Budget Review: AGRICULTURE — Can the ‘Marshall Plan’ do some magic?

As the country awaits the presentation of the 2018 budget soon, we take a look at the three main critical sectors of the economy—Agriculture, Industry, and Services—to see how they are faring and the various happenings in these sectors and also consider some of the policies in place by government to spur growth in these sectors.

Let set the agenda beginning with the sector touted as the backbone of the economy—agriculture. According to the Integrated Business Establishment Report (IBES II) by the Ghana Statistical Services (GSS), covering 2015, Institutional Agriculture generated GH₵5.48 billion, representing just 1.2 percent of the total revenue of GH₵457 billion by all three sectors.

Again, the same report adds that the sector recorded 54,267 employments, also representing 1.7 percent of the total 3,102,917 employment generated.

In terms of growth, compared to other sectors, the agriculture sector’s performance has been very disappointing for some years now.

The quarterly GDP figures by the GSS show that, since 2010, with the exception of some few quarters, industry and services have outshone agriculture in growth.

In the second quarter of 2010, agriculture grew by 12.1 percent, whereas industry and services grew by 3.8 and 4.3 percent respectively. It never grew past the two sectors, even recording negative growth rates in the first three quarters of 2012, till it overturned its fortunes and recorded 9.8 percent in the fourth quarter.

Hopes were high then as growth further increased in the first and second quarters of 2013 to record 24 and 50.8 percent respectively. But sadly, it took a sharp nose dive into the negatives as it recorded -12.6 and -0.6 in the last two quarters of that year.

The negative growth continued in 2014 until the third quarter when it grew by 28 percent, making it the first time it grew past industry and services since quarter four of 2012. Since then, however, it has never grown past the other two sectors, even though it has moved from the negatives.

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In the second quarter of 2017, agriculture grew by 3.4 percent whereas industry and services grew by 19.3 and 5.6 percent.

The situation is even more dispiriting so far as the sector’s contribution to GDP is concerned. Apart from the third quarter of 2009 when it became the largest contributor to GDP by recording 41.9 percent, compared to 17.6 and 40.5 percent recorded by industry and services, it has never hit that feat again.

In fact, the latest GDP figures show that agriculture contributed 22.6 percent, whereas industry and services contributed 24.2 and 53.2 percent respectively.

From the above statistics, it is clear that the statement: “agric is the backbone of the country’s economy” has become just a cliché, with facts and figures proving otherwise.

The abysmal performance of the sector has been blamed largely on financial constraints, as lenders, especially banks, consider it high risk to lend to players in the sector.

Again, the absence of modern tools and technology for farmers have been another bane of the sector. Many farmers, in this era, continue to employ outmoded farming methods such as weeding with cutlasses and hoes, instead of tractors; and harvesting manually, rather than the use of combine harvesters, among others.

Irrigation cannot be left out of the plight of farmers. Most farmers continue to rely on the rainy season, which limits their ability to farm all year round.

The above, and many other challenges, have been the causes of the sector’s slump over the years.

It is also important to remember that government has set a growth target of 3.5 percent at the end of 2017.

To address these problems and take the sector back to its rightful position as the backbone of the economy, the Akuffo-Addo-led government has rolled out some ambitious policies in the 2017 budget.

High on the agenda is the ‘Planting for Food and Jobs’ programme, which was launched in April this year by President Akufo-Addo.  The programme, government says, is expected to create 750,000 jobs and add GH₵1.4billion to the rural economy, although the fall arm worm invasion may have something to say about that.

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Another initiative, also on the table, and yet to be launched, is the “One Village, One Village Dam’ progarmme. Under this project, government plans to construct a dam in every village in the north to provide all-year-round irrigation to farmers.

In terms of finance, to lure banks into the sector, the Bank of Ghana in October 2016, launched the Ghana Incentive-Based Risk Sharing System for Agricultural Lending (GIRSAL), which is providing a GH¢100million guarantee for lenders to the agric sector.

The objective of GIRSAL, the BoG said, is to reduce overall risks in agricultural financing to boost agricultural production, productivity and export, with the aim of increasing foreign exchange earnings, supporting import substitution, and promoting economic growth.

In addition to the above initiatives and interventions, government has said the upcoming 2018 budget will roll out a major intervention dubbed: ‘Marshall Plan for Agriculture (MPA)’ which is aimed at aggressively revamping the sector.

The programme, according to Vice President Dr. Mahamudu Bawumia, will focus on ramping-up investments under the flagship ‘Planting for Food and Jobs Programme’, channel investments into improved seeds, subsidised fertiliser, and provide storage, among others.

Another key feature of the MPA will be the removal of duties on agro-processors’ equipment and machinery, as well as implementation of a grant-funding facility for agribusiness start-ups.

The Marshall Plan for Agriculture, the Vice President said, will be unveiled in next year’s budget, expected to be read by mid-November.

Dr. Bawumia also stated that the Marshall Plan has already identified some key road projects that will be constructed in selected food producing areas across the country.

“Implementing the Marshall Plan for Agriculture will lead to structural transformation which, in turn, will catalyse economic activities and connect major sectors in the Ghanaian economy. It will lead to higher farmer incomes, value addition, jobs and the opportunities that come with being globally competitive,” Dr. Bawumia said.

By Obed Attah Yeboah l thebftonline.com l Ghana

 

 

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