ANALYSIS OF RICE PRODUCTION AND OPPORTUNITIES IN GHANA

ByMakafui I. Dzudzor Masters in Agricultural Food and Environmental Policy Analysis (AFEPA)

• Background

• Problem statement

• Research question

• Research objectives

• Results

• Conclusions

• References

1. Background 2. Problem Statement3. Research question4. Research objectives5. Results 6. Conclusions7. References

TABLE OF CONTENT

• Population :24,658,823

• GDP:US$40.71billion– Services: 50%– Industry: 27.3%– Agriculture: 22.7%

• Agriculture – Land: 13,628,179 ha (55% under

cultivation)– Small farm sizes (average of about 2ha)– Crops- cocoa, oil palm, cassava, yam,

maize, rice, pineapple, citrus, banana, mangoes, pepper, tomatoes, etc

1. Background 2. Problem Statement3. Research question4. Research objectives5. Results6. Conclusions7. References

BACKGROUND

Ghana

• The type of rice (Childs and Burdett, 2000) can be classified based on various characteristics.

• Form : • Rough or paddy rice (both hull and bran layers attached to kernel) • Brown rice (bran layers)• Milled rice (no hull and bran layers)

• Ecogeographical regions: • Indica rice (tropics and sub tropics)• Japonica rice (temperate climates )

• Aroma:• Aromatic (fragrant) rice (Thai jasmine and basmati from India and Pakistan)• Non aromatic (non fragrant) rice.

1. Background 2. Problem Statement3. Research question4. Research objectives5. Results6. Conclusions7. References

BACKGROUND

Definition of terms

• Rice has become one of the major staple cereals in Ghana. It is the second largest cereal consumed after maize. This has been attributed to increasing urbanization and the ease with which it is prepared.

• About 70 percent of total rice consumed in Ghana is in urban areas, mainly Accra and Kumasi (SRID-MoFA, 2010).

• In 2011, the per capita consumption of rice was 24 kg per annum (SRID-MoFA, 2012).

• The Government of Ghana predicts the continuous increase in consumption levels due to rapid population growth and urbanization (GNRDS-MoFA, 2009).

• Rice imports attract 37 percent in taxes and levies (import tax-20%)

1. Background 2. Problem Statement3. Research question4. Research objectives5. Results 6. Conclusions7. References

BACKGROUND

Rice Sub-Sector in Ghana

• Over the past decade and a half, Ghana’s rice sector has attracted the attention of stakeholders and policy makers largely due to the increase in consumption and the effect of its rising import bill on the economy.

• Ghana has the right agronomic conditions to produce rice throughout the year(Assuming-Brempong,1998).

• However, structural constraints namely, poor agronomic practices, low usage of agrochemicals, lack of homogenous seeds of demanded varieties and low farm mechanisation have resulted in a lot of inefficiencies in the rice sub-sector.

• These inefficiencies have stifled the rice production opportunities that the right agronomic conditions offers.

• The inefficiencies, low yields coupled with high consumption has resulted in Ghana been a net importer of rice.

1. Background

2. Problem Statement3. Research question4. Research objectives5. Results 6. Conclusions7. References

PROBLEM STATEMENT

• Over the period 2000 to 2011, imported rice increased from 187,256MT to 543,465MT representing about 190 percent increase in imports. Over the same period, the import bill increased from US$65.03 million to US$391.17 million.

• Also smallholder farmers have to compete with these imported varieties.

• Consumers pay cheaper prices in terms of the quality of imported rice as against the domestically produced one and also they have more varieties to choose from.

• Therefore, the government has initiated a number of policies(FASDEP I, II, METASIP, etc) and established the Ghana Rice Inter-professional Body(GRIB) that promotes the best domestic aromatic varieties to be grown by farmers. Eg Marshall, Jasmine 85, Aromatic short (Diako et al, 2010)

1. Background

2. Problem Statement3. Research question4. Research objectives5. Results6. Conclusions7. References

PROBLEM STATEMENT

• Primary research questionWhat opportunities do the current state of Ghana's rice sub-sector

offer compared with rice imports

• Specific research questions1. How has Ghana's rice sub-sector responded to consumer’s

growing demand for quality and aromatic rice varieties

2. What are the characteristics of the rice distribution network in Ghana?

3. What is the effect of government agricultural and trade policy on the rice sub-sector in Ghana?

1. Background 2. Problem Statement

3. Research question4. Research objectives5. Results 6. Conclusions7. References

RESEARCH QUESTION

• Primary research objectiveTo analyse the state of Ghana's rice sub-sector and identify the

opportunities in this sub-sector

• Specific research objectives1. Analyse Ghana's rice sub-sector through a trend analysis of

production levels, acreage under cultivation, yield and rice import penetration ratio from 2000 to 2011

2. Analyse the rice distribution network

3. Simulate the effect of different agricultural and trade policy scenarios on the quantities produced, consumed and prices of domestic and imported rice.

1. Background 2. Problem Statement3. Research question

4. Research objectives5. Results6. Conclusions7. References

RESEARCH OBJECTIVES

• The data used in the study was sourced from the Ministry of Food and Agriculture-Ghana.

• The data covered production, acreage cultivated, yield and prices of rice and maize from 2000 to 2011.

• The data was not disaggregated on the bases of whether aromatic or non aromatic and therefore more computations were under taking to make the data appropriate for my study.

1. Background 2. Problem Statement3. Research question4. Research objectives

5. Results 6. Conclusions7. References

Data description

1. Background 2. Problem Statement3. Research question4. Research objectives5. Results 6. Conclusions7. References

RESULTS

Objective 1: rice production, yield and acreage

1998 2000 2002 2004 2006 2008 2010 20120

100000

200000

300000

400000

500000

600000

0

0.5

1

1.5

2

2.5

3

A Graph of Rice Production, Acreage Cultivated and Yield in Ghana from 2000-2011

paddy production (mt) acreage (ha) yield(mt/ha)

Years

Prod

uctio

n an

d A

crea

ge

Yie

ld

In 2007, poor rainfall resulted in less land going under cultivation and this led to low yields.

After 2007, the growth recorded can be attributable to more investment in the sector and the implementation of GNRDS

In 2011, governments reduced its discretionary budget allocation to agric by 30%. Therefore it affected the investment activities in the sector including the rice subsector.

1. Background 2. Problem Statement3. Research question4. Research objectives5. Results 6. Conclusions7. References

RESULTS

Objective 1: rice imports

1998 2000 2002 2004 2006 2008 2010 20120

100000

200000

300000

400000

500000

600000

700000

800000

900000

A Graph of Rice Imports into Ghana from 2000 - 2011

Years

Met

ric to

nnes

According to MoFA, the high figure recorded in 2003 may have been trans-shipment to neighbouring countries. This was the period when Cote d’Ivoire was fighting a civil war. Therefore, most landlocked country routed their imports through Ghana.

The peak of 2007, was due to poor rainfall so production levels that year were extra low so that resulted in higher imports

1. Background 2. Problem Statement3. Research question4. Research objectives5. Results 6. Conclusions7. References

RESULTS

Objective 1 : rice import penetration ratio

20002001

20022003

20042005

20062007

20082009

20102011

0.00

10.00

20.00

30.00

40.00

50.00

60.00

70.00

80.00

90.00

0

100000

200000

300000

400000

500000

600000

700000

800000

900000

A graph of rice imports, domestic production and import penetra-tion (2000-2011)

Imports domestic production (milled rice)import penetration ratio

Year

Perc

enta

ge(%

)

Met

ric to

nnes

Ghana still depends heavily on imported rice. This is despite all government interventions over the years. In 2011, the import penetration ratio was about 64 percent.

The generally high import penetration ratio is due to the fact that about 40 percent of paddy production is lost in the process of converting it into milled rice.

• There are 2 main rice distribution networks in Ghana • Local rice channel

1. Input suppliers 2. Producers 3. Local rice processors/aggregators 4. Rice wholesalers5. Rural and Urban retailers6. Rural and Urban consumers

• Imported rice channel 1. Rice importers2. Imported rice and Rice wholesalers3. Rural and Urban retailers4. Rural and Urban consumers

1. Background 2. Problem Statement3. Research question4. Research objectives

5. Results 6. Conclusions7. References

RESULTSObjective 2:Rice distribution network in Ghana

1. Background 2. Problem Statement3. Research question4. Research objectives

5. Results 6. Conclusions7. References

RESULTS Objective 2:Rice distribution network in Ghana

Local rice processors/ aggregators

Rice importers

Imported rice wholesalers

Local rice producers

Input wholesalers

Inputs

Urban retailers

Big processors

Foreign input manufacturers

Foreign milled rice suppliers

Urban consumers

Rural consumers

Rural retailers

Rice wholesalers

• The model developed in this objective is based on the Armington trade model.

• Assumptions of the model1. Rice is differentiated based on the country of origin 2. Rice is also differentiated based on variety(aromatic and non

aromatic)3. There is no rice export4. There is import tax and other taxes levied on imported rice5. There is self sufficiency in maize production(no import or export)6. Farmland is either used for maize or rice cultivation7. Consumers choice of cereal is between rice and maize8. Producer price of maize equals consumer price of maize

1. Background 2. Problem Statement3. Research question4. Research objectives

5. Results 6. Conclusions7. References

Methodology

Objective 3: simulation analysis

Rmix

CSR,

PPR

CSM,

PPM

Maro, Paro Caro,

Paro

Cnaro, Pnaro

CSR,

PCR

CM,

PCM

Mnaro, Pnaro

Cmix,

PCmix

CS aro,

PP aro

CSnaro , PP

naro

A schema of the Armington based partial equilibrium model

1. Background 2. Problem Statement3. Research question4. Research objectives

5. Results 6. Conclusions7. ReferencesObjective 3: Equations of the model

Production side

Farmer’s decision to either produce maize or rice

1. 𝑅ത𝑚𝑖𝑥 = 𝐶𝐸𝑇ሺ𝐶𝑆𝑅,𝐶𝑆𝑀ሻ ⟹𝑅ത𝑚𝑖𝑥 = 𝐴𝑚𝑖𝑥 ቂ𝛼𝑚𝑖𝑥𝐶𝑆𝑅𝛽𝑚𝑖𝑥 + (1− 𝛼𝑚𝑖𝑥)𝐶𝑆𝑀𝛽𝑚𝑖𝑥ቃ1 𝛽𝑚𝑖𝑥ൗ�

2. 𝜏𝑚𝑖𝑥 = 1𝛽𝑚𝑖𝑥 −1

3. 𝐶𝑆𝑅 𝐶𝑆𝑀 = 𝐾𝑚𝑖𝑥 ቀ𝑃𝑅𝑃𝑃𝑀𝑃ቁ𝜏𝑚𝑖𝑥

4. 𝐾𝑚𝑖𝑥 = ቂ(1−𝛼𝑚𝑖𝑥 )𝛼𝑚𝑖𝑥 ቃ

𝜏𝑚𝑖𝑥

Farmer’s decision to either produce aromatic or non aromatic rice

5. 𝐶𝑆𝑅 = 𝐶𝐸𝑇ሺ𝐶𝑆𝑎𝑟𝑜,𝐶𝑆𝑛𝑎𝑟𝑜ሻ ⟹𝐶𝑆𝑅 = 𝐴𝑅ቂ𝛼𝑅𝐶𝑆𝑎𝑟𝑜𝛽𝑅 + (1− 𝛼𝑅)𝐶𝑆𝑛𝑎𝑟𝑜𝛽𝑅 ቃ1 𝛽𝑅ൗ�

6. 𝜏𝑅 = 1𝛽𝑅−1

7. 𝐶𝑆𝑎𝑟𝑜 𝐶𝑆𝑛𝑎𝑟𝑜 = 𝐾𝑅ቀ𝑃𝑎𝑟𝑜𝑃𝑃𝑛𝑎𝑟𝑜𝑃 ቁ𝜏𝑅

8. 𝐾𝑅 = ቂ(1−𝛼𝑎𝑟𝑜 )𝛼𝑛𝑎𝑟𝑜 ቃ

𝜏𝑅

1. Background 2. Problem Statement3. Research question4. Research objectives

5. Results 6. Conclusions7. References

Objective 3: Equations of the model Consumption side Consumer’s decision to either consume rice or maize

9. 𝐶𝑚𝑖𝑥 = 𝐶𝐸𝑆ሺ𝐶𝑅,𝐶𝑀ሻ ⟹𝐶𝑚𝑖𝑥 = 𝐵𝑚𝑖𝑥ൗ�𝛾𝑚𝑖𝑥𝐶𝑅−𝜌𝑚𝑖𝑥 + (1− 𝛾𝑚𝑖𝑥)𝐶𝑀−𝜌𝑚𝑖𝑥൧1 −𝜌𝑚𝑖𝑥ൗ�

10. 𝜎𝑚𝑖𝑥 = 11+𝜌𝑚𝑖𝑥

11. 𝐶𝑅𝐶𝑀 = 𝐻𝑚𝑖𝑥 ቀ𝑃𝐶𝑅𝑃𝐶𝑀ቁ−𝜎𝑚𝑖𝑥

12. 𝐻𝑚𝑖𝑥 = ቂ(1−𝛾𝑚𝑖𝑥 )𝛾𝑚𝑖𝑥 ቃ

−𝜎𝑚𝑖𝑥

Consumer’s decision to either consume aromatic or non aromatic rice

13. 𝐶𝑅 = 𝐶𝐸𝑆ሺ𝐶𝑎𝑟𝑜,𝐶𝑛𝑎𝑟𝑜ሻ ⟹𝐶𝑅 = 𝐵𝑅ൗ�𝛾𝑅𝐶𝑎𝑟𝑜−𝜌𝑅 +ሺ1− 𝛾𝑅ሻ𝐶𝑛𝑎𝑟𝑜−𝜌𝑅൧1 −𝜌𝑅ൗ�

14. 𝜎𝑅 = 11+𝜌𝑅

15. 𝐶𝑎𝑟𝑜𝐶𝑛𝑎𝑟𝑜 = 𝐻𝑅ቀ𝑃𝐶𝑎𝑟𝑜𝑃𝐶𝑛𝑎𝑟𝑜ቁ

−𝜎𝑅

16. 𝐻𝑅 = ቂ(1−𝛾𝑅)𝛾𝑅 ቃ

−𝜎𝑅

1. Background 2. Problem Statement3. Research question4. Research objectives

5. Results 6. Conclusions7. References

Objective 3: Equations of the model Consumer’s decision to either consume imported or domestic aromatic rice

15. 𝐶𝑎𝑟𝑜 = 𝐶𝐸𝑆ሺ𝑀𝑎𝑟𝑜, 𝐶𝑆𝑎𝑟𝑜ሻ ⟹𝐶𝑎𝑟𝑜 = 𝐵𝑎𝑟𝑜ൗ�𝛾𝑎𝑟𝑜𝑀𝑎𝑟𝑜−𝜌𝑎𝑟𝑜 +ሺ1− 𝛾𝑎𝑟𝑜ሻ𝐶𝑆𝑎𝑟𝑜−𝜌𝑎𝑟𝑜൧1 −𝜌𝑎𝑟𝑜ൗ�

16. 𝜎𝑎𝑟𝑜 = 11+𝜌𝑎𝑟𝑜

17. 𝐶𝑆𝑎𝑟𝑜𝑀𝑎𝑟𝑜 = 𝐻𝑎𝑟𝑜 ቀ𝑃𝑃𝑎𝑟𝑜𝑃𝑀𝐶𝑎𝑟𝑜ቁ−𝜎𝑎𝑟𝑜

18. 𝐻𝑎𝑟𝑜 = ቂ(1−𝛾𝑎𝑟𝑜 )𝛾𝑎𝑟𝑜 ቃ

−𝜎𝑎𝑟𝑜

19. 𝑃𝑀𝐶𝑎𝑟𝑜 = 𝑃𝐶𝐼𝐹𝑎𝑟𝑜(1+ 𝑡𝑎𝑟𝑜)

Consumer’s decision to either consume imported or domestic non aromatic rice

20. 𝐶𝑛𝑎𝑟𝑜 = 𝐶𝐸𝑆ሺ𝑀𝑛𝑎𝑟𝑜 ,𝐶𝑆𝑛𝑎𝑟𝑜ሻ⟹𝐶𝑛𝑎𝑟𝑜 = 𝐵𝑛𝑎𝑟𝑜ൗ�𝛾𝑛𝑎𝑟𝑜 𝑀𝑛𝑎𝑟𝑜−𝜌𝑛𝑎𝑟𝑜 +ሺ1− 𝛾𝑛𝑎𝑟𝑜ሻ𝐶𝑆𝑛𝑎𝑟𝑜−𝜌𝑛𝑎𝑟𝑜 ൧1 −𝜌𝑛𝑎𝑟𝑜ൗ�

21. 𝜎𝑛𝑎𝑟𝑜 = 11+𝜌𝑛𝑎𝑟𝑜

22. 𝐶𝑆𝑛𝑎𝑟𝑜𝑀𝑛𝑎𝑟𝑜 = 𝐻𝑛𝑎𝑟𝑜 ቀ𝑃𝑃𝑛𝑎𝑟𝑜𝑃𝑀𝐶𝑛𝑎𝑟𝑜 ቁ−𝜎𝑛𝑎𝑟𝑜

23. 𝐻𝑛𝑎𝑟𝑜 = ቂ(1−𝛾𝑛𝑎𝑟𝑜 )𝛾𝑛𝑎𝑟𝑜 ቃ

−𝜎𝑛𝑎𝑟𝑜

24. 𝑃𝑀𝐶𝑛𝑎𝑟𝑜 = 𝑃𝐶𝐼𝐹𝑛𝑎𝑟𝑜 (1+ 𝑡𝑛𝑎𝑟𝑜 )

• Apply agricultural and trade shocks to the model through 1. An increase or decrease in taxes2. An increase or decrease in land cultivated3. An increase or decrease in the international price of rice

• The simulated results will be compared with the current state of the rice sub-sector and percentage changes will be calculated for production, consumption and prices of rice and its varieties and maize

1. Background 2. Problem Statement3. Research question4. Research objectives

5. Results 6. Conclusions7. References

Objective 3: simulation scenario

1. The import penetration ratio shows that Ghana still depends heavily on imported rice despite all the interventions by government

2. More market access should be created for farmers in order to reduce the influence of wholesalers ‘market women’.

3. Conclusion from the model (work in progress)

1. Background 2. Problem Statement3. Research question4. Research objectives5. Results

6. Conclusions7. References

CONCLUSION

• Amanor‐Boadu Vincent (2012), “Rice Price Trends in Ghana (2006‐2011) Monitoring Evaluation and Technical Support Services (METSS)”, Ghana Research and Issue Paper Series No. 02‐2012 ‐ June

2012• Asuming-Brempong S. and Osei-Asare Y., (2007), “Has Imported Rice Crowded-Out Domestic Rice Production in Ghana? What Has Been The Role Of Policy?”, AAAE Conference Proceedings, pg.91-97 • Fintrac (2012), “The Enabling Agricultural Trade (EAT) project - The Market for Maize, Rice, Soy, and Warehousing in Northern Ghana”, United States Agency for International Development (USAID)• Ministry of Food and Agriculture (MoFA) (2007), “Food and Agriculture Sector Development Policy (FASDEP II),” Accra-Ghana• Ministry of Food and Agriculture, Accra-Ghana, http://mofa.gov.gh/site/#, 13th February, 2013• Ministry of Food and Agriculture (MoFA) (2012), “Facts and Figures 2011”, Accra-Ghana• Ministry of Food and Agriculture (MoFA) (2011), “Facts and Figures 2010”, Accra-Ghana• Ministry of Food and Agriculture (MoFA) (2010), “Facts and Figures 2009”, Accra-Ghana• Ministry of Food and Agriculture (MoFA) (2012), Statistics, Research, and Information Directorate (SRID), Accra- Ghana • Ministry of Food and Agriculture (MoFA) (2010), Statistics, Research, and Information Directorate (SRID),

Accra- Ghana • Ministry of Food and Agriculture (MOFA) (2010), “Medium Term Agriculture Sector Investment Plan”, Accra Ghana• Ministry of Food and Agriculture (MoFA) 2009 “Ghana National Rice Development Strategy”, Accra, Ghana:

http://www.jica.go.jp/english/our_work/thematic_issues/agricultural/pdf/ghana_en.pdf, 13th February, 2013

1. Background 2. Problem Statement3. Research question4. Research objectives5. Methodology 6. Limitation of study7. Conclusions

8. References

REFERENCES

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