The Ministry of Food and Agriculture has put on hold the subsidy for its flagship ‘Planting for Food and Jobs’ (PFJ) programme, and will not continue it in 2023 after six years of implementation.
The B&FT can confirm that the newly-appointed sector minister, Brian Acheampong, at a meeting with farmer-based organisations (FBOs) earlier this year said he is interested in a more sustainable method of financing fertiliser and seeds for farmers instead of the annual subsidy placed on inputs – which has become very expensive to maintain.
Instead of subsidies on fertiliser, seeds and other inputs, the ministry will from this year implement a value chain approach; whereby aggregators (out-growers) will acquire inputs from government and distribute them to member-farmers.
The harvests will subsequently be purchased by MoFA to cater for government interventions such as the School Feeding Programme and others. Key associations such as poultry farmers and multinationals including Nestle will also be targetted for supplies.
This new method, which is an alternative way of supporting farmers, contrasts the PFJ system wherein government subsidised seeds and fertilisers across the board for all farmers and payments were made to input distributors.
Meanwhile, government says it will spend some GH¢660million on the PFJ programme in the 2023 implementation year, according to this year’s national budget.
In 2022, agriculture stakeholders described the PFJ as a waste of government money as the price difference between subsidised fertiliser and the open market price was just about GH¢10.
With purchases from the open market, farmers have said they are more guaranteed of quality inputs compared to the mostly substandard inputs supplied under the PFJ.
The new intervention is expected to bring stiff competition for quality delivery from fertiliser distributors, as their products will no longer be subsidised by government but sold on the open market.
Speaking to B&FT on the new development, Executive Director of the Peasant Farmers Association of Ghana (PFAG), Dr. Charles Nyaaba, said the decision came as no surprise; since the association has long been advocating an alternative livelihood system to replace the corruption-dented PFJ.
He alleged that some fertiliser distributors do not merit the PFJ but were awarded contracts due to favouritism and shady deals, adding: “Aggregators now have the choice to decide which distributor to buy from on the open market, based on quality and pricing.
“We are glad for the strides being made by the new sector minister, and we know the new intervention will bring quality delivery to farmers through this open competition system,” Dr. Nyaaba said.
The current average open market price for 50kg Urea is GH¢420, with the same volume of NPK ranging from GH¢450 to GH¢470.
Meanwhile, the decision to scrap the subsidy programme that started in 2017 could also be viewed as a cost-cutting measure as government desperately tries to reduce its expenditure – in line with conditions for the proposed economic bailout from the International Monetary Fund.
Key challenges with the PFJ system
Hoarding, smuggling and corruption have dented the PFJ programme, wherein contracts were reportedly offered to distributors who supplied substandard inputs without any monitoring systems.
Last year, the PFAG alleged that contracts were awarded to fertiliser distributors who supplied substandard and poor quality input to farmers – but have regardless received payment from government.
Decline of subsidies in recent times
Since the PFJ’s inception in 2017, MoFA reduced subsidies on fertilisers from 50 percent in the last five years, to an unprecedented 38 percent in the 2021 crop season. In the 2022 crop season, subsidies dropped as low as 15 percent; with the occurrence leading many stakeholders to question whether the programme had reached an anti-climax.
Purported benefits of the PFJ
At the launch of a financing scheme by the Ghana Incentive-Based Risk Sharing System for Agricultural Lending (GIRSAL) last year in Accra, former Minister of MoFA, Dr. Owusu Afriyie Akoto, said the value of food commodities produced under the (PFJ) programme was worth US$6.1billion from 2017 to 2021 – after government invested some US$321million in the programme.