Awareness Programme (EMQAP) Millennium Challenge Account Source: Korboe, 2011 Date Began 1987 1991 1993 1998 2002 2004 2004 Date completed 1990 1999 1998 2004 2005 2006 2009 Funding Agency GoG World Bank USAID USAID USAID World Bank USAID
2004 2007 2007
2013 2012 2012
GTZ AfDB & GoG MCC
In Fotobi (a farming community surveyed) a cooperative was observed. The Fotobi Pineapple Producers and Marketers Cooperative Society, is registered with the Akwapim south municipal cooperative department. Also, in Agomeda, there is the Dangbe West (Eastern Region of Ghana) a Mango Farmers Association was functional and registered with the Registrar General‟s Department. Both associations have benefited from the “Commercialization of Agriculture Project” under the Millennium Development Authority (MiDA). Members of the group have benefitted from capacity building sessions in technical and business management principles. The groups have Global GAP certificates and some members have also received direct financial assistance. However, due to the low proportion (20%) of beneficiaries of the financial package, there is a growing apathy towards the scheme.
In the horticultural sector, government has sought to encourage non-governmental organizations such as AMEX International, TechnoServe, CARE International, GTZ, DED, and SNV to partner international consultants such as Chemonics, Dai and ACDI/VOCA to implement programmes that will boost the food industry in Ghana. Key examples of NGOs operating within the sub-sector in the last decade include Technoserve, Amex International and the Care International (Table 3.2). The horticultural projects always specified the specific roles of the NGOs. Although most of the organizations were international NGOs and consultants, they partnered private and indigenous management consulting firms and training service providers to undertake the implementation of the actual field actions. For example, the GeneWeb Consult, Accra is the Training Service Provider for the MiDA Agricultural Commercialization project for the Akwapim South, Ewutu and Afutu-Senya districts. These are districts implementing the horticultural sector contents of the CoA project. Table 3.2: NGOs in the in the horticultural sector in Ghana, 2000-2011 Non-Governmental Organization AMEX International, TechnoServe and CARE International AMEX International, TechnoServe and CARE International NGO participation goal NA Establish a Ghanaian NGO with the capability to lead the horticultural industry in sustainable and profitable development
Name of Programme Trade and Investment Reform Programme Ghana Private-Public Partnership Food Industry Development Program (GHPPP)
NA To increase Ghana‟s private sector competitiveness in world markets through an improved enabling environment and a strengthened capacity of the private sector to respond to market demands. Private sector development through institutional development of associations (e.g. HAG and SPEG), support to market access, export promotion and trade fairs (e.g. Fruit Logistica), quality and certification standards and product innovation. The targets of the compact are 1,200 Farmer Based Organizations (FBOs) participating in commercial agriculture activity 60,000 farmers trained in commercial agriculture activity
Horticulture Export Industry Initiative (HEII) Trade and Investment Promotion for Competitive Export Economy (TIPCEE)
NA CARE and TechnoServe
Market Oriented Agricultural Programme (MOAP)
German Development Service (DED) and GTZ
MiDA has a 14 member board including at least five Ministers, representatives of the District Assemblies in each zone, representatives of the private sector and NGOs. Several NGOs in the Northern, Middle and Southern Zones were included in training service provision
Note: NA = Not available Source: Authors‟ compilation, 2011
Tractor and equipment hirers
Tractor hiring services is not limited to the cassava industry alone. The services have been controlled by the private sector, particularly large scale growers and exporters whose farms are in the communities or neighbouring towns. The survey results showed that 10 percent of all pineapple and mango growers own tractors. Due to the intensity of chemical application, all pineapple and mango households also own spraying machines. However, there are commercial spraying gangs (individuals that form groups) whose services are available when specific spraying contracts need to be completed.
Disposal of assets
There were State owned factories that processed pineapple, tomatoes, meat and fish. In the case of pineapple, the Nsawam Cannery was established. It was located close to a major pineapple producing areas in the Eastern Region. In 1995, the factory was divested and a private company named Caridan Ghana Ltd. purchased the company with all assets and liabilities. There was no State control of the production and marketing of mangoes.
Liberalisation in Export Crops (Cocoa)
Figure 3.1 Cocoa Produce, Beans and Processed Output
The removal of guaranteed prices
Beginning from 1947, the Cocoa Marketing Board (CMB) and Cocoa Marketing Company (CMC) was mandated to advise the Government on the price to pay to farmers every year, taking into consideration the world price and local factors. Cocoa buying was limited to two main periods termed the main crop and light crop. The guaranteed minimum price for cocoa was announced each year just before the main crop in August. Since 1992, the price has been determined by a technical committee known as Producer Price Review Committee (PPRC) made up of both the private (Licensed Buying Companies and farmers) and public sector (government and COCOBOD). Hence the guaranteed price system has not been abolished. What has been reformed is the percentage of the world price passed on to the farmer and which usually results in increases in the producer price of cocoa. It is observed that persistent macroeconomic problems implied that the real price increase lagged behind during most of the1990s and real gains for farmers were thus initially low. Since then prices have been fairly constant. The producer price is, as a result of COCOBOD‟s high share of the world market price, substantially lower in Ghana than in other cocoa producing countries. However, despite the fact that Ghana receives higher prices for its high quality cocoa, it is evident that the quality premium is not passed onto farmers. Hence, it appears COCOBOD benefits most from the quality premium and the associated price (Lundstedt and Parssinen, 2009).
Removal of monopsony arrangements in procurement and distribution
The colonial government has little involvement in the sector until the end of World War II. The cocoa sector was dominated by private international manufacturing and processing companies. In 1947, the Cocoa Marketing Board was established and given the responsibility of exporting cocoa through its wholly-owned subsidiary the Cocoa Marketing Company. Several licensed buying companies operated on the international market as buying and transporting companies for Cocoa Marketing Board. After independence in 1957, the responsibility of cocoa marketing board and structure of cocoa sector remained unchanged until 1961 when the multiple buying systems was replaced by a monopsony system. This system was abandoned as early as 1966 and the system with licensed buying companies was re-introduced. At the same time a state-owned buying company was established, and named the Produce Buying Company (PBC) to operate alongside the private-owned buying companies. The monopsony system was re-introduced again in 1977 with the PBC as a sole buying company operating on the internal marketing chain. A market-oriented reform programme was launched in 1983 and the late 1990s. The first phase of the reforms was introduced in 1983/85 and focused on
restructuring the Cocoa Marketing Board. The second phase, which was implemented in 1993, consisted of a re-introduction of the multiple buying systems and implied that private Licensed Buying companies were once again allowed to operate on the domestic market together with the produce buying company. More recent reforms, aiming at further increasing efficiency of the cocoa sector, were implemented in 1999 in the governments cocoa strategy. In 2000, the Produce Buying Company was partly privatized and introduced on the Ghana Stock Exchange. Input procurement was also handled by COCOBOD. It supplied inputs to farmers through its Cocoa Services Division. COCOBOD has its own seed unit for production of seeds and seedlings, the Abuakwa Formulation Plant in Kumasi for formulation and distribution of pesticides to the district CSDs. It imported active ingredients of key pesticides for the formulation. In 1995 the unified system of extension abolished the CSD and liberalised the sale of cocoa inputs. A cocoa input Supply Company as established with branches in all districts to sell cocoa inputs that are imported by the private sector and the Abuakwa Formulation Plant.
Encouraging private agents
Farmer Based Organizations
Cooperatives were used as an instrument in pre and post-colonial periods to disseminate good agricultural practices to cocoa farmers (Ghana, 1995). The formation of cocoa cooperative societies was compulsory and therefore every community in the six cocoa regions had a society. At the national level, the Ghana Cocoa Coffee Sheanut Farmers Association (GCCSFA) was formed to serve as the apex body for the three crops. The visibility of this association today is low compared to two decades ago and Government‟s support to the association has dwindled although still significant. In September 1, 2010, the Ghana News Agency reported that “The National Executives of the Ghana Cocoa, Coffee and Sheanut Farmers Association (GCCSFA), have expressed gratitude to government for supplying to farmers, solar torch lights to enable them meet the one million tonnes target set for 2011. The association has also called for pragmatic steps aimed at reversing the increased smuggling of cocoa from the country. Another major cooperative is Kuapa Kokoo, a farmer‟s cooperative established in 1993 with assistance from Twin Limited UK (www.kuapakooko.com). The cooperative aims at improving the social, economic and political wellbeing of its members. It also aims at enhancing the participation of women in the decision making process at all levels of operation and organization and also encourage environmentally sustainable cocoa production processes. However, there appear to be no functional cocoa cooperative societies in many cocoa communities. There are some informal farmer based organizations, not well organized and formally recognized by the local government and other relevant institutions in the cocoa value chain. In Agona Nyakrom (Eastern Region) for instance, members of the focus group discussion explained that “without tangible and especially financial benefits, farmers were not likely to stay committed to any association”. In an earlier study by Dormon et al (2009), it was asserted that in 2004 a farmer in the Suhum Kraboacoaltar district said that “it has become obvious that communication within the 'perceived network' of farmers was not effective because there was no feedback to the communities from the representatives attending the meetings. Also, the farmers did not see an immediate benefit because each time a new person attended the meeting he/she came up with the suggestion to provide credit or free inputs like cutlasses and boots, and seemed less interested in engaging in a long-term trajectory of collaborative work. Considering the distances that some of the farmers had to walk to attend the meetings there was little incentive to motivate the same person to consistently attend on behalf of his /her community”.
Tractor and equipment hirers
Cocoa farming is in carried out in forested areas of six regions in southern Ghana (excluding the Greater Accra Region). The areas do not support the use of tractors for ploughing. Bull dozers are used to uproot trees and chain saw machines to fell trees. There are tractor hiring services that have been controlled by the private sector, particularly individuals within farming communities or neighbouring towns. The few state owned companies like the Ghana Heavy Equipment Ltd.(GHEL) has served the sector. The district Assembly plant pool does not serve the cocoa sector since its tractors are limited to that for ploughing.
Disposal of State Assets
Most of the state assets for cocoa are intact with COCOBOD owning several hectares of farm lands in the Eastern and Western regions. Individual farmers bought the farms and operated them as private enterprises. Until the late 1930s local merchants were the ones controlling the cocoa trade in the Gold Coast. Companies like the U.A.C., Paterson and Zochonis (PZ), G.B. Olivant, United Trading Company (UTC), Cadbury and Fry and J. Lyons were importing foods into the Gold Coast and purchased farm products such as cocoa, coffee, kennels, rubber and palm oil for export overseas. Table 3.3: Cocoa produce buying companies and marketing share Share (%) 32.83 11.97 10.71 8.62 7.04 5.91 5.72 5.70 3.17 2.70 1.07 1.04 0.84 0.80 0.60 0.38 0.28 0.07 0.06 0.03 0.02 0.01 0.01 0.01 0.00 0.00
Number Name of company 1 Produce Buying Company 2 Akuafo adamfo Marketing Co. 3 OLAM Ghana Ltd. 4 Adwumapa Buyers Ltd. 5 Federated Commodities Ltd. 6 Kuapa Kokoo Ltd. 7 Transroyal Ghana Ltd. 8 Armajaro Ghana Ltd. 9 Cocoa Merchants Ghana Ltd. 10 Diaby Company Ltd. 11 DioJean Company 12 Royal Commodities Ltd. 13 Sika Aba Buyers Ltd. 14 Chartwell Ventures Ltd. 15 Sompa Kokoo Ltd. 16 West Africa Exchange Co. Ltd. 17 Evadox Ltd. 18 Allied Commodities Ltd. 19 Fereday Company Ltd. 20 Farmers Alliance Co. Ltd. 21 CDH Commodities Ltd. 22 Ghana cooperative Marketing co. Ltd. 23 AbaPa Golden Ltd. 24 Yayra Glover Ltd. 25 Aboafo Buying Co. Ltd. 26 Duapa Buyers Co. Ltd. Source: Ghana Cocoa Board, 2011
The fear of monopoly behaviour by Cadbury and Fry and unrests among (due to low price for their produce) led to the establishment of the Cocoa Marketing Board (CMB) in 1947 to provide marketing services to farmers. The Produce Buying Agency was given monopoly over the internal marketing of cocoa in the country in 1977. The sector was however liberalized in 1992 as a result of a World Bank policy. This led to the formation of License Buying Companies (LBCs) to do the internal marketing of cocoa; PBC is still the lead purchasing company (see Table 3.3). The assets of the Produce Buying Company were transferred to the new private-public partnership. The Cocoa Services Division was dissolved and its activities transferred to the Directorate of Agricultural Extension Services (DAES) of MoFA. However, its assets remained with COCOBOD. In 2008, another subsidiary of COCOBOD, the Quality Control Division (COCOBOD) was privatised and all its assets transferred to the newly formed Quality Control Company Ltd. The other subsidiaries, Cocoa Marketing Company, Cocoa Research Institute of Ghana (CRIG) as well as the Seed Unit have continued to perform the external marketing of cocoa.
Key Lessons Emerging
The analyses above on the changing role of the state in agriculture are quite revealing. First, four specific areas of liberalization were studied, namely, (i) the removal of guaranteed prices; (ii) the removal of monopsony (single buyer) arrangements; (iii) encouraging private agents‟ participation in markets; and (iv) the disposal of state assets. In analyzing the removal of guaranteed prices, it became evident that until the 2000s cassava had been cultivated mostly at subsistence level with small surpluses sold on the market. The output and input markets for cassava was one of the most liberalized because price controls were usually ignored by farmers making private traders negotiate for prices. It was in this regard that the government established the Ghana Food Distribution Corporation (GFDC) to handle post-harvest and marketing activities. This corporation had processing sites, vehicles, silos, warehouses and retail outlets as a way of regulating both producer and consumer prices. However, this practice was later abolished and GFDC like many of its counterparts was liquidated due to under performance in the year 2000. The early 2000s had a private-public partnership establishing the Ayensu Starch Factory in Bawjiase in the Central Region as part of the Presidential Special Initiative on Starch and Palm Oil which later closed down in 2007. Today, the private sector is in full control of all the activities in the food crop value chain in Ghana. Pineapples and mango are considered as horticultural crops and categorized as non-traditional agricultural commodities. Only until the 1980s, under the Economic Recovery Programme era did exportation for these crops begun. This became possible because there was an incentive scheme aimed at boosting exports in order to promote the diversification of the country‟s exports. Policies such as flexible exchange rate regime, export retention rate increased gradually to 100 percent and capacity building programmes in agronomy and standardization were all instituted. Cocoa is Ghana‟s only traditional and key crop export. The state‟s role in the value chain has reduced only slightly. The Cocoa Marketing Board (CMB) and Cocoa Marketing Company (CMC) which was mandated to advise the government on the price to pay to farmers for the cocoa beans was later taken up by a technical team known as Producer Price Review Committee (PPRC) which was made up of both private (Licensed Buying Companies and farmers) and public sectors (government and COCOBOD). The distribution of cassava cuttings was initially controlled by farmers until interests in research improved after 1980. Other farm inputs were handled by the Ministry of Agriculture now Ministry of Food and Agriculture (MOFA) under a state monopoly but now has been handed over to private companies since 1990 some of which are Wienco and Yara who import and sell fertilizers to farmers. The procurement of inputs for pineapple and mango producers has always been private sector dominated. However, government intervenes where there may be unfavourable trends or shocks to the subsector but withdraws quickly for the private sector to take over. A typical case is in point is the shift in European demand for the „smooth cayenne’ variety of pineapple the MD2. The cocoa sub-sector has a joint participation of both private and public institutions involved in the export business. However, while in 1947 when the Cocoa Marketing Board was established to be responsible for the exporting of cocoa, a state-owned buying company named the Produce Buying Company (PBC) was introduced to operate alongside private-owned companies. Input procurement was also handled by COCOBOD who supplied inputs to farmers through its Cocoa Services Division. It also had its Seed Unit as well as import of active ingredients of key pesticides for the formulation of recommended pesticides. A Cocoa Supply Company was established with branches in all districts to sell inputs which were imported by the private sectors and the Abuakwa Formulation Plant. Private agents have been encouraged to participate in the cassava value chain including the use of Farmer Based Organization (FBOs), plant pools or machine (tractor and spraying machines) and hiring services. Some of these are Ghana Heavy Equipment Ltd. (GHEL). Also, most of the state assets in companies have been sold or the companies have been closed down especially in the case of the cassava, pineapple and mango sub-sectors. For instance, the Ghana Food Distribution Corporation was liquidated in 2000 and its assets were sold, leased or put up for hiring. It is only the state assets for the
cocoa sub-sector that has most of them intact and the COCOBOD owns several hectares of farmlands in the Eastern and Western regions. In conclusion, the state has rolled back fully in all food commodity sectors and slightly in the cocoa sector. There is liberalization of the determination of prices of all products inputs and final food commodities. State monopoly is only seen in cocoa exportation by the Cocoa Marketing Board. All state assets for input procurement and distribution have been disposed off. Only in finance do we have banks assets in ADB, NIB, MB and GCB. State intervention has great interventions at every stage of the value chain. The state rolled back highly in farming (cocoa, oil palm, pineapple and maize), input procurement (seed, agrochemicals, fertilizers and machine), processing (pineapple, cocoa, tomatoes, fish and meat), marketing (Ghana Food distribution Corporation, Produce Buying Company and all GIHOCs). There has been low role back of State in provision of agricultural extension services, cocoa quality control, roads and high ways has ensured the maintenance of standards. In all cases the private sector is not blocked by state monopoly. The state intervenes more forcefully in traditional export (cocoa) than in food staples and cash crop. The state intervention in food staples and cash crops is seen in fertilizer subsidy and free extension services. The state has retreated slightly from „public goods‟ functions such as veterinary extension for subsistence farmers. Probably, the budget for maintaining infrastructure and training human capital has constrained private sector development (i.e. R&D, economic infrastructure, regulations, etc). Investments in telecom, transport, water and sanitation and energy are more visible and discussed by the media. Investments in large scale commercial crop, livestock and fish farming are not highlighted although cash crop investments in pineapple and mango are expanding. Producers are responding more but many (including cocoa) are in the informal sector and operate small hectares. Input suppliers need huge capital to import for distribution so the market is dominated by few firms, mainly multi-nationals. High initial capital requirement is also limiting investment in small implement manufacture and growing of seed. Cassava, pineapple and mango value chain activities are largely controlled by farmers, domestic private businesses and foreign private businesses. Only R&D, regulation and economic infrastructure 3 development is dominated by State FDI in agriculture and this accounted for 5 percent of the total 4 number of FDI projects and 1percent of their total value over this period . Joint-ventures appear to be the most attractive entry mode, followed by wholly-owned subsidiaries (e.g. Golden Exotic, Blue Skies and Pinora). All commodities are showing increased production. Export trade in mango has been declining due to low capacity of exporters to meet quality standards. There is increased investment in importation of processed juices from South Africa and Europe. Wide range of processed and convenient foods has increase choice for the urban middle to high income households. Poor and low income households also
“The main investor countries are United Kingdom, United States, India, Switzerland, France, Netherlands, Republic of Korea, Denmark, Singapore and Indonesia. Energy crops (Jatropha) and fishing are the main sectors of foreign investment. The presence of Asian investors has increased and accounted for 37 percent of the total FDI projects in agriculture. The Accra region is the most attractive one for investors. FDIs are crucial with respect to Ghana‟s economic policy objectives. The government aims to achieve the status of middle-income country by 2015 and to become a leading agro-industrial country. It tries to attract foreign capital through various reforms, new institutions and an increasingly stable business environment, However, procedures related to land-acquisitions, land registration, landuse and small holder land rights remain to be clarified” (Gerlach and Liu, 2010).
Gerlach, A and P. Liu (2010). Resource seeking foreign direct investment in African agriculture. A review of country case studies. FAO commodity and trade policy research working paper no. 3. Food and Agriculture Organisation, Rome, Italy.
spend windfall gains on such foods (chocolate, fruit juice and fufu powder). However, yield levels remain low; yield of pineapple has been maintained at 50Mt/ha; yield of cassava at 12-14 MT/ha; cocoa yield is 620mt/Ha. There are no restrictions in any of the activity areas except for cocoa export and quality assurance before cocoa export. Private individuals are free to enter and exit the agricultural farm sector and agro industry (cassava, pineapple and mango). Improvement in the production of cassava, pineapple, mango and cocoa has created temporary jobs for farm labourers, transporters, processors and traders. Incomes from sale of produce and wages are gained from providing farm labour services but it is not enough to lift households out of poverty. About 28% of Ghanaian households are below the poverty line of GH¢400.00/year. Farm labourers are members of low income households. Tree crops such as cocoa and mango are intercropped with food staples, ensuring household food security. However, the communities lack adequate socio-economic infrastructure and receive low producer prices. There is no marked reduction in vulnerability status of farm households due to trade liberalization. The private sector is fully responsible for food staples and horticultural export production. It has responded fully to the „rolling back‟ of direct state involvement in rural areas where food staples and horticultural exports are produced. The state has rolled back slightly in internal cocoa purchases and input distribution. There is the need to maintain the premium price Ghana‟s cocoa enjoys and therefore the state has kept its involvement in the sector to continue to provide quality assurance.
Private Sector Response to Opportunities in Agriculture and Rural Development
Private Sector Activity in Agriculture and Rural Development
A review of the extant literature suggests that there are mixed results in private sector response to opportunities in the agricultural sector. Less than 10 years into most reforms in Africa, some researchers maintained that the private sector has not been able to quickly fill the gap left by the complete state withdrawal from agricultural production and marketing (Weber et. al. 1988; Loveridge, 1988; Wehelie, 1989; Dione, 1989 and Staatz, 1990). In Ghana, there was the contention that unstable policy environment generally branded Ghana as an unsafe haven to do business. Many private sector actors needed time to gauge the sustenance of the reforms following Ghana‟s political history of coup d‟états (Asante and Tsikata, 2000). Some researchers assert though that the private sector has been slow to respond to the reforms, some successes have been recorded in the areas of agricultural research, extension and irrigation (World Bank. 2007; Ackah and Appleton, 2007; Aryeetey, 2005; Teal and Vigneri, 2004 and Nyanteng and Seini, 2000). DFID (2004) observed in its discussion on new directions for agriculture in reducing poverty in Africa, that the private sector response to input market liberalization in Africa has been weaker than to the output market liberalization. It again iterated an observed difference in the private sector supports for value addition, institutions and funding for research and development in Ghana. Topalova (2009) conceded that this was expected as little was known about the spatial and commodity patterns of private traders; their scale of operations, the direction of trade movements, their stocking behaviour and the social basis of these relations. Since the reforms coincided with the introduction of open market policies, import of cheap processed fruit juices from China and South Africa, has adversely affected the pace of response from the private sector. Additionally, duties and other charges and transport to bring these products on time in the right quality still remain a challenge to them. Private sector response is said to have suffered a setback in the pineapple sector when there was switch from the production of sweet cayenne to MD2 (TIPCEE, 2006). Thus, this has affected the pace to which technological capabilities were built and the Ghanaian exporters failed to develop at the pace it initially evolved (Whitfield, 2010). Many fruit intended for the export market has been sold on the domestic market, resulting in the mushrooming of processing companies for pineapple and mango juices and increased urban household consumption (Yeboah, 2005). Jaffee (1992) relied on survey methods by incorporating institutional development patterns within the context of political, economic, historical, cultural and social factors and better explained the private sector‟s response to agricultural reforms. In respect to social institutions, cooperatives were initially established in Ghana to facilitate the marketing of inputs but with fragile liquidity positions they gave way to small and medium farmers‟ associations in the inputs and outputs markets. Since 1990 several trade associations have been formed by the private sector to support information exchange and effective distribution of commodities in the international market. The well-known associations are the Sea Freight Pineapple Exporters of Ghana (SPEG), Horticulturalist Association of Ghana (HAG), Papaya and Mango Producers and Exporters association of Ghana (PAMPEAG) and the Vegetable Producers and Exporters Association of Ghana (VEPEAG). These associations are grouped under an umbrella association named, The Federation of Associations of Ghanaian Exporters (FAGE).
In Ghana, many farmers (small-scale producers) have responded to production in the less developed and poorly serviced parts of the country, especially in areas where the nature of the roads and bridges are poor and have generally made it difficult and expensive for the private sector to reach with inputs and source outputs. As early as 1988, it was observed that the naturally emerged private marketing chain has been intermediaries acting as liaison between rural producing areas and the developed urban markets (Staaz, Dione and Dembele. 1988). Production-costs have generally risen due to increased hiring of labour. Where farmers are cash-strapped they have „self-exploited themselves’ by extending their working hours (Blowfield, 2003). Women and children have assumed an increasing role in the processing and marketing chain of agricultural products due to the poor state of feeder roads that render them impassable at critical times of the agricultural seasons (IAS, 1996). The private sector has had its ability to mobilize credit adversely affected due to trade liberalization. In the pre-liberalization era credit inflows into the agricultural sector was mainly though the state controlled Agricultural Development Bank and some selected commercial banks at terms favourable to the stakeholders in the sector. The liberalization quickly increased interest rates and branded agriculture risky to be funded by the financial institutions (Jebuni et al., 1998 and Sowa and Acquaye, 1999). Hence, actors in the agricultural value chain have relied mainly on their own resources for initial investment and also depended on informal channels for their information flows. As observed by Chiwele et al (1998) in Zambia, private sector response to agricultural marketing liberalization has no clear pattern of both seasonal and regional price differentials. Most traders did not engage in seasonal arbitrage. However, in terms of farm-specific productive efficiency, modest gains have been recorded in most developing countries (Salim and Hossain, 2006). The study did not find any specific estimation for Ghana but that for Bangladesh agriculture was estimated at 8 percentage points from the pre-reform to postreform period. The efficiency differentials are largely attributed to increased farm sizes, infrastructure, households' off-farm income and the reduction of government anti-agricultural bias in relation to trade and domestic policies.
Stronger Response of FDI to Government Liberalization
According to information obtained from the Ghana Investment Promotion Centre (GIPC), on its first quarter review of 2011, 109 new projects were recorded in the year under review. The total estimated value of these registered projects was GH₵567.66 million (US$ 378.44 million), representing a substantial increase of 101.13 per cent compared to GH₵263.42 million (US$188.16 million) recorded in the first quarter of 2010. The Foreign Direct Investment (FDI) component of the estimated value of the projects registered for 2011 was GH₵ 527.63 million (US$351.75 million), representing 92.95 % of the total estimated value and an impressive increase of 118.02 per cent compared to GH₵ 225.88 million (US$ 161.34 million) recorded for the same quarter of 2010. For the total initial capital transfers from the projects so far, officials of the GIPC started that, the newly registered projects during the quarter under review amounted to GH₵ 103.35 million (US$ 68.90 million), representing an increase of 360 per cent , compared to that of last year. Of the total inflows, building and construction attracted the highest with 41%, representing US$157.04 million with six projects, followed by manufacturing with US$113.44 million with 12 new projects, while services raked in US$ in US$ 82.67 million with 37 projects. Interestingly, Agriculture, which is considered the backbone of the economy, rather attracted the least FDI in terms of value as it recorded US$.33 million from one project. India, with 19 projects topped the list of countries with the highest number of projects registered in the first quarter of 2011. China followed with 13, Lebanon 10, Nigeria 8, with Britain and the USA having seven registered projects each. With US$70.50 million as estimated investment, Britain and Belize topped the list of countries with the largest value of investments registered during the period under review. Lebanon and Mauritania came second and third respectively with US$60 million and US$56 million while Turkey recorded the least with US$7.30 million.
In terms of employment generation, data obtained indicated that, from the number of projects registered in the first quarter, it is expected that, 7, 004 jobs will be created. This represented an increase of 14.41% compared to the 6,122 expected jobs to be created in the corresponding quarter of the previous year. To be specific, the total number of jobs expected to be created for Ghanaians from the registered in the first quarter of the year 2011 amounted to 6,497, representing an increase of 18.80 %, over the same period last year. There was, however, a decrease of 23.36 % in the expected jobs to be created for expatriates from 653 for the first quarter 2010 to 507 for the quarter under review. This shows that, investors in the country were beginning to have confidence and trust in the Ghanaian economy (Daily Graphic, April 19, 2011; pp 39). Notable foreign direct investment as a result of Government‟s trade liberalization policies include the presence of some companies such as Blue Skies, Cargill Ghana limited, Golden Exotics Ghana Limited, Commodities Processing Industries (CPI), currently in the country.
Sectors where private engagement has been low and impact of policy reform on incomes and employment barely felt
Private engagement in Ghana is usually business oriented and the expectation of most investors is to reap the rewards of their investment in the shortest possible time. Therefore, certain sectors of the economy which require huge capital and financial investment, for long term outcomes tend to receive less private involvement. For instance, it was not surprising to find out from the GIPC 2011 mid-year review report that, Agriculture, which is considered the backbone of the economy, rather attracted the least FDI in terms of value as it recorded US$.33 million from one project. Even so, in the agriculture sector, due to the risky nature of the agriculture especially farming and high default rates of farmers, most insurance and banking institutions are very reluctant to invest in agriculture. In addition, apart from the Irrigation facilities provided by the Irrigation Development Authority under the Ministry of Agriculture, private companies do not often invest in commercial farming purposes. Other support services in agriculture do not often impact the livelihoods of the rural communities and for sectors such as the mining, the oil and gas industries which are quite capital intensive and also require skilled labour impact of policy reforms on income and employment are barely felt. In a related development, the president of the Governing council of the Private Enterprise Foundation (PEF), lamented that, trade liberalization at the expense of local industries, poor infrastructure, high cost of capital , lack of requisite and financial resources among others, continue to hamper the efforts of the private sector
Assessment of Private Sector Response to Agriculture in the Chain Level Infrastructure
A key opportunity area is rural infrastructure development. Land, roads and highways, electricity, facilities for education, health and electricity and local assembly markets provided by the local government for private use were examined. The survey results showed that land is controlled by the private sector. However, government through the district assembly has been able to assist companies that require large tracts of land for plantation development. In all the communities visited individuals have been able to negotiate land from individuals, families, clans and stools that owned them (also observed by Asenso Okyere et al, 1993). Infrastructure such as roads and highways, education, health, electricity and markets are provided by the District Assembly. The results of the survey showed that infrastructure for transportation, energy, education and health is on its development path. The cost of access is the limiting factor. Transportation cost renders agricultural production, marketing and distribution between surplus and deficit areas unattractive. It is estimated that transportation accounts for about 70% of total marketing costs (Aryeetey and Nyanteng, 2006). Thus, the private sector-led agricultural marketing system is still not viable due to undeveloped and not serviced transport networks in the food growing hub of Ghana (Asiedu et al, 2008). Though rural development that accompanied trade liberalization has helped decrease the time required to transport inputs and outputs between surplus and deficit areas, the reality is a lot still needs to be done for the private sector to respond appropriately.
Lack of amenities like electricity, which leads to migration, and results in labour shortages and high labour costs, is also a factor. In Mfafa (one of the surveyed communities in the Eastern Region of Ghana), there was no electricity and the road leading to the major town Bawjiase was untarred and difficult to access during raining season. This has prevented input dealers and other support services from opening permanent offices in the community. On the other hand, Agomeda and Fotobi have electricity and paved roads; therefore, there are input dealers and regular vehicular flow. Rural-urban drift occurs due to uneven spatial development (Adiah, 2008). A poorly educated rural population that lacks skills to raise agricultural productivity has made the average farm size of the Ghanaian farmer to remain constant even after the reforms. The current generation of Ghanaians has the opportunity to obtain basic education at low cost since there is no tuition fee. However, secondary education is a better level. In all the communities visited there were no secondary schools; the schools were in locations that called for transportation fees or boarding fees. With secondary education, children of farmers and members of households who want to remain in farming can integrate ICT in farming and marketing system more effectively. In that way, the private sector support services will benefit agriculture better. Weak, agricultural linkages with other sectors contribute to slow growth (Adiah, 2008). In all the farming systems, it is the older and less literate generation that supports production. There is a labour market with market determined wages and the state has no role in agricultural wage determination. Wages for work on fields are determined by the day or by activity. Daily wages range from GH¢5.00 for pesticide application (with spraying machine) to weeding which cost GH¢12.00. Planting materials have no organised markets but rather there is farmer-to-farmer sale. Farmers may obtain the materials free from relatives and friends. Otherwise, one could pay GH¢10.00 to obtain bundles that can crop one acre farm. Occasionally, the State owned research centres (Crop Research Institute and the Savanna Agricultural Research Institute) as well as private commercial seed growers (none is known for cassava) and distributors provide planting materials to interested individuals. A declining health status of rural population can make it cumbersome for the emerged private sector small farmers to increase their levels of production. Health centres are important for sensitisation on primary health care. Unfortunately, most communities do not have such facilities. Households have to travel for more than 30 minutes to obtain service. That was the situation in Mfafa and Fotobi. Members of farm households usually depend on native doctors and spiritualist or they employ is self-medication tactics, leading to ill health and low labour effort.
Research and Development
Research and development is dominated by the public sector. The private sector response is low and limited to few company level investigations into methods of preservation, packaging and innovations in marketing. There are few large scale multinational and indigenous companies that process pineapple, mango and cocoa and that has research departments. Examples for cocoa are: Nestle, Cadbury, Cocoa Processing, and WAMCO (see Box 1) and Promisidor. Examples for pineapple and mango are Blue Skies, Sunripe and Papso. There are no large scale cassava manufacturing companies in Ghana. The Ayenso Starch Company has suspended its operations but undertook processing research when it was operational. All research in cassava (including adaptive trials in new varieties and value addition) are carried out by state owned agencies such as the Council for Scientific and Industrial Research (CSIR) of the Ministry of Environment, Science and Technology (MEST), Ghana Atomic Energy commission and the State Universities (University of Ghana, Kwame Nkrumah University of Science and Technology, University for Development Studies, University of Cape Coast and University of Education, Winneba). Some institutes also carry out research in mango and pineapple. The institutes of importance for agriculture are the Crop Research, Soil Research, Food Research and Savannah Agricultural Research. Cocoa R&D is carried out by the Cocoa Research Institute of Ghana (CRIG) and the Quality control Company Ltd., COCOBOD. Research carried out focuses on that which will improve the breeding and multiplication of new seed varieties, management of pests and diseases soil and water, market demand and the socio-economy of
communities. The importance of the latter was recognised twenty years ago, allowing all science research institutes to establish social science units. With these units, the CRIG identified, developed and launched value added products for the local market. Examples of cocoa products are soap, jam, pomade and wine. The Food Research Institute (FRI) has developed cassava flour for pastries (snacks and breakfast meals) and fufu (main meal eaten with soups). FRI has assisted several companies to develop recipes for fruit juices and dried cuts using pineapple and mango (Personal Communication with CEO, Ebenut Company Ltd, Weija). The foregoing show that in general, R&D has been government led. The funding and expertise for managing the research processes is what has driven the situation. Apart from cocoa, there is no legislation to prevent the private sector from initiating research programmes. State research institutes are mostly funded by international donor organizations. The Council for Scientific and Industrial Research institutes that partner the Universities of Ghana, KNUST and UDS are under resourced in terms of funds and human resource (Otoo, 2000). Hence, several donor agencies have supported R&D in Ghana (Tables 3.1 and 4.1). While pre-reforms researches in cassava, pineapple and mango were supply-driven, agricultural R&D farmer field schools and other extension activities have been re-engineered to be demand-led in the post reform periods to facilitate farmer adoption. The current focus of R&D in cassava breeding and engineering is on the development of early-bulking and pest and diseases resistant varieties suitable for mechanized harvesting and peeling. Farmer Field Schools were established to serve as vehicles to improve planting multiplication and basic root crop cultivation techniques. However, the improvements in R&D have been matched by limited dissemination of research results on storage, processing and utilization of roots and tubers (IFAD, 2006). The private sector has been clearly unwilling to support R&D at field level and this has led to little continuity in research and extension and has caused cassava farmers to typically rely on a farmer-tofarmer exchange of varieties of extended storage life.
Assessment of the Private Sector Response in the Cassava Value Chain
The trends in cassava and production have been upwards since 1983 (Figures 4.4 and 4.5). Farmers confirmed that the increasing output trends had reflected in increasing daily expenditure. When households were asked if daily expenditure per capita exceeded GHC3.00, about 70 percent of respondents in pineapple and mango communities agreed. However, only 50 percent of cassava and cocoa households agreed to that assertion. Cassava is a staple food commodity and is not traded in the international market. “Most of our cocoa income is ploughed back into the enterprise so one cannot spend on personal effects”, a farmer lamented. Although per capita expenditure shows that most of the respondents could be said to be above the poverty line, over 80 percent of all the respondents said they were not very happy with their lives. The response confirmed empirical results of the MoFA 2011 study (conducted in 14 districts that grow cocoa and cassava in the Western region – see Table 4.1). Majority of respondents considered themselves as poor or very poor. The conclusion is that, private sector intervention in the agricultural sector is yet to boost employment and alleviate the poverty of rural households in Ghana.
Trends in cassava production 800 700 600 500
OUTPUT(MT) 400 300 200 100 0
YEAR 14000 12000
8000 OUTPUT ('000 MT) 6000 4000 2000 0 1980 1982 1984 1986 1988 1990 1992 1994 1996 1998 2000 2002 2004 2006 2008 Year
The pricing system for all but cocoa beans is competitive. The situation has received mixed reaction from rural households. Cocoa households are grateful for the ready market and annual stability in the guaranteed minimum prices offered. However, many believe that the price is still not adequate. A voice from the focus group echoes: “what is given to farmers in neighbouring Ivory Coast is better so our brothers close to the border are tempted to smuggle the beans for sale in that country. We are too far from the border and the transportation cost alone does not permit that action. In any case, the prices of inputs are too high, so farm income may look a lot but cannot buy much. Imagine buying a 50 kg bag of even the subsidized fertilizer for GH¢25.00. One needs three bags per acre, so continue the calculation for 10 acres. Pesticides are not subsidized and many of us do not enjoy the so called mass spraying. Seedlings are subsidized but you need to buy a lot. In the end we are not able to apply the good husbandry practices so the yield remains low and we get little from sale”.
When the world market price of cocoa fluctuates, there is a discrepancy between the actual and the predicted price, the latter on which the producer price is based on. This implies that there will be surpluses or deficits in relation to the targeted level depending on how the world market price fluctuates. In Ghana, the practice has been that the surplus is divided between the government and the farmers, while the deficit is covered by the government alone. Farmers receive the surplus in the form of yearly bonuses after payment. Some cocoa farmers say the bonuses are not paid early enough and “the level is too low”. Cassava, pineapple and mango households wished they received ready market and guaranteed prices like cocoa households currently do. “As for cassava the intra-year price fluctuation for output is too much. Yet, input prices are stable or only rise. The middlemen who buy from us have a field day when there is bumper harvest. In the lean season when prices rise, most of us may not have enough to sell”. With pineapple, the exporters and processors are the target. “The prices we receive for pineapples are quite okay but the payback period is what is too long. Occasionally, some buyers do not pay at all”. Mango exportation is the target of farmers. Yet, “about 50 percent of all mangoes are sold through our wives and relatives to long distance wholesalers from Accra. These middlemen just cheat us, sometimes with the excuse that more than half of the product will be lost to spoilage before sales are completed. Government will have to announce prices like it does for cocoa farmers! The cost of input is too much! The requirements for export and the disease and pest incidence on our farms have not allowed us to obtain the good producer price from exporters. Often less than 30 percent of harvest goes to export. The processors in Ghana are small scale and not a lot. They prefer to buy from traders in Accra”.
Food consists of carbohydrates, protein, fats and oils and vitamins. The common staples in Ghana are from root and tuber crops, cereals, vegetables, fruits, fish and meat. Many of the food crops are grown by farmers themselves. Many farmers have to purchase 50 percent of their food stuffs six months after the harvesting period. This is because the harvest is small and most of the food cannot be stored for long. They are sold and the money used on purchases at a later date. Due to high pest incidence some 1-7 percent of grains in store are lost (World Bank, 2011). The results of the study‟s rapid appraisal survey of the four communities and desk search show that households in cocoa, pineapple, mango and cassava communities are fairly food secure. This is because during focus group discussions it was agreed by community representatives that more than 90 percent of members of all households satisfy food needs with little difficulty each month. All households maintain food crop farms while there are one or more starchy staples available for harvest each month. Cassava is harvested throughout the year; some households process Cassava into gari (roasted grits) for storage and for sale. Maize, plantain, cocoyam and yam are seasonal. Plantain cannot store beyond one week. The rest can be protected and stored for six months or more.
Figure 4.2: Reasons why households faced difficulty in satisfying food needs 100 90 80 70 60 Percentage 50 40 30 20 10 0
Source: MoFA, 2011
About 20 percent of households grow rice; rice can be stored in the paddy or milled form beyond one year when protected with chemicals. All households grow a number of vegetables; many cannot be stored beyond one week. Pepper and okra can be tried and stored in its form or as powders. What is needed all the time by most farm households is the protein and fat source- fish, meat, egg and oils. A key oil source is oil palm, but this tree crop competes with mango, pineapple and cocoa so only a few households have maintained farms. A few crop households in Southern Ghana raise large stocks of animals. Due to the shortage of food in some months (May-July) and lack of own protein and oil sources, some amount of food need to be purchased. Many households think food prices are too high and this causes occasional difficulties to non-harvesting households. In a MoFA (2011) study, about 60 percent of households said that they had difficulty in satisfying food needs because of the high prices they had to pay (Figure 4.5). They majority attributed difficulties to post harvest losses.
Assessment of the Private Sector Response in Pineapple and Mango
As indicated earlier, the World Bank PSIA is used to assess the impact of the liberalization on the agricultural sector. The PSIA show that impacts of policies should be evident in employment generation, stable prices, improved assess to goods and service, and assets as well as transfer payments. With liberalization, the private sector is expected to compete at all levels and create employment opportunities, competitive prices, increase assess to goods and services and empower households to accumulate assets (World Bank, 2000). Employment comes with increased income that should result in improved food security, wellbeing, and reduced vulnerability to unfavourable trends, shocks and seasonality. With opportunities created in the value chains for higher income generation, households are expected to reduce the illegal exploitation of natural resources and thereby improve environmental soundness. However, both the empirical literature and the current rapid appraisal study point to mixed results of the impact of private sector participation in the agricultural sector. Below are the findings from the field survey
Employment and income
Farming and farm labouring are the major employment created in the rural communities that produce crops like cassava, pineapple, mangoes and cocoa. The results of the study showed that all household are growing the selected crops for commercial reasons. There is no household that does not have a young man or woman who offers his or her services permanently or occasionally on a farm for daily,
weekly or monthly wage. The minimum daily wage in Ghana is GH¢3.11 implying that a monthly wage of about GHC100.00 is expected. Many permanent labourers are paid this minimum or more.
Figure 4.3: Trends in pineapple exports (1980-2008) 80 70 60 50 OUTPUT 40 ('000 MT) 30 20 10 0 1980 1982 1984 1986 1988 1990 1992 1994 1996 1998 2000 2002 2004 2006 2008 YEAR
The pineapple communities suffered a slowdown and down turn in economic activities from 2004-2007. This resulted from the shift in European demand for traditional pineapple varieties towards the MD2 variety. Although, the new variety was multiplied and distributed by the HEII programme, the changeover seriously affected the ability of many producers to grow for export since the new variety required a higher level of husbandry and inputs. Around that time the USAID funded project, TIPCEE was implemented and it carried out training programmes for farmers, trader associations and the FAGE. The technology is now widely available although it is speculated that that a proportion of growers have withdrawn from pineapples. Trend in exports have turned around and has been increasing steadily (Figure 4.3). However, the trend in Mango exports has not been promising (Figure 4.4). However, overall production has been increasing due to the support given by the various horticultural projects.
Trends in mango exports, 2005-2009
1000 900 800 700 600 OUTPUT 500 ('000 MT) 400 300 200 100 0 2005 2006 2007 YEAR 2008 2009
Access to goods and services
The last three decades has seen gradual improvements in investments in the agricultural sector. In the survey, all the households represented in the focus group discussions were sure that, there is increased availability of all modern inputs for soil fertility management, pest and disease management and postharvest processing. The materials and machines can be obtained within 30 minutes‟ drive to the nearest markets in the districts or less than 3 hours‟ drive to the national capital Accra where “everything is available”. The horticultural sector has benefitted from substantial local investments with the replacement of existing pineapple planting stock, the development of mango plantings and the installation of cold stores and pack houses. However, the farmers interviewed were of the view that the locations of the pack houses were not close to their farms so “we do not benefit from them”. It means some pack houses are available and some farmers are benefiting but there is the need for increased numbers located closer to major growing communities. However, it should be pointed out that many of the pack houses have been built with donor funding rather than by for-profit private investors. With respect to cocoa, farmers need for depots to sell dried beans have been fully catered for by the private sector. All the purchasing companies have agents in key towns and villages and purchasing is throughout the year. Hence, many farmers can easily access the “Cocoa Krakye” any time of the day. Services for capacity strengthening of farmers are provided by the agricultural development units in of the district, municipal and metropolitan assemblies. Occasionally projects such as that of the Millennium Development Authority (MiDA) (2007) and RTIP are implemented to provide strong orientation towards small farmer organisations, capabilities and credit. In the survey, it was confirmed in Fotobi and Agomeda that, all the households that included themselves in the FBOs had capabilities built in group participation as well as technical and managerial information uptake. However, less than 30 percent of households have benefitted from the credit component. In Fotobi one of the FBOs reported that only 7 out of 47 members (15%) received credit from the MiDA arrangements. In Agomeda only 34 out of the 133 (26%) members of the Dangbe West Mango Farmers Association obtained the MiDA credit. Social services enhance economic activities in a community. The facilities studied included education, health, agro-input retail services, irrigation, veterinary, agricultural extension and market information. The results of the study showed that, most households are not very satisfied with quality of service of social facilities in the communities they lived. The MoFA (2011) study showed that many households saw that service conditions of social infrastructure were poor (Table 4.3). Irrigation and veterinary services enhance alternative livelihoods in rain fed farming systems; farmers can engage in dry season farming
and commercial livestock enterprises. Lack of good quality services can limit adoption of these livelihood strategies. Poor agro-input retail and agricultural extension services can hinder the adoption of improved farm practices that require the use of agro-chemicals and machines. Poor health reduces the time allocated to farm activities and thus affect productivity. Financing institutions were observed in all the districts visited. In Ghana, the state owned institutions are few (ADB, Ghana commercial Bank, Merchant Bank and National Investment Bank) and cannot dominate the over 200 available. There were rural banks in all the districts visited. There were private micro savings schemes (susu collection) in all the communities. Agomeda had a savings and loans company available. Information Communication Technologies (ICTs) are also developing in Ghana. Almost all the companies providing ICT (Milicom, Scanscom, Zain and Expresso) are privately owned. It is only Vodafone which is partly state owned. The companies provide internet and telephone services for a fee. Internet cafés are in all district capitals. There were cafés at Agomeda and Agona Nyakrom. The fee charged for use is GH¢1.00 per 10 minutes. The service is mainly beneficial to the literate young adults. None of the farmers interviewed used the internet. The mobile phone is used regular to seek market information and therefore all the cocoa, pineapple and mango farmers had mobile phones. More than 70 percent of the cassava farmers used mobile phones.
Table 4.3: Satisfaction of farm households with social facilities Service Nature of service (% HH opinion) Poor Health Education Agro-input retail services Irrigation Veterinary Agricultural extension Market information 44.7 30.7 52.7 62.4 66.7 47.6 39.7 Fair 27.9 41.1 31.6 22.5 21.0 27.4 49.9 Good 27.4 28.0 15.7 15.1 12.1 24.9 10.4
Social empowerment and capital
Farmer based organization is a phenomenon that had mixed results in terms of its performance. Where they are well organized, development projects have provided support and the capacity of members have been built (see box 2). This is social empowerment and improvement in capital for rural communities engaged in agriculture. Eventually, vulnerability due to poor knowledge is reduced. There is evidence of increased right to information, negotiation and advocacy. In all the four communities visited, groups that were viable affirmed their gains. Members of Cocoa Abrabopa benefit from technical and credit support from the Wienco Ghana Ltd., the private input supply company that organized them. Members of cassava producers and processors association in Mfafo were trained in agronomic practices to improve yields and 5 participate in outgrower scheme of the Ayensu Starch Factory during its functional period . Members of
5 Under the Presidential Special Initiative (PSI) on Cassava Starch, the goal of the government was to move Ghana into the club of nations producing industrial starch for the global market. To achieve this, the
Fotobi pineapple farmers‟ cooperative and Agomeda mango farmers‟ association affirmed the capacity building programmes they have participated in since 1990.
Access to assets
The results of the study showed that the assets owned by the households are mainly farm tools, land and houses and consumer durables. The consumer durables include cooking utensils, jewellery, mobile phone, radio/cassette players, electric iron, furniture, sewing machines, electric fans, video recorders, bicycles, mobile phones, special clothing and textiles and cooking utensils. In the MoFA(2011) survey, it was observed that a significant number of households have assets for shelter, information communication (radio and mobile phone) as well as for food preservation and cooking (Table 4.4). Clothing and livestock can easily be liquidated and extra income from non-farm business goes for consumption smoothening or working capital and investment in farm business.
Box 2: Support for farmer based organisation In 2002, 11 smallholders in Dodowa formed Power Pineapple Growers (PPP), an association to facilitate the production of pineapples. They adapted to pineapple production because of its agroclimatic conditions and its proximity to Accra‟s ports. The first harvest was in 2003. Out of the 3,000 pieces harvested, 80 percent were exported and the remaining 20 percent were sold on the local market. In 2004, they harvested 8,000 pieces of fruit. An Accra-based exporter bought the whole production. The group benefited from support from the Agricultural Services Support and Investment Program (AgSSIP), a World Bank program. Through the Cooperative Development Program, an AgSSIP initiative, farmers received training in activities such as group dynamics, financial management, and accounting.
concept of Corporate Village Enterprise (COVE) by which a limited liability company whose shareholders are the farmers and strategic investors, was considered to be the best approach. To facilitate the sustainable production of cassava for the ASCO factory, the cassava farmers were organized into an association and assisted to cultivate large acreages. Contracts were signed between the farmers and company. Apparently there was an effort to orientate the farmers towards cash crop production of the commodity.
Table 4.4 Household Assets in farming communities in the Central and Western Regions Asset Motor car Motor bike Bicycle Truck Furniture Sewing Machine Refrigerator/Freezer Radio (small size no cassette) Radio cassette Television Video recorder Electric/Gas Stove Electric Iron Electric Fan Utensils Mobile Telephone Land for farming Land for building Account with financial institution Shares in a company Jewellery Cloth: Dumas, Lace Sheep/Goat Chicken Non-farm business enterprise Farm tools House (mainly cement/burnt bricks) House (mainly mud) Source: MoFA, 2011 Households that own 11.6 6.8 21.4 0.7 77.6 34.2 42.9 77.6 51 63 39.7 16.3 57.1 46.3 95.9 89.1 91.8 38.8 56.5 6.1 63.9 93.9 46.9 60.5 34.5 92.5 30.6 40.1 Mean number of assets 1 1 1.5 1 6.3 1.3 1.3 1.2 1.2 1.2 1.2 1.3 1.1 1.6 17.4 2.1 9.8 1.8 1.6 2.2 22 18.6 21 18.6 1.6 6.6 1 1
Many households have alternative livelihoods. Those that do not explore alternatives or are not diversified may find it difficult to smoothening consumption whiles they wait for the maturity of produce from just established crops.
Assessment of Private sector response in Cocoa
It has been observed that about 99 percent of activities in input procurement, production, processing, distribution and sales of inputs and output are carried out by private entrepreneurs (Table 4.2). It is only in the cocoa sector that government controls the export of cocoa beans and sale to processing factories in the local market. “Through COCOBOD, the government controls cocoa quality, hands out licenses, finances and controls activities of private companies, sets producer prices and margins and sells and exports to manufacturing and processing companies. The QCD and the CMC are termed private companies yet they continue to function as subsidiaries of COCOBOD and have the same responsibilities as prior to the reforms. Moreover, COCOBOD finances a cocoa research institute, distributes subsidized inputs and hands out scholarships to farmers‟ children” (Lundstedt, Helena and Pärssinen (2009)
Table 4.2: Functions of selected institutions and units that provide services to the Cassava, Pineapple, Mango and Cocoa subsectors in Ghana* Actors Functions Research and development
Extension and education MoFA
Market infrastructur e Roads, highways, water electricity Markets
Public institutions District CSIR and Assembly/ public universities Central Government
Ministry of Food and Agriculture
Reengineering of prototypes of machines
Training of Extension agents and farmers
ADB NIB Merchant Bank GCB Social investment fund Implements input credit schemes initiated by donors
In partnership with donor agencies
Formulatio n and implementa tion
Collaborates with Gratis Ghana on technology development and transfer programmes
Capacity building programme s for processing groups
Implementat ion of agricultural projects by district units and national directorates e.g RTIMP. NARP. AgSSIP Supports groups with processing facilities
SRID provides domestic market informatio n
PPMED formulates FASDEP and medium term plans
Provide processin g informatio n and business advisory services Cocoa Marketing Company (GH) Ltd.
Project implementa tion
Cocoa Research Institute Ghana
Cocoa Services Division
Micro credit scheme
Cocoa Swollen Shoot Virus Diseased
Maintenanc e of cocoa roads; Establishme
COCOBOD Research unit contributes
Control Unit Seed Unit Quality Control Division nt of seed purchasing centres in selected districts provides market and marketing informatio n Facilitates market access and contracts; provides market informatio n Provide farm gate marketing services (assembli ng and selling); Informal market informatio n sharing to policy formulation and implementa tion guidelines Provides information during policy formulation
Private institutions Farmer NA Based Organisation s
Organising members for training in Good Agricultural Practices
Facilitation of members in debt financing
Communal labour and provision of machinery hiring services
Maintenanc e of community roads
Personal experimentatio n with botanical pesticides and seed
Informal technical knowledge sharing
Informal savings and credit sales
Family labour and exchange of inputs
Produce Buying Companies and individuals
Research into fair trade and organic produce by KuapaKokoo, Blue Skies and Ebenut
KuapaKoko o and other LBCs and companies builds capacity of members
KuapaKoko o operates a credit union; others render micro credit services
Umbrella organisatio n is represente (Agrimat d on and Wienco) working groups and committees during policy dialogue sessions Note: Functions were confirmed in a rapid appraisal interview of key officers in the agencies shown and groups in four farming communities, viz., Mfafo, Agomed, Fotobi and AgonaNyakrom. Source:Author‟s compilation, 2011
Partners the EPA and University departments to carry out agro chemical trials
Provide unorganise d extension as part of personal selling promotion activities
40 percent sell on credit to clients with long standing relationship
Most companies provide technical support by way of information and post harvest materials to farmers as incentives Partner farmer based organisation s to build capacity of farmer groups
Provide community purchasing centres
Operate own offices and hire part of premises to other service providers viz., finance institutions
Assemblin g, processin g and distributio n of cocoa beans, mango and pineapple fruits and cassava Engage in importatio n, wholesale and retail distributio n of agrochemi cals, seed and machines
Provides information during policy formulation ; LBC Representa tive is on cocoa technical committee and prices LBC Representa tive is on cocoa technical committee n prices
Structure of the cocoa sector in Ghana (courtesy Lundstedt, Helena And
Sara Pärssinen (2009)
Cocoa value chain
Farmers COCOA Input, bonus scholarship Cash/cheque
LBCs (include PBC) COCOA Seed fund licenses Extension and input providers
COCOBOD QCD CMC R&D PPRC Bank and credit facilitators, domestic and international COCOA COCOA Local cocoa industry
COCOA WORLD MARKET
Source: Lundstedt and Pärssinen (2009)
BOX 3: WAMCO AS AN INNOVATOR
The West African Mills Company (WAMCO) was first established 1947 by Gills and Dufus to process some of the cocoa beans purchased in the then Gold Coast. After independence in 1957, the plant came under the ownership of the Ghana Cocoa Board (then known as the Cocoa Marketing Board). Later the ownership structure changed to include German investors. There are three main factories producing the highest total value added cocoa export commodities – cocoa butter, natural cocoa liquor or cocoa masse. The total installed capacity is 75,000 tons but operates at 56,000 tons per annum. Clearly in the long history of the company‟s existence there have been innovations relating to modifications in hardware, processing techniques, products, packaging and the general manufacturing practices. The drive for such innovations has generally been the need to remain competitive, satisfy customers and meet the evolving international requirements for quality. WAMCO maintains a Quality Assurance Unit equipped with the basics such as autoclaves, weighing equipment, digital barometers, pH meters, solvent extractors, etc. to enable the company monitor and evaluate product quality. The international standards are stringent. For example the microbial count for salmonella is zero, molds and yeasts should be less than 50 and the total plate count (TPC) is limited at 5,000 colony forming units (CFU). The moisture of the cocoa cake produced should range from 2-5% and the free fatty acids, is 1.75 though WAMCO imposes the more stringent limit of 1.5 on itself. Technological hardware innovations have come from the successful installation and integration of machinery from different suppliers in Britain, Germany and The Netherlands. Maintenance and repairs require that parts be changed and without some of these innovations, the plant cannot work effectively. For example, the main barometric condenser had to be produced with stainless steel to safeguard the quality of the products. The operation of the deodorizer was also an innovation. WAMCO processing is able to use all grades of cocoa – from the 2J super maincrop through the 2C super light crop to the SB remnant – unlike the case in the other processing companies, which only use the high grade cocoa. The experiences in the operation, maintenance and repair of the plants have produced a maintenance schedule and culture unique to WAMCO. The high point of the internal innovation probably was when the Soxhlet Apparatus was redesigned and modified to allow for recycling of water and the innovator received an award.
In pursuit of Good Manufacturing Practices, containers are fumigated prior to loading, aired to clear fumigant, the container is weighed with the truck and the respective product is loaded bearing appropriate WAMCO code for traceability. There is a multi-institutional gang supervising the process. In WAMCO, there is also a Joint Production Coordinating Meeting every week to review production. Thus,there are training manuals for training and altogether, there seems to be an enabling environment and culture for innovation
Source: Essigbe, 2008
Platform Knowledge Piece 3: The strategic role of the private sector in agriculture and rural development: Ghana working paper Table 4.1: Institutions that support research and in Ghana‟s Cocoa Origin Foreign Foreign Foreign Foreign Foreign Foreign Foreign National
Name of institution Rockefeller Foundation International Institute of Tropical Agriculture (IITA) The Food and Agriculture Organization of the United Nations (FAO) The International Food Policy Research Institute (IFPRI) Collaborative Study of Cassava in Africa (COSCA) World Bank International Fund for Agricultural Development (IFAD) Crop Research and Food Research Institutes of the Council for Scientific and Industrial Research, Ghana Source: Author‟s Own Compilation. 2011.
Environmental Impacts (Cassava, Pineapple, Mango and Cocoa)
The extent to which increased participation of the private sector in agricultural value chains has resulted in better environmental soundness can be measured in terms of the extent to which households are involved in illegal stone quarrying, mining, tree felling (for charcoal burning), logging and sand winning. In the general press, there is speculation of increased deforestation and environmental degradation due to uncontrolled and illegal activities of rural households. In the survey, group members affirmed the situation but were quick to add that less than 1 percent of households are engaged in such activities. This is because: “there was enough to do in a cocoa farm; there is ready market for the beans and we sell our food crop. It is only in areas like Twifo and Dunkwa where there is gold that the young men and women find time to do illegal mining”. In the cassava community, “there are no natural resources now; our forests are gone and there are not enough trees to fell for commercial charcoal burning. Apart from food crops and working in pineapple farms, there is no natural resource to exploit”. In the pineapple community, “a few people engage in logging, but the activity is not significant; we do not know of many households that depend on income from exploiting natural resources this way”. In Agomeda, “there is stone quarry and charcoal burning by some households but they can be counted on the finger tip”.
Vulnerability (Cassava, Pineapple, Mango and Cocoa)
Despite the free market economy of farming communities that allows households to explore potentials and engage in a wide range of income generating activities, farming communities continue to be vulnerable, especially to disease and pest incidence. Dormon et al (2009) observed that in cocoa villages low productivity has been a major bane on farming. The biological factors include the incidence of pests and diseases, and of epiphytes, which have been neglected. The socioeconomic causes were indirect and include the low producer price and the lack of amenities like electricity, which leads to migration, resulting in labour shortages and high labour cost”. Projects such as, the Roots and Tubers Improvement and Marketing Project (RTIMP) allowed the selection of high yielding varieties for multiplication and distribution to farmers. Many cassava growing villages, including Mfafa were not included in the projects. The projects selected few communities for piloting and they are hardly up-scaled. After the project period even participating communities are not able to practice the new found knowledge due to lack of capital to purchase inputs, or lack of output markets to sell excess output.
Many households are thus not happy. They believed that in times of crisis they cannot get help. In the MoFA(2011) study, it was shown that due to the vulnerable state of many farm households they cannot access financial support and they cannot give help to others (see Table 4.5).
Table 4.5 Households‟ state of vulnerability in the Central and Western Regions Indicators Level of happiness (N=600): Very happy Quite happy Not very happy Not at all happy Level of security in time of crisis(N=602): Very secure Somewhat secure Averagely secure Somewhat insecure Insecure Survival instinct compared to five years ago (N=600): More confident 55.67 Same 16.33 Less confident 28.00 Give financial support (N=602): Very regularly Somewhat regularly Occasionally Hardly ever Never 18.77 23.59 30.90 17.44 9.30 12.13 26.74 24.92 23.42 12.79 21.50 45.17 27.33 6.00 Percentage
Obtain financial support (600): Very regularly 15.83 Somewhat regularly 24.67 Occasionally 29.50 Hardly ever 25.00 Never Source: MoFA, 2011
The following key lessons emerged from analyzing private sector response to opportunities in agriculture and rural development: When there is demand for a product it drives the private sector to look for profit and this is exactly what the private sector has done in response to the opportunities provided. There is demand for cassava in Ghana; it is a food as well as cash crop for all the households that are involved in it. It is a raw material for a key storable product, gari. Access to the international market drives private sector participation. There is demand for tropical fruits in the European Union, the key trading partner of Ghana. As far as Ghanaian exporters can guide farmers to produce to Global GAP specifications there will be ready market and this is what is driving the donor agencies to support the for-profit private sector to produce, process and or export. Availability of processing factories and demand for processed products drives private sector participation. There are emerging opportunities in agro-processing of fruit juices although South Africa is a keen competitor. Several small scale processors are continuing to emerge daily in cities such as Accra, Tema, Kumasi and Takoradi. There is a positive impact of private sector activity on low-income rural households: some households are investing in durable assets like houses and ICT gadgets as well as improving availability of food in the household. In order to reduce further the vulnerability of farm households to uncontrolled prices in liberalised markets, pro-poor strategies that target specific households and communities should be instituted The agricultural sector in Ghana is more dynamic and competitive today because there are no restrictions in any of the activity areas except for cocoa export and quality assurance before export. R&D is sensitive and capital (finance, material and human) intensive and so government cannot leave the space completely to the private sector in the foreseeable future.
Donor Support to Private Sector Activity in Agriculture and Rural Development
Donor Support to Agriculture and Rural Development
Currently, the country receives aid in various forms, including general budgetary support, sector budget support (mainly health and education), and project aid using parallel systems. Aid to Ghana has been provided by its bilateral and multi-lateral development partners or donors. However, some further `informal‟ classification exist, namely, traditional donors (DAC) and non-traditional (Non-DAC) donors. 6 The former currently comprise of the 23 multilateral and 24 bilateral donors . The World Bank remains the largest multilateral donor, providing over 45% of the multilateral annual average. The bilateral donors is made up of traditional donors like Australia, Austria, Belgium, Canada, Denmark, Finland, France, Germany, Italy, Japan, Netherlands, Norway, Spain, Sweden, Switzerland, the UK, and USA. Non-traditional bilateral donors who are increasingly becoming important in Ghana‟s aid architecture include the BRICK countries, the Saudi Fund, and the Abu Dhabi Fund. These non-traditional donors do not participate actively in current aid coordination efforts with the traditional donors and the Ghana Aid Policy and Strategy (2011-2015) seeks to address this issue (Ghana PD Evaluation Report, 2010).
Table 2: Ghana ODA Envelope in Millions US$ (2003-2010) 2003 Total IMF
2004 1130.1 38.7 174.1 174.1 0.0 316.7 309.0 7.7 0.0
2005 1205.8 38.2 196.9 196.9 0.0 313.2 281.9 31.3 0.0
2006 1471.8 116.6 307.3 209.8 97.5 349.3 312.2 37.2 0.0
2007 1656.5 0.0 342.7 246.1 96.6 386.7 316.6 70.1 12.1
2008 1649.6 0.0 229.5 158.4 71.1 473.1 368.1 104.9 15.2
2009 2102.5 200.0 289.6 191.9 97.7 700.4 525.2 175.2 86.9
2010 1896.8 200.0 235.8 168.8 67.0 619.2 451.2 167.7 81.2
1003.0 76.6 154.2 154.2 0.0 277.9 277.9 0.0 0.0
Debt Relief Grants HIPC MDRI Budget Support MDBS SBS Swap
6Ghana DP-PAF Baseline Report 2009 7 Balance of Payments support
Platform Knowledge Piece 3: The strategic role of the private sector in agriculture and rural development: Ghana working paper Earmarked Project Aid GDP Total ODA (% of GDP) 0.0 494.4 7621 13.2 7.7 600.6 8853 12.8 31.3 657.5 10726 11.2 37.2 698.6 12729 11.6 58.0 927.0 14984 11.1 89.8 947.0 16085 10.3 88.2 912.5 14385 14.6
86.5 841.8 14870 12.8
Source: D-PAF Baseline Report 2009
Aid flows to Ghana has increased over the years especially after the economic reforms of the 1980s. ODA inflows to Ghana have increased from US$ 578.96 million in 2001 in nominal terms to US$1,896.8 million in 2010 (Table 2). Aid as a percentage of GDP increased from 13.2 percent in 2003 to 12.8 percent in 2010. However, the second half of 2008 and first half of 2009 was a difficult period for the country as aid flows were less forthcoming partly due to the global economic and financial crisis (Ghana PD Evaluation Report, 2010).
Donor Support to Agriculture
There are various interventions as outlined in the Development Partners (DPs) resource envelope and this include the Food and Agriculture Budgetary Support, Food Security and Environmental Facility, SFASDEP, Cocoa Sector Support Programme grant from the EEC, Agricultural Services Sub-sector Investment Programme (AgSSIP), Community Based Natural Resource Management, Land Administration Project, Northern Savannah Biodiversity Conservation, Rural Financial Services Project, Forest Biodiversity, Village Infrastructure Project (VIP), Fisheries sub-sector capacity building project and the Natural Resource Management Project, Rural and Agricultural Finance Programme (IFAD), Outgrowers and Value-chain Fund, Afram Plains Agriculture Development Project to mention but a few (Table 5.2). It must be added that the AgSSIP project is being phased out for the A-SWAP, where donors agree with government on the overall strategy and then directly put money into a basket (budget) specifically for agriculture.
Table 5.1: Support to Private Sector Development in Agriculture in Ghana 2001-2011 Area of Intervention Firm Level Access to Inputs & Irrigation Product Development R&D including Science & Technology Marketing Capacity Building Agric Enterprise Devt. Public Sector – Policy Pro-market regulatory Donor Comments
AfDB, Japan, Spanish, ABED, AFD AfDB, Canada, EU, FAO, AFD, IFAD, USA, IDA, JICA, World Bank AFD, Japan AFD, GIZ, USAID-ATP, USAID-ACDICOCA, AfDB, IFAD, CAG, EU, AGRA, ADRA USA, Danida, USAID
Major area of focus
Major area of focus
AFD, JICA, CIDA
Platform Knowledge Piece 3: The strategic role of the private sector in agriculture and rural development: Ghana working paper reforms Infrastructure Development AfDB, Denmark, EU, France, Germany, Japan, Netherlands, Spain, Switzerland, USA, World Bank Major area of focus
PSD Support Financial Sector General PSD Support
IFAD, USAID (Advance), Kfw, IFAD, AGRA, AfDB, Canada, Denmark, EU, IFAD, Japan, Netherlands, Italy, UK, World Bank
Source: Author‟s Presentation based on Data from Ministry of Finance (2011)
Most projects are geared towards promoting production at the firm or farm level especially the promotion of food crops to enhance food security. This has can be attributed to the limited development of commercial farming due to land tenure and the culture of farming which views agriculture as a family business. A large amount of donor support has been towards infrastructure development. Infrastructure development and marketing are also high on donors‟ agenda. There is however enough room for specialization; financial services, regulatory reforms, R&D etc have limited support. The World Bank also provides other direct and indirect support to agriculture in Ghana some of which include eGhana ($40 million), Regional Trade development which run from 2007 to 2010, $50.5 million support for the Trade and Investment Gateway, MSME support for $45 million, Vocational Skills and Informal Sector support (1993 -2003) of which $9.6 million was disbursed, and the Non-bank Financial Institutional Assistance programme for the period 1992-2002 with a project support of $23.9 million. Currently, it is providing an IDA facility of XDR 10.1 million to Ghana under the West Africa Agriculture Productivity Programme (WAAP). The World Bank has also been supporting the Cocoa Sector. The African Development Bank (AfDB) is one of the major institutions providing direct support to agriculture in Ghana. Over the period January 2003 to June 2006, it provided direct support to agriculture in various forms totaling $75.33 million and on cumulative basis total commitments since 2004 amounted to €399.30 million. Some of the major projects include Export Market and Quality Awareness, Nerica Dissemination, Invasive Aquatic Weeds, Rural Enterprise Project, Livestock Development Project, Food Crops Development Project, Cashew Development Project, Community Forestry Development Project, Inland Valley Rice Development Project, Rural Financial Services Programme, Small-scale Irrigation Development Project, Creation of Sustainable Tsetsefly Project and Afram Plains Rural Development. The United States is also one of the major donors who directly support agricultural activities in Ghana with project funds amounting to $63.35 million between January 2003 and June 2006 and the MiDA project of which a total of $540 million has been earmarked. Some of the specific projects funded include: Increase Agriculture Productivity, Improve Sustainable Management of Natural Resources and Biodiversity Conservation, Agricultural Activities in Food for Peace Program, Fisheries Services, AgroIndustries, Forest Industries, Agricultural Education/Training, Development of Agricultural Productivity and Value added Project (MCA), Project Management and Oversight (MCA) and Pre-Compact Support Services (MCA).
The Canadian Government has also been supporting agriculture in Ghana through its development agency CIDA. It has provided financial support to agriculture development to the tune of $52.74 million, making it the fourth largest contributor to agriculture in Ghana. Some of the projects financed include the Land Administration Project (with the World Bank), Farmer Responsive Mechanisms in Extension and Research (FARMER), FBOs Development Fund, Community Driven Initiatives in Food Security, Rural Enterprises Project, Ghana Food Aid Project, Food Security and Environment Facility, Ghana Environment Management Project, Support to Food Security Programme and Measuring Impact in Food Security. It must be added that CIDA has a programme for building trade capacity in Ghana, Tanzania, South Africa, Ethiopia, Mali, Mozambique and Senegal. More recently, some of the support includes Community–Driven Initiatives in Food Security (CIFS), Support to the Food Security and Agriculture Sector Development Policy (SFASDEP), FASDEP II, BUSAC Phase II (2010-2014), CIDA annually provides approximately $35 million Canadian dollars in support to the agriculture sector in Ghana. From the above, it can be deduced that CIDA works mainly in three areas, namely, food security, governance (human rights and government management system) and water interventions with particular focus in Northern Ghana, where poverty prevails. Two-thirds of aid going to agriculture is in the form of direct budget support to the Ministry of Agriculture for capacity building and research. They work at various levels; directly with rural enterprises, with decentralised administration and with the Ministry of Agriculture. They also financed a program for the development of rural enterprises supporting agribusiness for food production and providing relative technical assistance. The EU is another key financier of agriculture development in Ghana but with more emphasis on supporting infrastructure. It has been a major financier of the Ghana Cocoa Sector Support Programme (Phase II). Other projects supported so far include Strengthening Monitoring and Evaluation Capacities in Decentralized Ministry of Food and Agriculture, Credit for Investment by Private Sector Enterprises, th Support for the Leasing Sector, the 5 Micro-projects II, the Transport Infrastructure Programme and the Pro-poor Production and Export of Fair Trade and Organic Fruits from Ghana and Baukina Faso to mention but a few. Similarly, the Nordic Development Fund comprising Denmark, Finland, Iceland, Norway and Sweden has been providing direct support to agriculture and agri-business development in Ghana. Two notable projects financed by Nordic Fund include the Land Administration Project, Urban V Project, and Urban Sanitation Project II. IFAD, which is a “bank for the rural poor”, provides loans to support pro-poor agricultural growth. IFAD support to rural finance and rural enterprise development has been on-going for quite some time. IFAD works through rural banks and therefore they expect a major change with the revamping of the Apex Rural Bank, a network of more than 100 rural banks since the existing rural banks have very limited outreach. Projects financed include the Northern Ghana Agricultural Support Programme, Root and Tuber Improvement and Marketing Programme, Northern Ghana Poverty Reduction Programme, Upper East Land Conservation and Smallholder Rehabilitation Programme, the Village Infrastructure Project and the Upper West Agricultural Development Project. From the above, it can be added that IFAD, unlike other donors, focuses more on support for smallholder food crop farmers rather than cash crop farmers. Japan used to be one of the major and the highest bilateral donor to Ghana till 2001 when Ghana sought for HIPC assistance. Subsequently, Ghana had received less support from Japan particularly in terms of assistance to agriculture. Two major infrastructure projects are associated with Japanese aid, namely, rehabilitation of Trunk Roads and the Achimota-Anyinam Road Improvement Project. There are other
infrastructure projects financed by Japanese aid in Ghana although not directly linked to general agriculture. JICA had also provided support to rice and Citrus production, Oil Palm processing and Shea Butter quality standardization in Ghana. The German government and its development agencies, namely, GTZ (now GIZ) and KFW have also been operational in Ghana, providing support to agriculture in the following areas: Market Oriented Agriculture Programme, Forest Resource Use Management Project, Forest Protection Programme in the Volta Region, Village Infrastructure Programme, Rehabilitation of Feeder Roads and the Promotion of Out-grower Schemes. GIZ is currently into Mango, Pineapple, Citrus, Rubber, Chili pepper, Grasscutter, Guinea fowl and Fish United Kingdom through its development agency DFID also provides direct support to agri-business in Ghana. Some of the major agriculture intervention areas include Land administration, Trade Development, Agriculture and Forestry and Rural Roads. Other donors such as FAO provide numerous but small grants to agriculture development in the country. Over the period discussed above, it provided direct support to agriculture to the tune of $10.73 million. Key intervention areas include the Sericulture and Silk Processing Project, Strengthening the Organizational capacity of Fish Farmers to mention but a few. Also, France, Denmark, Italy and Spain all provide support either directly to general agriculture or through the Private Sector Development programme in the GPRS and the Ghana Shared Growth and Development Agenda (GSGDA). Government of Ghana through an Act of Parliament provides incentives to farmers through EDIF. It provides financial resources towards the development and promotion of Ghana‟s export trade. The fund has since 2002 supported businesses, enterprises and institutions with credit and grant facilities. EDIF works with 23 designated financial institutions and has the lowest rates of interest pegged at 12.5 percent.
Platform Knowledge Piece 3: The strategic role of the private sector in agriculture and rural development: Ghana working paper Table 5.2: Types of Donor Interventions in Agriculture
Dev. Partner Type Grant Grant Grant Grant Grant Grant Grant Grant Grant Grant Grant Grant Grant Grant Grant Grant Grant Grant Grant Grant Grant Grant Grant Grant Grant Grant Grant Grant Grant Grant Grant Grant Grant Grant Grant Loan Loan Loan Loan Loan Loan Loan Loan Loan Loan Loan Loan Loan Loan Loan Loan Loan Loan Loan CREDITOR ADF ADF CAG CAG CAG CAG CAG CAG CAG CAG CAG EEC EEC EEC EEC FRG FRG FRNG FRNG FRNG FRNG IFAD JAPG JAPG JAPG JAPG JAPG JAPG JAPG UKG UKG UKG USAG USAG USAG FRG FRG FRNG PTIC SPAG SPAG ABED ABED ADF ADF ADF ADF ADF ADF ADF ADF ADF FRNG IDA LIST OF ON-GOING LOANS as at 31/3/2011 Description Agreement Date Effectiveness Date EFFECTIVE DATE 2006-08-31 2006-05-31 2001-06-24 2001-11-28 2001-07-20 2003-04-20 2004-03-06 2007-04-25 2007-04-20 2006-09-30 2009-06-15 2003-09-30 2005-09-01 2007-12-06 2008-03-31 2001-03-10 2004-09-30 2006-03-01 2006-09-30 2006-11-30 2007-12-08 2010-05-24 2002-03-31 2006-11-30 2007-12-31 2009-02-01 2009-06-21 2010-01-29 2010-03-01 1999-03-03 2007-05-31 2009-11-16 2006-10-31 2007-08-31 2008-01-31 2008-01-11 2010-09-29 2006-12-27 2009-08-20 2007-10-17 1994-12-08 2003-02-02 2008-07-29 2001-01-25 2002-10-27 2002-06-06 2003-01-09 2005-03-30 2006-01-01 2006-05-31 2007-01-02 2009-04-30 2008-08-28 2008-04-07 Currency Revised Contract Value REVISED INST. CURR AMOUNT BUA 341,000 BUA 15,581,000 CAD 10,000,000 CAD 1,100,000 CAD 500,000 CAD 3,000,000 CAD 85,000,000 CAD 7,000,000 CAD 5,000,000 CAD 15,000,000 CAD 100,000,000 XEU 1,989,200 XEU 6,500,000 XEU 2,800,000 XEU 5,000,000 XEU 3,476,785 DEM 19,752,647 XEU 777,631 XEU 500,000 XEU 2,000,000 XEU 1,300,000 USD 1,512,000 JPK 400,000 JPK 178,000 JPK 343,000 JPK 360,000 JPK 504,000 JPK 36,000 JPK 593,000 GBP 4,300,000 GBP 4,700,000 GBP 250,000 USD 547,000,000 USD 640,000 USD 7,850,000 XEU 6,000,000 XEU 10,000,000 XEU 17,400,000 USD 27,360,000 XEU 7,000,000 USD 8,000,000 USD 9,500,000 USD 5,000,000 BUA 15,000,000 BUA 9,890,000 BUA 15,000,000 BUA 19,580,000 BUA 2,650,000 BUA 6,640,000 BUA 17,000,000 BUA 19,970,000 BUA 40,000,000 XEU 12,500,000 XDR 10,100,000
PROJECT TITLE AGREEMENT DATE Avian Influenza 2006-04-05 Promotion of Science & Technology for FORUM for Agric 2006-01-01 farmer responsive mechanism 2001-06-24 Measuring The Impact Of Food Securty Pg 2001-08-28 GHANA SUPPORT TO FOOD SECURITY PJ. 2001-07-20 Farmer Based Organistion Dev't Fund 2003-01-20 Food Agric Budgetary Support 2004-03-04 CIFS-Component l - Capacity Building 2004-04-22 CIFS-Component ll - Investment Fund 2004-04-22 Food Security and Environmental Facility 2006-06-30 SFASDEP 2009-01-01 Strengthening, Monitoring Capacities -MOFA 2003-06-06 Protected Area Dev't Ph II 2005-01-01 Avian Infreuenza Project 2007-07-06 Cocoa Sector Support Programme 2007-01-01 Agricultural Policies and Services 2001-03-10 Market -Oriented Agriculture 2004-06-07 Ex FSP Aliment. & Org.Riziculteur 2005-12-07 Food Security and Organization of Rice granting 2006-06-08 Promotion of Perennial Crops Plantation 2006-08-15 Rice Projects in Four Northern Regions of Ghana 2007-08-08 Rural and Agric. Finance programme(RAFIP) 2009-11-23 Food Aid (2000) 2000-06-20 Study on the Promotion of Domestic Rice 2006-07-01 Study on Upper West Integrated Agricultural Development 2007-11-01 Comprehensive Development For Promotion of Domestic Rice in Northern2009-02-01 and Ashanti Pj for Sustainable Development of Rain-fed Lowland Rice Prod. 2009-06-21 Plant Breeder (Rice) for WACCI 2010-01-01 FM Improv. Proj. of the MOFA 2010-02-11 Support to Rural Livelihoods 1999-03-03 Support to Agric Sector Harmonisation 2007-02-05 Savannah Accelerated Development Authority 2009-11-02 Millenium Challenge Corporation (MCC)) 2006-08-01 Agric Enterprise Development- USADF 2007-04-02 Agric Enterprise Expansion -USADF 2007-10-24 Promotion of Perennial Crops 2006-08-15 Outgrowers and Value Chain Fund 2010-03-29 Perennial Crops 2006-08-15 2 Units of 46M Patrol Boats 2008-09-23 Supply of Refrigeration for Fishing Sector 2007-06-29 Kpong Irrigation Project 1993-09-16 Small Farms Irrigation Project II 2000-07-20 Line of credit to Agric Dev't Bank 2001-07-12 Small Scale Irrigation Dev. Project 1998-05-29 Cashew Development Project 2001-03-08 Inland Valleys Rice Development Project 2001-05-23 Livestock Development Project Main 2002-08-02 Nerica Rice Dissemination Project 2003-10-17 Tsetse and Trypanosomiasis Free Areas Pj. 2005-04-15 Export Market and Quality Awareness Pg. 2005-07-29 Afram Plains Agric. Dev't Pj. 2006-06-29 Northern Rural Growth Programme 2008-03-04 Rice Sector Support Project 2007-08-08 West Africa Agricultural Productivity Program(WAAP) Supp.Pj. 2007-06-21
Table 5.2: Donor Interventions in Agriculture
Devt Partner/ Donor Agencies GIZ
Specific Value Chain (Category)
Mango, Pineapple, Citrus, Rubber, Chili pepper, Grass cutter, Guinea fowl and Fish.
Processing & Marketing ( Exports) Market Oriented Agriculture
(MOAP) - An amount of €15million Euros for a period of 9 years (2004-2013).
Rice Production; Citrus & Oil Palm Processing; Shea Butter Quality Standardization. Value Chain Approach to Agricultural Development Programme: Marketing value chain level. Maize, Livestock (meat) and Onion(shallot) Agricultural Devt & Value Chain Enhancement Program (ADVANCE) Maize, Rice Soybean, Mango, pineapple and citrus. Perennial crops (Oil Palm, Rubber, Cocoa & Cashew nut.) It is yet to go into agro-value chain production for food and horticultural crops such as Cassava, Mango and Pineapple. Perennial crops sector (Oil palm, Rubber);
$14 million USD
Agricultural services Supply chaindomestic & international markets
EUR 10,000 million as loan to support agriculture for a duration of 4-6 years.(April, 2011)
On cumulative basis total commitments of
Platform Knowledge Piece 3: The strategic role of the private sector in agriculture and rural development: Ghana working paper Food crops (rice). Supports Golden Exotics a private pineapple production and processing company, located in Kpong.
Production, processing marketing the AFD group since 2004, is €399. 30 million, including €319,45 million with loans , €73,76 million with grants and € 6,09 million with guarantees. Lending to the Agriculture sector to support cocoa in millions of dollars in fiscal year is $1.11 million USD US$ 14.8 million loan; US 22.5 million loan ; US$25.5 million loan & US$ 4.0 million including a grant amount of US$0.3 million approved within 2000-2005 for the aforementioned projects respectively.
Cashew Devt Project (2000); Inland Rice Devt Project(2001); Export Market & Quality Awareness Program in nontraditional agric crops especially, Pineapple, Papaya, Chilli pepper & Egg- plant(2005); Nerrica rice Dissemination Project (2003).
Root and Tuber Improvement and Marketing Programme: Cassava Rights & Voices Initiative (2004-2009 Attract £15 million private sector investment in the North-2010-2015
Platform Knowledge Piece 3: The strategic role of the private sector in agriculture and rural development: Ghana working paper CIDA Support to the Food Security and Agriculture Sector Development Policy (SFASDEP) Farmer Responsive Mechanism Measuring the Impact of Food Security Skills development Fund to the Private Sector -Mixed Credits to Small Industrial Projects Support to SME‟s for Advocacy activities aimed at improving the business environment
CIDA Contribution Cdn $110,000,000 Project Duration: 2008-2013 10,000,000 2001-2007) (
BUSAC Phase II Phase II 20102014 CIDA annually provides approximately $35 million Canadian dollars in support to the agriculture sector in Ghana. FASDEP II
1,100,000362 grants approved at a total of 11.63 million GHS across the country (Agric sector had 20% of the total grant)
$8 million -$ 20 million is expected to be disbursed.
Community–Driven Initiatives in Food Security (CIFS) JICA JICA Lowland Rice Devt Project Policy Advisor on Small and Medium Enterprises. West Africa Centre for Crop Improvement (WACCI) Grant Assistance for Underprivileged Farmers (KR2) Value Chain Development 2003-2008
Rice Sector Support Project (RSSP)
Value Chain Development
€ 12.5 million Very concessionary loan
Platform Knowledge Piece 3: The strategic role of the private sector in agriculture and rural development: Ghana working paper Food Security & Rice Producers Org.Project Ghana Rice Inter – Professional Body (Production with €1.5 Grant
Ghana Cocoa Sector Support Programme Phase II:
EU Contribution: € 5,000,000.00 (100% of total).2008-2013
USAID agricultural budget has ranged between $6 - $8 million USD annually/ per year. From 2004-2010, Commercial Agriculture & Value Chain Approach Small–to-medium sized agricultural businesses eg smallholder farmers. The African Enterprise Challenge Fund (AECF): is a USD $ 50-100 million private sector fund hosted by AGRA, which funds private sector innovation to spur rural development through like-for like investment.
With MiDA support, ADRA Ghana is building the capacity of farmers and developing agribusinesses in the Afram Basin. IFAD loans amount to a total commitment of
Platform Knowledge Piece 3: The strategic role of the private sector in agriculture and rural development: Ghana working paper US$193.4 million, making Ghana the second largest user of IFAD resources in the region
Impact on the Private Sector and Low Income Households
The analysis on the impacts of these interventions indicated mixed outcomes . Whereas some respondents especially from public sector held the view that donor programmes are generally effective, some felt otherwise. For example, some of the respondents cited the USAID, SOAG programme which intends to enhance the competitiveness of Ghanaian private sector agri-businesses to compete within the global marketplace since 2003 and GTZ Market Oriented Programme which also targets the private sector in agri-business as successful case studies. Others think the BUSAC Fund, the USAID ATP Program, MiDA & Advance projects are showing signs of successful. It must be emphasized that project outcomes differ and therefore aggregate assessments will not bring out the true impact. Therefore only evaluation reports of such donor projects will suffice the answer. Donors have been assisting governments, civil society and the private sector effectively according to our field investigation. About 6 out of 10 respondents were of the opinion that donors have been assisting governments, civil society and the private sector effectively. In addition, they intimated that, donors and development partners do support key components of all aspects of Ghana‟s economy. They further added that, GoG receives a chunk of budget support from development partners and donors. Equally, CSOs and PSOs have over the years received assistance in various forms from donors. Project impacts on low income households were also undertaken and some respondents indicated that several benefits have accrued from private sector interventions in agricultural. Some of the benefits they mentioned include job opportunities, employment opportunities as smallholder out-grower farmers and also increases in their income. However, some respondents revealed that, there are negative repercussions such as the loss of farm lands to cash crops rather than food crops farming which has repercussions on food prices and the general cost of living. Others indicated that farmers who do not belong to an FBO may have problems with the production and marketing of their produce.
Assessment of Donor Support to Cassava
In Ghana, cassava is a staple crop with several benefits just like maize. However, compared to other crops, it seems to receive less attention from donors and development partners supporting Agricultural development in Ghana. Most donor support for Agriculture focuses mainly on crops such as rice, oil palm, pineapple; mango and citrus but do not have specific interventions on the cassava value chain. The major
8 Some areas have seen significant improvements at every stage of the value chain. Private sector response in the production of cocoa, oil palm, pineapple and maize as well as input procurement (seed, agrochemicals, fertilizers and machine), processing (pineapple, cocoa, tomatoes, fish and meat), marketing has been high but low in areas like the provision of agricultural extension services, cocoa quality control, roads and high ways has ensured the maintenance of standards.
donor in this value chain is IFAD and this is mainly in its Root & Tuber Improvement & Marketing Programme (2006-2014) with a funding portfolio of XDR 13.05 million. Despite the limited donor support in this area, both the government and private enterprises have initiated projects which centre on cassava but little can be said of the success of such initiatives. During 1998, when the market for non–traditional agricultural produce for cassava became more liberalized, the state developed a Presidential Special Initiative (PSI) in cassava chips and starch production. For instance, the Ghana Investment Promotion Centre (GIPC) collaborated with the Root and Tubers Unit of MOFA to go into the marketing of cassava pellets in 2004 but it has not been successful. In 2005, the government also, selected cassava as a commodity for the presidential special initiative programme. Consequently, a starch factory was set up at Bawjiase in the Central Region of Ghana to produce industrial starch for export. Another instance is the GH¢ 750,000.00 Ayensu Starch Factory - a long term project of the National Investment Bank. The Starch project is not functioning currently due to technical problems. Even some private companies in Ghana which were setup to go into cassava chips production failed, due to several reasons including global competition from Thailand and Brazil as at 2005. As intimated earlier, only few donor agencies in Ghana have programmes which give attention to the value and supply chains of cassava production. A key donor or development partner which has interventions focused towards the improvement of cassava production is the International Fund for Agricultural Development (IFAD) under its Root and Tuber Improvement and Marketing Programme (RTIMP). The programme is intended to support the improvement of food crop varieties such as cassava, yam and other root and tuber crops in Ghana. Its specific objective is to build up competitive, marketbased and inclusive commodity chains for roots and tubers, supported by relevant, effective and sustainable services accessible to poor rural people. It further aims to support the emergence of both an inclusive private sector deeply anchored in the realities of Ghana and a stronger public sector, capable of improving the policy and regulatory environment and delivering the required public goods. Between Nov-2006 and Dec-2014, a loan amount of $27.70 million was committed towards the programme with $7.26 million disbursed as at November 2010. Also an additional amount of $ 5.0 million was specifically approved towards the improvement and marketing of cassava, from 2007-2013. As at May 2011, IFAD loans amount to a total commitment of US $193.4 million, making Ghana the second largest user of IFAD resources in the region. Another key support to the sector is the World Bank‟s West Africa Agricultural Productivity Project (WAPP), which focuses on Regional Cooperation in Agricultural Technology generation & dissemination. The project with national focus on roots & tubers also joins Ghana with Mali (rice) & Senegal (cereals). An amount of $ 25 million has been committed to the project for 2008 -2010.
Assessment of Donor Support to Mango and Pineapple
Mango and Pineapple are two of the horticultural cash crops which have enjoyed wider popularity for some years now. According to information obtained from the Ghana Investment Promotion Centre (GIPC), the pineapple industry is the most developed horticultural sub-sector in Ghana. Production is estimated between 120,000-150,000 tons annually and during 2003-2007, an average of 63% of Ghana‟s pineapple production was exported. In 2007, commercial export of MD2 pineapple variety earned the country $ 20 million in foreign exchange. According to the GIPC, Mango has the potential to become an important non- traditional export earner for Ghana and is doing quite well on the export market. Also, information obtained from the Export Development and Investment Fund (EDIF), there is an increasing demand for mangoes (both processed and unprocessed) in the export market. There is sponsored a Mango Project at Bole, Northern Region in 2010.
The GIZ (formerly GTZ), USAID and DANIDA are some of the agencies which have direct interventions involving all levels of the value chain within the sub-sector. The EU also supports the exports of organic fruits such as pineapple and mangoes from Ghana. The German agency supports the marketing value chain with a programme called the Market-Oriented Approach Programme (MOAP). GTZ„s focus is on the processing and marketing of horticultural produce specifically fruits and vegetables. In 2004-2007, GTZ Market-Oriented Agriculture (Phase I) committed a grant amount of DEM 10,170,316 to the marketing of horticultural crops. Further, an amount of €15 million Euros has been committed by GTZ for a period of 9 years (i.e. 2004-2013) to support this initiative. The commodities it supports include Mango, Pineapple, Citrus, Chili pepper, Guinea fowl among others. At the production level, specific bottlenecks which GIZ assist to address include quality standards at production through development and dissemination of Good Agricultural Practices (Global GAP), organic and fair trade certification. In agro-processing, GIZ technical support goes to hygiene standards (HACCP), the development of appropriate technology, innovative products and marketing. In trading, GIZ equips trainees with adequate handling, packaging, hygiene and quality control to reduce losses and raise consumer acceptance. It also helps in capacity building for actors in the value chain like exporters associations and FBOs through training courses. In addition, contract farming and out-grower schemes receive specific organizational and financial support from the agency. In the opinion of GIZ‟s representatives, transparent management of business associations requires special managerial and organizational development skills. They assert that, support to agricultural finance including the scaling up of small scale farmers into higher value chains needs well targeted mid-term financing facilities, that can be accessed through rural and commercial banks supported by embedded business and technical services or assistances. In order to be globally competitive, private sector organizations are strengthened to voice their interests and to place competitive supply offers. The agency assists exporters and Private Enterprise Associations such as FAGE to build their capacity and be able to advocate effectively. It also collaborates with other development partners to help actors in the private sector to enter into investment opportunities in the value chains such as agro- processing, packaging, marketing and distribution. Usually FBOs, which are productive and their members own pieces of land over 5 acres are selected for GIZ technical assistance. Vibrant SMEs are also trained in the packaging of fruits like pineapple and mangoes for exports. The GIZ gives technical assistance to large firms in fruits production and processing, especially pineapple and citrus. These institutions include PINORA, HW, Blue Skies Company at Nsawam (Eastern region) and Kumanga Farms (a foreign subsidiary firm) in the Brong Ahafo Region of Ghana. Golden Exotica at Asutuare is another foreign subsidiary company which receives technical assistance and agribusiness advisory services in the production and exportation of fresh and processed fruits like pineapple and mangoes from the agency. The Tamale Integrated Food Production (Mango Project) which is currently also receives technical assistance from GIZ and USAID. The USAID places emphasis on the agricultural sector to create a modern, market driven and competitive sector. Its activities are designed to support both public and private entities in overcoming technical, institutional and regulatory constraints to increased productivity. The USAID Trade and Investment Program for a Competitive Export Economy (TIPCEE) and Agricultural Development and Value Chain Enhancement Program (ADVANCE) are broad programs which are directly into agribusiness and jointly support capacity building in value chain development. Also, DANIDA and USAID are also collaborating to give smart credit to promote value chain approach in investment in fruits through the ACDI-VOCA
Platform Knowledge Piece 3: The strategic role of the private sector in agriculture and rural development: Ghana working paper
managed, ADVANCE program . TIPCEE, with a budget of $30 million USD was to run from 2004- 2009 and was tasked to provide assistance to develop competitive agricultural value chains and also address both production and regulatory issues through partnerships with both private and public actors and other development partners like DANIDA. The main outcomes of the program are: increased production, internal sale and export of horticultural crops such as pineapple and increased quantities of high quality maize for processing. The ADVANCE project was launched in 2009 for a four year period, is a USAID funded program and implemented by a consortium of local and international partners led by ACDI-VOCA. It is focused on adequately developing selected commodities -Maize, Rice, Soya beans, Mango, Pineapple and Citrusfrom cultivation through marketing in order to increase their competiveness on the global market. It intends among other strategies to improve access to private sector–run mechanization services and support growth and effectiveness of commercial input supply systems. It is estimated that, the ADVANCE program intervention will reach 60,000 farmers over the four year period. To date, about 23,000 farmers and 508 FBOs‟ are participating in programme supported supply chains. In addition, 85 buyers and processors, 55 input dealers and 39 mechanization service providers have been engaged by the program in a strategy to bring growth to the sector through increased efficiencies and also developing a mutually beneficial business relationship. The financial services component of the programme involves working with 4 commercial banks, 2 non- bank financial institutions, 4 venture capital firms and 10 rural banks. The African Development Bank also, has a programme called the Export Market & Quality Awareness Program, which aims to contribute towards increasing export earnings in non-traditional agricultural crops especially, Pineapple, Papaya, Chilli pepper & Egg- plant. The Bank approved a loan amount of US$ 25.5 million to support the project from 2005-2010. The program was initiated on Good Agricultural Practices (GAP) and developed production manuals with GAP protocols to enable smallholder farmers meet requirements of international markets. It would provide key infrastructure like farm access roads, farm pack houses, refrigerated trucks and laboratories for testing the quality of farm produce prior to exports. The program covers five horticultural regions of Ghana. DANIDA‟s Value Chain Approach to Agricultural Development Programme in horticultural crops including fruits like Pineapple has approved an amount of $14 million USD for 2011 to develop a market oriented non-traditional export products. A fair assessment of the performance of interventions of donors with respect to specific value chains and its effects on the private sector and the poor can best be obtained from private companies and FBOs into the production of such commodities like pineapple. Generally, donors are helping in the cultivation, processing and marketing of Pineapple and Mango. The supply chains for these commodities are being developed because recently, some few private companies are into the processing of fruit juices, fresh pineapple cuts and fruit drinks. Moreover, donors who support these commodities are into market oriented agricultural production, value chain development and capacity building for FBOs. On the whole, donors support particular agricultural commodities depending on its priority to the national economy and the global market. For instance, when the Smooth Cayene and Sugar Loaf species of pineapple were being rejected in 2003 for a new variety called the MD2 on the European Markets, the donor agencies such as GTZ assisted FBOs and Exporters in capacity building and development of new varieties.
Assessment of Donor Support to Cocoa
Unlike cassava, the cocoa industry in Ghana is more developed. Ghana is the world‟s largest cocoa producer after Cote d‟Ivoire. As in most cocoa producing countries, Ghana‟s cocoa is grown by smallholder farmers. It employs about 1.5 million people in production and transport. Over the years, the Government of Ghana has implemented policies that add value to Ghana‟s raw agricultural products like cocoa and oil palm. For example, the volume of cocoa beans processed locally has doubled in the last decade. Donors who support Cocoa production include the World Bank, the European Union and African Development Bank. The World Bank lends to the Agriculture sector to support the Production & Marketing of Cocoa. In the 2010 fiscal year, it gave Ghana a loan amount of $1.11 million USD to support the crop. In 2007, the World Bank approved an IDA Credit of US$ 15 million to Ghana at a 10 year grace period and a maturity period of 40 years. Mali and Senegal also had equal amounts and the objective of the project is to generate and disseminate improved technologies in the participating countries focusing on roots and tubers in Ghana, rice in Mali and cereals in Senegal. The Delegation of the European Union, has also contributed a grant amount of € 5.0 million (100% of total) towards the Phase II of the Ghana Cocoa Sector Support Programme. The same amount was approved for the first phase of the project. The duration of the second phase is from Dec 2011- Dec 2013. The project‟s purpose is to ensure an improved sustainability of cocoa production and marketing as an export crop in Ghana. The overall objective is to contribute to an improved livelihood of smallholder cocoa farmers in Ghana.
Key Lessons Emerging
A major lesson drawn from the analysis on donor support to private sector activity in agriculture and rural development includes the following: Only few donor agencies and development partners have significant portfolio and strategic programmes targeted towards the agricultural sector compared to what prevails in health, education and infrastructure sub-sectors. Most agencies do not have the private sector as a priority area but rather, there are small components representing a small fraction of the private sector. There is rather a concentration of donors in production, infrastructure and general PSD support. Thus, unlike the MCA that has a comprehensive approach to agriculture ranging from irrigation (production) to marketing, infrastructure and credit for small holder farmers and farmer based organizations, most support to agriculture has been on a piecemeal basis with little connection with other on-going donor interventions. This is certainly an easy way out since it requires fewer resources but often less helpful to the sector. Secondly, it was observed that, while some development partners and donor agencies were pooling their resources to work towards a common agenda, others prefer to solely fund their projects. Consequently some projects are not well harmonized to yield the desired impact. Consequently, donor support to the sector is not very significant compared to support to other sectors and often, they are less co-ordinated. A striking finding that this discussion brings to bear is the fact that, there is a lot of lip service both within Government and its development partners in terms of its role as an engine of growth considering the level of funding it receives compared to what is required to drive the economy. Therefore, there is the need to find ways to effectively engage the private sector in Agriculture and rural development. The thrust of the discussion is that, there is a school of thought that Agriculture is a development issue, because most of the poor rural communities depend on it for their livelihood. Therefore, the government should do everything possible within its means to ensure increased food production. However, a different
school of thought is that Agriculture should be seen as a business that has several benefits, especially the numerous opportunities that trade liberalization is associated with. The private sector must therefore be given the needed support in the form of easy access to large tracts of land for large scale farming, capital, agricultural equipment such as tractors and an environment conducive to investment. They can also be engaged effectively by providing the needed infrastructure such as road networks, irrigation facilities and access to markets to open up the rural areas to investment. It should also be supported to invest in the various value chains by formulating strategic agricultural policies and also be given the chance to compete in the privatization of seed certification, fertilizers, irrigation, marketing and distribution. Almost all the representatives from the local financial institutions do support agriculture in one way or the other. They also share the view that agriculture must be seen as a business rather than a development issue, in order to attract long term finance. Thus, the private sector should be provided with the requisite resources and infrastructure in order to motivate them to invest more resources into the sector. They asserted that, instead of development partners providing lines of credit for onward leasing to rural people, through bilateral relations with the government and/or other agencies, international finance agencies can partner with them to deliver efficient services to various people in all the value chains to boost the agricultural industry. Representatives from the various development agencies also hold the view rural agricultural development requires a strong Ministry of Food and Agriculture with a well-qualified, dedicated and well trained staff that will be results-oriented to achieve the goals of development through agricultural transformation. They also intimated that, there is the need for a strong policy framework and well integrated and comprehensive programmes to guide the private sector in agricultural development. They further called for a systematic intra-ministerial linkage or communication especially between technical staff and their leadership to effectively harmonized donor projects for better outcomes. Stakeholders in the industry must communicate and organize concerted efforts towards agricultural and rural development. It is important to note that, all these are meant to increase the private sector‟s role in agricultural development.
Summary of Key Messages
The study aims to improve our understanding of the role played by the private sector in promoting agricultural and rural development and to propose pragmatic ways donors can engage with the sector to yield better developmental outcomes. The following approaches were used to study these issues. First, Agricultural value chains in food staples, traditional exports and commercial production for domestic markets was studied using secondary data sources. Second, a detailed value chain analysis of Cassava, Pineapple, Mango and Cocoa were undertaken whereby the extent of private sector involvement and the role of the state and donors in supporting or impeding outcomes were investigated. The whole chain of the selected products (Cassava, Pineapple, Mango and Cocoa) including R&D, input markets, production, intermediaries, processing and output markets as well as support institutions (policy, technical support, public infrastructure, financial services, and institutions) were analysed. The study also ascertained how public, private and donor actions impact on the chain. This was done using both primary and secondary data from the relevant Ministries as well as micro studies of impact. Thus a selection of key interventions of each of these crops was evaluated using the World Bank PSIA methodology. Communities growing these crops were selected for the focus group discussions targeting a minimum of 10 experienced male and female farmers, traders, processors and service providers were included when available. The following major findings emerged: first, the private sector is fully responsible for food staples and horticultural export production in Ghana and has responded fully to the „rolling back‟ of direct state involvement in rural areas where food staples and horticultural exports are produced. The state has also `retreated‟ slightly in internal cocoa purchases and input distribution. This policy has been pursued because of the need to maintain the premium price Ghana‟s cocoa enjoys. Consequently, the state has kept its involvement in the sector to continue to provide quality assurance. An analysis of the private sector‟s response to the opportunities in agriculture shows that it has provided increased demand for the selected crops and the private sector has responded positively. Secondly, access to the international market drives private sector participation. There is demand for tropical fruits in the European Union, the key trading partner of Ghana. As far as Ghanaian exporters can guide farmers to produce to Global GAP specifications there will be ready market and this is what is driving the donor agencies to support the for-profit private sector to produce, process and or export. In addition, availability of processing factories and demand for processed products drives private sector participation. There are emerging opportunities in agro-processing of fruit juices although South Africa is a keen competitor. Several small scale processors are continuing to emerge daily in the major cities of Ghana. It was also observed that there is a positive impact of private sector activity on low-income rural households. This is evident in household investments in durable assets like houses and ICT gadgets as well as improving availability of food in the household. However, in order to reduce further the vulnerability of farm households to uncontrolled prices in liberalised markets, pro-poor strategies that target specific households and communities should be instituted. Also, revealing is the finding that the agricultural sector in Ghana is more dynamic and competitive today because there are no restrictions in any of the activity areas except for cocoa export and quality assurance before export. Another major finding is that R&D is sensitive and capital (finance, material and human) intensive and therefore government cannot leave the space completely to the private sector in the foreseeable future.
In analyzing donor support for private sector activity in agriculture it became evident that only few donor agencies and development partners have significant portfolio and strategic programmes targeted towards the agricultural sector compared to what prevails in health, education and infrastructure sub-sectors. Most agencies do not have the private sector as a priority area but rather, there are small components representing a small fraction of the private sector. Secondly, it was observed that, while some development partners and donor agencies were pooling their resources to work towards a common agenda, others prefer to solely fund their projects – an approach which affects the development outcome of donor funds. A related finding is that funding for agriculture development is small compared to what prevails in other sector although the latter is a major employer and contributes a greater share of GDP. Also striking is the thinking that agriculture is a development issue rather than seen as a business. However, the local financial institutions interviewed do share the view that agriculture must be seen as a business rather than a development issue, in order to attract long term finance. Thus, the private sector should be provided with the requisite resources and infrastructure in order to motivate them to invest more resources into the sector. They asserted that, instead of development partners providing lines of credit for onward leasing to rural people, through bilateral relations with the government and/or other agencies, international finance agencies can partner with them to deliver efficient services to various people in all the value chains to boost the agricultural industry. Representatives from the various development agencies also hold the view rural agricultural development requires a strong Ministry of Food and Agriculture in addition to providing a strong policy framework and well integrated and comprehensive programmes to guide the private sector in agricultural development. This should be complemented with a systematic intra-ministerial linkage or communication especially between technical staff and their leadership to effectively harmonized donor projects for better outcomes. Stakeholders in the industry must communicate and organize concerted efforts towards agricultural and rural development. It is important to note that, all these are meant to increase the private sector‟s role in agricultural development.
How Should the Platform Donor Effectively Engage the Private Sector in Rural Areas?
Platform donors have been actively supporting the development agenda but in order to maximize the gains from their activities, the following methods of engagement are suggested: The study suggests that donor support to agriculture should be aligned to national priorities through the GSGDA and other stakeholder consultations. Another suggestion relates to the need to promote aid delivery through pooled funding in order to reduce transactions costs resulting from unnecessary duplication. It is also suggested that donor support to agriculture should be increased if not doubled at least. Current support to the sector is inadequate and cannot significantly move the sector into a modern and vibrant segment of the economy. A comprehensive and integrated approach to agriculture support as proposed by the MCA compact should be followed by all donors as the piecemeal or less integrated approach seeks to do presently. Platform donors should increase aid to support accelerated development of capacities at all levels as Ghana continues its transition into a high middle income country. Aid should also be targeted at building the capacity of institutions and human resources to effectively manage the transition. Platform Donors should also harmonize their aid procedures in agriculture and other key sectors. According to the 2010 PD Evaluation, the recent pace at harmonization is very slow (also see the Ghana
Aid Harmonization Matrix). There should be a shift from project funding towards pooled or programme funding by ensuring that the various projects are aligned with the GSGDA to avoid stand-alone projects. Platform donors who provide lines of credit for onward leasing to rural people, through bilateral relations with the government and/or other agencies, international finance agencies should consider partnering directly with local financial institutions to deliver efficient services to various people in all the value chains to boost the agricultural industry. Aid conditionalities still remain a challenge and the mixture of project, programme and pooled funding has led to a complex aid architecture with its associated high transactions cost. Thus, donors should continually shift from project funding towards programme or pooled funding. A successful agricultural programme requires a strong Ministry of Food and Agriculture in addition to providing a strong and comprehensive policy framework that is well integrated with other sectors. Thus platform donors should support the technical capacities of the Ministry of Food and Agriculture including the use of its accounting and procurement systems.
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Appendix 2.1: Questions and responses of the key personnel interviewed in various agencies. Appendix 2.2: Names and contacts of focus group participants in Mfafo Appendix 2.3: Names and contacts of focus group participants in Fotobi Appendix 2.4: Names and contacts of focus group participants in AgonaNyakrom Appendix 2.5: Names and contacts of focus group participants in Agomeda Appendix 2.6: ODI/PKP study: Sample of discussion guide
Appendix 2.7: Qualitative assessment of opportunities for private sector participation and implications for community/household development Variable Score (1=Yes, 0=No) Cassava Pineapple Community Community
Are the following availability and in good condition for the private sector?: Land (fertile and conflict free) Roads and highways Electricity Local assembly market space Health centres Are the following services controlled by the private sector: Procurement Production (including field personnel) Processing Distribution and sales of inputs Distribution and sales of output Are the following controlled by the private sector? Research and development, Training and capacity development Financing (credit and insurance) Are households‟ food secure? Is household expenditure per capita up to GHC5.00? Do households own basic assets? Is community socially empowered? Is community ensuring environmental soundness
1 0 0 0 0
1 1 1 1 0
1 1 1 1 0
1 1 1 1 1
1 1 1 1 1
1 1 1 1 1
1 1 1 1 1
1 1 1 1 0
0 0 1
0 0 1
0 0 1
0 0 1
1 1 1 0 1
1 1 1 1 1
1 1 1 1 1
1 1 0 1 1
Source: Survey data, April, 2011
Platform Knowledge Piece 3: The strategic role of the private sector in agriculture and rural development: Ghana working paper Appendix 2.8: Output of cassava and cocoa and export volumes of pineapple and mango Year 1980 1981 1982 1983 1984 1985 1986 1987 1988 1989 1990 1991 1992 1993 1994 1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 Cassava 1857.6 2065 1986 1728 2200 2300 2876.2 2725.8 3300 3320 2717 5701.5 5662 5972.6 6025 6611.4 7111.18 6999.509 7171.5 7845.44 8106.8 8965.84 9731.04 10239.34 9738.812 Pineapple 6600 6300 6900 5500 5300 5500 6000 8000 9000 10000 11000 12000 12000 15000 18000 20000 35000 35000 35000 35000 60000 60000 60000 60000 67000 NA 599,318 407 740,458 182 614,532 Mango NA Cocoa 257,974 224,882 178,626 158,956 174,809 219,034 227,765 188,171 300,101 295,051 293,352 242,817 312,123 254,653 309,454 403,872 322,488 409,383 397,675 436,947 389,772 340,562 496,846 736,975
Platform Knowledge Piece 3: The strategic role of the private sector in agriculture and rural development: Ghana working paper 9567 9638 10217.93 11351.1 12230.6 Note: NA= Data not available 67000 67000 68000 68000 NA 823.73 680,781 857.57 710,642 434.87 632,037 NA
Prepared by: Platform Secretariat Published by: Global Donor Platform for Rural Development Godesberger Allee 119, 53175, Bonn, Germany Study conducted by: Overseas Development Institute, London Authors: Peter Quartey and Irene Egyir Photo credits: www.123rf.com/haak Date of publication: December 2011
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