pkp3__ strategic role of the private sector in ard: ghana

Global Donor Platformfor Rural Development

WORKING PAPER

– GHANA ––––––––––––

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The Global Donor Platform for Rural Development commissioned three comprehensive studies to capture Plat-form members’ knowledge on key issues affecting the delivery and impact of aid in ARD:

PKP 1 Policy coherence for agriculture and rural developmentPKP 2 Aid to agriculture, rural development and food security – Unpacking aid flows for enhanced

effectivenessPKP 3 The strategic role of the private sector in agriculture and rural development

The PKPs are the products of extensive surveys of Platform member head office and field staff, visits to countryoffices, workshops dedicated to sharing findings and refining messages, and successive rounds of comments ondrafts.

On the basis of each PKP, separate policy briefs will be published.

For more information on the PKPs visit donorplatform.org

This working paper is only available electronically and can be downloaded from the website of the Global Donor Platform for Rural Development at:www.donorplatform.org/resources/publications

Secretariat of the Global Donor Platform for Rural Development,Dahlmannstrasse 4, 53113 Bonn, GermanyEmail: [email protected]

The views expressed herein are those of the authors and do not necessarily represent those of individual Platform members.

All rights reserved. Reproduction and dissemination of material in this information product for educational or other non-commercial purposes isauthorised, without any prior written permission from the copyright holders, provided the source is fully acknowledged. Reproduction of material inthis information product for resale or other commercial purposes is prohibited without written permission of the copyright holders. Applications forsuch permission should be addressed to: Coordinator, Secretariat of the Global Donor Platform for Rural Development, Dahlmannstrasse 4, 53113Bonn, Germany, or via email to: [email protected].

© Global Donor Platform for Rural Development 2011

About thePlatform Knowledge Piece series

Prepared by:Platform Secretariat

Published by:Global Donor Platform for Rural Developmentc/o Federal Ministry for Economic Cooperation and Development (BMZ)Dahlmannstraße 4, 53113 Bonn, Germany

Study conducted by:Overseas Development Institute, London

Authors:Lídia CabralJohn HowellGeraldine Baudienville

Photo credits:www.istock.com/Günter Guni/skyhouse; www.fotolia.com/africa/Ivan Gulei/lulú;www,pixelio.de/hjördis Kozel/Rauner Sturm

August 2011

PKP2-COVER-RZ-INNEN-U2-U3_140911_PRINT:Layout 1 12.10.2011 10:54 Uhr Seite 1

Platform Knowledge Piece 3: The strategic role of the private sector in agriculture and rural

development: Ghana working paper 1

Contents

Contents ....................................................................................................................................................... 1

Executive summary ...................................................................................................................................... 4

Introduction ................................................................................................................................................... 6

Research Questions .................................................................................................................................. 7

Methodology ............................................................................................................................................ 7

Research Approach ...................................................................................................................................... 8

The Approach ........................................................................................................................................... 8

Selection of Crops ................................................................................................................................... 10

The Role of the State in Agriculture in Ghana ............................................................................................ 12

Introduction ............................................................................................................................................ 12

Context of liberalization ......................................................................................................................... 12

Phases of Ghana’s Agricultural Liberalization .................................................................................... 12

Liberalization in the Food Staples, Commercial Crops and Export Crop Subsectors ............................. 14

Liberalisation in Food Staples (Cassava) ................................................................................................. 14

The removal of guaranteed prices ..................................................................................................... 14

Removal of monopsony arrangements in procurement and distribution ............................................. 15

Encouraging private agents .................................................................................................................... 16

Farmer Based Organizations .................................................................................................................. 16

Tractor and equipment hirers ................................................................................................................ 16

Disposal of assets ................................................................................................................................... 16

Liberalization in Commercial Crops (Pineapple and Mango) ................................................................. 17

The removal of guaranteed prices ..................................................................................................... 17


Encouraging private agents .................................................................................................................... 19

Farmer Based Organizations .............................................................................................................. 19

Non-governmental organizations ........................................................................................................... 20


Disposal of assets ................................................................................................................................... 21

Liberalisation in Export Crops (Cocoa) ....................................................................................................... 22

The removal of guaranteed prices ......................................................................................................... 22




Encouraging private agents ........................................................................................................................ 24

Farmer Based Organizations .................................................................................................................. 24


Disposal of State Assets .......................................................................................................................... 25

Key Lessons Emerging............................................................................................................................. 26

Private Sector Response to Opportunities in Agriculture and Rural Development .................................... 29

Private Sector Activity in Agriculture and Rural Development .............................................................. 29

Stronger Response of FDI to Government Liberalization ................................................................... 30

Sectors where private engagement has been low and impact of policy reform on incomes and

employment barely felt ...................................................................................................................... 31

Assessment of Private Sector Response to Agriculture in the Chain Level ............................................ 31

Infrastructure...................................................................................................................................... 31

Research and Development ............................................................................................................... 32

Assessment of the Private Sector Response in the Cassava Value Chain .............................................. 33

Prices ...................................................................................................................................................... 34

Food security .......................................................................................................................................... 35

Assessment of the Private Sector Response in Pineapple and Mango .................................................. 36

Employment and income ....................................................................................................................... 36

Access to goods and services ................................................................................................................. 38

Social empowerment and capital ........................................................................................................... 39

Access to assets ...................................................................................................................................... 40

Assessment of Private sector response in Cocoa ................................................................................... 42

Environmental Impacts (Cassava, Pineapple, Mango and Cocoa) ......................................................... 46

Vulnerability (Cassava, Pineapple, Mango and Cocoa) ...................................................................... 46

Key Lessons ............................................................................................................................................. 49

Donor Support to Private Sector Activity in Agriculture and Rural Development ....................................... 50

Donor Support to Agriculture and Rural Development .......................................................................... 50

Donor Support to Agriculture ................................................................................................................. 51

Impact on the Private Sector and Low Income Households............................................................... 60

Assessment of Donor Support to Cassava .............................................................................................. 60

Assessment of Donor Support to Mango and Pineapple ....................................................................... 61

Assessment of Donor Support to Cocoa ................................................................................................. 64

Key Lessons Emerging............................................................................................................................. 64

Conclusions ................................................................................................................................................ 66

Summary of Key Messages ..................................................................................................................... 66

How Should the Platform Donor Effectively Engage the Private Sector in Rural Areas? ....................... 67



References ................................................................................................................................................. 69

Appendices ................................................................................................................................................. 72



Executive summary

Agricultural growth contributes to poverty reduction by improving rural incomes, utilizing the productive

capacity of poor peoples‟ land and labour assets, providing food and supporting the means of living for

both urban and rural poor. Agriculture also stimulates economic opportunities and diversification into the

non-farm sector where growth is generally faster, with labour productivity and wages higher. Regardless

of the sector‟s immense contribution to Ghana‟s GDP, the incidence of poverty is highest among food

crop farmers since the sector is characterized by basic technology and poor support from agencies.

Although there has been an overall decline in the incidence of poverty in Ghana from 38.7% in 1998-

1999 to 28.5 in 2005-2006 (GSS, 2006), many poor people in the country are faced with chronic food

insecurity, thereby making them more vulnerable. It is generally agreed that appropriate private sector

involvement and support is essential to improve the agricultural sector. This involvement and support

include the provision of infrastructure, adequate research and development and favourable governmental

policies just to mention a few to increase private sector response to the agriculture and rural development

sectors.

However, the question remains with respect to the kind of opportunities that have been presented to the

private sector and the degree to which these private enterprises support the activities in the agricultural

value chain. This study aims at improving our understanding of the role played by the private sector in

promoting agricultural and rural development and to propose pragmatic ways donors can engage with the

sector to yield better outcomes. It also provides background information on the role of the state and

private sector involvement in Ghana‟s agricultural sector over the years. Focusing on three key

agricultural subsectors: food staples (Cassava), Commercial Production for domestic markets (Pineapple

and Mango) and Traditional Exports (Cocoa), the study was carried out in the Eastern and Central

Regions of Ghana. The study employed the World Bank (2003) framework on Poverty and Social Impact

Analysis (PSIAs) to assess the impact of private sector response in agriculture on rural households.

Focus group discussions and questionnaire administration were data collection tools utilized.

The results from the field survey revealed that private sector response to the agricultural sector in Ghana

is low and limited to few company level investigations. However, the encouragement of private agents to

participate in the value chain of these agricultural subsectors yield benefits mainly from capacity building

sessions in technical and business management principles to direct financial assistance. Due to the low

response on the side of the private sector, interventions in agriculture is yet to boost employment and

alleviate the poverty of rural households in Ghana although the survey results indicate that more than 90

percent of members of all households interviewed satisfy food needs with little difficulty.

Interventions by development partners (DPs) to agriculture in Ghana are to provide direct and indirect

support to the sector. The support measures that are common to agriculture by DPs are budgetary

support specifically in the areas of FBO/CBO/CSO development, community-driven initiatives in food

security and rural enterprises projects. Furthermore, observations show that, while some development

partners and donor agencies were pooling their resources to work towards a common agenda, others

prefer to exclusively fund their projects. The impact of some of these projects is not very significant and

lacks harmonised and co-ordinated efforts. On the whole, donors support particular agricultural

commodities depending on its priority to the national economy and the global market.

In effect, the private sector is not the precedence for most agencies; however, these agencies have small

components representing a small fraction of the private sector. Despite the limited donor support in this

area, both the government and private enterprises have initiated projects which centre on the three key

agricultural subsectors (that the study focuses on) but the success of such initiatives have been limited in

view of the size and scale of interventions. Based on the findings, the study recommends the following

methods of engagement to platform donors:

The study suggests that donor support to agriculture should be aligned to national priorities

through the GSGDA and other stakeholder consultations. Another suggestion relates to the need



to promote aid delivery through pooled funding in order to reduce transactions costs resulting

from unnecessary duplication.

It is also suggested that donor support to agriculture should be increased if not doubled at least.

Current support to the sector is inadequate and cannot significantly move the sector into a

modern and vibrant segment of the economy.

A comprehensive and integrated approach to agriculture support as proposed by the MCA

compact should be followed by all donors as the piecemeal or less integrated approach seeks to

do presently.

Platform donors should increase aid to support accelerated development of capacities at all

levels as Ghana continues its transition into a high middle income country. Aid should also be

targeted at building the capacity of institutions and human resources to effectively manage the

transition.

Platform Donors should also harmonize their aid procedures in agriculture and other key sectors.

According to the 2010 PD Evaluation, the recent pace of harmonization is very slow (also see the

Ghana Aid Harmonization Matrix). There should be a shift from project funding towards pooled or

programme funding by ensuring that the various projects are aligned with the GSGDA to avoid

stand-alone projects.

Platform donors who provide lines of credit for onward leasing to rural people, through bilateral

relations with the government and/or other agencies, international finance agencies should

consider partnering directly with local financial institutions to deliver efficient services to various

people in all the value chains to boost the agricultural industry.

Aid conditionalities still remain a challenge and the mixture of project, programme and pooled

funding has led to a complex aid architecture with its associated high transactions cost. Thus,

donors should continually shift from project funding towards programme or pooled funding

A successful agricultural programme requires a strong Ministry of Food and Agriculture in

addition to providing a strong and comprehensive policy framework that is well integrated with

other sectors. Thus platform donors should support the technical capacities of the Ministry of

Food and Agriculture including the use of its accounting and procurement systems



Introduction

Agriculture employs a greater proportion of the labour force in Africa and contributes significantly to GDP

in these countries. Like most developing countries in Africa, agriculture is the mainstay of the economy

and about 70% of the population is rural. Ghana has a population of about 24 million1 and the land area

is 23.8 million hectares of which 57% is agricultural land (MOFA, 2003). In Ghana, the share of

agriculture in GDP has been around 40%and not until recently when services became the leading sector,

agriculture was the main economic activity employing about 55% of the working population. Besides,

growth in agricultural output over the past five years has been the highest with the bulk coming from

cocoa. Despite the contribution of agriculture to the national economy, the incidence of poverty is

reported to be highest amongst food crop farmers, and amongst self-employed rural people working in

off-farm activities such as trade. Currently, agriculture in Ghana is still being mostly practiced using basic

technology; the „hoe and cutlass‟ method, with very minimal processing. The majority of farmers operate

barely subsistence farms or receive very low incomes from their holdings. There is also limited use of

irrigation and rain-fed agriculture dominates. Investment in the sector compared with other sectors has

been low due to a myriad of factors including the high risk, low returns, and long term nature of

agricultural finance while banks prefer funding short term investments to mention but a few (Table 1).

From Table 1, the manufacturing, services, building and construction sub-sectors were the main areas

with the highest investment with Agriculture being the least (2.65%). It is, however, refreshing to note that

investment in Agriculture has increased significantly in 2010 accounting for about 27.2% of total

investment cost in 2010.

Table 1: Foreign Direct Investment (January 2001 – December 2010)

Jan 01 – Dec 10 2010 2009

Sector Projects Inv. Cost ($m)

Percent Projects Inv. Cost ($m)

Percent Projects Inv. Cost ($m)

Percent

Manufacturing 576 7555.80 22.37 60 108.90 8.57 59 98.06 1.95

Services 656 1463.30 25.00 143 609.39 47.98 87 210.70 4.19

Tourism 210 152.12 5.26 24 6.00 0.47 21 60.55 1.21

Build. & Construction

184 2565.71 14.47 30 123.06 9.69 19 118.64 2.36

Export Trade 96 50.12 11.84 19 21.41 1.69 4 1.33 0.03

Agriculture 124 796.67 2.63 15 345.19 27.18 14 103.77 2.07

General Trade 451 1107.40 18.42 85 56.04 4.41 52 35.10 0.70

Total 2297 13691.11 100.00 376 1269.98 100.00 256 628.15 12.51

Source: Ghana Investment Promotion Centre, 2011

A number of factors have contributed to this poor state of affairs and had ensured that the agri-business

sector has enable the sector realize its full potential. The factors affecting the agri-business sector

include marketing, storage, infrastructure, finance and limited ability to influence government policy.

To address these problems, the state has played very active role in agricultural production and marketing

in Ghana until the SAP era (liberalization period). The „retreat‟ of the state saw the private sector playing

a more active role but the extent to which the change in roles have affected the sector remains to be

investigated. The study aims to improve our understanding of the role played by the private sector in

1 According to the 2010 National Housing and Population Census



promoting agricultural and rural development and to propose pragmatic ways donors can engage with the

sector to yield better developmental outcomes.

Research Questions

The aim of the study as outlined in the TOR is to improve the effectiveness with which private sector

development initiatives in rural areas are supported. The key questions to be addressed are:

How has the private sector responded to the „rolling back‟ of direct state involvement in rural areas, and

the emergence of other opportunities, and what is the explanation for the different responses observed?

What is the impact of this private sector activity on low-income rural households and the dynamism and

competitiveness of the agricultural sector?

What has determined the success of donors, governments, NGOs and other initiatives to stimulate

private sector development?

What are the implications of this analysis for the way that Platform members support private sector

development in rural areas?

Methodology

As per the project TOR, the study aims to tackle several wide-ranging issues including: the liberalization

of agricultural markets over the recent decades (from the ERP era in the case of Ghana), the private

sector‟s response to this policy initiative and the opportunities available in rural areas. Other key areas of

importance include understanding the causes of this response, how donor organizations seek to support

rural enterprises and ways to improve on the effectiveness of these interventions. In order to study these

issues in Ghana, the following approaches will be employed:

First, Agricultural value chains in food staples, traditional exports and commercial production for domestic

markets was studied using secondary data sources. Second, a detailed value chain analysis of Cassava,

Pineapple, Mango and Cocoa was undertaken. Here, the extent of private sector involvement and the

role of the state and donors in supporting or impeding outcomes were investigated. The whole chain of

the selected products (Cassava, Pineapple, Mango and Cocoa) including R&D, input markets,

production, intermediaries, processing and output markets as well as support institutions (policy,

technical support, public infrastructure, financial services, and institutions).

An earlier study (Quartey, 2007) noted key players or development agencies that are actively involved in

stimulating private sector development in the agricultural sector since the year 2000. These players and

emerging one have been interviewed accordingly (see Appendix 1). The study also ascertained how

public, private and donor actions impact on the chain. This was done using both primary and secondary

data from the relevant Ministries as well as micro studies of impact. Thus a selection of key interventions

of each of these crops was evaluated using a before and after analysis. It is important to note that a

broad view of what constitutes the private sector was employed. This included agricultural producers,

indigenous entrepreneurs, corporate bodies as well as international corporate entities.



Research Approach

The Ghana report has four main components as outlined in the RPKPIII project TOR. The first section

provides a brief review of the `retreat‟ of the state from agricultural production, financing, marketing,

processing etc. Thus, discussions on the `Operation Feed Yourself‟ policies, „State Farms‟, the demise of

the Ghana Food Distribution Corporation, Cocoa Marketing Board, Timber Marketing Board, provision of

fertilizer subsidies and implements were all discussed. During the liberalization period, price controls

which ensured that the urban sector wage worker benefited from cheap food items and subsidies to

agriculture were all removed. The state however performed some major interventions particularly in major

export crops such as Cocoa. It also continued to provide infrastructure especially feeder roads linking

agricultural producing areas and also regulated the marketing of these products. These and many others

will be investigated to ascertain whether the state still intervenes significantly in markets for food staples

and traditional exports such as cocoa, timber and minerals (gold, diamond, etc).

The second part of the study will examine the opportunities that the liberalization has presented to the

private sector. This will involve assessing impacts at the chain level (quantity of output, revenue,

employment, etc) as well as community level impacts (household income, job creation, access to and

affordability of social services such as education, health, etc, household asset building and transfer

payments). It is believed that where the private sector has successfully facilitated the development of

markets in rural areas this has led to improved livelihood. For example, pineapple exporting company

(Blueskies) has developed the pineapple export markets in the Eastern Region of Ghana. It has also

promoted the processing of mango and pineapple into juice for export and sale on the local market. This

has had significant positive impact on low-income households within the Eastern Region of Ghana.

However, there are cases of state and market failure – the Presidential Special Initiative (PSI) on

Cassava is a test case of state and market failure. Low income households who went into Cassava

production after the Starch factory was set up have had their hopes dashed.

The Approach

The assumption is that prior to 1980 the state was largely involved in the entire primary and secondary

activities of the agricultural value chains in Ghana. The state controlled procurement of inputs, operated

farms, processing factories, marketing of commodities, financing and transportation. In short, trade was

restrictive. With the introduction of trade liberalization in 1983, an incentive structure has been put

together for the private sector to fill the spaces left by the state in the agricultural value chain. The

question being answered then is what opportunities have been presented to the private sector? To what

extent are private enterprises supporting the activities in the agricultural value chains? Are there non-

agricultural enterprises (financial institutions, labour gangs, processing centres, and buying agents)?

Have farm households improved their livelihoods (food security, income, housing conditions and assets)

due to the support being obtained? Agriculture in Ghana is a rural phenomenon; have rural infrastructure

and human resources been developed? How are natural resources being managed by rural communities

due to the new role of the private sector? Based on the issues raised it was hypothesized that there is

private sector response and significant impact on farm households and communities.

In assessing impact on rural households, the World Bank (2003) framework on Poverty and Social

Impact Analysis (PSIAs) will be adopted. The PSIA also show that impacts of policies should be evident

in employment generation, stable prices, improved assess to goods and service, and assets as well as

transfer payments. These assertions guided the data collection and analysis of the study. The guide

identifies the impact transmission mechanisms of intervention policies as follows:



Question Description

What is being analysed? Likely impact of public, private and donor actions

on the chain

What is the welfare measure being assessed? Likely distributional impacts of income and non-

income dimensions

Whose welfare is being analyzed? The low income and those vulnerable to

impoverishment

How are impacts channeled? Through employment; prices (production,

consumption, and wages); access to goods and

services; assets; transfers and taxes.

How do institutions affect outcomes? Markets, legal systems, and the formal rules and

informal behavior of implementing agencies,

including government will affect real costs and

quality of goods and services for the poor.

When do impacts materialize? Short, medium or long-run. Short-run losses may

result in long-run gains for given groups, or

immediate gains may lead to eventual losses- it is

complex

What are the risks of an unexpected outcome? Have economic agents and institutions been

directed on how they are expected to act? Do

projects/programmes specify how impacts would

be transmitted to households?

Which conditions exogenous to the policy has been

determined?

Source: Adapted from World Bank, 2003.

The framework below also shows how the value chain is affected through the various initiatives. The low-

income or poor households operate mainly in the production assembling, processing and marketing

levels (in red), associating with the private sector directly or indirectly through the government support

services.



Figure 2.1: Sustainable livelihoods framework

Processing

Assembling

Production

Input supplying

FunctionsSupportServices

Input Suppliers

Exporters/ Producers

Outgrowers

Small/ Medium scale

Marketing

Processors

Wholesalers

Supermarket

Local traders

Open market

Supermarket

Actors in the agricultural value chain

Domestic MarketExport Market

Cold Chain

Financial

Research &Dev’t

Extension &Technical

Associations

Source: DfID (2000)

The effectiveness of these interventions will be assessed across a broad range of donors (multi-lateral

and bilateral) as well as privately funded initiatives such as the Private Enterprise Foundation and

corporate social responsibility programmes. Desk analysis of RPKP3 platform donors and other key

donors engaged in agricultural support and financing will be undertaken.

The sustainable livelihoods framework (SLF) developed by DfID (2000) and the Poverty and Social

Impact Assessment (PSIA) framework developed by the World Bank (2003) guided the thinking that

shaped the assessment of the role of the private sector in agricultural value chains in Ghana under trade

liberalization.

The SLF suggests that whenever new structures and processes are put in place they influence both the

asset position and strategies of groups that operate in a vulnerable context (Figure 2.1). Eventually, there

is transformation and people can cope better with shocks, trends and seasonality because of new levels

of governance, policies, laws, cultures, etc.). The result is improved food security, income and general

wellbeing as well as reduced vulnerability and environmental soundness.

Selection of Crops

Four crops were selected based on the three categories of agricultural products outlined in the TOR,

namely, Food Staples (Cassava), Commercial Production for domestic markets (Pineapple and Mango),

Traditional Exports (Cocoa). These crops have been selected in view of their contributions towards the

sub-sector output, revenue and employment. Cocoa has been the leading and traditional export of Ghana

and the country ranks very high on the international market. The value chain system for cocoa is the

most integrated and developed in the sub-region. Pineapple and Mango have both played significant

roles in the commercial production sub-category but have played much larger role in the non-traditional

exports sector in recent years. Thus, the bring some dynamics to the chain of crops being studied; first as

a crop produced for the domestic market and later as non-traditional exports with lots of opportunities for

poverty reduction. Cassava is a major staple also selected for the dynamism it can bring; it is a staple

that has Presidential Initiatives to develop it into commercially processed product that could be exported

to the international market. There is some political economy lessons to be drawn from this crop since it

benefited from Government Support but a regime change together with political interventions has brought

the major state financed processing company involved some difficulties.



Table 1.1 Crops Selected

Agricultural product Crop

Food staples Cassava

Commercial production for domestic markets Pineapple and Mango

Traditional exports Cocoa, Pineapple and Mango



The Role of the State in Agriculture in

Ghana

Introduction

Agriculture in Ghana provides the raw materials for domestic use and for industry. It is recognized as the

backbone of the economy because until recently, it contributed more than 35 percent of the national

GDP. Since the colonial era, there have been several reforms to ensure that an enabling environment is

created to induce its chain participants to perform well. However, a key observation is that, “Ghana‟s

agriculture from the colonial era to the 1980s was characterized by restrictive and distortionary policies in

the form of price controls, input and credit subsidies, obligatory credit allocations, and heavy state

intervention in production, distribution and marketing” (Brooks et al., 2006).

Despite state control, by 1982, the sector‟s production had dipped to an all time low; the production of

key staples had fallen; the key traditional crop export, cocoa was failing and commodities that could also

earn foreign exchange were not being promoted. Cocoa production reached an all-time low of 159,000

tonnes in 1982/83, a mere 17 share of world production, down from the 36 percent in 1964/65 (Amanor,

2005).

Like many SSA economies, Ghana adopted an IMF sponsored trade and agricultural reforms in 1983, to

create an efficient private sector-driven production to ensure food security and adequate nutrition,

regulate inputs and output supplies, and facilitate international and domestic trade (Aryeetey et al., 2000).

Ghana‟s reforms to remove price distortions on crops, eliminate subsidies for agricultural inputs and

reduce the role of parastatals gained momentum with the introduction of the Agricultural Services

Rehabilitation Project in 1987 (Nyanteng and Seini, 2000). From 1990, all the development programmes,

policy frameworks, and plans specified the State‟s facilitating role in all activities in the agricultural value

chain –procurement, production, post-harvest, marketing and sale. The state‟s lead role in research and

development, regulation and public market infrastructure provision has also been specified.

Context of liberalization

Phases of Ghana’s Agricultural Liberalization

Ghana‟s agricultural reforms under trade liberalisation can be categorised into three phases, namely, the

era of gradual reforms and the period of sustained reforms, and the consolidation era. The era of gradual

reforms (1983-1990) dealt mainly with the removal of price distortions within the broad framework of

macroeconomic stability in Ghana. Meanwhile, the Era of Sustained Reforms (1991-2000) began with the

Medium Term Agricultural Development Program to abolish subsidies on inputs and further reduced

state‟s involvement in input and output markets by 2000 (MOA, 1990). Additionally, it was characterized

by increased support for selected key institutions and improved rural infrastructure to boost productivity

and competitiveness in the agricultural sector. For cocoa, the phase was marked by increased producer

prices and improved production and marketing efficiencies in related cocoa activities (Fold, 2002 and

Haque and Mukherjee, 2004). Input distribution and parastatal agricultural firms were privatized; the

extension services was reformed and processing activities reorganized (Daviron and Gibbon, 2002;

Abbot, et al., 2005, Ton et al. 2008).

The Consolidation Era (2001-date) permitted some public interventions especially in the cocoa sector,

private partnership in inputs and output marketing as well as increased advocacy in the supply chain of

agriculture in Ghana. It affirms the long-term economic and social impact of reforms as still uncertain in

terms of private sector response to production, marketing, research and development.

A major feature of agriculture in the 1970s was the formation of single product development boards such

as the cotton, bast fibre, grains, cattle and meat (Nyanteng and Seini, 2000). These boards were to offer

incentives, advice and oversee production of these crops. Subsequently, guaranteed price schemes were

instituted to protect farmers against income losses due to overproduction or productivity gains. There was



also an upsurge in interest in raising agricultural production to self-sufficiency level. This led to the

establishment of the Operation Feed Yourself (OFY) and the Operation Feed Your Industries. The OFY

was successful as rice production increased.

The 1980s saw the introduction of the Economic Recovery Programme (ERP) which aimed to resuscitate

the economy. The main feature in terms of agricultural policy was to increase the producer price of

cocoa. The second phase of the reforms (1986-8) emphasized increased productivity and internal price

stability in agriculture while the third phase of the reforms was implemented within the context of the

Medium Term Agricultural Development Programme (1991-2000). As part of this programme, the

guaranteed minimum price of maize and rice were abolished and all subsidies removed including those

on fertilizer, insecticides and fungicides. In addition, the procurement and distribution of these inputs

were taken from the Ministry of Agriculture and COCOBOD and privatized in order to ensure competition

and efficiency.

Beginning 2001, a Ghana Poverty Reduction Strategy (GPRS) was implemented to guide overall national

development. Private sector as the engine of growth was firmed. The focus of private sector

competitiveness was captured as “to ensure accelerated growth through modernized agriculture and led

by a vibrant private sector”. To achieve this objective, a strategy to develop the private sector is being

implemented which focuses on achieving nine key policy objectives namely:

Improving Ghana‟s position in global and regional markets

Enhancing efficiency and accessibility of national markets

Strengthening firms competency and capacity to operate effectively and efficiently

Enhancing government capacity for private sector policy formation, implementation, and

monitoring and evaluation

Facilitating private sector access to capital

Facilitating the removal of institutional and legal bottlenecks

Facilitating innovation and entrepreneurship

Ensuring accelerated development of strategic sectors

Supporting and promoting attitudinal change of the population towards the private sector.

In the light of agriculture under the GPRS II, the sector‟s policies focused on achieving three broad

objectives: (i) sustainable increase in agricultural productivity and output to support industry and provide

stable income for farmers, (ii) food security for all and increase the access of the poor to adequate food

and nutrition; and (iii) the development and strengthening of the requisite institutional capacity to support

increased productivity.



Liberalization in the Food Staples, Commercial Crops and Export Crop Subsectors

This section provides a description of how the state has sought to increase private sector participation in

specific agricultural subsectors. The subsectors are cassava (food staple), pineapple and mango

(commercial crops) and cocoa (export crop). The specific areas of liberalization probed included: (i) the

removal of guaranteed prices; (ii) the removal of monopsony (single buyer) arrangements; (iii)

encouraging private agents‟ participation in markets; and (iv) the disposal of state assets.

Figure 2: Cassava Production, Product and Processing

Liberalisation in Food Staples (Cassava)

The removal of guaranteed prices

Until the 2000‟s cassava had been cultivated mostly at subsistence level with small surpluses sold on the

market (Adams, 1957; Ofori et al. 1997). The output and input markets for cassava have been one of the

most liberalized because in times where there were price controls, these were usually ignored by farmers

and private traders negotiated on prices instead. In the 1970s, a price support scheme was instituted for

food crops in Ghana. The crops, including root and tubers (cassava, yam and cocoyam), grains (rice,

maize and cowpea), and vegetables (onions) enjoyed guaranteed minimum prices. The government

parastatal, Ghana Food Distribution Corporation (GFDC) was established to handle post-harvest and

marketing activities. The corporation had processing sites, vehicles, silos, warehouses and retail outlets.

Each year, two prices were announced, namely, the producer price and the consumer price. In 1986 the

guaranteed market price for consumers was abolished and in 1990 that for producers was also

abolished. GFDC continued to be a post-harvest handling and marketing actor; it bought and sold

cassava at market prices.

In year 2000, the GFDC was liquidated due to under performance. It was estimated that GFDC was

purchasing only 10 percent of all harvested produce. Some of the challenges that led to the demise of

GFDC included delays in farmer payments and poor logistics management. In addition, there were no

contractual agreements with farmers and the quality control was left in the hands of farmers. The larger

market had a greater influence during the harvesting period; they required a large range of quality and

payment plans. Meanwhile, some traders made advance payments or provided credit and all these

challenges joined to threaten the sustainability of the price support scheme. In the early 2000s, a private–

public partnership established the Ayensu Starch Factory in Bawjiase in the Central region as part of the

Presidential Special Initiatives on Starch and Palm Oil. Consequently, formal outgrower schemes were

created and guaranteed minimum prices were determined but persistently low turnover led to the close

down of the factory in 2007.

Today, the private sector is in full control of all the activities in the food crop value chain in Ghana.

However, marketing is still unspecialized partly due to the limited use to which the product has been put

and the decline in world price for cassava pellets. In the 1990s, a private company, TC&G Limited

mobilized cassava farmers in the Ashanti, Volta, Northern, Eastern and Brong Ahafo Regions to process

cassava pellets for export (Al-Hassan and Egyir, 2003) but the company is defunct due to consistent

http://en.wikipedia.org/wiki/File:Manihot_esculenta_dsc07325.jpg



decline in turnover. Despite these challenges, a wide range of outlets have existed in the cassava

marketing system:

Farmer open market arrangement: where farmers bringing cassava to the open market for traders to

come and buy on mostly cash basis. This appears to be mostly the case at harvest time where traders

have very little incentive to go to remote surplus areas. Farmers sell at established market prices for

trader to either pay the full cost of the bag and its content or only the cost of the cassava. This marketing

chain has evolved to specifically meet the needs of small traders with no transport facilities to collect

cassava from farms.

Traders Farm Gate: This occurs when traders go to remote surplus villages to look for farmers to buy

from them. It often takes place in lean seasons when large traders either directly or through sub-agents

procure the products at the farm gate into a central place in the village. They transport the cassava from

the central point for sale as wholesalers or to retailers via trucks. A variant of this has been the Farmer

agents‟ arrangement where a farmer purchases on a commission basis from many small farmers and

assemble them for a trader to eventually transport them to the selling centres. In such instances the

farmer-agent meets the transport costs from the farm gate to the assembly point while the trader incurs

the cost of transporting from the collection point to the selling point.

Farmers - buyer: This evolved in response to glut where farmers have to go looking for traders for their

produce. Under such arrangement, the buyer charges the farmers for the transport costs incurred and

usually have products procured on credit basis.

Outgrower scheme is the situation where large buyers usually give inputs to trustworthy farmers who,

upon harvest, sell the produce to them either on credit or cash basis depending on the contractual

arrangements. Evidence suggests that contracts are usually not binding as farmers may sell to other

traders, depending on their cash needs.

Farmer – farmer: is the case where surplus farmers sell their produce to local deficit households in mostly

pre-farming seasons and/or rainy seasons where feeder roads are rendered immotorable to transport the

commodity out of the area.

Removal of monopsony arrangements in procurement and distribution

Arrangements in procurement of agricultural inputs include that for seed, fertiliser, irrigation,

agrochemicals and machines. The multiplication and distribution of cassava cuttings (the seed) was

controlled by farmers until interests in research improved after 1980. Otim-Nape (1995) observed that

cassava was viewed as an inferior food whose per capita consumption was destined to decline as

farmers‟ income increased (Jones, 1959 and Marter, 1978). Cassava has never been produced under

irrigation and tractor mechanization technology is not suitable for its production (Nweke, 1979). Weed

management has been done manually, although the use of zero tillage (applying herbicides) is a growing

phenomenon. Application of fertilizer has been done in cassava maize intercrops only. Hence, the

cassava subsector was not significantly influenced when there was state monopoly in the arrangements

for input procurement and distribution.

At the time of state monopoly the Ministry of Agriculture (now Ministry of Food and Agriculture, MoFA)

operated farmer input shops (FASCOMs) to sell imported inputs (pesticides, machines and fertilizer) and

certified seed to farmers. Since 1990, private companies (both multinationals and indigenous) have been

given licenses to import whatever the market needs. In 2008, the Government of Ghana under its

fertilizer subsidy scheme signed MOUs with companies such as Yara and Wienco to import fertilizers for

onward sale to farmers. Fertilizers such as NPK, SOA and Urea are sold to farmers at prices 50 percent

lower than the actual price2. Our field survey (May, 2011) of cassava farm households confirmed that,

any input needed for cassava production, processing and marketing could be obtained within a 10 km

2 Fertilizer subsidies were revisited since farmers could not afford them at the prevailing market price

while there are visible signs that the sector urgently need a boost in productivity



radius. Bawjiase, Kasoa and Awutu (district capital) were mentioned as key towns where private retailers

offered goods and services. There is no difficulty in obtaining these inputs if one had financial resources.

A few houses have developed social capital; they are able to obtain cassava cuttings for free (8%) or buy

inputs on credit (20%) occasionally.

Encouraging private agents

Private agents have been encouraged to participate in the cassava value chain including the use of

Farmer Based Organizations (FBOs), plant pools or machine (tractor and spraying machines) hiring

services. The activities engaged in by these entities are discussed below:

Farmer Based Organizations

Farmer based Organizations (FBOs) are made up of private individuals (farmers, traders and processors)

who cooperate voluntarily for mutual gain. They have been a phenomenon in agricultural value chains in

Ghana for a long time. In the cassava farming system, there is association at the processor level. Thus,

Cassava products like `Gari‟ and `Agbelema‟ have individual processors who have formed groups to

obtain community spaces for communal processing and storage. Although Cassava farmers‟

associations are not well known, at the market level, traders form informal groups to improve advocacy

for shed and stalls or control seasonal price fluctuations but the state has never been in control of such

organizations.

During the field survey (May 2011), it was observed that the Gari processing association formed in the

Bawjiase area in the early 2000s in response to the President‟s Special Initiative on Cassava was not

functional. A functional one was observed in Mfafo and this was made up of a community based

organization (CBO) engaged in micro financing. The first CBO, named Macrofin, was organized by Plan

Ghana to enhance the financial empowerment of community members. The CBO is organized as a

rotating savings and credit association. Two other micro finance associations, namely, the Hope and

Nyamebekyere MFAs were organized by the Bawjiase rural bank to support interested households.

Tractor and equipment hirers

Tractor hiring services has been controlled by the private sector, particularly individuals within farming

communities or neighbouring towns. There have been few state owned companies. The Ghana Heavy

Equipment Ltd. (GHEL) is a limited liability company, solely owned by the Government of Ghana. It used

to be the Heavy Equipment Division of the erstwhile Ghana National Trading Corporation (GNTC). The

company has its head office in Accra, with branches strategically located in Kumasi to cater for the

middle zone and Tamale to cater for the Northern zone. GHEL is involved in the sales / services of Earth

Moving Equipment, Agricultural Tractors / Implements, Generator sets and Automobiles.

Since trade liberalization, several District Assemblies have been enabled by the state to purchase

tractors for hiring. In 2008, the GoG purchased and sold tractor on hire purchase to individuals to operate

under the plant pool project. Thus, individuals within 10 kilometre radius of each community were offered

tractor services. Insecticide and weedicide spraying machines have also received attention in the last two

decades due to increased use of weedicide. The cost of purchasing this farm asset ranges from

GH¢50.00 (manual) to GH¢1000.00 (motorized). Hence a few farm households have spraying machines

which is hired out. Owners usually train and develop the special skill in chemical application and serve as

personnel for spraying in the communities. Otherwise, communities depend on the services of personnel

from the District Agricultural Development Units (DADU).

In Mfafu (a farming community surveyed), three percent of households were well-known for such hiring

services. Since households operate small cassava farms (less than 3 hectares), the sprayers are able to

serve the majority of households before the activity period passes and no delays were recorded.

Disposal of assets

The Ghana Food Distribution Corporation was liquidated in 2000 and its assets including postharvest

handling and processing equipment as well as vehicles were sold, leased or put up for hiring. Private

individuals and companies leased the equipments for grain drying and processing. Farmers close to the

facilities hired the drying and storage services. The vehicles and retail shops were useful for cassava



haulage and trade. Middlemen, particularly maize traders, who travel from cities to purchase goods to

urban centres benefited from the disposed assets. On the contrary, Cassava farmers, traders and

processors in rural communities have not gained directly from their disposal; they have gained indirectly

from traders who purchased from farmers.

Liberalization in Commercial Crops (Pineapple and Mango)


IMF/World Bank liberalization of agriculture in terms of removal of guaranteed prices have affected

products competing with subsidized imports (Bertow, 2007). Pineapples and mango are considered as

horticultural crops and categorized as non-traditional agricultural commodities. It was only in the early

1980s (Economic Recovery Programme era) that significant exportation of these commodities begun.

The incentive framework that was implemented aimed to boost exports in order to promote diversification

of the country‟s exports. Thus, policies such as a flexible exchange rate regime, export retention rate

increased gradually to 100 percent and capacity building programmes in agronomy and standardization

were all instituted. There has never been any price support system for exporters of such commercial

crops. In other words guaranteed minimum price has not been a phenomenon in the horticultural value

chain in Ghana.



Figure 3: Pineapple and its Processed Products


Procurement of inputs for pineapple and mango producers has always been private sector dominated.

Growers, processors and exporters of produce and processed products are private sector companies.

Even when the Nsawam Cannery was operational, the state did not control procurement of industrial raw

materials for processing and export. Planting materials (suckers and seedlings) were organized by

private companies from neighbouring countries, particularly La Cote d‟Ivorie. In the early 1990s, Koranco,

Paradise, Combined and Jei River Farms were well known pineapple farms that supplied suckers to

individuals and groups (Obeng, 1993). Mango seedlings were produced by individuals trained by the

District Agricultural Development Unit.The importation and distribution of specialized fertilizer, pesticides

and growth regulators has been organized by private companies such as Dizenghoff, Chemico, Riess

and Co., Aglow, Sidalco, K. Badu and Agrimat. These companies have informal and formal arrangements

with retailers at the district and community levels to receive stocks on credit or outright purchase for

retailing.

Box 1: Blue Skies – Successful Private Sector Response

The introduction of the Free zones policy by the government saw the emergence of Blue Skies in addition to support received from a pineapple exporter who helped in the acquisition of the land for the factory. Thus, Blue Skies Ghana Limited was founded in 1998 as a Free Zone Enclave beneficiary, to produce fresh–cut fruit and fresh squeezed juice and fresh fruit salads, with 95 % pure pineapple juice as its main ingredients. Its management comprises of both Ghanaian and British investors. The company employs over 1500 people in Ghana and many others in Egypt, South Africa and Brazil. In Ghana, Blue Skies has a total of over 200 pineapple growers who supply the main raw material for production (pineapple) to the company. The company also organizes periodic capacity building training sessions for the out-grower pineapple farmers in Nsawam and buys all the pineapples grown by them after the main planting season. Officials of the company maintain thatthere is a close relationship between them, the pineapple farmers and the employees who are basically indigenous people from Nsawam and nearby communities in the Eastern region, where the business is located. Most of the farmers it expensive to cultivate MD2 which is a new variety of pineapple compared with the Smooth Cayene or Sugar loaf varieties. It also came to light that, the Export Development & Investment Fund -which was basically set up to provide financial resources for the development and promotion of non-traditional export and trade in Ghana- provided credit support to the pineapple growers to go into tissue culture in order to increase production. The company is committed to adding value at source and supplies to 12 major European retailers such as Mark and Spencer in UK. It also accounts for 5 % of Ghana‟s non-traditional exports, 20% of pineapple exports and 70% of mango exports according to company sources. Blue Skies also supports a supply base in Ghana, of 150 small-holder farms, contribute £2.5 million to the local economy per year through salaries, and is the biggest employer in the Eastern Region of Ghana.

Source: Field Survey, 2011

http://www.facebook.com/pages/Mangoes-from-Ghana/10836086163



However, despite the fact that the private sector dominates procurement and distribution arrangements in

this sub-sector, when there are unfavourable trends or shocks to the sub-sector, the government

intervenes, but withdraws quickly for the private sector to take over again. A case in point is a situation

that occurred in the early 2000‟s when European demand for traditional pineapple varieties (smooth

cayenne) shifted in favour of the MD2. The new variety was multiplied and distributed by the Horticultural

Export Industry Initiative (HEII) programme implemented by MoFA. The changeover seriously affected

the ability of many producers to grow for export since the new variety required a higher level of

husbandry and inputs.

The Ministry of Food and Agriculture‟s (MOFA‟s) involvement in the pineapple and mango export industry

has been limited to its regulation. The extension services are handled at the local government level by

the district, municipal and metro departments of agriculture. Horticultural research is carried out at the

Crops Research Institute in Kumasi, the Ghana Atomic Energy Commission in Accra and in some of the

agricultural and botany departments of public Universities. Phytosanitary controls, food pest control,

pesticide regulations, and seed certification in all crop products are the responsibility of the Plant

Protection and Regulatory Services Directorate (PPRSD). The Environmental Protection Agency licenses

the import of pesticides.

Apart from regulation of procurement and distribution, the government has participated in some targeted

activities to assist the pineapple sector. The Ghana Export Promotion Council and Ghana Export

Company were established to provide technical support to the private sector actors in the sector. Under

initiatives of government and donor agencies, individual growers and exporters receive capacity building

packages. The Export Development Fund (EDIF), for instance is aiding exporting companies. When

Farmapine was in operation it obtained support in terms of funding and technical assistance from the

Cooperative Village Enterprise and the President‟s Special Initiative, which was led by the Ministry of

Trade and Industry.



Farmer based organizations were encouraged as soon as production of the non-traditional crops begun.

They were referred to as “outgrowers” since they supplied their good quality produce to exporters or

processors. Some of the exporters and processing firms owned large scale farms. They purchase from

outgrowers to assure consistent supply and to meet importer volumes. The purchasing companies

encouraged the FBOs and provided capacity building programmes for them. National level associations

such as Horticultural Association of Ghana (HAG) and Sea Freight Pineapple Exporters of Ghana

(SPEG) were also initiated in the early 1990s. By the late 1990‟s the Federation of Association of

Ghanaian Exporters (FAGE) had been formed to ensure that farmers and exporters‟ capacities can be

strengthened whenever necessary and there will be a forum to voice out concerns of members.

As early as 1987, the Pineapple Production Expansion Programme was implemented by the Crop

Services Directorate of the Ministry of Food and Agriculture (Table 3.1). Government‟s extension

programmes were extended to farmer organizations for dissemination to members and individuals in the

larger community. All the donor funded projects that followed in 1991 used FBOs as the key entry points

(see table for projects and funding agencies). Hence, many have had to seek legitimization by registering

with the Department of Cooperatives or the Registrar Generals‟ Department. These are government

bodies mandated to support the registration and auditing of organizations. The cooperative department

also inspects stock of its societies, settles disputes and provides education on group dynamics for

societies.



Table 3.1 Interventions in the horticultural sector in Ghana

Name of programme Date Began Date completed Funding Agency

The Pineapple Production Expansion Programme

1987 1990 GoG

Agricultural Diversification Project 1991 1999 World Bank

Trade and Investment Programme (TIP)

1993 1998 USAID

Trade and Investment Reform Programme

1998 2004 USAID

Ghana Sustainable Horticulture Export Chain

2002 2005 USAID

Horticulture Export Industry Initiative (HEII)

2004 2006 World Bank

Trade and Investment Promotion for Competitive Export Economy (TIPCEE)

2004 2009 USAID

Market Oriented Agricultural Programme (MOAP)

2004 2013 GTZ

Export Marketing Quality Awareness Programme (EMQAP)

2007 2012 AfDB & GoG

Millennium Challenge Account 2007 2012 MCC

Source: Korboe, 2011

In Fotobi (a farming community surveyed) a cooperative was observed. The Fotobi Pineapple Producers

and Marketers Cooperative Society, is registered with the Akwapim south municipal cooperative

department. Also, in Agomeda, there is the Dangbe West (Eastern Region of Ghana) a Mango Farmers

Association was functional and registered with the Registrar General‟s Department. Both associations

have benefited from the “Commercialization of Agriculture Project” under the Millennium Development

Authority (MiDA). Members of the group have benefitted from capacity building sessions in technical and

business management principles. The groups have Global GAP certificates and some members have

also received direct financial assistance. However, due to the low proportion (20%) of beneficiaries of the

financial package, there is a growing apathy towards the scheme.

Non-governmental organizations

In the horticultural sector, government has sought to encourage non-governmental organizations such as

AMEX International, TechnoServe, CARE International, GTZ, DED, and SNV to partner international

consultants such as Chemonics, Dai and ACDI/VOCA to implement programmes that will boost the food

industry in Ghana. Key examples of NGOs operating within the sub-sector in the last decade include

Technoserve, Amex International and the Care International (Table 3.2). The horticultural projects always

specified the specific roles of the NGOs. Although most of the organizations were international NGOs

and consultants, they partnered private and indigenous management consulting firms and training

service providers to undertake the implementation of the actual field actions. For example, the GeneWeb

Consult, Accra is the Training Service Provider for the MiDA Agricultural Commercialization project for

the Akwapim South, Ewutu and Afutu-Senya districts. These are districts implementing the horticultural

sector contents of the CoA project.

Table 3.2: NGOs in the in the horticultural sector in Ghana, 2000-2011

Name of Programme Non-Governmental Organization NGO participation goal

Trade and Investment Reform Programme

AMEX International, TechnoServe and CARE International

NA

Ghana Private-Public Partnership Food Industry Development Program (GHPPP)

AMEX International, TechnoServe and CARE International

Establish a Ghanaian NGO with the capability to lead the horticultural industry in sustainable and profitable development



Horticulture Export Industry Initiative (HEII)

NA NA

Trade and Investment Promotion for Competitive Export Economy (TIPCEE)

CARE and TechnoServe To increase Ghana‟s private sector competitiveness in world markets through an improved enabling environment and a strengthened capacity of the private sector to respond to market demands.

Market Oriented Agricultural Programme (MOAP)

German Development Service (DED) and GTZ

Private sector development through institutional development of associations (e.g. HAG and SPEG), support to market access, export promotion and trade fairs (e.g. Fruit Logistica), quality and certification standards and product innovation.

Millennium Challenge Account

MiDA has a 14 member board including at least five Ministers, representatives of the District Assemblies in each zone, representatives of the private sector and NGOs. Several NGOs in the Northern, Middle and Southern Zones were included in training service provision

The targets of the compact are 1,200 Farmer Based Organizations (FBOs) participating in commercial agriculture activity 60,000 farmers trained in commercial agriculture activity

Note: NA = Not available

Source: Authors‟ compilation, 2011


Tractor hiring services is not limited to the cassava industry alone. The services have been controlled by

the private sector, particularly large scale growers and exporters whose farms are in the communities or

neighbouring towns. The survey results showed that 10 percent of all pineapple and mango growers own

tractors. Due to the intensity of chemical application, all pineapple and mango households also own

spraying machines. However, there are commercial spraying gangs (individuals that form groups) whose

services are available when specific spraying contracts need to be completed.

Disposal of assets

There were State owned factories that processed pineapple, tomatoes, meat and fish. In the case of

pineapple, the Nsawam Cannery was established. It was located close to a major pineapple producing

areas in the Eastern Region. In 1995, the factory was divested and a private company named Caridan

Ghana Ltd. purchased the company with all assets and liabilities. There was no State control of the

production and marketing of mangoes.



Liberalisation in Export Crops (Cocoa)

Figure 3.1 Cocoa Produce, Beans and Processed Output


Beginning from 1947, the Cocoa Marketing Board (CMB) and Cocoa Marketing Company (CMC) was

mandated to advise the Government on the price to pay to farmers every year, taking into consideration

the world price and local factors. Cocoa buying was limited to two main periods termed the main crop and

light crop. The guaranteed minimum price for cocoa was announced each year just before the main crop

in August.

Since 1992, the price has been determined by a technical committee known as Producer Price Review

Committee (PPRC) made up of both the private (Licensed Buying Companies and farmers) and public

sector (government and COCOBOD). Hence the guaranteed price system has not been abolished. What

has been reformed is the percentage of the world price passed on to the farmer and which usually results

in increases in the producer price of cocoa. It is observed that persistent macroeconomic problems

implied that the real price increase lagged behind during most of the1990s and real gains for farmers

were thus initially low. Since then prices have been fairly constant. The producer price is, as a result of

COCOBOD‟s high share of the world market price, substantially lower in Ghana than in other cocoa

producing countries. However, despite the fact that Ghana receives higher prices for its high quality

cocoa, it is evident that the quality premium is not passed onto farmers. Hence, it appears COCOBOD

benefits most from the quality premium and the associated price (Lundstedt and Parssinen, 2009).


The colonial government has little involvement in the sector until the end of World War II. The cocoa

sector was dominated by private international manufacturing and processing companies. In 1947, the

Cocoa Marketing Board was established and given the responsibility of exporting cocoa through its

wholly-owned subsidiary the Cocoa Marketing Company. Several licensed buying companies operated

on the international market as buying and transporting companies for Cocoa Marketing Board.

After independence in 1957, the responsibility of cocoa marketing board and structure of cocoa sector

remained unchanged until 1961 when the multiple buying systems was replaced by a monopsony

system. This system was abandoned as early as 1966 and the system with licensed buying companies

was re-introduced. At the same time a state-owned buying company was established, and named the

Produce Buying Company (PBC) to operate alongside the private-owned buying companies.

The monopsony system was re-introduced again in 1977 with the PBC as a sole buying company

operating on the internal marketing chain. A market-oriented reform programme was launched in 1983

and the late 1990s. The first phase of the reforms was introduced in 1983/85 and focused on



restructuring the Cocoa Marketing Board. The second phase, which was implemented in 1993, consisted

of a re-introduction of the multiple buying systems and implied that private Licensed Buying companies

were once again allowed to operate on the domestic market together with the produce buying company.

More recent reforms, aiming at further increasing efficiency of the cocoa sector, were implemented in

1999 in the governments cocoa strategy. In 2000, the Produce Buying Company was partly privatized

and introduced on the Ghana Stock Exchange.

Input procurement was also handled by COCOBOD. It supplied inputs to farmers through its Cocoa

Services Division. COCOBOD has its own seed unit for production of seeds and seedlings, the Abuakwa

Formulation Plant in Kumasi for formulation and distribution of pesticides to the district CSDs. It imported

active ingredients of key pesticides for the formulation. In 1995 the unified system of extension abolished

the CSD and liberalised the sale of cocoa inputs. A cocoa input Supply Company as established with

branches in all districts to sell cocoa inputs that are imported by the private sector and the Abuakwa

Formulation Plant.





Cooperatives were used as an instrument in pre and post-colonial periods to disseminate good

agricultural practices to cocoa farmers (Ghana, 1995). The formation of cocoa cooperative societies was

compulsory and therefore every community in the six cocoa regions had a society. At the national level,

the Ghana Cocoa Coffee Sheanut Farmers Association (GCCSFA) was formed to serve as the apex

body for the three crops. The visibility of this association today is low compared to two decades ago and

Government‟s support to the association has dwindled although still significant. In September 1, 2010,

the Ghana News Agency reported that “The National Executives of the Ghana Cocoa, Coffee and

Sheanut Farmers Association (GCCSFA), have expressed gratitude to government for supplying to

farmers, solar torch lights to enable them meet the one million tonnes target set for 2011. The association

has also called for pragmatic steps aimed at reversing the increased smuggling of cocoa from the

country.

Another major cooperative is Kuapa Kokoo, a farmer‟s cooperative established in 1993 with assistance

from Twin Limited UK (www.kuapakooko.com). The cooperative aims at improving the social, economic

and political wellbeing of its members. It also aims at enhancing the participation of women in the

decision making process at all levels of operation and organization and also encourage environmentally

sustainable cocoa production processes. However, there appear to be no functional cocoa cooperative

societies in many cocoa communities. There are some informal farmer based organizations, not well

organized and formally recognized by the local government and other relevant institutions in the cocoa

value chain. In Agona Nyakrom (Eastern Region) for instance, members of the focus group discussion

explained that “without tangible and especially financial benefits, farmers were not likely to stay

committed to any association”. In an earlier study by Dormon et al (2009), it was asserted that in 2004 a

farmer in the Suhum Kraboacoaltar district said that

“it has become obvious that communication within the 'perceived network' of farmers was not effective

because there was no feedback to the communities from the representatives attending the meetings.

Also, the farmers did not see an immediate benefit because each time a new person attended the

meeting he/she came up with the suggestion to provide credit or free inputs like cutlasses and boots, and

seemed less interested in engaging in a long-term trajectory of collaborative work. Considering the

distances that some of the farmers had to walk to attend the meetings there was little incentive to

motivate the same person to consistently attend on behalf of his /her community”.


Cocoa farming is in carried out in forested areas of six regions in southern Ghana (excluding the Greater

Accra Region). The areas do not support the use of tractors for ploughing. Bull dozers are used to uproot

trees and chain saw machines to fell trees. There are tractor hiring services that have been controlled by

the private sector, particularly individuals within farming communities or neighbouring towns. The few

state owned companies like the Ghana Heavy Equipment Ltd.(GHEL) has served the sector. The district

Assembly plant pool does not serve the cocoa sector since its tractors are limited to that for ploughing.



Disposal of State Assets

Most of the state assets for cocoa are intact with COCOBOD owning several hectares of farm lands in

the Eastern and Western regions. Individual farmers bought the farms and operated them as private

enterprises. Until the late 1930s local merchants were the ones controlling the cocoa trade in the Gold

Coast. Companies like the U.A.C., Paterson and Zochonis (PZ), G.B. Olivant, United Trading Company

(UTC), Cadbury and Fry and J. Lyons were importing foods into the Gold Coast and purchased farm

products such as cocoa, coffee, kennels, rubber and palm oil for export overseas.

Table 3.3: Cocoa produce buying companies and marketing share

Number Name of company Share (%)

1 Produce Buying Company 32.83

2 Akuafo adamfo Marketing Co. 11.97

3 OLAM Ghana Ltd. 10.71

4 Adwumapa Buyers Ltd. 8.62

5 Federated Commodities Ltd. 7.04

6 Kuapa Kokoo Ltd. 5.91

7 Transroyal Ghana Ltd. 5.72

8 Armajaro Ghana Ltd. 5.70

9 Cocoa Merchants Ghana Ltd. 3.17

10 Diaby Company Ltd. 2.70

11 DioJean Company 1.07

12 Royal Commodities Ltd. 1.04

13 Sika Aba Buyers Ltd. 0.84

14 Chartwell Ventures Ltd. 0.80

15 Sompa Kokoo Ltd. 0.60

16 West Africa Exchange Co. Ltd. 0.38

17 Evadox Ltd. 0.28

18 Allied Commodities Ltd. 0.07

19 Fereday Company Ltd. 0.06

20 Farmers Alliance Co. Ltd. 0.03

21 CDH Commodities Ltd. 0.02

22 Ghana cooperative Marketing co. Ltd. 0.01

23 AbaPa Golden Ltd. 0.01

24 Yayra Glover Ltd. 0.01

25 Aboafo Buying Co. Ltd. 0.00

26 Duapa Buyers Co. Ltd. 0.00

Source: Ghana Cocoa Board, 2011

The fear of monopoly behaviour by Cadbury and Fry and unrests among (due to low price for their

produce) led to the establishment of the Cocoa Marketing Board (CMB) in 1947 to provide marketing

services to farmers. The Produce Buying Agency was given monopoly over the internal marketing of

cocoa in the country in 1977. The sector was however liberalized in 1992 as a result of a World Bank

policy. This led to the formation of License Buying Companies (LBCs) to do the internal marketing of

cocoa; PBC is still the lead purchasing company (see Table 3.3). The assets of the Produce Buying

Company were transferred to the new private-public partnership. The Cocoa Services Division was

dissolved and its activities transferred to the Directorate of Agricultural Extension Services (DAES) of

MoFA. However, its assets remained with COCOBOD. In 2008, another subsidiary of COCOBOD, the

Quality Control Division (COCOBOD) was privatised and all its assets transferred to the newly formed

Quality Control Company Ltd. The other subsidiaries, Cocoa Marketing Company, Cocoa Research

Institute of Ghana (CRIG) as well as the Seed Unit have continued to perform the external marketing of

cocoa.



Key Lessons Emerging

The analyses above on the changing role of the state in agriculture are quite revealing. First, four specific

areas of liberalization were studied, namely, (i) the removal of guaranteed prices; (ii) the removal of

monopsony (single buyer) arrangements; (iii) encouraging private agents‟ participation in markets; and

(iv) the disposal of state assets. In analyzing the removal of guaranteed prices, it became evident that

until the 2000s cassava had been cultivated mostly at subsistence level with small surpluses sold on the

market.

The output and input markets for cassava was one of the most liberalized because price controls were

usually ignored by farmers making private traders negotiate for prices. It was in this regard that the

government established the Ghana Food Distribution Corporation (GFDC) to handle post-harvest and

marketing activities. This corporation had processing sites, vehicles, silos, warehouses and retail outlets

as a way of regulating both producer and consumer prices. However, this practice was later abolished

and GFDC like many of its counterparts was liquidated due to under performance in the year 2000. The

early 2000s had a private-public partnership establishing the Ayensu Starch Factory in Bawjiase in the

Central Region as part of the Presidential Special Initiative on Starch and Palm Oil which later closed

down in 2007. Today, the private sector is in full control of all the activities in the food crop value chain in

Ghana.

Pineapples and mango are considered as horticultural crops and categorized as non-traditional

agricultural commodities. Only until the 1980s, under the Economic Recovery Programme era did

exportation for these crops begun. This became possible because there was an incentive scheme aimed

at boosting exports in order to promote the diversification of the country‟s exports. Policies such as

flexible exchange rate regime, export retention rate increased gradually to 100 percent and capacity

building programmes in agronomy and standardization were all instituted.

Cocoa is Ghana‟s only traditional and key crop export. The state‟s role in the value chain has reduced

only slightly. The Cocoa Marketing Board (CMB) and Cocoa Marketing Company (CMC) which was

mandated to advise the government on the price to pay to farmers for the cocoa beans was later taken

up by a technical team known as Producer Price Review Committee (PPRC) which was made up of both

private (Licensed Buying Companies and farmers) and public sectors (government and COCOBOD).

The distribution of cassava cuttings was initially controlled by farmers until interests in research improved

after 1980. Other farm inputs were handled by the Ministry of Agriculture now Ministry of Food and

Agriculture (MOFA) under a state monopoly but now has been handed over to private companies since

1990 some of which are Wienco and Yara who import and sell fertilizers to farmers. The procurement of

inputs for pineapple and mango producers has always been private sector dominated. However,

government intervenes where there may be unfavourable trends or shocks to the subsector but

withdraws quickly for the private sector to take over. A typical case is in point is the shift in European

demand for the „smooth cayenne’ variety of pineapple the MD2.

The cocoa sub-sector has a joint participation of both private and public institutions involved in the export

business. However, while in 1947 when the Cocoa Marketing Board was established to be responsible

for the exporting of cocoa, a state-owned buying company named the Produce Buying Company (PBC)

was introduced to operate alongside private-owned companies. Input procurement was also handled by

COCOBOD who supplied inputs to farmers through its Cocoa Services Division. It also had its Seed Unit

as well as import of active ingredients of key pesticides for the formulation of recommended pesticides. A

Cocoa Supply Company was established with branches in all districts to sell inputs which were imported

by the private sectors and the Abuakwa Formulation Plant.

Private agents have been encouraged to participate in the cassava value chain including the use of

Farmer Based Organization (FBOs), plant pools or machine (tractor and spraying machines) and hiring

services. Some of these are Ghana Heavy Equipment Ltd. (GHEL). Also, most of the state assets in

companies have been sold or the companies have been closed down especially in the case of the

cassava, pineapple and mango sub-sectors. For instance, the Ghana Food Distribution Corporation was

liquidated in 2000 and its assets were sold, leased or put up for hiring. It is only the state assets for the



cocoa sub-sector that has most of them intact and the COCOBOD owns several hectares of farmlands in

the Eastern and Western regions.

In conclusion, the state has rolled back fully in all food commodity sectors and slightly in the cocoa

sector. There is liberalization of the determination of prices of all products inputs and final food

commodities. State monopoly is only seen in cocoa exportation by the Cocoa Marketing Board. All state

assets for input procurement and distribution have been disposed off. Only in finance do we have banks

assets in ADB, NIB, MB and GCB.

State intervention has great interventions at every stage of the value chain. The state rolled back highly

in farming (cocoa, oil palm, pineapple and maize), input procurement (seed, agrochemicals, fertilizers

and machine), processing (pineapple, cocoa, tomatoes, fish and meat), marketing (Ghana Food

distribution Corporation, Produce Buying Company and all GIHOCs). There has been low role back of

State in provision of agricultural extension services, cocoa quality control, roads and high ways has

ensured the maintenance of standards. In all cases the private sector is not blocked by state monopoly.

The state intervenes more forcefully in traditional export (cocoa) than in food staples and cash crop. The

state intervention in food staples and cash crops is seen in fertilizer subsidy and free extension services.

The state has retreated slightly from „public goods‟ functions such as veterinary extension for subsistence

farmers. Probably, the budget for maintaining infrastructure and training human capital has constrained

private sector development (i.e. R&D, economic infrastructure, regulations, etc).

Investments in telecom, transport, water and sanitation and energy are more visible and discussed by the

media. Investments in large scale commercial crop, livestock and fish farming are not highlighted

although cash crop investments in pineapple and mango are expanding. Producers are responding more

but many (including cocoa) are in the informal sector and operate small hectares. Input suppliers need

huge capital to import for distribution so the market is dominated by few firms, mainly multi-nationals.

High initial capital requirement is also limiting investment in small implement manufacture and growing of

seed.

Cassava, pineapple and mango value chain activities are largely controlled by farmers, domestic private

businesses and foreign private businesses. Only R&D, regulation and economic infrastructure

development is dominated by State FDI3 in agriculture and this accounted for 5 percent of the total

number of FDI projects and 1percent of their total value over this period4. Joint-ventures appear to be the

most attractive entry mode, followed by wholly-owned subsidiaries (e.g. Golden Exotic, Blue Skies and

Pinora).

All commodities are showing increased production. Export trade in mango has been declining due to low

capacity of exporters to meet quality standards. There is increased investment in importation of

processed juices from South Africa and Europe. Wide range of processed and convenient foods has

increase choice for the urban middle to high income households. Poor and low income households also

3 “The main investor countries are United Kingdom, United States, India, Switzerland, France,

Netherlands, Republic of Korea, Denmark, Singapore and Indonesia. Energy crops (Jatropha) and fishing

are the main sectors of foreign investment. The presence of Asian investors has increased and

accounted for 37 percent of the total FDI projects in agriculture. The Accra region is the most attractive

one for investors. FDIs are crucial with respect to Ghana‟s economic policy objectives. The government

aims to achieve the status of middle-income country by 2015 and to become a leading agro-industrial

country. It tries to attract foreign capital through various reforms, new institutions and an increasingly

stable business environment, However, procedures related to land-acquisitions, land registration, land-

use and small holder land rights remain to be clarified” (Gerlach and Liu, 2010).

4 Gerlach, A and P. Liu (2010). Resource seeking foreign direct investment in African agriculture. A

review of country case studies. FAO commodity and trade policy research working paper no. 3. Food

and Agriculture Organisation, Rome, Italy.



spend windfall gains on such foods (chocolate, fruit juice and fufu powder). However, yield levels remain

low; yield of pineapple has been maintained at 50Mt/ha; yield of cassava at 12-14 MT/ha; cocoa yield is

620mt/Ha. There are no restrictions in any of the activity areas except for cocoa export and quality

assurance before cocoa export. Private individuals are free to enter and exit the agricultural farm sector

and agro industry (cassava, pineapple and mango). Improvement in the production of cassava,

pineapple, mango and cocoa has created temporary jobs for farm labourers, transporters, processors

and traders. Incomes from sale of produce and wages are gained from providing farm labour services but

it is not enough to lift households out of poverty. About 28% of Ghanaian households are below the

poverty line of GH¢400.00/year.

Farm labourers are members of low income households. Tree crops such as cocoa and mango are inter-

cropped with food staples, ensuring household food security. However, the communities lack adequate

socio-economic infrastructure and receive low producer prices. There is no marked reduction in

vulnerability status of farm households due to trade liberalization.

The private sector is fully responsible for food staples and horticultural export production. It has

responded fully to the „rolling back‟ of direct state involvement in rural areas where food staples and

horticultural exports are produced. The state has rolled back slightly in internal cocoa purchases and

input distribution. There is the need to maintain the premium price Ghana‟s cocoa enjoys and therefore

the state has kept its involvement in the sector to continue to provide quality assurance.



Private Sector Response to

Opportunities in Agriculture and Rural

Development

Private Sector Activity in Agriculture and Rural Development

A review of the extant literature suggests that there are mixed results in private sector response to

opportunities in the agricultural sector. Less than 10 years into most reforms in Africa, some researchers

maintained that the private sector has not been able to quickly fill the gap left by the complete state

withdrawal from agricultural production and marketing (Weber et. al. 1988; Loveridge, 1988; Wehelie,

1989; Dione, 1989 and Staatz, 1990). In Ghana, there was the contention that unstable policy

environment generally branded Ghana as an unsafe haven to do business. Many private sector actors

needed time to gauge the sustenance of the reforms following Ghana‟s political history of coup d‟états

(Asante and Tsikata, 2000).

Some researchers assert though that the private sector has been slow to respond to the reforms, some

successes have been recorded in the areas of agricultural research, extension and irrigation (World

Bank. 2007; Ackah and Appleton, 2007; Aryeetey, 2005; Teal and Vigneri, 2004 and Nyanteng and Seini,

2000). DFID (2004) observed in its discussion on new directions for agriculture in reducing poverty in

Africa, that the private sector response to input market liberalization in Africa has been weaker than to

the output market liberalization. It again iterated an observed difference in the private sector supports for

value addition, institutions and funding for research and development in Ghana. Topalova (2009)

conceded that this was expected as little was known about the spatial and commodity patterns of private

traders; their scale of operations, the direction of trade movements, their stocking behaviour and the

social basis of these relations.

Since the reforms coincided with the introduction of open market policies, import of cheap processed fruit

juices from China and South Africa, has adversely affected the pace of response from the private sector.

Additionally, duties and other charges and transport to bring these products on time in the right quality

still remain a challenge to them. Private sector response is said to have suffered a setback in the

pineapple sector when there was switch from the production of sweet cayenne to MD2 (TIPCEE, 2006).

Thus, this has affected the pace to which technological capabilities were built and the Ghanaian

exporters failed to develop at the pace it initially evolved (Whitfield, 2010). Many fruit intended for the

export market has been sold on the domestic market, resulting in the mushrooming of processing

companies for pineapple and mango juices and increased urban household consumption (Yeboah,

2005).

Jaffee (1992) relied on survey methods by incorporating institutional development patterns within the

context of political, economic, historical, cultural and social factors and better explained the private

sector‟s response to agricultural reforms. In respect to social institutions, cooperatives were initially

established in Ghana to facilitate the marketing of inputs but with fragile liquidity positions they gave way

to small and medium farmers‟ associations in the inputs and outputs markets.

Since 1990 several trade associations have been formed by the private sector to support information

exchange and effective distribution of commodities in the international market. The well-known

associations are the Sea Freight Pineapple Exporters of Ghana (SPEG), Horticulturalist Association of

Ghana (HAG), Papaya and Mango Producers and Exporters association of Ghana (PAMPEAG) and the

Vegetable Producers and Exporters Association of Ghana (VEPEAG). These associations are grouped

under an umbrella association named, The Federation of Associations of Ghanaian Exporters (FAGE).



In Ghana, many farmers (small-scale producers) have responded to production in the less developed and

poorly serviced parts of the country, especially in areas where the nature of the roads and bridges are

poor and have generally made it difficult and expensive for the private sector to reach with inputs and

source outputs. As early as 1988, it was observed that the naturally emerged private marketing chain has

been intermediaries acting as liaison between rural producing areas and the developed urban markets

(Staaz, Dione and Dembele. 1988). Production-costs have generally risen due to increased hiring of

labour. Where farmers are cash-strapped they have „self-exploited themselves’ by extending their

working hours (Blowfield, 2003). Women and children have assumed an increasing role in the processing

and marketing chain of agricultural products due to the poor state of feeder roads that render them

impassable at critical times of the agricultural seasons (IAS, 1996).

The private sector has had its ability to mobilize credit adversely affected due to trade liberalization. In

the pre-liberalization era credit inflows into the agricultural sector was mainly though the state controlled

Agricultural Development Bank and some selected commercial banks at terms favourable to the

stakeholders in the sector. The liberalization quickly increased interest rates and branded agriculture

risky to be funded by the financial institutions (Jebuni et al., 1998 and Sowa and Acquaye, 1999). Hence,

actors in the agricultural value chain have relied mainly on their own resources for initial investment and

also depended on informal channels for their information flows. As observed by Chiwele et al (1998) in

Zambia, private sector response to agricultural marketing liberalization has no clear pattern of both

seasonal and regional price differentials. Most traders did not engage in seasonal arbitrage.

However, in terms of farm-specific productive efficiency, modest gains have been recorded in most

developing countries (Salim and Hossain, 2006). The study did not find any specific estimation for Ghana

but that for Bangladesh agriculture was estimated at 8 percentage points from the pre-reform to post-

reform period. The efficiency differentials are largely attributed to increased farm sizes, infrastructure,

households' off-farm income and the reduction of government anti-agricultural bias in relation to trade

and domestic policies.

Stronger Response of FDI to Government Liberalization

According to information obtained from the Ghana Investment Promotion Centre (GIPC), on its first

quarter review of 2011, 109 new projects were recorded in the year under review. The total estimated

value of these registered projects was GH₵567.66 million (US$ 378.44 million), representing a

substantial increase of 101.13 per cent compared to GH₵263.42 million (US$188.16 million) recorded in

the first quarter of 2010. The Foreign Direct Investment (FDI) component of the estimated value of the

projects registered for 2011 was GH₵ 527.63 million (US$351.75 million), representing 92.95 % of the

total estimated value and an impressive increase of 118.02 per cent compared to GH₵ 225.88 million

(US$ 161.34 million) recorded for the same quarter of 2010.

For the total initial capital transfers from the projects so far, officials of the GIPC started that, the newly

registered projects during the quarter under review amounted to GH₵ 103.35 million (US$ 68.90 million),

representing an increase of 360 per cent , compared to that of last year. Of the total inflows, building and

construction attracted the highest with 41%, representing US$157.04 million with six projects, followed by

manufacturing with US$113.44 million with 12 new projects, while services raked in US$ in US$ 82.67

million with 37 projects. Interestingly, Agriculture, which is considered the backbone of the economy,

rather attracted the least FDI in terms of value as it recorded US$.33 million from one project.

India, with 19 projects topped the list of countries with the highest number of projects registered in the

first quarter of 2011. China followed with 13, Lebanon 10, Nigeria 8, with Britain and the USA having

seven registered projects each. With US$70.50 million as estimated investment, Britain and Belize

topped the list of countries with the largest value of investments registered during the period under

review. Lebanon and Mauritania came second and third respectively with US$60 million and US$56

million while Turkey recorded the least with US$7.30 million.



In terms of employment generation, data obtained indicated that, from the number of projects registered

in the first quarter, it is expected that, 7, 004 jobs will be created. This represented an increase of 14.41%

compared to the 6,122 expected jobs to be created in the corresponding quarter of the previous year. To

be specific, the total number of jobs expected to be created for Ghanaians from the registered in the first

quarter of the year 2011 amounted to 6,497, representing an increase of 18.80 %, over the same period

last year. There was, however, a decrease of 23.36 % in the expected jobs to be created for expatriates

from 653 for the first quarter 2010 to 507 for the quarter under review. This shows that, investors in the

country were beginning to have confidence and trust in the Ghanaian economy (Daily Graphic, April 19,

2011; pp 39).

Notable foreign direct investment as a result of Government‟s trade liberalization policies include the

presence of some companies such as Blue Skies, Cargill Ghana limited, Golden Exotics Ghana Limited,

Commodities Processing Industries (CPI), currently in the country.

Sectors where private engagement has been low and impact of policy reform on incomes

and employment barely felt

Private engagement in Ghana is usually business oriented and the expectation of most investors is to

reap the rewards of their investment in the shortest possible time. Therefore, certain sectors of the

economy which require huge capital and financial investment, for long term outcomes tend to receive

less private involvement. For instance, it was not surprising to find out from the GIPC 2011 mid-year

review report that, Agriculture, which is considered the backbone of the economy, rather attracted the

least FDI in terms of value as it recorded US$.33 million from one project. Even so, in the agriculture

sector, due to the risky nature of the agriculture especially farming and high default rates of farmers, most

insurance and banking institutions are very reluctant to invest in agriculture. In addition, apart from the

Irrigation facilities provided by the Irrigation Development Authority under the Ministry of Agriculture,

private companies do not often invest in commercial farming purposes. Other support services in

agriculture do not often impact the livelihoods of the rural communities and for sectors such as the

mining, the oil and gas industries which are quite capital intensive and also require skilled labour impact

of policy reforms on income and employment are barely felt.

In a related development, the president of the Governing council of the Private Enterprise Foundation

(PEF), lamented that, trade liberalization at the expense of local industries, poor infrastructure, high cost

of capital , lack of requisite and financial resources among others, continue to hamper the efforts of the

private sector

Assessment of Private Sector Response to Agriculture in the Chain Level

Infrastructure

A key opportunity area is rural infrastructure development. Land, roads and highways, electricity, facilities

for education, health and electricity and local assembly markets provided by the local government for

private use were examined. The survey results showed that land is controlled by the private sector.

However, government through the district assembly has been able to assist companies that require large

tracts of land for plantation development. In all the communities visited individuals have been able to

negotiate land from individuals, families, clans and stools that owned them (also observed by Asenso

Okyere et al, 1993).

Infrastructure such as roads and highways, education, health, electricity and markets are provided by the

District Assembly. The results of the survey showed that infrastructure for transportation, energy,

education and health is on its development path. The cost of access is the limiting factor. Transportation

cost renders agricultural production, marketing and distribution between surplus and deficit areas

unattractive. It is estimated that transportation accounts for about 70% of total marketing costs (Aryeetey

and Nyanteng, 2006). Thus, the private sector-led agricultural marketing system is still not viable due to

undeveloped and not serviced transport networks in the food growing hub of Ghana (Asiedu et al, 2008).

Though rural development that accompanied trade liberalization has helped decrease the time required

to transport inputs and outputs between surplus and deficit areas, the reality is a lot still needs to be done

for the private sector to respond appropriately.



Lack of amenities like electricity, which leads to migration, and results in labour shortages and high

labour costs, is also a factor. In Mfafa (one of the surveyed communities in the Eastern Region of

Ghana), there was no electricity and the road leading to the major town Bawjiase was untarred and

difficult to access during raining season. This has prevented input dealers and other support services

from opening permanent offices in the community. On the other hand, Agomeda and Fotobi have

electricity and paved roads; therefore, there are input dealers and regular vehicular flow. Rural-urban drift

occurs due to uneven spatial development (Adiah, 2008).

A poorly educated rural population that lacks skills to raise agricultural productivity has made the average

farm size of the Ghanaian farmer to remain constant even after the reforms. The current generation of

Ghanaians has the opportunity to obtain basic education at low cost since there is no tuition fee.

However, secondary education is a better level. In all the communities visited there were no secondary

schools; the schools were in locations that called for transportation fees or boarding fees. With

secondary education, children of farmers and members of households who want to remain in farming can

integrate ICT in farming and marketing system more effectively. In that way, the private sector support

services will benefit agriculture better. Weak, agricultural linkages with other sectors contribute to slow

growth (Adiah, 2008).

In all the farming systems, it is the older and less literate generation that supports production. There is a

labour market with market determined wages and the state has no role in agricultural wage

determination. Wages for work on fields are determined by the day or by activity. Daily wages range from

GH¢5.00 for pesticide application (with spraying machine) to weeding which cost GH¢12.00. Planting

materials have no organised markets but rather there is farmer-to-farmer sale. Farmers may obtain the

materials free from relatives and friends. Otherwise, one could pay GH¢10.00 to obtain bundles that can

crop one acre farm. Occasionally, the State owned research centres (Crop Research Institute and the

Savanna Agricultural Research Institute) as well as private commercial seed growers (none is known for

cassava) and distributors provide planting materials to interested individuals.

A declining health status of rural population can make it cumbersome for the emerged private sector

small farmers to increase their levels of production. Health centres are important for sensitisation on

primary health care. Unfortunately, most communities do not have such facilities. Households have to

travel for more than 30 minutes to obtain service. That was the situation in Mfafa and Fotobi. Members of

farm households usually depend on native doctors and spiritualist or they employ is self-medication

tactics, leading to ill health and low labour effort.

Research and Development

Research and development is dominated by the public sector. The private sector response is low and

limited to few company level investigations into methods of preservation, packaging and innovations in

marketing. There are few large scale multinational and indigenous companies that process pineapple,

mango and cocoa and that has research departments. Examples for cocoa are: Nestle, Cadbury, Cocoa

Processing, and WAMCO (see Box 1) and Promisidor. Examples for pineapple and mango are Blue

Skies, Sunripe and Papso. There are no large scale cassava manufacturing companies in Ghana. The

Ayenso Starch Company has suspended its operations but undertook processing research when it was

operational.

All research in cassava (including adaptive trials in new varieties and value addition) are carried out by

state owned agencies such as the Council for Scientific and Industrial Research (CSIR) of the Ministry of

Environment, Science and Technology (MEST), Ghana Atomic Energy commission and the State

Universities (University of Ghana, Kwame Nkrumah University of Science and Technology, University for

Development Studies, University of Cape Coast and University of Education, Winneba). Some institutes

also carry out research in mango and pineapple. The institutes of importance for agriculture are the Crop

Research, Soil Research, Food Research and Savannah Agricultural Research. Cocoa R&D is carried

out by the Cocoa Research Institute of Ghana (CRIG) and the Quality control Company Ltd., COCOBOD.

Research carried out focuses on that which will improve the breeding and multiplication of new seed

varieties, management of pests and diseases soil and water, market demand and the socio-economy of



communities. The importance of the latter was recognised twenty years ago, allowing all science

research institutes to establish social science units. With these units, the CRIG identified, developed and

launched value added products for the local market. Examples of cocoa products are soap, jam, pomade

and wine. The Food Research Institute (FRI) has developed cassava flour for pastries (snacks and

breakfast meals) and fufu (main meal eaten with soups). FRI has assisted several companies to develop

recipes for fruit juices and dried cuts using pineapple and mango (Personal Communication with CEO,

Ebenut Company Ltd, Weija).

The foregoing show that in general, R&D has been government led. The funding and expertise for

managing the research processes is what has driven the situation. Apart from cocoa, there is no

legislation to prevent the private sector from initiating research programmes. State research institutes are

mostly funded by international donor organizations. The Council for Scientific and Industrial Research

institutes that partner the Universities of Ghana, KNUST and UDS are under resourced in terms of funds

and human resource (Otoo, 2000). Hence, several donor agencies have supported R&D in Ghana

(Tables 3.1 and 4.1).

While pre-reforms researches in cassava, pineapple and mango were supply-driven, agricultural R&D

farmer field schools and other extension activities have been re-engineered to be demand-led in the post

reform periods to facilitate farmer adoption. The current focus of R&D in cassava breeding and

engineering is on the development of early-bulking and pest and diseases resistant varieties suitable for

mechanized harvesting and peeling. Farmer Field Schools were established to serve as vehicles to

improve planting multiplication and basic root crop cultivation techniques. However, the improvements in

R&D have been matched by limited dissemination of research results on storage, processing and

utilization of roots and tubers (IFAD, 2006).

The private sector has been clearly unwilling to support R&D at field level and this has led to little

continuity in research and extension and has caused cassava farmers to typically rely on a farmer-to-

farmer exchange of varieties of extended storage life.

Assessment of the Private Sector Response in the Cassava Value Chain

The trends in cassava and production have been upwards since 1983 (Figures 4.4 and 4.5). Farmers

confirmed that the increasing output trends had reflected in increasing daily expenditure. When

households were asked if daily expenditure per capita exceeded GHC3.00, about 70 percent of

respondents in pineapple and mango communities agreed. However, only 50 percent of cassava and

cocoa households agreed to that assertion. Cassava is a staple food commodity and is not traded in the

international market. “Most of our cocoa income is ploughed back into the enterprise so one cannot

spend on personal effects”, a farmer lamented. Although per capita expenditure shows that most of the

respondents could be said to be above the poverty line, over 80 percent of all the respondents said they

were not very happy with their lives. The response confirmed empirical results of the MoFA 2011 study

(conducted in 14 districts that grow cocoa and cassava in the Western region – see Table 4.1). Majority

of respondents considered themselves as poor or very poor. The conclusion is that, private sector

intervention in the agricultural sector is yet to boost employment and alleviate the poverty of rural

households in Ghana.



Figure 4.1: Trends in cassava production

Prices

The pricing system for all but cocoa beans is competitive. The situation has received mixed reaction from

rural households. Cocoa households are grateful for the ready market and annual stability in the

guaranteed minimum prices offered. However, many believe that the price is still not adequate. A voice

from the focus group echoes:

“what is given to farmers in neighbouring Ivory Coast is better so our brothers close to the border are

tempted to smuggle the beans for sale in that country. We are too far from the border and the

transportation cost alone does not permit that action. In any case, the prices of inputs are too high, so

farm income may look a lot but cannot buy much. Imagine buying a 50 kg bag of even the subsidized

fertilizer for GH¢25.00. One needs three bags per acre, so continue the calculation for 10 acres.

Pesticides are not subsidized and many of us do not enjoy the so called mass spraying. Seedlings are

subsidized but you need to buy a lot. In the end we are not able to apply the good husbandry practices so

the yield remains low and we get little from sale”.

0

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When the world market price of cocoa fluctuates, there is a discrepancy between the actual and the

predicted price, the latter on which the producer price is based on. This implies that there will be

surpluses or deficits in relation to the targeted level depending on how the world market price fluctuates.

In Ghana, the practice has been that the surplus is divided between the government and the farmers,

while the deficit is covered by the government alone. Farmers receive the surplus in the form of yearly

bonuses after payment. Some cocoa farmers say the bonuses are not paid early enough and “the level is

too low”.

Cassava, pineapple and mango households wished they received ready market and guaranteed prices

like cocoa households currently do. “As for cassava the intra-year price fluctuation for output is too much.

Yet, input prices are stable or only rise. The middlemen who buy from us have a field day when there is

bumper harvest. In the lean season when prices rise, most of us may not have enough to sell”.

With pineapple, the exporters and processors are the target. “The prices we receive for pineapples are

quite okay but the payback period is what is too long. Occasionally, some buyers do not pay at all”.

Mango exportation is the target of farmers. Yet, “about 50 percent of all mangoes are sold through our

wives and relatives to long distance wholesalers from Accra. These middlemen just cheat us, sometimes

with the excuse that more than half of the product will be lost to spoilage before sales are completed.

Government will have to announce prices like it does for cocoa farmers! The cost of input is too much!

The requirements for export and the disease and pest incidence on our farms have not allowed us to

obtain the good producer price from exporters. Often less than 30 percent of harvest goes to export. The

processors in Ghana are small scale and not a lot. They prefer to buy from traders in Accra”.

Food security

Food consists of carbohydrates, protein, fats and oils and vitamins. The common staples in Ghana are

from root and tuber crops, cereals, vegetables, fruits, fish and meat. Many of the food crops are grown by

farmers themselves. Many farmers have to purchase 50 percent of their food stuffs six months after the

harvesting period. This is because the harvest is small and most of the food cannot be stored for long.

They are sold and the money used on purchases at a later date. Due to high pest incidence some 1-7

percent of grains in store are lost (World Bank, 2011).

The results of the study‟s rapid appraisal survey of the four communities and desk search show that

households in cocoa, pineapple, mango and cassava communities are fairly food secure. This is because

during focus group discussions it was agreed by community representatives that more than 90 percent of

members of all households satisfy food needs with little difficulty each month. All households maintain

food crop farms while there are one or more starchy staples available for harvest each month. Cassava is

harvested throughout the year; some households process Cassava into gari (roasted grits) for storage

and for sale. Maize, plantain, cocoyam and yam are seasonal. Plantain cannot store beyond one week.

The rest can be protected and stored for six months or more.



Figure 4.2: Reasons why households faced difficulty in satisfying food needs

Source: MoFA, 2011

About 20 percent of households grow rice; rice can be stored in the paddy or milled form beyond one

year when protected with chemicals. All households grow a number of vegetables; many cannot be

stored beyond one week. Pepper and okra can be tried and stored in its form or as powders. What is

needed all the time by most farm households is the protein and fat source- fish, meat, egg and oils. A

key oil source is oil palm, but this tree crop competes with mango, pineapple and cocoa so only a few

households have maintained farms. A few crop households in Southern Ghana raise large stocks of

animals. Due to the shortage of food in some months (May-July) and lack of own protein and oil sources,

some amount of food need to be purchased. Many households think food prices are too high and this

causes occasional difficulties to non-harvesting households. In a MoFA (2011) study, about 60 percent of

households said that they had difficulty in satisfying food needs because of the high prices they had to

pay (Figure 4.5). They majority attributed difficulties to post harvest losses.

Assessment of the Private Sector Response in Pineapple and Mango

As indicated earlier, the World Bank PSIA is used to assess the impact of the liberalization on the

agricultural sector. The PSIA show that impacts of policies should be evident in employment generation,

stable prices, improved assess to goods and service, and assets as well as transfer payments. With

liberalization, the private sector is expected to compete at all levels and create employment opportunities,

competitive prices, increase assess to goods and services and empower households to accumulate

assets (World Bank, 2000). Employment comes with increased income that should result in improved

food security, wellbeing, and reduced vulnerability to unfavourable trends, shocks and seasonality. With

opportunities created in the value chains for higher income generation, households are expected to

reduce the illegal exploitation of natural resources and thereby improve environmental soundness.

However, both the empirical literature and the current rapid appraisal study point to mixed results of the

impact of private sector participation in the agricultural sector. Below are the findings from the field survey

Employment and income

Farming and farm labouring are the major employment created in the rural communities that produce

crops like cassava, pineapple, mangoes and cocoa. The results of the study showed that all household

are growing the selected crops for commercial reasons. There is no household that does not have a

young man or woman who offers his or her services permanently or occasionally on a farm for daily,

0 10 20 30 40 50 60 70 80 90

100

Percentage



weekly or monthly wage. The minimum daily wage in Ghana is GH¢3.11 implying that a monthly wage of

about GHC100.00 is expected. Many permanent labourers are paid this minimum or more.

Figure 4.3: Trends in pineapple exports (1980-2008)

Source:

The pineapple communities suffered a slowdown and down turn in economic activities from 2004-2007.

This resulted from the shift in European demand for traditional pineapple varieties towards the MD2

variety. Although, the new variety was multiplied and distributed by the HEII programme, the changeover

seriously affected the ability of many producers to grow for export since the new variety required a higher

level of husbandry and inputs. Around that time the USAID funded project, TIPCEE was implemented

and it carried out training programmes for farmers, trader associations and the FAGE. The technology is

now widely available although it is speculated that that a proportion of growers have withdrawn from

pineapples. Trend in exports have turned around and has been increasing steadily (Figure 4.3).

However, the trend in Mango exports has not been promising (Figure 4.4). However, overall production

has been increasing due to the support given by the various horticultural projects.

0

10

20

30

40

50

60

70

80

1980 1982 1984 1986 1988 1990 1992 1994 1996 1998 2000 2002 2004 2006 2008

OUTPUT ('000 MT)

YEAR



Figure 4.4: Trends in mango exports, 2005-2009

Access to goods and services

The last three decades has seen gradual improvements in investments in the agricultural sector. In the

survey, all the households represented in the focus group discussions were sure that, there is increased

availability of all modern inputs for soil fertility management, pest and disease management and

postharvest processing. The materials and machines can be obtained within 30 minutes‟ drive to the

nearest markets in the districts or less than 3 hours‟ drive to the national capital Accra where “everything

is available”.

The horticultural sector has benefitted from substantial local investments with the replacement of existing

pineapple planting stock, the development of mango plantings and the installation of cold stores and pack

houses. However, the farmers interviewed were of the view that the locations of the pack houses were

not close to their farms so “we do not benefit from them”. It means some pack houses are available and

some farmers are benefiting but there is the need for increased numbers located closer to major growing

communities. However, it should be pointed out that many of the pack houses have been built with donor

funding rather than by for-profit private investors. With respect to cocoa, farmers need for depots to sell

dried beans have been fully catered for by the private sector. All the purchasing companies have agents

in key towns and villages and purchasing is throughout the year. Hence, many farmers can easily access

the “Cocoa Krakye” any time of the day.

Services for capacity strengthening of farmers are provided by the agricultural development units in of the

district, municipal and metropolitan assemblies. Occasionally projects such as that of the Millennium

Development Authority (MiDA) (2007) and RTIP are implemented to provide strong orientation towards

small farmer organisations, capabilities and credit. In the survey, it was confirmed in Fotobi and Agomeda

that, all the households that included themselves in the FBOs had capabilities built in group participation

as well as technical and managerial information uptake. However, less than 30 percent of households

have benefitted from the credit component. In Fotobi one of the FBOs reported that only 7 out of 47

members (15%) received credit from the MiDA arrangements. In Agomeda only 34 out of the 133 (26%)

members of the Dangbe West Mango Farmers Association obtained the MiDA credit.

Social services enhance economic activities in a community. The facilities studied included education,

health, agro-input retail services, irrigation, veterinary, agricultural extension and market information. The

results of the study showed that, most households are not very satisfied with quality of service of social

facilities in the communities they lived. The MoFA (2011) study showed that many households saw that

service conditions of social infrastructure were poor (Table 4.3). Irrigation and veterinary services

enhance alternative livelihoods in rain fed farming systems; farmers can engage in dry season farming

0

100

200

300

400

500

600

700

800

900

1000

2005 2006 2007 2008 2009

OUTPUT ('000 MT)

YEAR



and commercial livestock enterprises. Lack of good quality services can limit adoption of these livelihood

strategies. Poor agro-input retail and agricultural extension services can hinder the adoption of improved

farm practices that require the use of agro-chemicals and machines. Poor health reduces the time

allocated to farm activities and thus affect productivity.

Financing institutions were observed in all the districts visited. In Ghana, the state owned institutions are

few (ADB, Ghana commercial Bank, Merchant Bank and National Investment Bank) and cannot dominate

the over 200 available. There were rural banks in all the districts visited. There were private micro

savings schemes (susu collection) in all the communities. Agomeda had a savings and loans company

available. Information Communication Technologies (ICTs) are also developing in Ghana. Almost all the

companies providing ICT (Milicom, Scanscom, Zain and Expresso) are privately owned. It is only

Vodafone which is partly state owned. The companies provide internet and telephone services for a fee.

Internet cafés are in all district capitals. There were cafés at Agomeda and Agona Nyakrom. The fee

charged for use is GH¢1.00 per 10 minutes. The service is mainly beneficial to the literate young adults.

None of the farmers interviewed used the internet. The mobile phone is used regular to seek market

information and therefore all the cocoa, pineapple and mango farmers had mobile phones. More than 70

percent of the cassava farmers used mobile phones.

Table 4.3: Satisfaction of farm households with social facilities

Service Nature of service (% HH opinion)

Poor Fair Good

Health 44.7 27.9 27.4

Education 30.7 41.1 28.0

Agro-input retail services 52.7 31.6 15.7

Irrigation 62.4 22.5 15.1

Veterinary 66.7 21.0 12.1

Agricultural extension 47.6 27.4 24.9

Market information 39.7 49.9 10.4

Social empowerment and capital

Farmer based organization is a phenomenon that had mixed results in terms of its performance. Where

they are well organized, development projects have provided support and the capacity of members have

been built (see box 2). This is social empowerment and improvement in capital for rural communities

engaged in agriculture. Eventually, vulnerability due to poor knowledge is reduced. There is evidence of

increased right to information, negotiation and advocacy. In all the four communities visited, groups that

were viable affirmed their gains. Members of Cocoa Abrabopa benefit from technical and credit support

from the Wienco Ghana Ltd., the private input supply company that organized them. Members of cassava

producers and processors association in Mfafo were trained in agronomic practices to improve yields and

participate in outgrower scheme of the Ayensu Starch Factory during its functional period5. Members of

5 Under the Presidential Special Initiative (PSI) on Cassava Starch, the goal of the government was to

move Ghana into the club of nations producing industrial starch for the global market. To achieve this, the



Fotobi pineapple farmers‟ cooperative and Agomeda mango farmers‟ association affirmed the capacity

building programmes they have participated in since 1990.

Access to assets

The results of the study showed that the assets owned by the households are mainly farm tools, land and

houses and consumer durables. The consumer durables include cooking utensils, jewellery, mobile

phone, radio/cassette players, electric iron, furniture, sewing machines, electric fans, video recorders,

bicycles, mobile phones, special clothing and textiles and cooking utensils. In the MoFA(2011) survey, it

was observed that a significant number of households have assets for shelter, information

communication (radio and mobile phone) as well as for food preservation and cooking (Table 4.4).

Clothing and livestock can easily be liquidated and extra income from non-farm business goes for

consumption smoothening or working capital and investment in farm business.

concept of Corporate Village Enterprise (COVE) by which a limited liability company whose shareholders

are the farmers and strategic investors, was considered to be the best approach. To facilitate the

sustainable production of cassava for the ASCO factory, the cassava farmers were organized into an

association and assisted to cultivate large acreages. Contracts were signed between the farmers and

company. Apparently there was an effort to orientate the farmers towards cash crop production of the

commodity.

Box 2: Support for farmer based organisation

In 2002, 11 smallholders in Dodowa formed Power Pineapple Growers (PPP), an association to

facilitate the production of pineapples. They adapted to pineapple production because of its agro-

climatic conditions and its proximity to Accra‟s ports. The first harvest was in 2003. Out of the 3,000

pieces harvested, 80 percent were exported and the remaining 20 percent were sold on the local

market. In 2004, they harvested 8,000 pieces of fruit. An Accra-based exporter bought the whole

production. The group benefited from support from the Agricultural Services Support and

Investment Program (AgSSIP), a World Bank program. Through the Cooperative Development

Program, an AgSSIP initiative, farmers received training in activities such as group dynamics,

financial management, and accounting.



Table 4.4 Household Assets in farming communities in the Central and Western Regions

Asset Households that own Mean number of assets

Motor car 11.6 1

Motor bike 6.8 1

Bicycle 21.4 1.5

Truck 0.7 1

Furniture 77.6 6.3

Sewing Machine 34.2 1.3

Refrigerator/Freezer 42.9 1.3

Radio (small size no cassette) 77.6 1.2

Radio cassette 51 1.2

Television 63 1.2

Video recorder 39.7 1.2

Electric/Gas Stove 16.3 1.3

Electric Iron 57.1 1.1

Electric Fan 46.3 1.6

Utensils 95.9 17.4

Mobile Telephone 89.1 2.1

Land for farming 91.8 9.8

Land for building 38.8 1.8

Account with financial institution 56.5 1.6

Shares in a company 6.1 2.2

Jewellery 63.9 22

Cloth: Dumas, Lace 93.9 18.6

Sheep/Goat 46.9 21

Chicken 60.5 18.6

Non-farm business enterprise 34.5 1.6

Farm tools 92.5 6.6

House (mainly cement/burnt bricks) 30.6 1

House (mainly mud) 40.1 1

Source: MoFA, 2011



Many households have alternative livelihoods. Those that do not explore alternatives or are not

diversified may find it difficult to smoothening consumption whiles they wait for the maturity of produce

from just established crops.

Assessment of Private sector response in Cocoa

It has been observed that about 99 percent of activities in input procurement, production, processing,

distribution and sales of inputs and output are carried out by private entrepreneurs (Table 4.2). It is only

in the cocoa sector that government controls the export of cocoa beans and sale to processing factories

in the local market. “Through COCOBOD, the government controls cocoa quality, hands out licenses,

finances and controls activities of private companies, sets producer prices and margins and sells and

exports to manufacturing and processing companies. The QCD and the CMC are termed private

companies yet they continue to function as subsidiaries of COCOBOD and have the same

responsibilities as prior to the reforms. Moreover, COCOBOD finances a cocoa research institute,

distributes subsidized inputs and hands out scholarships to farmers‟ children” (Lundstedt, Helena and

Pärssinen (2009)

Table 4.2: Functions of selected institutions and units that provide services to the Cassava,

Pineapple, Mango and Cocoa subsectors in Ghana*

Actors Functions

Research and development

Extension and education

Finance Technical support

Market infrastructure

Marketing facilitation

Policy Making

Public institutions

District Assembly/

Central Government

CSIR and public universities

MoFA ADB NIB Merchant Bank GCB Social investment fund

In partnership with donor agencies

Roads, highways, water electricity Markets

NA Formulation and implementation

Ministry of Food and Agriculture

Re-engineering of prototypes of machines

Training of Extension agents and farmers

Implements input credit schemes initiated by donors

Implementation of agricultural projects by district units and national directorates e.g RTIMP. NARP. AgSSIP

NA SRID provides domestic market information

PPMED formulates FASDEP and medium term plans

NBSSI

Collaborates with Gratis Ghana on technology development and transfer programmes

Capacity building programmes for processing groups

Input credit Supports groups with processing facilities

NA Provide processing information and business advisory services

Project implementation

COCOBOD Cocoa Research Institute of Ghana

Cocoa Services Division

Micro credit scheme

Cocoa Swollen Shoot Virus Diseased

Maintenance of cocoa roads; Establishme

Cocoa Marketing Company (GH) Ltd.

COCOBOD Research unit contributes



Control Unit Seed Unit Quality Control Division

nt of seed purchasing centres in selected districts

provides market and marketing information

to policy formulation and implementation guidelines

Private institutions

Farmer Based Organisations

NA Organising members for training in Good Agricultural Practices

Facilitation of members in debt financing

Communal labour and provision of machinery hiring services

Maintenance of community roads

Facilitates market access and contracts; provides market information

Provides information during policy formulation

Farmers Personal experimentation with botanical pesticides and seed

Informal technical knowledge sharing

Informal savings and credit sales

Family labour and exchange of inputs

NA Provide farm gate marketing services (assembling and selling); Informal market information sharing

Provides information during policy formulation; LBC Representative is on cocoa technical committee and prices

Produce Buying Companies and individuals

Research into fair trade and organic produce by KuapaKokoo, Blue Skies and Ebenut

KuapaKokoo and other LBCs and companies builds capacity of members

KuapaKokoo operates a credit union; others render micro credit services

Most companies provide technical support by way of information and post harvest materials to farmers as incentives

Provide community purchasing centres

Assembling, processing and distribution of cocoa beans, mango and pineapple fruits and cassava

LBC Representative is on cocoa technical committee n prices

Input dealers

(Agrimat and Wienco)

Partners the EPA and University departments to carry out agro chemical trials

Provide unorganised extension as part of personal selling promotion activities

40 percent sell on credit to clients with long standing relationship

Partner farmer based organisations to build capacity of farmer groups

Operate own offices and hire part of premises to other service providers viz., finance institutions

Engage in importation, wholesale and retail distribution of agrochemicals, seed and machines

Umbrella organisation is represented on working groups and committees during policy dialogue sessions

Note: Functions were confirmed in a rapid appraisal interview of key officers in the agencies shown and

groups in four farming communities, viz., Mfafo, Agomed, Fotobi and AgonaNyakrom.

Source:Author‟s compilation, 2011



Figure 4.1: Structure of the cocoa sector in Ghana (courtesy Lundstedt, Helena And

Sara Pärssinen (2009)

Cocoa value chain

COCOA

Input, bonus scholarship

Cash/cheque

COCOA Seed fund licenses

Financing

COCOA COCOA

Source: Lundstedt and Pärssinen (2009)

Farmers

Extension and input providers

COCOBOD

QCD

CMC

R & D

PPRC

WORLD COCOA

MARKET

Local cocoa industry

Bank and credit

facilitators, domestic and

international

LBCs (include PBC)



BOX 3: WAMCO AS AN INNOVATOR

The West African Mills Company (WAMCO) was first established 1947 by Gills and Dufus to process

some of the cocoa beans purchased in the then Gold Coast. After independence in 1957, the plant

came under the ownership of the Ghana Cocoa Board (then known as the Cocoa Marketing Board).

Later the ownership structure changed to include German investors. There are three main factories

producing the highest total value added cocoa export commodities – cocoa butter, natural cocoa

liquor or cocoa masse. The total installed capacity is 75,000 tons but operates at 56,000 tons per

annum.

Clearly in the long history of the company‟s existence there have been innovations relating to

modifications in hardware, processing techniques, products, packaging and the general

manufacturing practices. The drive for such innovations has generally been the need to remain

competitive, satisfy customers and meet the evolving international requirements for quality.

WAMCO maintains a Quality Assurance Unit equipped with the basics such as autoclaves, weighing

equipment, digital barometers, pH meters, solvent extractors, etc. to enable the company monitor

and evaluate product quality. The international standards are stringent. For example the microbial

count for salmonella is zero, molds and yeasts should be less than 50 and the total plate count

(TPC) is limited at 5,000 colony forming units (CFU). The moisture of the cocoa cake produced

should range from 2-5% and the free fatty acids, is 1.75 though WAMCO imposes the more stringent

limit of 1.5 on itself.

Technological hardware innovations have come from the successful installation and integration of

machinery from different suppliers in Britain, Germany and The Netherlands. Maintenance and

repairs require that parts be changed and without some of these innovations, the plant cannot work

effectively. For example, the main barometric condenser had to be produced with stainless steel to

safeguard the quality of the products. The operation of the deodorizer was also an innovation.

WAMCO processing is able to use all grades of cocoa – from the 2J super maincrop through the 2C

super light crop to the SB remnant – unlike the case in the other processing companies, which only

use the high grade cocoa. The experiences in the operation, maintenance and repair of the plants

have produced a maintenance schedule and culture unique to WAMCO. The high point of the

internal innovation probably was when the Soxhlet Apparatus was redesigned and modified to allow

for recycling of water and the innovator received an award.

In pursuit of Good Manufacturing Practices, containers are fumigated prior to loading, aired to clear

fumigant, the container is weighed with the truck and the respective product is loaded bearing

appropriate WAMCO code for traceability. There is a multi-institutional gang supervising the

process. In WAMCO, there is also a Joint Production Coordinating Meeting every week to review

production. Thus,there are training manuals for training and altogether, there seems to be an

enabling environment and culture for innovation

Source: Essigbe, 2008



Table 4.1: Institutions that support research and in Ghana‟s Cocoa

Name of institution Origin

Rockefeller Foundation Foreign

International Institute of Tropical Agriculture (IITA) Foreign

The Food and Agriculture Organization of the United Nations (FAO) Foreign

The International Food Policy Research Institute (IFPRI) Foreign

Collaborative Study of Cassava in Africa (COSCA) Foreign

World Bank Foreign

International Fund for Agricultural Development (IFAD) Foreign

Crop Research and Food Research Institutes of the Council for Scientific and Industrial Research, Ghana

National

Source: Author‟s Own Compilation. 2011.

Environmental Impacts (Cassava, Pineapple, Mango and Cocoa)

The extent to which increased participation of the private sector in agricultural value chains has resulted

in better environmental soundness can be measured in terms of the extent to which households are

involved in illegal stone quarrying, mining, tree felling (for charcoal burning), logging and sand winning. In

the general press, there is speculation of increased deforestation and environmental degradation due to

uncontrolled and illegal activities of rural households. In the survey, group members affirmed the situation

but were quick to add that less than 1 percent of households are engaged in such activities. This is

because:

“there was enough to do in a cocoa farm; there is ready market for the beans and we sell our food crop. It

is only in areas like Twifo and Dunkwa where there is gold that the young men and women find time to do

illegal mining”. In the cassava community, “there are no natural resources now; our forests are gone and

there are not enough trees to fell for commercial charcoal burning. Apart from food crops and working in

pineapple farms, there is no natural resource to exploit”. In the pineapple community, “a few people

engage in logging, but the activity is not significant; we do not know of many households that depend on

income from exploiting natural resources this way”. In Agomeda, “there is stone quarry and charcoal

burning by some households but they can be counted on the finger tip”.

Vulnerability (Cassava, Pineapple, Mango and Cocoa)

Despite the free market economy of farming communities that allows households to explore potentials

and engage in a wide range of income generating activities, farming communities continue to be

vulnerable, especially to disease and pest incidence. Dormon et al (2009) observed that in cocoa villages

low productivity has been a major bane on farming. The biological factors include the incidence of pests

and diseases, and of epiphytes, which have been neglected. The socioeconomic causes were indirect

and include the low producer price and the lack of amenities like electricity, which leads to migration,

resulting in labour shortages and high labour cost”.

Projects such as, the Roots and Tubers Improvement and Marketing Project (RTIMP) allowed the

selection of high yielding varieties for multiplication and distribution to farmers. Many cassava growing

villages, including Mfafa were not included in the projects. The projects selected few communities for

piloting and they are hardly up-scaled. After the project period even participating communities are not

able to practice the new found knowledge due to lack of capital to purchase inputs, or lack of output

markets to sell excess output.



Many households are thus not happy. They believed that in times of crisis they cannot get help. In the

MoFA(2011) study, it was shown that due to the vulnerable state of many farm households they cannot

access financial support and they cannot give help to others (see Table 4.5).

Table 4.5 Households‟ state of vulnerability in the Central and Western Regions

Indicators Percentage

Level of happiness (N=600):

Very happy

Quite happy

Not very happy

Not at all happy

21.50

45.17

27.33

6.00

Level of security in time of crisis(N=602):

Very secure

Somewhat secure

Averagely secure

Somewhat insecure

Insecure

12.13

26.74

24.92

23.42

12.79

Survival instinct compared to five years ago

(N=600):

More confident

Same

Less confident

55.67

16.33

28.00

Give financial support (N=602):

Very regularly

Somewhat regularly

Occasionally

Hardly ever

Never

18.77

23.59

30.90

17.44

9.30



Obtain financial support (600):

Very regularly

Somewhat regularly

Occasionally

Hardly ever

Never

5.00

15.83

24.67

29.50

25.00

Source: MoFA, 2011



Key Lessons

The following key lessons emerged from analyzing private sector response to opportunities in agriculture

and rural development:

When there is demand for a product it drives the private sector to look for profit and this is exactly

what the private sector has done in response to the opportunities provided. There is demand for

cassava in Ghana; it is a food as well as cash crop for all the households that are involved in it. It

is a raw material for a key storable product, gari.

Access to the international market drives private sector participation. There is demand for tropical

fruits in the European Union, the key trading partner of Ghana. As far as Ghanaian exporters can

guide farmers to produce to Global GAP specifications there will be ready market and this is what

is driving the donor agencies to support the for-profit private sector to produce, process and or

export.

Availability of processing factories and demand for processed products drives private sector

participation. There are emerging opportunities in agro-processing of fruit juices although South

Africa is a keen competitor. Several small scale processors are continuing to emerge daily in

cities such as Accra, Tema, Kumasi and Takoradi.

There is a positive impact of private sector activity on low-income rural households: some

households are investing in durable assets like houses and ICT gadgets as well as improving

availability of food in the household. In order to reduce further the vulnerability of farm households

to uncontrolled prices in liberalised markets, pro-poor strategies that target specific households

and communities should be instituted

The agricultural sector in Ghana is more dynamic and competitive today because there are no

restrictions in any of the activity areas except for cocoa export and quality assurance before

export.

R&D is sensitive and capital (finance, material and human) intensive and so government cannot

leave the space completely to the private sector in the foreseeable future.



Donor Support to Private Sector Activity

in Agriculture and Rural Development

Donor Support to Agriculture and Rural Development

Currently, the country receives aid in various forms, including general budgetary support, sector budget

support (mainly health and education), and project aid using parallel systems. Aid to Ghana has been

provided by its bilateral and multi-lateral development partners or donors. However, some further

`informal‟ classification exist, namely, traditional donors (DAC) and non-traditional (Non-DAC) donors.

The former currently comprise of the 23 multilateral and 24 bilateral donors6.

The World Bank remains the largest multilateral donor, providing over 45% of the multilateral annual

average. The bilateral donors is made up of traditional donors like Australia, Austria, Belgium, Canada,

Denmark, Finland, France, Germany, Italy, Japan, Netherlands, Norway, Spain, Sweden, Switzerland, the

UK, and USA. Non-traditional bilateral donors who are increasingly becoming important in Ghana‟s aid

architecture include the BRICK countries, the Saudi Fund, and the Abu Dhabi Fund. These non-traditional

donors do not participate actively in current aid coordination efforts with the traditional donors and the

Ghana Aid Policy and Strategy (2011-2015) seeks to address this issue (Ghana PD Evaluation Report,

2010).

Table 2: Ghana ODA Envelope in Millions US$ (2003-2010)

2003 2004 2005 2006 2007 2008 2009 2010

Total 1003.0 1130.1 1205.8 1471.8 1656.5 1649.6 2102.5 1896.8

IMF7 76.6 38.7 38.2 116.6 0.0 0.0 200.0 200.0

Debt Relief Grants

HIPC

MDRI

154.2

154.2

0.0

174.1

174.1

0.0

196.9

196.9

0.0

307.3

209.8

97.5

342.7

246.1

96.6

229.5

158.4

71.1

289.6

191.9

97.7

235.8

168.8

67.0

Budget Support

MDBS

SBS

Swap

277.9

277.9

0.0

0.0

316.7

309.0

7.7

0.0

313.2

281.9

31.3

0.0

349.3

312.2

37.2

0.0

386.7

316.6

70.1

12.1

473.1

368.1

104.9

15.2

700.4

525.2

175.2

86.9

619.2

451.2

167.7

81.2

6Ghana DP-PAF Baseline Report 2009

7 Balance of Payments support



Earmarked 0.0 7.7 31.3 37.2 58.0 89.8 88.2 86.5

Project Aid 494.4 600.6 657.5 698.6 927.0 947.0 912.5 841.8

GDP

Total ODA (% of GDP)

7621

13.2

8853

12.8

10726

11.2

12729

11.6

14984

11.1

16085

10.3

14385

14.6

14870

12.8

Source: D-PAF Baseline Report 2009

Aid flows to Ghana has increased over the years especially after the economic reforms of the 1980s.

ODA inflows to Ghana have increased from US$ 578.96 million in 2001 in nominal terms to US$1,896.8

million in 2010 (Table 2). Aid as a percentage of GDP increased from 13.2 percent in 2003 to 12.8

percent in 2010. However, the second half of 2008 and first half of 2009 was a difficult period for the

country as aid flows were less forthcoming partly due to the global economic and financial crisis (Ghana

PD Evaluation Report, 2010).

Donor Support to Agriculture

There are various interventions as outlined in the Development Partners (DPs) resource envelope and

this include the Food and Agriculture Budgetary Support, Food Security and Environmental Facility,

SFASDEP, Cocoa Sector Support Programme grant from the EEC, Agricultural Services Sub-sector

Investment Programme (AgSSIP), Community Based Natural Resource Management, Land

Administration Project, Northern Savannah Biodiversity Conservation, Rural Financial Services Project,

Forest Biodiversity, Village Infrastructure Project (VIP), Fisheries sub-sector capacity building project and

the Natural Resource Management Project, Rural and Agricultural Finance Programme (IFAD),

Outgrowers and Value-chain Fund, Afram Plains Agriculture Development Project to mention but a few

(Table 5.2). It must be added that the AgSSIP project is being phased out for the A-SWAP, where donors

agree with government on the overall strategy and then directly put money into a basket (budget)

specifically for agriculture.

Table 5.1: Support to Private Sector Development in Agriculture in Ghana 2001-2011

Area of Intervention Donor Comments

Firm Level

Access to Inputs & Irrigation AfDB, Japan, Spanish, ABED, AFD

Product Development AfDB, Canada, EU, FAO, AFD, IFAD, USA, IDA, JICA, World Bank

Major area of focus

R&D including Science & Technology

AFD, Japan

Marketing AFD, GIZ, USAID-ATP, USAID-ACDI-COCA, AfDB, IFAD,

Major area of focus

Capacity Building CAG, EU, AGRA, ADRA

Agric Enterprise Devt. USA, Danida, USAID

Public Sector – Policy

Pro-market regulatory AFD, JICA, CIDA



reforms

Infrastructure Development AfDB, Denmark, EU, France, Germany, Japan, Netherlands, Spain, Switzerland, USA, World Bank

Major area of focus

PSD Support

Financial Sector IFAD, USAID (Advance), Kfw, IFAD, AGRA,

General PSD Support AfDB, Canada, Denmark, EU, IFAD, Japan, Netherlands, Italy, UK, World Bank

Source: Author‟s Presentation based on Data from Ministry of Finance (2011)

Most projects are geared towards promoting production at the firm or farm level especially the promotion

of food crops to enhance food security. This has can be attributed to the limited development of

commercial farming due to land tenure and the culture of farming which views agriculture as a family

business. A large amount of donor support has been towards infrastructure development. Infrastructure

development and marketing are also high on donors‟ agenda. There is however enough room for

specialization; financial services, regulatory reforms, R&D etc have limited support.

The World Bank also provides other direct and indirect support to agriculture in Ghana some of which

include eGhana ($40 million), Regional Trade development which run from 2007 to 2010, $50.5 million

support for the Trade and Investment Gateway, MSME support for $45 million, Vocational Skills and

Informal Sector support (1993 -2003) of which $9.6 million was disbursed, and the Non-bank Financial

Institutional Assistance programme for the period 1992-2002 with a project support of $23.9 million.

Currently, it is providing an IDA facility of XDR 10.1 million to Ghana under the West Africa Agriculture

Productivity Programme (WAAP). The World Bank has also been supporting the Cocoa Sector.

The African Development Bank (AfDB) is one of the major institutions providing direct support to

agriculture in Ghana. Over the period January 2003 to June 2006, it provided direct support to agriculture

in various forms totaling $75.33 million and on cumulative basis total commitments since 2004 amounted

to €399.30 million. Some of the major projects include Export Market and Quality Awareness, Nerica

Dissemination, Invasive Aquatic Weeds, Rural Enterprise Project, Livestock Development Project, Food

Crops Development Project, Cashew Development Project, Community Forestry Development Project,

Inland Valley Rice Development Project, Rural Financial Services Programme, Small-scale Irrigation

Development Project, Creation of Sustainable Tsetsefly Project and Afram Plains Rural Development.

The United States is also one of the major donors who directly support agricultural activities in Ghana

with project funds amounting to $63.35 million between January 2003 and June 2006 and the MiDA

project of which a total of $540 million has been earmarked. Some of the specific projects funded include:

Increase Agriculture Productivity, Improve Sustainable Management of Natural Resources and

Biodiversity Conservation, Agricultural Activities in Food for Peace Program, Fisheries Services, Agro-

Industries, Forest Industries, Agricultural Education/Training, Development of Agricultural Productivity and

Value added Project (MCA), Project Management and Oversight (MCA) and Pre-Compact Support

Services (MCA).



The Canadian Government has also been supporting agriculture in Ghana through its development

agency CIDA. It has provided financial support to agriculture development to the tune of $52.74 million,

making it the fourth largest contributor to agriculture in Ghana. Some of the projects financed include the

Land Administration Project (with the World Bank), Farmer Responsive Mechanisms in Extension and

Research (FARMER), FBOs Development Fund, Community Driven Initiatives in Food Security, Rural

Enterprises Project, Ghana Food Aid Project, Food Security and Environment Facility, Ghana

Environment Management Project, Support to Food Security Programme and Measuring Impact in Food

Security. It must be added that CIDA has a programme for building trade capacity in Ghana, Tanzania,

South Africa, Ethiopia, Mali, Mozambique and Senegal. More recently, some of the support includes

Community–Driven Initiatives in Food Security (CIFS), Support to the Food Security and Agriculture

Sector Development Policy (SFASDEP), FASDEP II, BUSAC Phase II (2010-2014), CIDA annually

provides approximately $35 million Canadian dollars in support to the agriculture sector in Ghana.

From the above, it can be deduced that CIDA works mainly in three areas, namely, food security,

governance (human rights and government management system) and water interventions with particular

focus in Northern Ghana, where poverty prevails. Two-thirds of aid going to agriculture is in the form of

direct budget support to the Ministry of Agriculture for capacity building and research. They work at

various levels; directly with rural enterprises, with decentralised administration and with the Ministry of

Agriculture. They also financed a program for the development of rural enterprises supporting agri-

business for food production and providing relative technical assistance.

The EU is another key financier of agriculture development in Ghana but with more emphasis on

supporting infrastructure. It has been a major financier of the Ghana Cocoa Sector Support Programme

(Phase II). Other projects supported so far include Strengthening Monitoring and Evaluation Capacities in

Decentralized Ministry of Food and Agriculture, Credit for Investment by Private Sector Enterprises,

Support for the Leasing Sector, the 5th Micro-projects II, the Transport Infrastructure Programme and the

Pro-poor Production and Export of Fair Trade and Organic Fruits from Ghana and Baukina Faso to

mention but a few.

Similarly, the Nordic Development Fund comprising Denmark, Finland, Iceland, Norway and Sweden

has been providing direct support to agriculture and agri-business development in Ghana. Two notable

projects financed by Nordic Fund include the Land Administration Project, Urban V Project, and Urban

Sanitation Project II.

IFAD, which is a “bank for the rural poor”, provides loans to support pro-poor agricultural growth. IFAD

support to rural finance and rural enterprise development has been on-going for quite some time. IFAD

works through rural banks and therefore they expect a major change with the revamping of the Apex

Rural Bank, a network of more than 100 rural banks since the existing rural banks have very limited

outreach. Projects financed include the Northern Ghana Agricultural Support Programme, Root and Tuber

Improvement and Marketing Programme, Northern Ghana Poverty Reduction Programme, Upper East

Land Conservation and Smallholder Rehabilitation Programme, the Village Infrastructure Project and the

Upper West Agricultural Development Project. From the above, it can be added that IFAD, unlike other

donors, focuses more on support for smallholder food crop farmers rather than cash crop farmers.

Japan used to be one of the major and the highest bilateral donor to Ghana till 2001 when Ghana sought

for HIPC assistance. Subsequently, Ghana had received less support from Japan particularly in terms of

assistance to agriculture. Two major infrastructure projects are associated with Japanese aid, namely,

rehabilitation of Trunk Roads and the Achimota-Anyinam Road Improvement Project. There are other



infrastructure projects financed by Japanese aid in Ghana although not directly linked to general

agriculture. JICA had also provided support to rice and Citrus production, Oil Palm processing and Shea

Butter quality standardization in Ghana.

The German government and its development agencies, namely, GTZ (now GIZ) and KFW have also

been operational in Ghana, providing support to agriculture in the following areas: Market Oriented

Agriculture Programme, Forest Resource Use Management Project, Forest Protection Programme in the

Volta Region, Village Infrastructure Programme, Rehabilitation of Feeder Roads and the Promotion of

Out-grower Schemes. GIZ is currently into Mango, Pineapple, Citrus, Rubber, Chili pepper, Grasscutter,

Guinea fowl and Fish

United Kingdom through its development agency DFID also provides direct support to agri-business in

Ghana. Some of the major agriculture intervention areas include Land administration, Trade

Development, Agriculture and Forestry and Rural Roads.

Other donors such as FAO provide numerous but small grants to agriculture development in the country.

Over the period discussed above, it provided direct support to agriculture to the tune of $10.73 million.

Key intervention areas include the Sericulture and Silk Processing Project, Strengthening the

Organizational capacity of Fish Farmers to mention but a few. Also, France, Denmark, Italy and Spain

all provide support either directly to general agriculture or through the Private Sector Development

programme in the GPRS and the Ghana Shared Growth and Development Agenda (GSGDA).

Government of Ghana through an Act of Parliament provides incentives to farmers through EDIF. It

provides financial resources towards the development and promotion of Ghana‟s export trade. The fund

has since 2002 supported businesses, enterprises and institutions with credit and grant facilities. EDIF

works with 23 designated financial institutions and has the lowest rates of interest pegged at 12.5

percent.



Table 5.2: Types of Donor Interventions in Agriculture

Table 5.2: Donor Interventions in Agriculture

Dev. Partner Description Agreement Date Effectiveness Date Currency Revised Contract Value

Type CREDITOR PROJECT TITLE AGREEMENT DATE EFFECTIVE DATE CURR

REVISED INST.

AMOUNT

Grant ADF Avian Influenza 2006-04-05 2006-08-31 BUA 341,000

Grant ADF Promotion of Science & Technology for FORUM for Agric 2006-01-01 2006-05-31 BUA 15,581,000

Grant CAG farmer responsive mechanism 2001-06-24 2001-06-24 CAD 10,000,000

Grant CAG Measuring The Impact Of Food Securty Pg 2001-08-28 2001-11-28 CAD 1,100,000

Grant CAG GHANA SUPPORT TO FOOD SECURITY PJ. 2001-07-20 2001-07-20 CAD 500,000

Grant CAG Farmer Based Organistion Dev't Fund 2003-01-20 2003-04-20 CAD 3,000,000

Grant CAG Food Agric Budgetary Support 2004-03-04 2004-03-06 CAD 85,000,000

Grant CAG CIFS-Component l - Capacity Building 2004-04-22 2007-04-25 CAD 7,000,000

Grant CAG CIFS-Component ll - Investment Fund 2004-04-22 2007-04-20 CAD 5,000,000

Grant CAG Food Security and Environmental Facility 2006-06-30 2006-09-30 CAD 15,000,000

Grant CAG SFASDEP 2009-01-01 2009-06-15 CAD 100,000,000

Grant EEC Strengthening, Monitoring Capacities -MOFA 2003-06-06 2003-09-30 XEU 1,989,200

Grant EEC Protected Area Dev't Ph II 2005-01-01 2005-09-01 XEU 6,500,000

Grant EEC Avian Infreuenza Project 2007-07-06 2007-12-06 XEU 2,800,000

Grant EEC Cocoa Sector Support Programme 2007-01-01 2008-03-31 XEU 5,000,000

Grant FRG Agricultural Policies and Services 2001-03-10 2001-03-10 XEU 3,476,785

Grant FRG Market -Oriented Agriculture 2004-06-07 2004-09-30 DEM 19,752,647

Grant FRNG Ex FSP Aliment. & Org.Riziculteur 2005-12-07 2006-03-01 XEU 777,631

Grant FRNG Food Security and Organization of Rice granting 2006-06-08 2006-09-30 XEU 500,000

Grant FRNG Promotion of Perennial Crops Plantation 2006-08-15 2006-11-30 XEU 2,000,000

Grant FRNG Rice Projects in Four Northern Regions of Ghana 2007-08-08 2007-12-08 XEU 1,300,000

Grant IFAD Rural and Agric. Finance programme(RAFIP) 2009-11-23 2010-05-24 USD 1,512,000

Grant JAPG Food Aid (2000) 2000-06-20 2002-03-31 JPK 400,000

Grant JAPG Study on the Promotion of Domestic Rice 2006-07-01 2006-11-30 JPK 178,000

Grant JAPG Study on Upper West Integrated Agricultural Development 2007-11-01 2007-12-31 JPK 343,000

Grant JAPG Comprehensive Development For Promotion of Domestic Rice in Northern and Ashanti2009-02-01 2009-02-01 JPK 360,000

Grant JAPG Pj for Sustainable Development of Rain-fed Lowland Rice Prod. 2009-06-21 2009-06-21 JPK 504,000

Grant JAPG Plant Breeder (Rice) for WACCI 2010-01-01 2010-01-29 JPK 36,000

Grant JAPG FM Improv. Proj. of the MOFA 2010-02-11 2010-03-01 JPK 593,000

Grant UKG Support to Rural Livelihoods 1999-03-03 1999-03-03 GBP 4,300,000

Grant UKG Support to Agric Sector Harmonisation 2007-02-05 2007-05-31 GBP 4,700,000

Grant UKG Savannah Accelerated Development Authority 2009-11-02 2009-11-16 GBP 250,000

Grant USAG Millenium Challenge Corporation (MCC)) 2006-08-01 2006-10-31 USD 547,000,000

Grant USAG Agric Enterprise Development- USADF 2007-04-02 2007-08-31 USD 640,000

Grant USAG Agric Enterprise Expansion -USADF 2007-10-24 2008-01-31 USD 7,850,000

Loan FRG Promotion of Perennial Crops 2006-08-15 2008-01-11 XEU 6,000,000

Loan FRG Outgrowers and Value Chain Fund 2010-03-29 2010-09-29 XEU 10,000,000

Loan FRNG Perennial Crops 2006-08-15 2006-12-27 XEU 17,400,000

Loan PTIC 2 Units of 46M Patrol Boats 2008-09-23 2009-08-20 USD 27,360,000

Loan SPAG Supply of Refrigeration for Fishing Sector 2007-06-29 2007-10-17 XEU 7,000,000

Loan SPAG Kpong Irrigation Project 1993-09-16 1994-12-08 USD 8,000,000

Loan ABED Small Farms Irrigation Project II 2000-07-20 2003-02-02 USD 9,500,000

Loan ABED Line of credit to Agric Dev't Bank 2001-07-12 2008-07-29 USD 5,000,000

Loan ADF Small Scale Irrigation Dev. Project 1998-05-29 2001-01-25 BUA 15,000,000

Loan ADF Cashew Development Project 2001-03-08 2002-10-27 BUA 9,890,000

Loan ADF Inland Valleys Rice Development Project 2001-05-23 2002-06-06 BUA 15,000,000

Loan ADF Livestock Development Project Main 2002-08-02 2003-01-09 BUA 19,580,000

Loan ADF Nerica Rice Dissemination Project 2003-10-17 2005-03-30 BUA 2,650,000

Loan ADF Tsetse and Trypanosomiasis Free Areas Pj. 2005-04-15 2006-01-01 BUA 6,640,000

Loan ADF Export Market and Quality Awareness Pg. 2005-07-29 2006-05-31 BUA 17,000,000

Loan ADF Afram Plains Agric. Dev't Pj. 2006-06-29 2007-01-02 BUA 19,970,000

Loan ADF Northern Rural Growth Programme 2008-03-04 2009-04-30 BUA 40,000,000

Loan FRNG Rice Sector Support Project 2007-08-08 2008-08-28 XEU 12,500,000

Loan IDA West Africa Agricultural Productivity Program(WAAP) Supp.Pj. 2007-06-21 2008-04-07 XDR 10,100,000

LIST OF ON-GOING LOANS as at 31/3/2011



No. Devt

Partner/

Donor

Agencies

Selected Crops Specific Value Chain

(Category)

Amount

Committed/Disbursed

GIZ Mango, Pineapple,

Citrus, Rubber, Chili

pepper, Grass cutter,

Guinea fowl and Fish.

Processing &

Marketing ( Exports)

Market Oriented

Agriculture

(MOAP) - An amount

of €15million Euros

for a period of 9

years (2004-2013).

JICA Rice Production; Citrus

& Oil Palm Processing;

Shea Butter Quality

Standardization.

- -

DANIDA Value Chain

Approach to

Agricultural

Development

Programme:

Marketing

value chain

level.

$14 million USD

USAID –ATP Maize, Livestock

(meat) and

Onion(shallot)

Marketing -

USAID –ACDI-

VOCA

Agricultural Devt &

Value Chain

Enhancement Program

(ADVANCE) Maize,

Rice Soybean, Mango,

pineapple and citrus.

Agricultural services

Supply chain-

domestic &

international markets

N/A

KfW Perennial crops (Oil

Palm, Rubber, Cocoa

& Cashew nut.) It is yet

to go into agro-value

chain production for

food and horticultural

crops such as

Cassava, Mango and

Pineapple.

EUR 10,000 million

as loan to support

agriculture for a

duration of 4-6

years.(April, 2011)

AFD Perennial crops sector

(Oil palm, Rubber);

Production On cumulative basis

total commitments of



Food crops (rice).

Supports Golden

Exotics a private

pineapple production

and processing

company, located in

Kpong.

Production,

processing and

marketing

the AFD group since

2004, is €399. 30

million, including

€319,45 million with

loans , €73,76 million

with grants and € 6,09

million with

guarantees.

WORLD BANK Cocoa Production Lending to the

Agriculture sector to

support cocoa in

millions of dollars in

fiscal year is $1.11

million USD

AfDB Cashew Devt Project

(2000); Inland Rice

Devt Project(2001);

Export Market &

Quality Awareness

Program in non-

traditional agric crops

especially, Pineapple,

Papaya, Chilli pepper

& Egg- plant(2005);

Nerrica rice

Dissemination Project

(2003).

Production,

Marketing

US$ 14.8 million loan;

US 22.5 million loan ;

US$25.5 million loan &

US$ 4.0 million

including a grant

amount of US$0.3

million approved within

2000-2005 for the

aforementioned projects

respectively.

IFAD

Root and Tuber

Improvement and

Marketing Programme:

Cassava

UKaid/DFID Rights & Voices

Initiative (2004-2009

Attract £15 million

private sector

investment in the

North-2010-2015



CIDA Support to the Food

Security and

Agriculture Sector

Development Policy

(SFASDEP)

BUSAC Phase II

Phase II 2010-

2014

CIDA annually

provides

approximately

$35 million

Canadian

dollars in

support to the

agriculture

sector in

Ghana.

FASDEP II

Community–Driven

Initiatives in Food

Security (CIFS)

Farmer

Responsive

Mechanism

Measuring

the Impact

of Food

Security

Skills

development

Fund to the

Private

Sector

-Mixed

Credits to

Small

Industrial

Projects

Support to SME‟s for

Advocacy activities

aimed at improving

the business

environment

CIDA Contribution

Cdn $110,000,000 -

Project Duration:

2008-2013

10,000,000 (

2001-2007)

1,100,000362 grants

approved at a total of

11.63 million GHS

across the country

(Agric sector had 20%

of the total grant)

$8 million -$ 20 million

is expected to be

disbursed.

JICA JICA Lowland Rice Devt

Project Policy Advisor

on Small and Medium

Enterprises.

West Africa Centre for

Crop Improvement

(WACCI)

Grant Assistance for

Underprivileged

Farmers (KR2)

Value Chain

Development

2003-2008

AFD Rice Sector Support

Project (RSSP)

Value Chain

Development

€ 12.5 million Very

concessionary loan



Food Security & Rice

Producers Org.Project

Ghana Rice Inter –

Professional Body

(Production with €1.5 Grant

EU Ghana Cocoa Sector

Support Programme -

Phase II:

Production EU Contribution: €

5,000,000.00 (100%

of total).2008-2013

USAID USAID agricultural

budget has ranged

between $6 - $8 million

USD annually/ per

year. From 2004-2010,

MIDA Commercial

Agriculture & Value

Chain Approach

AGRA Small–to-medium

sized agricultural

businesses eg

smallholder farmers.

The African Enterprise

Challenge Fund

(AECF): is a USD $

50-100 million private

sector fund hosted by

AGRA, which funds

private sector

innovation to spur rural

development through

like-for like investment.

ADRA With MiDA support,

ADRA Ghana is

building the capacity of

farmers and

developing

agribusinesses in the

Afram Basin.

IFAD IFAD loans amount to

a total commitment of



Impact on the Private Sector and Low Income Households

The analysis on the impacts of these interventions indicated mixed outcomes8. Whereas some

respondents especially from public sector held the view that donor programmes are generally effective,

some felt otherwise. For example, some of the respondents cited the USAID, SOAG programme which

intends to enhance the competitiveness of Ghanaian private sector agri-businesses to compete within the

global marketplace since 2003 and GTZ Market Oriented Programme which also targets the private

sector in agri-business as successful case studies. Others think the BUSAC Fund, the USAID ATP

Program, MiDA & Advance projects are showing signs of successful.

It must be emphasized that project outcomes differ and therefore aggregate assessments will not bring

out the true impact. Therefore only evaluation reports of such donor projects will suffice the answer.

Donors have been assisting governments, civil society and the private sector effectively according to our

field investigation. About 6 out of 10 respondents were of the opinion that donors have been assisting

governments, civil society and the private sector effectively. In addition, they intimated that, donors and

development partners do support key components of all aspects of Ghana‟s economy. They further

added that, GoG receives a chunk of budget support from development partners and donors. Equally,

CSOs and PSOs have over the years received assistance in various forms from donors.

Project impacts on low income households were also undertaken and some respondents indicated that

several benefits have accrued from private sector interventions in agricultural. Some of the benefits they

mentioned include job opportunities, employment opportunities as smallholder out-grower farmers and

also increases in their income. However, some respondents revealed that, there are negative

repercussions such as the loss of farm lands to cash crops rather than food crops farming which has

repercussions on food prices and the general cost of living. Others indicated that farmers who do not

belong to an FBO may have problems with the production and marketing of their produce.

Assessment of Donor Support to Cassava

In Ghana, cassava is a staple crop with several benefits just like maize. However, compared to other

crops, it seems to receive less attention from donors and development partners supporting Agricultural

development in Ghana. Most donor support for Agriculture focuses mainly on crops such as rice, oil palm,

pineapple; mango and citrus but do not have specific interventions on the cassava value chain. The major

8 Some areas have seen significant improvements at every stage of the value chain. Private sector

response in the production of cocoa, oil palm, pineapple and maize as well as input procurement (seed,

agrochemicals, fertilizers and machine), processing (pineapple, cocoa, tomatoes, fish and meat),

marketing has been high but low in areas like the provision of agricultural extension services, cocoa

quality control, roads and high ways has ensured the maintenance of standards.

US$193.4 million,

making Ghana the

second largest user of

IFAD resources in the

region



donor in this value chain is IFAD and this is mainly in its Root & Tuber Improvement & Marketing

Programme (2006-2014) with a funding portfolio of XDR 13.05 million.

Despite the limited donor support in this area, both the government and private enterprises have initiated

projects which centre on cassava but little can be said of the success of such initiatives. During 1998,

when the market for non–traditional agricultural produce for cassava became more liberalized, the state

developed a Presidential Special Initiative (PSI) in cassava chips and starch production. For instance, the

Ghana Investment Promotion Centre (GIPC) collaborated with the Root and Tubers Unit of MOFA to

go into the marketing of cassava pellets in 2004 but it has not been successful. In 2005, the government

also, selected cassava as a commodity for the presidential special initiative programme. Consequently, a

starch factory was set up at Bawjiase in the Central Region of Ghana to produce industrial starch for

export. Another instance is the GH¢ 750,000.00 Ayensu Starch Factory - a long term project of the

National Investment Bank. The Starch project is not functioning currently due to technical problems.

Even some private companies in Ghana which were setup to go into cassava chips production failed, due

to several reasons including global competition from Thailand and Brazil as at 2005.

As intimated earlier, only few donor agencies in Ghana have programmes which give attention to the

value and supply chains of cassava production. A key donor or development partner which has

interventions focused towards the improvement of cassava production is the International Fund for

Agricultural Development (IFAD) under its Root and Tuber Improvement and Marketing Programme

(RTIMP). The programme is intended to support the improvement of food crop varieties such as cassava,

yam and other root and tuber crops in Ghana. Its specific objective is to build up competitive, market-

based and inclusive commodity chains for roots and tubers, supported by relevant, effective and

sustainable services accessible to poor rural people. It further aims to support the emergence of both an

inclusive private sector deeply anchored in the realities of Ghana and a stronger public sector, capable of

improving the policy and regulatory environment and delivering the required public goods.

Between Nov-2006 and Dec-2014, a loan amount of $27.70 million was committed towards the

programme with $7.26 million disbursed as at November 2010. Also an additional amount of $ 5.0 million

was specifically approved towards the improvement and marketing of cassava, from 2007-2013. As at

May 2011, IFAD loans amount to a total commitment of US $193.4 million, making Ghana the second

largest user of IFAD resources in the region.

Another key support to the sector is the World Bank‟s West Africa Agricultural Productivity Project

(WAPP), which focuses on Regional Cooperation in Agricultural Technology generation & dissemination.

The project with national focus on roots & tubers also joins Ghana with Mali (rice) & Senegal (cereals). An

amount of $ 25 million has been committed to the project for 2008 -2010.

Assessment of Donor Support to Mango and Pineapple

Mango and Pineapple are two of the horticultural cash crops which have enjoyed wider popularity for

some years now. According to information obtained from the Ghana Investment Promotion Centre

(GIPC), the pineapple industry is the most developed horticultural sub-sector in Ghana. Production is

estimated between 120,000-150,000 tons annually and during 2003-2007, an average of 63% of Ghana‟s

pineapple production was exported. In 2007, commercial export of MD2 pineapple variety earned the

country $ 20 million in foreign exchange. According to the GIPC, Mango has the potential to become an

important non- traditional export earner for Ghana and is doing quite well on the export market. Also,

information obtained from the Export Development and Investment Fund (EDIF), there is an increasing

demand for mangoes (both processed and unprocessed) in the export market. There is sponsored a

Mango Project at Bole, Northern Region in 2010.



The GIZ (formerly GTZ), USAID and DANIDA are some of the agencies which have direct interventions

involving all levels of the value chain within the sub-sector. The EU also supports the exports of organic

fruits such as pineapple and mangoes from Ghana. The German agency supports the marketing value

chain with a programme called the Market-Oriented Approach Programme (MOAP). GTZ„s focus is on the

processing and marketing of horticultural produce specifically fruits and vegetables. In 2004-2007, GTZ

Market-Oriented Agriculture (Phase I) committed a grant amount of DEM 10,170,316 to the marketing of

horticultural crops. Further, an amount of €15 million Euros has been committed by GTZ for a period of 9

years (i.e. 2004-2013) to support this initiative. The commodities it supports include Mango, Pineapple,

Citrus, Chili pepper, Guinea fowl among others.

At the production level, specific bottlenecks which GIZ assist to address include quality standards at

production through development and dissemination of Good Agricultural Practices (Global GAP), organic

and fair trade certification. In agro-processing, GIZ technical support goes to hygiene standards

(HACCP), the development of appropriate technology, innovative products and marketing. In trading, GIZ

equips trainees with adequate handling, packaging, hygiene and quality control to reduce losses and

raise consumer acceptance. It also helps in capacity building for actors in the value chain like exporters

associations and FBOs through training courses. In addition, contract farming and out-grower schemes

receive specific organizational and financial support from the agency.

In the opinion of GIZ‟s representatives, transparent management of business associations requires

special managerial and organizational development skills. They assert that, support to agricultural finance

including the scaling up of small scale farmers into higher value chains needs well targeted mid-term

financing facilities, that can be accessed through rural and commercial banks supported by embedded

business and technical services or assistances. In order to be globally competitive, private sector

organizations are strengthened to voice their interests and to place competitive supply offers. The agency

assists exporters and Private Enterprise Associations such as FAGE to build their capacity and be able to

advocate effectively. It also collaborates with other development partners to help actors in the private

sector to enter into investment opportunities in the value chains such as agro- processing, packaging,

marketing and distribution.

Usually FBOs, which are productive and their members own pieces of land over 5 acres are selected for

GIZ technical assistance. Vibrant SMEs are also trained in the packaging of fruits like pineapple and

mangoes for exports. The GIZ gives technical assistance to large firms in fruits production and

processing, especially pineapple and citrus. These institutions include PINORA, HW, Blue Skies

Company at Nsawam (Eastern region) and Kumanga Farms (a foreign subsidiary firm) in the Brong Ahafo

Region of Ghana. Golden Exotica at Asutuare is another foreign subsidiary company which receives

technical assistance and agribusiness advisory services in the production and exportation of fresh and

processed fruits like pineapple and mangoes from the agency. The Tamale Integrated Food Production

(Mango Project) which is currently also receives technical assistance from GIZ and USAID.

The USAID places emphasis on the agricultural sector to create a modern, market driven and competitive

sector. Its activities are designed to support both public and private entities in overcoming technical,

institutional and regulatory constraints to increased productivity. The USAID Trade and Investment

Program for a Competitive Export Economy (TIPCEE) and Agricultural Development and Value Chain

Enhancement Program (ADVANCE) are broad programs which are directly into agribusiness and jointly

support capacity building in value chain development. Also, DANIDA and USAID are also collaborating to

give smart credit to promote value chain approach in investment in fruits through the ACDI-VOCA



managed, ADVANCE program9. TIPCEE, with a budget of $30 million USD was to run from 2004- 2009

and was tasked to provide assistance to develop competitive agricultural value chains and also address

both production and regulatory issues through partnerships with both private and public actors and other

development partners like DANIDA. The main outcomes of the program are: increased production,

internal sale and export of horticultural crops such as pineapple and increased quantities of high quality

maize for processing.

The ADVANCE project was launched in 2009 for a four year period, is a USAID funded program and

implemented by a consortium of local and international partners led by ACDI-VOCA. It is focused on

adequately developing selected commodities -Maize, Rice, Soya beans, Mango, Pineapple and Citrus-

from cultivation through marketing in order to increase their competiveness on the global market. It

intends among other strategies to improve access to private sector–run mechanization services and

support growth and effectiveness of commercial input supply systems.

It is estimated that, the ADVANCE program intervention will reach 60,000 farmers over the four year

period. To date, about 23,000 farmers and 508 FBOs‟ are participating in programme supported supply

chains. In addition, 85 buyers and processors, 55 input dealers and 39 mechanization service providers

have been engaged by the program in a strategy to bring growth to the sector through increased

efficiencies and also developing a mutually beneficial business relationship. The financial services

component of the programme involves working with 4 commercial banks, 2 non- bank financial

institutions, 4 venture capital firms and 10 rural banks.

The African Development Bank also, has a programme called the Export Market & Quality Awareness

Program, which aims to contribute towards increasing export earnings in non-traditional agricultural crops

especially, Pineapple, Papaya, Chilli pepper & Egg- plant. The Bank approved a loan amount of US$ 25.5

million to support the project from 2005-2010. The program was initiated on Good Agricultural Practices

(GAP) and developed production manuals with GAP protocols to enable smallholder farmers meet

requirements of international markets. It would provide key infrastructure like farm access roads, farm

pack houses, refrigerated trucks and laboratories for testing the quality of farm produce prior to exports.

The program covers five horticultural regions of Ghana.

DANIDA‟s Value Chain Approach to Agricultural Development Programme in horticultural crops including

fruits like Pineapple has approved an amount of $14 million USD for 2011 to develop a market oriented

non-traditional export products. A fair assessment of the performance of interventions of donors with

respect to specific value chains and its effects on the private sector and the poor can best be obtained

from private companies and FBOs into the production of such commodities like pineapple. Generally,

donors are helping in the cultivation, processing and marketing of Pineapple and Mango. The supply

chains for these commodities are being developed because recently, some few private companies are

into the processing of fruit juices, fresh pineapple cuts and fruit drinks. Moreover, donors who support

these commodities are into market oriented agricultural production, value chain development and

capacity building for FBOs. On the whole, donors support particular agricultural commodities depending

on its priority to the national economy and the global market. For instance, when the Smooth Cayene and

Sugar Loaf species of pineapple were being rejected in 2003 for a new variety called the MD2 on the

European Markets, the donor agencies such as GTZ assisted FBOs and Exporters in capacity building

and development of new varieties.

9 http://www.acdivoca.org/site/Lookup/Ghana_ADVANCE/$file/Ghana_ADVANCE.pdf



Assessment of Donor Support to Cocoa

Unlike cassava, the cocoa industry in Ghana is more developed. Ghana is the world‟s largest cocoa

producer after Cote d‟Ivoire. As in most cocoa producing countries, Ghana‟s cocoa is grown by small-

holder farmers. It employs about 1.5 million people in production and transport. Over the years, the

Government of Ghana has implemented policies that add value to Ghana‟s raw agricultural products like

cocoa and oil palm. For example, the volume of cocoa beans processed locally has doubled in the last

decade. Donors who support Cocoa production include the World Bank, the European Union and African

Development Bank.

The World Bank lends to the Agriculture sector to support the Production & Marketing of Cocoa. In the

2010 fiscal year, it gave Ghana a loan amount of $1.11 million USD to support the crop. In 2007, the

World Bank approved an IDA Credit of US$ 15 million to Ghana at a 10 year grace period and a maturity

period of 40 years. Mali and Senegal also had equal amounts and the objective of the project is to

generate and disseminate improved technologies in the participating countries focusing on roots and

tubers in Ghana, rice in Mali and cereals in Senegal.

The Delegation of the European Union, has also contributed a grant amount of € 5.0 million (100% of

total) towards the Phase II of the Ghana Cocoa Sector Support Programme. The same amount was

approved for the first phase of the project. The duration of the second phase is from Dec 2011- Dec 2013.

The project‟s purpose is to ensure an improved sustainability of cocoa production and marketing as an

export crop in Ghana. The overall objective is to contribute to an improved livelihood of smallholder cocoa

farmers in Ghana.

Key Lessons Emerging

A major lesson drawn from the analysis on donor support to private sector activity in agriculture and rural

development includes the following:

Only few donor agencies and development partners have significant portfolio and strategic programmes

targeted towards the agricultural sector compared to what prevails in health, education and infrastructure

sub-sectors. Most agencies do not have the private sector as a priority area but rather, there are small

components representing a small fraction of the private sector. There is rather a concentration of donors

in production, infrastructure and general PSD support. Thus, unlike the MCA that has a comprehensive

approach to agriculture ranging from irrigation (production) to marketing, infrastructure and credit for small

holder farmers and farmer based organizations, most support to agriculture has been on a piecemeal

basis with little connection with other on-going donor interventions. This is certainly an easy way out since

it requires fewer resources but often less helpful to the sector. Secondly, it was observed that, while

some development partners and donor agencies were pooling their resources to work towards a common

agenda, others prefer to solely fund their projects. Consequently some projects are not well harmonized

to yield the desired impact. Consequently, donor support to the sector is not very significant compared to

support to other sectors and often, they are less co-ordinated.

A striking finding that this discussion brings to bear is the fact that, there is a lot of lip service both within

Government and its development partners in terms of its role as an engine of growth considering the level

of funding it receives compared to what is required to drive the economy. Therefore, there is the need to

find ways to effectively engage the private sector in Agriculture and rural development.

The thrust of the discussion is that, there is a school of thought that Agriculture is a development issue,

because most of the poor rural communities depend on it for their livelihood. Therefore, the government

should do everything possible within its means to ensure increased food production. However, a different



school of thought is that Agriculture should be seen as a business that has several benefits, especially

the numerous opportunities that trade liberalization is associated with. The private sector must therefore

be given the needed support in the form of easy access to large tracts of land for large scale farming,

capital, agricultural equipment such as tractors and an environment conducive to investment. They can

also be engaged effectively by providing the needed infrastructure such as road networks, irrigation

facilities and access to markets to open up the rural areas to investment. It should also be supported to

invest in the various value chains by formulating strategic agricultural policies and also be given the

chance to compete in the privatization of seed certification, fertilizers, irrigation, marketing and

distribution.

Almost all the representatives from the local financial institutions do support agriculture in one way or the

other. They also share the view that agriculture must be seen as a business rather than a development

issue, in order to attract long term finance. Thus, the private sector should be provided with the requisite

resources and infrastructure in order to motivate them to invest more resources into the sector. They

asserted that, instead of development partners providing lines of credit for onward leasing to rural people,

through bilateral relations with the government and/or other agencies, international finance agencies can

partner with them to deliver efficient services to various people in all the value chains to boost the

agricultural industry.

Representatives from the various development agencies also hold the view rural agricultural development

requires a strong Ministry of Food and Agriculture with a well-qualified, dedicated and well trained staff

that will be results-oriented to achieve the goals of development through agricultural transformation. They

also intimated that, there is the need for a strong policy framework and well integrated and

comprehensive programmes to guide the private sector in agricultural development. They further called

for a systematic intra-ministerial linkage or communication especially between technical staff and their

leadership to effectively harmonized donor projects for better outcomes. Stakeholders in the industry

must communicate and organize concerted efforts towards agricultural and rural development. It is

important to note that, all these are meant to increase the private sector‟s role in agricultural

development.



Conclusions

Summary of Key Messages

The study aims to improve our understanding of the role played by the private sector in promoting

agricultural and rural development and to propose pragmatic ways donors can engage with the sector to

yield better developmental outcomes. The following approaches were used to study these issues. First,

Agricultural value chains in food staples, traditional exports and commercial production for domestic

markets was studied using secondary data sources. Second, a detailed value chain analysis of Cassava,

Pineapple, Mango and Cocoa were undertaken whereby the extent of private sector involvement and the

role of the state and donors in supporting or impeding outcomes were investigated. The whole chain of

the selected products (Cassava, Pineapple, Mango and Cocoa) including R&D, input markets, production,

intermediaries, processing and output markets as well as support institutions (policy, technical support,

public infrastructure, financial services, and institutions) were analysed.

The study also ascertained how public, private and donor actions impact on the chain. This was done

using both primary and secondary data from the relevant Ministries as well as micro studies of impact.

Thus a selection of key interventions of each of these crops was evaluated using the World Bank PSIA

methodology. Communities growing these crops were selected for the focus group discussions targeting

a minimum of 10 experienced male and female farmers, traders, processors and service providers were

included when available.

The following major findings emerged: first, the private sector is fully responsible for food staples and

horticultural export production in Ghana and has responded fully to the „rolling back‟ of direct state

involvement in rural areas where food staples and horticultural exports are produced. The state has also

`retreated‟ slightly in internal cocoa purchases and input distribution. This policy has been pursued

because of the need to maintain the premium price Ghana‟s cocoa enjoys. Consequently, the state has

kept its involvement in the sector to continue to provide quality assurance.

An analysis of the private sector‟s response to the opportunities in agriculture shows that it has provided

increased demand for the selected crops and the private sector has responded positively. Secondly,

access to the international market drives private sector participation. There is demand for tropical fruits in

the European Union, the key trading partner of Ghana. As far as Ghanaian exporters can guide farmers

to produce to Global GAP specifications there will be ready market and this is what is driving the donor

agencies to support the for-profit private sector to produce, process and or export. In addition, availability

of processing factories and demand for processed products drives private sector participation. There are

emerging opportunities in agro-processing of fruit juices although South Africa is a keen competitor.

Several small scale processors are continuing to emerge daily in the major cities of Ghana.

It was also observed that there is a positive impact of private sector activity on low-income rural

households. This is evident in household investments in durable assets like houses and ICT gadgets as

well as improving availability of food in the household. However, in order to reduce further the

vulnerability of farm households to uncontrolled prices in liberalised markets, pro-poor strategies that

target specific households and communities should be instituted. Also, revealing is the finding that the

agricultural sector in Ghana is more dynamic and competitive today because there are no restrictions in

any of the activity areas except for cocoa export and quality assurance before export. Another major

finding is that R&D is sensitive and capital (finance, material and human) intensive and therefore

government cannot leave the space completely to the private sector in the foreseeable future.



In analyzing donor support for private sector activity in agriculture it became evident that only few donor

agencies and development partners have significant portfolio and strategic programmes targeted towards

the agricultural sector compared to what prevails in health, education and infrastructure sub-sectors. Most

agencies do not have the private sector as a priority area but rather, there are small components

representing a small fraction of the private sector. Secondly, it was observed that, while some

development partners and donor agencies were pooling their resources to work towards a common

agenda, others prefer to solely fund their projects – an approach which affects the development outcome

of donor funds. A related finding is that funding for agriculture development is small compared to what

prevails in other sector although the latter is a major employer and contributes a greater share of GDP.

Also striking is the thinking that agriculture is a development issue rather than seen as a business.

However, the local financial institutions interviewed do share the view that agriculture must be seen as a

business rather than a development issue, in order to attract long term finance. Thus, the private sector

should be provided with the requisite resources and infrastructure in order to motivate them to invest

more resources into the sector. They asserted that, instead of development partners providing lines of

credit for onward leasing to rural people, through bilateral relations with the government and/or other

agencies, international finance agencies can partner with them to deliver efficient services to various

people in all the value chains to boost the agricultural industry.

Representatives from the various development agencies also hold the view rural agricultural development

requires a strong Ministry of Food and Agriculture in addition to providing a strong policy framework and

well integrated and comprehensive programmes to guide the private sector in agricultural development.

This should be complemented with a systematic intra-ministerial linkage or communication especially

between technical staff and their leadership to effectively harmonized donor projects for better outcomes.

Stakeholders in the industry must communicate and organize concerted efforts towards agricultural and

rural development. It is important to note that, all these are meant to increase the private sector‟s role in

agricultural development.

How Should the Platform Donor Effectively Engage the Private Sector in Rural Areas?

Platform donors have been actively supporting the development agenda but in order to maximize the

gains from their activities, the following methods of engagement are suggested:

The study suggests that donor support to agriculture should be aligned to national priorities through the

GSGDA and other stakeholder consultations. Another suggestion relates to the need to promote aid

delivery through pooled funding in order to reduce transactions costs resulting from unnecessary

duplication.

It is also suggested that donor support to agriculture should be increased if not doubled at least. Current

support to the sector is inadequate and cannot significantly move the sector into a modern and vibrant

segment of the economy.

A comprehensive and integrated approach to agriculture support as proposed by the MCA compact

should be followed by all donors as the piecemeal or less integrated approach seeks to do presently.

Platform donors should increase aid to support accelerated development of capacities at all levels as

Ghana continues its transition into a high middle income country. Aid should also be targeted at building

the capacity of institutions and human resources to effectively manage the transition.

Platform Donors should also harmonize their aid procedures in agriculture and other key sectors.

According to the 2010 PD Evaluation, the recent pace at harmonization is very slow (also see the Ghana



Aid Harmonization Matrix). There should be a shift from project funding towards pooled or programme

funding by ensuring that the various projects are aligned with the GSGDA to avoid stand-alone projects.

Platform donors who provide lines of credit for onward leasing to rural people, through bilateral relations

with the government and/or other agencies, international finance agencies should consider partnering

directly with local financial institutions to deliver efficient services to various people in all the value chains

to boost the agricultural industry.

Aid conditionalities still remain a challenge and the mixture of project, programme and pooled funding has

led to a complex aid architecture with its associated high transactions cost. Thus, donors should

continually shift from project funding towards programme or pooled funding.

A successful agricultural programme requires a strong Ministry of Food and Agriculture in addition to

providing a strong and comprehensive policy framework that is well integrated with other sectors. Thus

platform donors should support the technical capacities of the Ministry of Food and Agriculture including

the use of its accounting and procurement systems.



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Appendices

Appendix 2.1: Questions and responses of the key personnel interviewed in various agencies.

Appendix 2.2: Names and contacts of focus group participants in Mfafo

Appendix 2.3: Names and contacts of focus group participants in Fotobi

Appendix 2.4: Names and contacts of focus group participants in AgonaNyakrom

Appendix 2.5: Names and contacts of focus group participants in Agomeda

Appendix 2.6: ODI/PKP study: Sample of discussion guide



Appendix 2.7: Qualitative assessment of opportunities for private sector participation and implications

for community/household development

Variable Score (1=Yes, 0=No)

Cassava Community

Pineapple Community

Mango Community

Cocoa Community

Are the following availability and in good condition for the private sector?: Land (fertile and conflict free) Roads and highways Electricity Local assembly market space Health centres

1 0 0 0 0

1 1 1 1 0

1 1 1 1 0

1 1 1 1 1

Are the following services controlled by the private sector: Procurement Production (including field personnel) Processing Distribution and sales of inputs Distribution and sales of output

1 1 1 1 1

1 1 1 1 1

1 1 1 1 1

1 1 1 1 0

Are the following controlled by the private sector? Research and development, Training and capacity development Financing (credit and insurance)

0 0 1

0 0 1

0 0 1

0 0 1

Are households‟ food secure? Is household expenditure per capita up to GHC5.00? Do households own basic assets? Is community socially empowered? Is community ensuring environmental soundness

1 1 1 0 1

1 1 1 1 1

1 1 1 1 1

1 1 0 1 1

Source: Survey data, April, 2011



Appendix 2.8: Output of cassava and cocoa and export volumes of pineapple and mango

Year Cassava Pineapple Mango Cocoa

1980 1981 1982 1983 1984 1985 1986 1987 1988 1989 1990 1991 1992 1993 1994 1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009

1857.6

2065

1986

1728

2200

2300

2876.2

2725.8

3300

3320

2717

5701.5

5662

5972.6

6025

6611.4

7111.18

6999.509

7171.5

7845.44

8106.8

8965.84

9731.04

10239.34

9738.812

6600

6300

6900

5500

5300

5500

6000

8000

9000

10000

11000

12000

12000

15000

18000

20000

35000

35000

35000

35000

60000

60000

60000

60000

67000

NA NA

407

182

257,974 224,882 178,626 158,956 174,809 219,034 227,765 188,171 300,101 295,051 293,352 242,817 312,123 254,653 309,454 403,872 322,488 409,383 397,675 436,947 389,772 340,562 496,846 736,975 599,318 740,458 614,532



9567

9638

10217.93

11351.1

12230.6

67000

67000

68000

68000

NA

823.73

857.57

434.87

NA

680,781 710,642 632,037

Note: NA= Data not available

Prepared by: Platform Secretariat Published by: Global Donor Platform for Rural Development Godesberger Allee 119, 53175, Bonn, Germany Study conducted by: Overseas Development Institute, London Authors: Peter Quartey and Irene Egyir Photo credits: www.123rf.com/haak Date of publication: December 2011

pkp3__ strategic role of the private sector in ard: ghana

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