Globalising rural Ghana through cash crops

Perhaps the recent launching of the Planting for Exports and Rural Development (PERD) initiative provides another opportunity to link Ghana’s rural economy to the national and global economies.

According to government, the initiative was designed to boost the rural economy and reduce Ghana’s reliance on cocoa as the major source of foreign exchange. The initiative complements the existing Planting for Food and Jobs programme launched in 2017 to increase local production of food and create jobs.

The glut of local food on the market in 2018 signified the success of planting for food and jobs. So, opening up rural Ghana with PERD to boost jobs and exports is worth every investment. The six crops targetted under the initiative include Cotton, Coffee, Oil palm, Rubber, Mango, Coconut and Cashew. To boost the scheme, the Ministry of Food and Agriculture and Ministry of Local Government and Rural Development are providing seedlings and extension services to current and potential farmers. The key implementing agencies are district assemblies in the implementing regions.

Overall, 212 districts have been identified to implement the PERD programme. The breakdown is as follows: 98 districts from the transitional zones of Ashanti Region through Bono Regions to the three northern regions to implement the cashew project; 30 districts for oil palm, 35 districts for coconut and 14 districts for rubber. According the Deputy Minister of Agriculture, Mr. Collins Ntim, very soon Ghana will be divided into cash zones to deepen government’s rural industrialisation drive. In addition, farmers will be grouped into cooperatives to be able to attract private investments.

According to government’s projections, by 2025 Ghana will diversify from exporting cocoa as the main cash crop to include Cotton, Coffee, Oil palm, Rubber, Mango, Coconut and Cashew. This is expected to bridge the gap between imports and exports, and also generate additional foreign exchange in order to ease pressure off the cedi.

No doubt, linking agriculture to rural development is an impetus to spurring rural industrialisation. Since independence, Ghana’s economy has been urbanised to the neglect of rural development. Key economic activities have been centred in the Accra, Tema, Takoradi and Kumasi enclaves. Some economists have argued that the urbanisation of economic activities is the major driver of rural-urban migration.  Thus, the PERD will not only open rural economies to the globalised world, but is arguably the most practical demonstration of government’s policy for moving Ghana beyond aid.

Decline in funding

The past 20 years have witnessed a steep decline in the availability of public resources for agriculture and rural development.  According to IFAD, between 1983-1987 and 1998-2000 the annual average allocations of Official Development Assistance (ODA) for agriculture in the least-developed and other low-income countries fell by 57 percent from US$5.14billion (2002 prices) to US$2.22billion.

Lending from international financial institutions followed a similar pattern, while domestic public spending has remained stagnant at best. The result has been reduced incentives for rural investment. Serious questions have also been raised as to the efficiency and effectiveness of public resource mobilisation for agriculture and the rural space. This may be applicable to Ghana – since over recent years agricultural growth has been sluggish, dropping as low as 3.1 percent in 2016.

Development Context

Against the backdrop of underfunding, research has shown that agriculture is an important component of most rural economies – especially in developing countries like Ghana. Therefore, any successful rural development strategy should contain an agricultural development component. This arguably has been the missing link in Ghana’s development paradigms over the years.

But other researchers have countered that rural development and agricultural development are not the same.  While agricultural development aims at improving the welfare of populations through sustained improvements in productivity of the agricultural sector, rural development aims at improving the welfare of rural populations through sustained growth of the rural economy.

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What, then, is rural development? According to Anriquez and Stamoulis (2007), since the 1970s rural development as a concept has been highly associated with the promotion of standards of living and as a precondition for reducing rural poverty. This pro-poor policy stemmed from the understanding that in some societies where wealth is extremely concentrated, mean incomes could grow without improving the wellbeing of the most dispossessed – Anriquez and Stamoulis (2007). Thus, if the general definition of rural development is accepted (i.e., improvement of welfare for all members of rural populations), then this pro-poor bias is justified.

From the above argument, the definition of rural development has evolved through time as a result of changes in the perceived mechanisms and goals for development. A reasonable definition of rural development would be: development that benefits rural populations – where development is understood as sustained improvement of the population’s standard of living or welfare (ibid).

This definition of rural development, however, has to be further qualified. In the 1960s and early 1970s the consensus was that intense industrialisation was the main characteristic of the perceived development path. In this context, it is natural to define rural development as precisely leading into that path: “Rural development is essentially a part of structural transformation characterised by diversification of the economy away from agriculture” – Anriquez and Stamoulis (2007).

Anriquez and Stamoulis (2007) are of the view that poorer countries, with lower per capita income and with higher incidence of poverty, are not only more rural, but in their economies agriculture has a higher relative weight. Thus, the poorer the economy, the more important agriculture is for its rural and overall development.

An important question in the development debate regarding rural development has been the relationship between agriculture and the rural economy. In certain respects, past policy practices have equated rural development with agriculture; with rural development policies subsumed under an agricultural policy package. This buttresses the point that agriculture in some poor countries like Ghana have been underfunded.

Recently, however, the emergence of national and international commitments on poverty-related targets (MDGs and PRS at country level), coupled with the failure of past paradigms to make mass reductions in rural poverty, have given a new impetus to the role of agriculture in development and poverty reduction.

Over the years, the focus and definition of rural development turned provision of social services to the rural poor. This shift was partially founded on the recognition that even under rapid growth of income in rural areas, the availability or equitable access to social services and amenities was not guaranteed.

Lacroix (1985) exemplifies this line of thought when he explains the difference between agricultural and rural development: “Agricultural Development generally tries to raise agricultural production and productivity and is of a technical nature. It is similar to other efforts to develop physical capital as a means for economic growth. Rural Development, though, is oriented more toward benefitting primarily the poor… Thus, the fundamental distinction between pure agricultural and rural development is the emphasis on capital development for the former, and human capital development for the latter”.

Role of Agriculture in Development

Some economists argued that agriculture plays an important role in development. One of the first arguments in favour of the role of agriculture in development was placed by Lewis (1954) in Anriquez and Stamoulis (2007) – who suggested that “there are large sectors of the economy where the marginal productivity of labor is negligible, zero, or even negative”. Of course these labour resources are tied to the primary sector and are a key ingredient for industrial growth, which will occur thanks to a growing labour force coming from the primary sector. Hence, the primary sector plays an important role in development.

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Later, Johnston and Mellor (1961) in Anriquez and Stamoulis (2007) identified some active roles that the agricultural sector performs throughout the development path: i) agriculture provides food necessary for a growing economy, as food demand – although at a decreasing rate – grows with income (Engel’s Law); ii) agricultural exports generate the foreign exchange necessary to import capital goods; iii) agriculture, as the larger sector in less developed countries, is the only sector capable of generating the savings mass that the non-agricultural sector needs for capital accumulation; and iv) a growing agricultural sector creates a larger local market for the non-agricultural sector. Thus, the Johnston-Mellor linkages remain relevant for a developing economy like Ghana with a large primary sector, but largely dependent on imports.

The authors observed that countries that embark on a successful industrialisation path first experience fast agricultural expansion, fuelled not by absorbing resources from the rest of the economy but by rapid increases in productivity. The authors tell the story of Japan in the early 20th century, which used technology in agriculture to overturn the fears of rapid population growth. Other success stories are the Asian giants of India and China, with fast industrialisation preceded by fast productivity growth in the agricultural sector, commonly called the ‘green revolution’.

Linkages

According to Anriquez and Stamoulis (2007) agriculture’s production linkages and development linkages in the agricultural sector are easy to identify: forward linkages are mainly in the agricultural and food processing industries, in the service industry with the restaurant and hotel industries, and sometimes public schooling. Perhaps this reflects the current government’s attempt to link agriculture to the school feeding programme and Free Senior High School scheme.

Similarly, the main backward linkages are with the agricultural industries that produce animal feed, with the chemical and mineral industry for purchased fertilisers, and – depending on the degree of sophistication of the agricultural sector – with the financial and business services sector and the industry of machinery manufacture. In many developing countries, backward industries consist of many small firms (fertiliser mixing, small-scale transport, agricultural implement repair, commerce etc.) largely labour intensive and vital for the rural economy.

Thus, overwhelming empirical evidence shows that agricultural growth is not only pro-poor, but more pro-poor than growth in other sectors of the economy. The fact that agricultural growth is more pro-poor than in other sectors seems to be substantiated in poor countries like Ghana. As one of the most accepted characteristics of underdevelopment is a secular decline in the share of agriculture, countries with larger rural population shares are expected to be poorer since the main activity in the rural economies is likely to be agriculture. In fact, most – if not all – of Ghana’s agricultural activities and investments are in the rural areas.

Therefore, government’s decision to link agriculture and rural development must be hailed and supported.

References

Anriquez, G. and Stamoulis, K. (2007) Rural Development and poverty reduction: Is agriculture still key. eJADE. Vo l4. No.1

IFAD (2001), “Rural Poverty Report 2001. The Challenge of Ending Rural Poverty”, Oxford University Press, Oxford.

Lacroix, Richard (1985), “Integrated Rural Development in Latin America,” World Bank Staff Working Papers, Nr. 716, World Bank, Washington DC.

World Bank (2003), Reaching the Rural Poor. A Renewed Strategy for Rural Development, Washington DC.

(***The writer is a Development and Communications Management Specialist, and a Social Justice Advocate.  All views expressed in this article are my personal views and do not represent those of any organization(s). Email: safoamos@gmail.com.

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