Promoting and Sustaining Growth in the Agricultural Sector: … Looking beyond Planting for Food and Jobs

Agriculture, since the days of Adam, has been very essential to human and economic development. Studies show that nations evolve from agrarian to industrial, and finally to service-led economies. At the apex of a nation’s development, the services sector becomes the largest contributor to economic growth compared to agriculture and industry, because of the backward and forward linkages between agriculture, industry and services.

The World Bank Group (2004) writes that the advantage of a growing services sector is it tends to require relatively less economic capital and more human capital than producing agricultural or industrial goods, and that puts less pressure on local, regional, and global environments. In spite of a country’s level of development, the crucial role of agriculture in national development cannot be relegated to the background.

This article is about how Ghana can promote and sustain growth in its agricultural sector by ensuring that all the subsectors of agriculture receive equal attention through the implementation of appropriate policies. Promoting and sustaining the sector’s growth will enable Ghana harness its numerous benefits. Ghana’s agricultural sector is made up of the crops, livestock, fisheries, and forestry and logging subsectors. The Ministry of Food and Agriculture (MoFA) is responsible for the crops, livestock and cocoa sub-sectors. The Ministry of Fisheries and Aquaculture Development (MoFAD) oversees the fisheries subsector. Also, the Ministry of Lands and Natural Resources (MLNR) supervises the forestry & logging subsector.

Ghana’s agricultural output is said to have been fallen consistently since the 1960s. The factors which have contributed to the decline include: the fall of commodity prices in the late 1960s, which was a disincentive to farmers to produce; an overall deterioration of infrastructure and services; high inputs costs.

Food production has fallen as well, with a decline in the food self-sufficiency ratio from 83 percent in 1961-66 to 71 percent in 1978-80, coupled with a four-fold increase in food imports diring the decade prior to 1982. The drought in 1983 caused widespread food shortages in Ghana (www.modernghana.com). Asuming-Prempong & Kuwornu’s (2013) review, of the various policies under which Ghana’s agricultural sector has operated since independence, informs us that the Socialist approach of the 1960s was in sharp contrast with the Liberalised Market approach of the 1980s and 1990s under the Structural Adjustment Programme (SAP). These different implemented policies have had significant effects on agricultural performance in Ghana and the role of agriculture at different periods. Thus, the effects of different policies in the agricultural sector have been mixed.

Aryeetey & Kanbur (2005) present the average sectoral contributions to economic growth of Ghana from 1970 to 2000 in Table-1. It is evident from Table-1 that the agricultural sector led in contributions to real GDP at an average rate of about 47%. This was followed by the services sector (36%) and the industrial sector (17%). Breisinger, Diao, Thurlow, & Al-Hassan (2008) also report that agricultural gross domestic product (GDP) growth and contribution to agricultural GDP growth from 2001-2005 was estimated at 5.5% per annum, while in 2006 the growth rate was 5.6%.

Table-1.  Sectorial Contributions to Real GDP (in percentages)

Sector 1970-75 1976-82 1983-86 1987-90 1991-95 1995-2000
Agriculture 52 51 52 46 42 39.5
Industry 19 17 12 14 14 27.5
Services 29 32 36 40 44 33

  Source: Aryeetey & Kanbur (2005)

 

The leading role of agriculture between 1970 and 2000, though at a decreasing rate, may be explained by the fact that Ghana did not pursue its industrialisation agenda embarked upon by the first president, Dr. Kwame Nkrumah, but relied on the exports of raw agricultural products. Again, political upheavals and high cost of technologies might have served as a hindrance to its industrialisation drive. Diao (2010) is of the view that agriculture was less intervened in by government than industry and services, and its growth was primarily led by smallholder farmers for subsistence production.

 

Table-2 shows the sectorial growth rates of non-oil GDP at 2006 constant prices (in percent) from 2007 to 2017. After a negative growth rate of 1.7% in 2007, the sector’s performance became impressive from 2008 to 2010. The contribution of agriculture to national GDP continued to decline steadily since 2011, except in 2017. During this period, the services and industrial sectors continued to dominate, except in 2014 and 2015 when industry recorded negative growth rates of 0.3 and 0.7 respectively. A further look at Table-2 shows that provisional GDP estimates for 2017 showed a growth rate of 8.4% compared to 3.7% in 2016 in the agricultural sector.  This is said to be the result of current government policies’ ‘Planting for Food and Jobs’ (PFJ) and ‘Modernising Agriculture in Ghana’ (MAG) programmes.

Table-2: Growth Rates of Non-Oil GDP at 2006 Constant Prices (percent)

Year 2007 2008 2009           2010 2011 2012 2013 2014 2015  2016  2017*
Agriculture -1.7 7.4 7.2 5.3 0.8 2.3 5.7 4.6 2.8 3.0 8.4

 

Industry 6.1 15.1 4.5 5.6 16.0 8.5 3.6 -0.3 -0.7 4.9 0.4

 

Services 7.7 8.0 5.6 9.8 9.4 12.1 10.0 5.6 6.3 5.7 4.3

 

Source: Ghana Statistical Service (2018)

 

The ‘Planting for Food and Jobs’ (PFJ) and ‘Modernising Agriculture in Ghana’ (MAG) programmes initiated by the Nana Akufo-Addo-led government in 2016 were meant to transform and modernise agriculture by providing improved seeds and fertilisers, facilitating market access, and expanding access to extension services by farmers.

Among the number of key successes recorded in 2017 were: increased average yields of targetted crops (maize from 1.8 to 3.0 mt/ha, rice from 2.7 to 4.0 mt/ha between 2016 and 2017); domestic rice production grew from 44% in 2016 to 47% in 2017; staple crops such as roots and tubers (cassava, yam, and cocoyam) maintained increased growth in yield and production landscape, resulting in food surpluses.

Despite these achievements, Capture fisheries over the years generally experienced a decline due to the proliferation of illegal harvesting methods (pair-trawling, light-fishing, use of chemicals etc.) and inadequate capacity to regulate and control the industry.  There was an increased share of imported rice available for consumption due to taste and preference for foreign rice by Ghanaians. Whereas meat products imported in 2017 increased by about 32%, domestic production increased marginally by about 4% within the same period, The Livestock sub-sector recorded a percentage growth point of 0.1 compared with 2016 (MoFA, 2018).

In view of the mixed performances of the subsectors in agriculture, and the important role the sector plays in the national economy, it is imperative that Ghana implements more – but active – policies backed by very strong political will, so as to ensure sustained growth of the sector.

  • Benefits of Promoting and Sustaining Growth in Ghana’s Agricultural Sector

A conscious effort to promote and sustain growth in agriculture has many national and international benefits, such as the following:

Promoting and sustaining agricultural sector growth will ensure food and nutrition security (FNS) for the citizenry. Ensuring adequate supply of agricultural products at relatively cheaper prices will enable the citizenry to feed themselves and their dependants and live healthily. Food and Nutrition Security (FNS) exists when all people at all times have physical, social and economic access to consume food in sufficient quantity and quality to meet their dietary needs and food preferences, supported by an environment of adequate sanitation, health services and care, to allow for a healthy and active life (UNSCN, 2013; cited in MoFA, 2018).

Again, promoting and sustaining agricultural sector growth will reduce labour unrest. Labour unrest resulting from demand for higher wages and salaries is likely to decrease if workers can have an adequate supply of food sold at stable and reasonable prices. Food shortages on the market will lead to higher food prices – which will cause real incomes of workers to fall and as a result lead to higher wage demands by workers to enable them meet the increased cost of living. Therefore, workers’ ability to buy food items at a relatively low prices in sufficient quantities will reduce the pressure put on governments to meet higher wage demands by workers.

Also, promoting and sustaining agricultural sector development will provide job opportunities for able-bodied men and women in our country. The supply chain offers huge employment opportunities. All these people in the supply chain earn incomes that help to improve their living standards. There are many students who study agriculture as a course in tertiary institutions, and after completion will teach, lecture, provide extension services, and conduct researches to influence policy formulation and implementation in the agricultural sector. MoFA, (2018) reports that about 745,000 jobs were created along the selected commodity value chains under the PFJ campaign in 2017.

Furthermore, promoting and sustaining agricultural sector growth will increase government’s tax revenue as incomes from the sale and exports of agricultural products will grow, as well as wages and salaries of agricultural sector workers being taxed by government for developmental projects.

In addition, promoting and sustaining agricultural sector growth will help Ghana conserve foreign exchange that would have been used to import agricultural products. This will be used to develop the economy. Rice attracts a high average import bill of US$376million annually (MoFA, 2018).

Surplus agricultural produce can also be exported to earn foreign exchange for economic growth. Kale-Dery (2019) reports that Ghana exported foodstuffs to neighbouring Burkina Faso and Cote d’Ivoire in 2018. For, example, the Ejura Market in the Ashanti Region of Ghana supplies about 2,008 tonnes of yellow maize and 2,174 tonnes of white maize; and 1,291 tonnes and 144 tonnes of cowpea were exported to Cote d’Ivoire and Burkina Faso respectively at the end of 2018.

Within the same period, 296.88 tonnes of yam were exported to Cote d’Ivoire alone. Also, 13,394 tonnes of plantain and 16, 413 tonnes of banana were exported from Abofour Market in the Ashanti Region to Burkina Faso in 2018. These will bring a lot of foreign exchange to Ghana. However, it would be a very sad issue to talk about if, in the near-future, we turn around and begin to import the same products into Ghana.

Finally, promoting and sustaining agricultural sector growth will provide raw materials for the industrial sector. The problem of lacking sugarcane for producing sugar by the Komenda Sugar Factory in the Central Region of Ghana must be a lesson for all policymakers in Ghana to learn from. The success of the One District, One Factory policy of the Akufo-Addo-led government hinges on the availability of raw materials for said factories. Peterson (1984) reports that the spread of agriculture in the 19th century played a part in the early industrialisation of the United States of America (U.S.A.).

The economic benefits of promoting and sustaining agricultural sector growth in Ghana are numerous. The question, however, is “What is the way forward in promoting and sustaining agricultural sector growth?”

  • Suggested Measures to Promote and Sustain Growth in Ghana’s Agricultural Sector

It is an undeniable fact that government policies either help or hinder development of the agricultural sector and livelihoods of the teeming participants in agriculture. Present and future governments of Ghana are advised to work hand in hand with the private sector, by formulating and implementing many active agricultural sector policies that will help modernise and sustain the agricultural sector for the economic well-being of Ghanaians.

Government should help in stabilising prices of agricultural products. Price stability will help farmers to earn stable incomes and maximise their welfare. Price stability helps consumers to make well-informed consumption decisions and producers to make well-informed investment decisions for efficient allocation of resources.

Huka, Ruoja & Mchopa (2014), writing on price fluctuation of agricultural products and its impact on small-scale farmers’ development in Kilimanjaro Tanzania, concludes that: “Although high prices can technically be good news for farmers, price fluctuation is extremely dangerous as farmers and other agents in the food chain risk losing their investments if prices fall. Price fluctuation of agricultural products is a challenge to achievement of small-scale farmers’ development – which results in loss of capital and farmers shifting to other production activities”.

Government should help farmers to store excess agricultural goods by providing warehouses or storage facilities in all the regional and district capitals of Ghana, and possibly in major agricultural centres. This will help match available supply with available demand at all times. There must be ready markets for the sale of agricultural products. There must frantic efforts to process surplus farm products into finished goods.

Government financed institutions such as schools – Free Senior High Schools and School Feeding Programmes – Prisons, Sports Colleges, etc., must compulsorily be asked to use agricultural goods produced in Ghana. These will provide ready markets and stable prices for agricultural products and farmers. In the 1920s, demand for American farm products fell as European countries began to recover from World War I and instituted austerity programmes to reduce their imports. The result was a sharp drop in farm prices. However, the prices farmers paid for machinery, seeds, and fertilizers as well as consumer goods remained constant.

These developments were made worse by the Great Depression of 1929 and 1930s. In 1929, President Herbert Hoover organised the Federal Farm Board which established the principle of direct interference with supply and demand to provide greater economic stability for farmers. Again, in 1938, farm legislation introduced the concept of a ‘parity’ price for farmers, a price to provide farmers the same relative purchasing power that farm prices had in a favourable base period.

If production was greater than that which could be sold at a specialised percentage of the parity price, government agreed to purchase the excess – generally through purchase agreements with farmers or non-recourse loan programmes. Under these loan programmes, government paid a set price to farmers as a loan for crops that were placed in storage; farmers could pay-off the loan in full by turning the crops over to government (Peterson, 1984).

Again, financial institutions must help players in the agricultural sector to access credit facilities at relatively low costs to reduce production costs.  This will help farmers and those in the supply chain buy inputs for their activities and in the final analysis sell their products at reasonable prices to consumers.

ISSER (2003; cited in Amissah, 2018), reports that though Agriculture contributes substantially to the Ghanaian economy, financial support for the sector has been inadequate.  Percentage credit supply by the Deposit Money Banks (DMBs) to agriculture has been declining continuously compared to the amount of credit given to the non-agricultural sectors in Ghana.

Again, MoFA (2010; cited in Amissah, 2018) hints that allocation of credit to agriculture from the formal financial institutions has been declining since 1998; it fell from levels close to 20% before the financial sector reforms in the 1980s; and since 2000 allocation to agriculture has been below 10%, falling to just above 6% in 2006 – the reason being the fear that the loans would not be repaid.

The government of Ghana must revisit it objectives for setting up Rural and Community Banks, the National Investment Bank and the Agricultural Development Bank, so as to channel sufficient credit resources to the agricultural sector. The government of Ghana should set aside part of revenue from the sale of Ghana’s oil and give it to well-established indigenous banks to cater for farmers at relatively cheap interest rates.

There must be an improved system of transportation to ensure easy transfer of harvested products from agricultural producing centres to market centres and the ports. This should include rehabilitation and construction of old and new railway lines. The Aviation Sector can be involved in this activity during critical times.  We could import refrigerated trains and cars to lift agricultural products from producing centres to market centres and ports.

The vital role of the railway and roads in transporting crops to American markets and to ports for shipment overseas was underscored by the fact that, prior to the 1870s, an estimated 1/5th of all farm products in America rotted before reaching consumers. But during that decade, railroads and cars were refrigerated and heated, helping preserve perishable goods.

Farmers or exporters of agricultural products should be allowed to pay low tariffs on the exports of agricultural products and the imports of agricultural inputs. This will help them acquire the necessary inputs for their work and save a substantial part of their incomes for reinvestment.

Government must expedite action on implementation of the One District, One Factory agenda, so as to buy agricultural raw materials for production and processing into finished products for domestic and external uses.

There must be a deliberate effort and policy of government to ban the import of certain food items – like rice, maize, beans, vegetables, palm oil, tomatoes, poultry products, etc. – after a certain grace period is given to the importers of such items. Government must disabuse the minds of Ghanaians about the use of foreign rice in favour of locally produced rice.

Agriculture must not be only rain-fed. The construction of dams for all-year-round irrigation purposes in all farming communities across the length and breadth of the country, especially in communities that contribute immensely to the national food basket, would be good. This will ensure an all-year-round supply of foodstuff.

  • Conclusion

In conclusion, though the PFJ and MAG have been successful, all hands must be on deck to help Ghana become food-sufficient in the next few years. Formulation and implementation of agricultural policies must be devoid of partisan considerations. We must do well to increase the domestic production of livestock, poultry, fish and rice to curtail the huge import bills on them.

Government must encourage all citizens to engage in backyard gardens to grow food for their own consumption through the supply of free seeds, seedlings, fertiliser, cutlasses and hoes to interested households.  Above all, there must be strategic private-public partnerships in the agricultural sector.

The writer is a lecturer at the Wisconsin International University College, Ghana.

Leave a Reply

Please Login to comment
  Subscribe  
Notify of