Without doubt, Ghana’s heavy dependence on imports, especially rice, places tremendous pressure on the cedi; thus creating an unfavourable balance of payments position. On average, Ghana’s import bill exceeds US$10billion annually. This import bill is accounted for by a diverse range of items which include agricultural products like rice, fish, poultry and palm. Other top imports are iron, steel, aluminum, sugar, oil, cement, fertiliser, pharmaceuticals, toilet-rolls, toothpicks and fruit juices. While little can be done about imports like iron, petroleum and some categories of pharmaceuticals, policy and financial interventions can be used to reverse Ghana’s huge imports of rice, sugar and fish, which can be produced locally.
In the 2023 Budget Statement, Finance Minister Ken Ofori-Atta stated that Ghana currently has the capacity to locally-produce items which account for about 45 percent of the annual imports’ value. These include rice, fish, sugar, poultry, cement, pharmaceuticals, jute-bags, computers, etc. “To this end, government will target these products for import substitution by supporting the private sector, through partnerships with existing and prospective businesses to expand, rehabilitate and establish manufacturing plants targetted at producing these selected items,” says the Budget Statement.
Rice is fast emerging as a strategic cash crop and a potential political and economic tool in Ghana, due to its impact on the import bill. Ghana imports more than 60 percent of its rice needs, with dire economic and financial consequences. Between 2007 and 2015, the amount spent on imported rice rose from US$151million to US$1.2billion annually. Currently, rice imports stand at more than US$1.3billion; with domestic consumption supplemented by imports primarily from Thailand, Vietnam and India.
Rice consumption continues to increase due to the preference of Ghanaians for perfumed rice over local rice. According to statistics from MoFA, between 2008 and 2020 paddy-rice production was in the range of 302,000mt and 987,000mt (181,000 to 622,000mt of milled rice) with large annual fluctuations. The total rice consumption in 2020 amounted to about 1,450,000mt, which is equivalent to per capita consumption of about 45.0kg per annum.
According to a report by the Agriculture Research for Sustainable Development, Ghana’s rice self-sufficiency ratio declined from 38% in 1999 to 24% in 2006 and increased to about 43% in 2020. Despite the slight increase in production for 2020, a surge in local consumption makes a compelling case for increased and sustained domestic production of good quality rice to improve food security, import substitution and savings in foreign exchange. Government believes that the negative narrative in the rice sector can only be changed with an injection of massive capital by big sector players from the private sector.
Private sector response
One of the best news items toward the end of 2022 was the decision of government to use policy direction to support private sector investment in local rice production for consumption and export. This news was augmented by the Jospong Group of Companies’ decision to invest in local rice production to support government’s import substitution drive. Import substitution aims at reducing imports of some foreign goods and boosting an economy by increasing the demand for domestically produced goods. This reduces the demand for foreign currencies and its effects on depreciation of the local currency. The logic is simple: why import goods when a country can produce them locally and create employment for its young population?
Honestly, it is unpardonable for Ghana to be importing over two billion dollars’ worth of rice each year amid abundant land and water resources. Despite the ongoing invasion of Ukraine by Russia, Ukraine continues to export about 74 million tonnes of grain – while Ghanaians continue to blame everything, including unbridled prices hikes, on the Russian invasion.
The Jospong Group of Companies’ (JGC) decision to invest in the rice sector has been hailed as an impetus to government’s vision of ensuring that Ghana produces rice for local consumption and for export. In the view of Finance Minister Ken Ofori-Atta, the JGC initiative illustrates the ingenuity of Ghanaian entrepreneurs. “We will back this decision with the various government and inter-ministerial financial support in a pragmatic way, so that we can encourage more people to respond positively,” said Mr. Ofori-Atta when addressing a delegation of investors from Thailand led by the Executive Chairman of JGC, Mr. Joseph Siaw Agyepong, on December 30, 2022.
In late 2022, a team from the Jospong Group led by its Executive Chairman, Joseph Siaw Agyepong, visited Thailand to understudy the Thai rice sector and possibly replicate their production models in the country. Jospong Group signed an MoU with key rice-sector players to establish a seed development and research centre; rice mechanisation centres; bio-organic fertiliser production centres; and ensure a supply of farm implements and rice mills in the country. The Group intends to partner the Ghana Rice Inter-professional Body (GRIB) and other local rice players to achieve this vision. The project involves integrated rice farming processes ranging from seed development, paddy cultivation, milling, packaging and marketing.
The collaboration between JCC and the Thai investors’ initiative is aimed at overturning Ghana’s over-reliance on foreign rice imports to the neglect of local production. The Thai companies will provide technical and equipment support for the entire rice value chain in the country, with the aim of producing rice for the local and export market. The collaboration should also provide value addition, market linkages and self-sustaining models. However, some economic analysts think Ghana’s rice initiative should be solely driven by Ghanaians. One financial expert argues that if Thai producers are allowed to invest here, whatever they produce is counted as foreign output; and as such, the investors will repatriate their profits.
Special rice initiative
In recent years, government has made conscious efforts to transform the entire agricultural space into a vibrant and high-yielding sector. Recent policy interventions have focused on the Special Rice Initiative aimed at bringing improved rice seeds to farmers across the country – as a first-step to reversing Ghana’s huge rice imports. The rice sector has become a priority due to its impact on Ghana’s import bill. In response, the Ministry of Food and Agriculture has facilitated a revision of the National Rice Development Strategy (NRDS) to achieve self-sufficiency by 2024.
Besides, the Ministry of Food and Agriculture and United Nations Industrial Development Organisation (UNIDO) have launched the ‘Improving the Technology and Quality Control System for Higher Addition in Post-Harvest Processes of Rice Value Chain Project’. The project is expected to upgrade quality assurance systems along the rice value chain, focusing on post-harvest processes and crop management. With private sector players like Jospong Group of Companies embracing the initiative, these interventions will no doubt contribute to meeting rice self-sufficiency in Ghana by 2024.
Planting for food and jobs
Furthermore, government should not take its eyes off the ‘Planting for Food and Jobs’ (PFJ) campaign. PFJ draws its roots from ‘Investing for Food and Jobs’, which has rice as one of the focus crops. The overall objective of the ‘Planting for Food and Jobs’ campaign is to stimulate interest in agriculture as a viable and job-creating activity for the youth. The campaign is anchored on five pillars:
- provision of subsidised improved seeds to farmers,
- supply of subsidised fertiliser to farmers,
- provision of dedicated extension services,
- improved marketing strategies to mop-up produce
- an electronic platform to harness all activities in food and agriculture.
Taking a cue from Nigeria
Ghana needs to draw some lessons from Nigeria, by way of boosting local production and weaning itself from foreign rice imports over a three-year span as recently announced. In 2015, the Nigerian government implemented a policy decision to ban rice importation despite rising local consumption. Imports of rice in 2012 to 2013 were estimated to reach about three million tonnes in Nigeria, but this did not deter the Nigerian government from taking the local initiative.
In Nigeria, as in Ghana, rice remains an important and inevitable diet for the local population. Against this backdrop, the Nigerian government based its policy for rice production on the following considerations:
Firstly, on food security, it was recognised that if the country produced significantly to cater for its domestic consumption – and perhaps even exports – the food crisis bedevilling Nigerian would be solved.
Secondly, on employment generation, it was recognised that not only would mass rice production provide food security but also trigger employment generation. The high level of importation for milled rice products in Nigeria had the capacity to create jobs for more farmers and reduce job creation in exporting countries like the USA, Thailand and India.
Thirdly, on foreign exchange earnings, it was envisaged that if Nigeria fully harnessed its agricultural potentials and boosted rice production for domestic consumption and exports, the country would earn more foreign exchange and stabilise the naira. This would also complement earnings accrued from the country’s petroleum products, which remained the major income earners.
Generally, Nigeria recognised that mass rice production would not only improve food security but also enhance employment creation and stimulate economic development. I believe that the reasons Nigeria assigned for embarking on the major policy reforms in rice production apply to Ghana, as both countries share social and economic characteristics. I just hope that the government of Ghana will not crack under pressure from its western donors to disinvest from rice production for food security and employment creation. Local food self-sufficiency is the surest step out of the current economic hardships confronting Ghana.