Can Agribusiness Reduce Poverty In Ghana?

Joyous farmer Vozbeth K. Azumah ploughing his farm at Agotime in the Volta Region of Ghana

Accra, Ghana, June 6, 2019//-With its vast agricultural potential, Ghana’s agribusiness sector is becoming the ‘new oil’ fueling the motor of inclusive growth and development in the country.

The sector, therefore, is the engine driving the country’s economic transformation through the provisions of raw materials for industry, foreign exchange, food security, employment, and poverty reduction.

Significance of the sector

The potential for agriculture and agribusiness to bring about structural change and poverty reduction is significant in Ghana as it is in other developing economies.

The pathways through which agriculture and agribusiness spur economic growth and poverty reduction have been described extensively in the development literature, World Bank 2016 report noted.

High productivity in agriculture raises farm incomes and increases demand for products and services mostly from the non-farm sector. It also leads to more and cheaper food, and generates patterns of development that are employment-intensive, benefiting both the farm and non-farm sectors, agric economists indicated.

WAYS AGRIBUSINESS CAN REDUCE POVERTY 

Major source of raw materials

The agriculture sector remains an important contributor to Ghana’s export earnings and a major source of inputs to the manufacturing sector.

Two-thirds of non-oil manufacturing depends on agriculture for raw materials as agriculture and agribusiness account for a major share of all economic activities and livelihoods among smallholder farmers in the country.

Foreign exchange earnings

For instance, cocoa alone accounts for 25 percent of total foreign exchange earnings and Ghana accounts for about 20 percent of global cocoa exports, World Bank’s third Ghana Economic Update report revealed.

Similarly, figures from the Ghana Export Promotion Authority (GEPA) indicated that processed and semi-processed products sub-sector contributed $2.105 billion to the country’s Non-Traditional Export (NTEs) revenues in 2017, representing 82.35 percent of the total NTEs revenues in that year.

This was followed by the agricultural sub-sector which contributed $440.95 million whereas the industrial arts and crafts sub-sector generated US$10.41 million.

These contributions brought the entire NTE sector’s revenue performance to US$2.557 billion, representing an increase of 3.81 percent as compared to the US$ 2.463 billion total sector revenue performance in 2016.

The NTE sector’s performance represents an 18 percent contribution to Ghana’s total merchandise exports revenues in 2017.

According to the report, the improved performance in 2017 was as a result of the increase in exports of cocoa products such as cocoa paste and cocoa powder, which rose in value by 60.5 percent from US$542.3 million in 2016 to US$870.2 million in 2017. Data on NTE revenues for 2018 have not yet been released.

Employment 

Agribusiness is a major sector where jobs could be created for the teeming unemployed youth. The youth can be employed in all areas of the agribusiness sector- resource management, farming, conservation, ranching, sales, among other if they are properly trained.

“As technology has progressed and markets have become increasingly global, agribusiness has developed to meet and solve high-tech farming needs and problems”, Mubarak Seidu Abdulai, Managing Director of Antika Farms Company Limited, a Wa-based producer of high quality seed, distributor and retailer of agro-inputs including fertilizer, agro-chemicals and seeds, told African Eye Report.

 Agriculture is also the most important sector for jobs and livelihoods in the rural areas. The agribusiness sector has a very large multiplier effect on employment, creating over 750 jobs for every additional US$1million of output, World Bank’s third Ghana Economic Update report revealed.

Also, the agriculture sector employs more people, particularly in the rural areas where the sector is the main employer of last resort. According to the 2015 Ghana Labour Force Report, there were 9.3 million people who were formally employed in 2015. Of the total number, 3.3 million (about 36 percent) were employed in agriculture.

However, in the rural areas, total employment recorded was 4.6 million (49.1 percent of total employed). Of the total rural employment, 70.6 percent were employed in the agriculture sector. This is most likely an understatement, as the Labour Force study only covered formal wage employment.

However, in the rural areas agriculture is the employer of last resort and hence total agriculture employment—formal and informal—is even higher than the labour force study suggests.

For instance take cashew in which the country exports about 90 percent of the raw cashew nuts for processing in Vietnam and India.

Cashew

Dozens of cashew farmers and labourers at Seikwa and its surrounding communities in the Tain District in the Bono Region walk around a vast cashew plantation.

The dry leaves on the ground crackle as they collect the highly prized nuts, which grow on large evergreen trees. They detach the nuts and pour them into baskets and sacks.

Opanyin Kwame Adu, a farmer, said: “These nuts are an important source of income for people in Seikwa and its neighbouring communities”.

Across the major producing regions of cashew namely, Bono East, Ahafo, Bono, Savannah, and Upper West, the crop is a major source of employment and income for the people, especially the youth.

Cashew which was introduced into Ghana about 30 years ago, is currently the leading export commodity in the NTE sub-sector, data from GEPA revealed.

Ghana with current annual production of 70,000 tonnes of raw cashew nuts, raked in about $197 million worth of export revenue in 2016, depicting 53 percent of the $371 million received from the total agricultural NTE sub-sector, GEPA said.

Furthermore, across much of West Africa, cashew trees are a major cash crop, with raw cashew nut production hitting 1.5 million tonnes, or over 43% of the global supply in 2018, according to the International Nut and Dried Fruit Council.

Côte d’Ivoire, Guinea-Bissau, Nigeria, Benin, Burkina Faso, Ghana, Senegal and Gambia are the major producers in the region, with Côte d’Ivoire alone accounting for nearly half of regional production.

West Africa’s total production outstrips East Africa’s 470,000 tonnes, which mostly come from Tanzania, Mozambique and Kenya.

However the bulk of what is produced locally, around 90%, is exported as unprocessed raw nuts to processors in India and Vietnam, before being dispatched to supermarkets in Europe and the United States.

Vietnam imported around 53% of the world’s raw cashew nuts and India accounted for 45% last year. The loss of added value is worth about $200 million, the World Bank estimated.

This large untapped processing potential is providing new opportunities in Ghana and West Africa, where large-scale international processors like Singapore’s Olam International, European snack company Intersnack, Brazilian group Usibras, and Singapore’s international commodity trader Valency International all have a footprint.

Farmer

Locally, domestic processors are emerging and expanding, including Tolaro Global (Benin), Mim Cashew (Ghana), Anatrans (Burkina Faso), Cajou Espoir (Togo), FoodPro (Nigeria), and Cajou des Savanes (Côte d’Ivoire).

With demand driven by changing consumption patterns and the increasing use of cashews as snacks and bakery and confectionery ingredients, global cashew production has increased by over 830,000 tonnes, or 5%, in the last year.

Currently, the industry is worth over $7 billion, attracting new suppliers who want to muscle in on the market and meet growing demand.

In March, Vietnamese conglomerate T&T Group JSC signed an agreement to purchase cashew nuts from Côte d’Ivoire and build a processing plant.

Food security

Gareth Wilkie, Managing Director of VegPro Ghana Limited, a leading Kenyan horticulture giant which produces crops including chilies, butternut, avocado pear and baby corn at Fodzoku-Torgome in the Volta Region of Ghana, noted that the country’s agribusiness sector has a bright future which could enhance food security for all.

He explained: “Ghana has fertile soil which is good for agric and agribusiness sector. There are about 30 million mouths to feed, stable economy and burgeoning agribusiness sector”.

Mr Wilkie whose company employs over 650 workers and exports 98% of products, added that the sector is the surest path to ending hunger in the country.

For Emmanuel Asigri, Chief Executive Officer of the National Youth Authority (NYA), was emphatic that; “the financial drain on the economy as a result of imports of such staples as rice, wheat, sugar, poultry and in some instances vegetables, could be a thing of the past if majority of our youth, the most productive labour force of the country would venture into agribusiness”.

Ghana’s Minister of Food and Agriculture, Dr Owusu Afriyie Akoto added: “We believe we can leverage the Planting for Food and Jobs (PFJ) and Rearing for Food and Jobs (RFJ) programmes and our other efforts in agriculture and agribusiness sector to reduce our large food imports”.

As a country, we spend over $2 billion every year importing food. For example, we import over a billion dollars of rice, $ 320 million of sugar, and $374 million of poultry, he stated.

“Most of these we could produce here; creating jobs and saving foreign exchange. It is therefore a key goal of government to replace a significant fraction of these imports with domestic production in the medium term”.

Poverty reduction

Vozbeth K. Azumah, Community Development Specialist and agric Investor said: “Among all sectors in Ghana- service, agriculture and industrial sectors; the main area to help reduce poverty is the agriculture/agribusiness sector”.

Largely, the smallholder farmers who have been experiencing prolonged poverty incidence at the rural areas of the country are all involved in either farming or engaged in agribusiness”.

This means that if indeed the country wants to reduce poverty, then it must use the tool that the people are used to which is, agribusiness.

“It is the only sector that can accommodate the teaming employed. Due to the numerous value chains the sector has, anybody could identify an “entree point” within the chain and start solving a problem and eventually making money out it”, Azumah explained.

Agribusiness and SDGs

Since its inception in 2015, the 2030 Agenda for Sustainable Development has provided a blueprint for shared prosperity in a sustainable world—a world where all people can live productive, vibrant and peaceful lives on a healthy planet.

The Sustainable Development Goals (SDGs) are a collection of 17 global goals set by the United Nations (UN) General Assembly in 2015.

 The goals are broad and interdependent, yet each has a separate list of targets to achieve. Achieving all 169 targets would signal accomplishing all 17 goals. The SDGs cover social and economic development issues including povertyhungerhealtheducationglobal warminggender equalitywater, sanitationenergyurbanizationenvironment and social justice.

The SDGs Report 2019 indicated that progress is being made in some critical areas, and that some favourable trends are evident.

Extreme poverty has declined considerably, the under-5 mortality rate fell by 49 per cent between 2000 and 2017, immunizations have saved millions of lives, and the vast majority of the world’s population now has access to electricity, the report noted.

“Countries are taking concrete actions to protect our planet: marine protected areas have doubled since 2010; countries are working concertedly to address illegal fishing; 186 parties have ratified the Paris Agreement on climate change, and almost all have communicated their first nationally determined contributions”.

Mr  Azumah who is also UN SDGs 1 & 2 Advocate said: “The SDG 1 and SDG 2-No Poverty, and Zero Hunger” respectively  are actually linked to agribusiness”.

For Ghana to achieve food security, there is the need for it to invest in the agribusiness sector.  The country is doing its best to ensure food security, he stated.

From the above, it is evident that the agribusiness sector can reduce poverty in Ghana when given the needed attention.

By Masahudu Ankiilu Kunateh, African Eye Report

Email: mk68008@gmail.com 

 

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