Agribusinesses lose 61% of monthly revenue to COVID-19 – CAG Survey

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…small scale agribusinesses suffered largest revenue shortfall

Agribusinesses, on average, have lost 61.2 percent of monthly revenues as a result of COVID-19, the Agribusiness Sector Survey Report 2020, authored by the Chamber of Agribusiness Ghana (CAG) – an apex body for coordinating agricultural sector players in the country – has revealed.

The report noted that small scale agribusiness firms suffered the largest revenue shortfalls of about 77.4 percent, while large scale firms suffered 55.4 percent, with medium scale agribusinesses remaining in the middle with 75.2 percent monthly losses in revenues.

The report connected the shortfall in revenue of small scale agribusinesses compared to largest sufferers with factors such as underdeveloped business linkages, weak incorporation of technology, poor raw material supply chain and inventory management.

“The relatively low revenue shortfalls of large scale Ghanaian agribusiness firms may result from good work or employee arrangement, improved raw material supply chains and good market arrangements,” the report indicated.

Generally, a majority of agribusiness firms in Ghana lost revenue due to COVID-19 lockdown restrictions and social distancing policies, as well as disruption in adjacent agribusiness industry activities.

Over 80 percent of agribusinesses surveyed admitted that the pandemic has had a toll on their operations and services, with paramount effects including disruption in normal business operations, increase in business expenditure, cut in supply/production, and difficulty in meeting monthly revenue targets as well as honouring tax obligation/debt payment among others.

Also, in the report, the agribusinesses indicated that they have to adopt different strategies to deliver products/services to their customers. 41 percent of agribusinesses has resorted to direct delivery at business location; 28 percent resorted to price reduction or discount sale; 17 percent resorted to door-to-door delivery; and 14 percent to e-commerce platforms.

The agribusinesses have therefore expressed the need for support schemes that can help mitigate effects of the pandemic on their businesses. Notable among these are included: financial support, market access and linkage, support for transport and machinery services, and training and agribusiness advisory services.

Small scale agribusinesses also called for formalisation of their business as the topmost need to cushion them against the pandemic’s consequences.

According to CAG, the nation-wide survey seeks to assess the economic effects of COVID-19 on Ghanaian agribusinesses, and is aimed at providing data-driven inputs and proposals so government can map out immediate interventions to cushion the agribusiness sector from the pandemic’s dreaded impacts.

The report indicated that food insecurity levels in Africa are on the ascendancy, and in Ghana disruption to food supply chains may occasion imminent food unavailability if measures are not implemented swiftly.

It was noted that the distortions in agri-food supply chains are also expected to affect employment, labour, migration, wage rates, revenue or profitability of agribusiness, and agriculture’s contribution to Gross Domestic Product (GDP).

The report recommended that smallholder farmers and agribusinesses should be included in government’s stimulus package and social protection programmes addressing the crisis. Also, the report is advising government to promote trade by avoiding export bans and import restrictions.

The report also called on government agencies like the GRA to assist smallholder farmers to plan and honour their tax obligation post covid-19 when the situation is normalise.

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