By: Stephen Awuah SENIOR MANAGER, AFRICA (SSA)
Ghana’s growing reputation as a west African powerhouse has been hard-won but the COVID-19 global pandemic is a big test of the country’s agribusiness and food supply resilience. Stephen Awuah, Senior Manager, Sub-Saharan Africa for Farrelly & Mitchell examines its response in this update on the coronavirus and highlight food supply chain problems in Ghana
There is no doubt that food supply chains, and general agribusiness, have been considerably affected. The country imports much of its food. This means that the country spends an average of US$2.4 billion every year to import rice, sugar, soybeans, sorghum, frozen chicken and meat, among other food items, for domestic and industrial consumption on annual basis. According to the ministry of agriculture, Ghana is officially self-sufficient in maize from the gains derived from the Government of Ghana’s flagship project: Planting for Food and Jobs – and has pledged to reduce food imports under the campaign. Though the country’s maize sufficiency has been disputed.
With the rainy season coming in May and June it appears the country is racing against time to prepare to farm to replace its dwindling food resources in the midst of the COVID 19 pandemic. There is food from the previous harvest, but evidence indicates the pandemic may affect stocks and supply chains. Ghana’s government has opted to lock down, and like elsewhere, people went into panic-buying mode, creating significant challenges for the food sector. Key strategies have had to be drawn up to minimise the fallout from this issue and the Minister of Agriculture has assured citizens there is no food shortage, with plenty of food in storage.
Pandemic pushing up prices
The National Food Buffer Stock Company mandated by the government to aggregate food from farmers, mostly grain produce, has been releasing them to the market when there is shortfalls.
At the supermarkets you can see examples of food supply chain problems in shortages due to panic buying and that has led to price hikes on key food commodities. That amounts on average to 20% and upwards for grain such as rice and some vegetables like tomatoes. The same can be seen with eggs and fish – and an increase by 50 per cent has been recorded for some commodities.
Even before COVID-19 hit, there was room for improvement in Ghana’s food policy. For example, $1bn worth of rice is imported each year, displacing local jobs and depleting badly needed forex reserves.
Busy farming season is set to start soon and the essential need for farmers to start production and cropping during the rainy season. However, the supply chains of critical agriculture inputs have been slowed due to the pandemic. We anticipate if the government doesn’t step in and fast track movement of the critical inputs, farmers will have to start late and it will affect production of food for this farming season and thereby have a knock-on effect with not as much food in the markets.
Government action to defend sector
The government is putting together a strategy together with the major stakeholders in the country’s agriculture sector. This includes the Ghana Chamber of Agribusiness, the Peasant Farmers Association and others working with the government to discuss strategy, aiming to fast track to farmers crucial agriculture inputs. Bulk fertilizers come from different countries, particularly Morocco, Finland and Estonia. These are blended and bagged into NPK, Urea, Ammonium sulphate, among others for distribution. There is enough stock in place from imports in 2019, but the stock needs to be replenished. The pandemic threatens to leave a future gap in the supply chain. The Minister has reassured business and farming interests that there are more than enough provisions at the moment and no cause for alarm.
How the government should respond
From an advisory perspective, it would be recommended that Ghana do its utmost to create strategic supply reserves spread across the entire country. Currently there is enough fertiliser for example, but the real challenge to countering food supply chain problems lies in distribution – how to get these fertilisers to communities and places where farmers need to have them before the rains come.
Lockdowns at borders mean slow movement of vehicles and the restrictions on the movement of people to offices, warehouses and factories, that rationing of staff, is also contributing to overall delays in getting fertilisers to farmers.
In the face of this pandemic the government and all major stakeholders should come up with a very clear step-by-step strategy and a top priority is ensuring the flow of those inputs for growing be made available before planting.
The main lockdowns in the country are focused in the Greater Accra and Ashanti Regions, the first and second cities with high economic activities. Greater Accra is the hub of all operations within Ghana. The government needs to come up with a stimulus package at the right time to support agribusiness operations across the country, otherwise productivity will greatly suffer. Farmers have used up most of their savings to feed their families during the pandemic and are currently sounding calls to the government to help them procure critical farm inputs for the 2020 planting season. Without enough injection of stimulus, there will be low productivity and a low food output subsequently being processed, with a serious impact on the country’s food security.
The time for the government to implement the Agric Marshall Plan which was announced in 2017 is now. This plan was to help direct some GHC700 million into the agriculture sector to improve key projects and subsidise machinery for farmers, among others.
Crop spotlight: COVID-19 impact on burgeoning cashew industry
Cashew has been grown in Ghana for a very long time but it was only after public education on its potential in 2002 that the plant was promoted on a massive scale and production and cultivated areas have increased significantly. Over 98% of Ghana’s cashew nuts are exported in their raw form to India and Vietnam where they are processed and re-exported. There have been ups and downs in the industry since, with this pandemic being the latest down.
Cashew has been mainly grown in the Bono East, Bono and Ahafo regions and parts of Ashanti and Northern regions of Ghana. But during the last global recession, the export markets failed and farmers lose interest in cashew nut production.
From around 2008 onwards, interest in growing cashew on a massive scale dwindled partly due to a fall in price of the commodity on the export market. This changed recently when the government came up with the idea of promoting tree crops planting for export and jobs. In line with this, funds were provided to revamp the sector by setting up the Tree Crop Development Authority to work with interested farmers. This policy has ignited interest in production of cashew once again.
Many farmers who hadn’t cut down their trees re-examined their crop management practices renewing their interest in cashew production – again exporting mainly to Vietnamese, Chinese and Indian markets. This had gone well until the latter half of last year when the markets fell again by between 35- 45 per cent – leading the farmers to put in measures so that they are no longer fully dependent on the export market.
This had been achieved through the government helping private business interests to set up processing factories to source cashew nuts from local farmers. Confidence in the sector is returning as farmers see that as profitable and direct in terms of having access to ready markets for their cashew nuts.
This progress is once again affected because of the pandemic, the foreign buyers are not coming and the buyers resident in the country are in lockdown. There is a hope that the pandemic can be ended to maintain that sense of confidence by the farmers and continue to develop the cashew sector as a very commercial and export-led commodity.
Cashew aside, the pandemic is affecting every aspect of the agri sector and commodity value chains. There are no official studies yet on the impact of the pandemic on cocoa and coffee etc but is no secret that it has affected processors and farmers trying to improve productivity levels and standards.
Revised budget and the regional picture
The government had presented its 2020 budget at the end of last year, with of course no knowledge of this impending pandemic. The minister for finance has hinted that the government will present a revised budget in July 2020. This will mean longer timelines and less money but also perhaps a clearer government strategy to enhance the agri sector and some kind of stimulus plan to be activated into the agribusiness space to lift businesses on to their feet.
It is a similar picture for neighbouring countries in terms of containment measures, but Ghana is much more ahead of countries like Senegal, Burkina Faso, Ivory Coast, Liberia and Benin. They may have the resources to follow Ghana’s lead in minimising food supply chain problems, but timely strategic action is needful.
Stephen Awuah SENIOR MANAGER, AFRICA (SSA)
