Policy Notes and Briefs

× Tomatoes are a key component in the diets of Ghanaian households. Approximately 440,000 tons of tomato are consumed annually, equivalent to 40 percent of household vegetable expenditure (Van Asselt et al. 2018). Despite government support for the sector, national production has not increased much in the last decade, resulting in domestic supply falling far short of demand. While UN Comtrade (2019) trade statistics for 2007 to 2017 indicate that the country imported only around 8,000 tons of tomato annually, mainly from neighboring Burkina Faso, Van Asselt et al. (2018) put this figure at closer to 100,000 tons or one-quarter of domestic supply. Evidently, large quantities of tomato enter the country informally, making it difficult to estimate actual supply and demand patterns and devise appropriate marketing policies. The perishability of tomato is a major challenge and imparts significant risk on producers and traders. As such, post-harvest handling, transport, storage, and processing losses have been estimated at between 20 and 65 percent of production (Vowotor et al. 2012).

× Maize is a widely consumed and cultivated staple crop in Ghana. It accounts for more than one-quarter of calories consumed, about double that of the second crop, cassava (GSS 2018). About three-quarters of maize consumption is from own production, suggesting maize has limited appeal as a cash crop (Gage et al. 2012). This is set to change as Ghana’s Planting for Food and Jobs (PFJ) initiative, launched in 2017, prioritizes maize seed and fertilizer distribution and encourages market participation by smallholders (MoFA 2019). Already average maize output over the period 2017 to 2019 has been 40 percent higher than the average output achieved between 2013 and 2016 (MoFA 2020a). Government attributes this dramatic production response to PFJ. It is uncertain whether the maize market in Ghana can absorb increased this increased maize output without significant impacts on market prices or the profitability of maize cultivation.

× Rice is an important staple in Ghana and is cultivated across all agroecological zones. Paddy rice output grew at around 10 percent per annum between 2008 and 2019, with an especially sharp increase of 25 percent in 2019. However, domestic production continues to fall short of demand with the import share of rice consumed remaining above 50 percent (MoFA 2018). This reflects a growing preference for rice among Ghanaian households, especially as consumers become wealthier and more urbanized. The large dependence on rice imports heightens concerns around foreign exchange imbalances and vulnerability to international rice price shocks. Hence, the National Rice Development Strategy of 2009 and the Planting for Food and Jobs (PFJ) campaign launched in 2017 not only prioritize rice but set ambitious expansion targets for domestic rice production (MOFA 2017a). Policy objectives include substituting rice imports and producing a higher-quality product that is more acceptable to Ghanaian consumers and can compete with imported rice.

× Chili pepper (Capsicum spp.) is an important spice and condiment used in many Ghanaian dishes. Alongside tomato and onion, chili ranks as one of Ghana’s three most important vegetable crops in terms of hectarage and crop value with significant potential for generating income, creating jobs, and contributing to foreign exchange through exports (Gonzalez et al. 2014). As is the case with other vegetable crops, chili production in Ghana is more profitable than producing traditional staple crops, such as maize and rice (Van Asselt et al. 2018). However, supply is highly seasonal as most production is rainfed. Chili yields in Ghana are also well below their potential. The government of Ghana has recognized this underexploited potential by designating chili as a priority crop under the Planting for Food Jobs (PFJ) initiative.

× Soya bean is an important legume that is both a valuable source of feed for livestock and fish and a good source of protein in human diets. The bean contains around 30 percent cholesterol free oil, 40 percent protein, and essential vitamins (El Agroudy et al. 2011). The soya bean industry provides numerous opportunities for value chain actors from seed and grain production through to processing and marketing. As such, growth and modernization of the soya bean sector has potential to improve livelihoods and reduce poverty. While industrial processing and utilization of soya bean has expanded in Ghana, domestic production has not kept up with demand, resulting in significant growth in imports. Currently around half of soya beans or soya bean products is imported (Eshun et al. 2018; Gage et al. 2012). Average soya bean crop yields are low, ranging from 0.7 to 1.7 metric tons per hectare depending on variety, the environment, and management practices used (SRID 2017).

× Onion is a common vegetable crop used globally as seasoning and for medicinal purposes (van der Meer 1997; Cheema et al. 2003). The bulb is also used widely in Ghana in the preparation of stews and soups, accounting for around one-fifth of vegetable expenditure by households (van Asselt et al. 2018). Despite being widely consumed, onion production in Ghana falls well short of demand with imports coming in from neighboring Niger and Burkina Faso even during the peak local production season. Although trade statistics are notoriously weak, some estimates suggest as much as 80 to 90 percent of onion in the local market is imported. The two main varieties cultivated in Ghana are Bawku Red and Galmi. Major production challenges include varietal issues, the seasonal nature of production, and high post-harvest losses. The importance of onion and the significant potential for growth in the subsector has long since been recognized, and the crop was one of the first to be prioritized under Ghana’s Planting for Food and Jobs (PFJ) program.

× In 2014, African heads of state reaffirmed their commitment to the Comprehensive African Agricultural Development Program (CAADP) through the adoption of the Malabo Declaration (AU 2014). The declaration included commitments to reduce hunger and poverty, boost intra-regional trade, enhance resilience to climate variability, and, in line with the Maputo Declaration a decade earlier, to continue allocating to agriculture at least 10 percent of government expenditure. Despite this long-standing spending commitment, Ghana’s agricultural budget share has remained well below 10 percent during the last decade. Depending on accounting principles followed, estimates range from 1 to 2 percent (CAGD 2016), 2 to 4 percent (FAO 2014) or 6 to 8 percent (MoFA 2017a). Given strong evidence that agricultural spending in developing countries yields significant returns (Mogues et al. 2015), Ghana’s relatively weak agricultural performance during the period from 2007 to 2017 may be linked to low levels of spending. At 4.3 percent per annum, agricultural GDP growth has only been half that realized in the non-agricultural sectors (MoF 2018). This weak agricultural growth has also not benefited the poor. Rural poverty has increased in recent years, especially in northern Ghana (GSS 2018). While budgetary allocations to agriculture matter, the quality of spending is as important (Akroyd and Smith 2007). In this regard, concerns have been raised about the decline in allocations to agricultural research, knowledge transfer, and infrastructure in favor of spending on routine operations (FAO 2014; World Bank 2017). Ideally, sector budgets should maintain a healthy balance between investments in a sector’s capacity to grow, e.g., infrastructure or farmers’ knowledge, and expenditures that are fully consumed in the same period, e.g., operational expenses or subsidies (Benin & Tiburcio 2018; Mogues et al. 2015).
Following Ghana’s unfavorable assessment in the African Agricultural Transformation Scorecard (AATS), which was launched by the African Union (AU) in 2018, and in light of policy developments, budgetary trends, and socioeconomic outcomes, Ghana’s development partners called for an increase in funding allocated to the agriculture sector at the national Joint Sector Review for Agriculture in June 2019. They further called for improvements in the effectiveness of agricultural spending, with the distortionary effects of large-scale subsidy programs highlighted as a specific concern. A recent study led by IFPRI’s Ghana Strategy Support Program (GSSP) and FAO’s Monitoring and Analyzing Food and Agricultural Policies (MAFAP) project considers these issues further (Aragie et al. 2019). Specifically, using an economywide model of the Ghanaian economy, the research-ers examined how changes in the level and composition of public agricultural expenditure affect socioeconomic outcomes in the short and medium term in Ghana. This note highlights selected key study findings.

× In practice, however, warehouse receipt financing has generally failed to deliver the benefits to smallholders hoped for by development economists and practitioners. In Ghana, and more generally throughout Africa, warehouse receipt financing is currently used almost exclusively by large traders, processors, and exporters. In this brief, we explore reasons why smallholders have shunned warehouse receipt financing and discuss policy prescriptions that could make warehouse receipt financing more accessible and beneficial to them.

× In 2009, Ghana passed Local Government Instrument 1961 (LI 1961) to devolve a set of functions from the central government to the country’s 216 Metropolitan, Municipal, and District Assemblies (MMDA). Agriculture, along with public works and social welfare, was among the first sectors to be devolved. This transfer was formally institutionalized in 2012. In addition, LI 1961 stipulated that the staff of the MMDA departments were to be transferred from the national civil service to a newly created Local Government Services (LGS). A composite budget system also was introduced, which integrated the budgets of all departments of the MMDAs into the overall budget for the MMDA.

× Ghana’s population is becoming younger and increasingly urbanized – by 2010, over half the population lived in urban settlements of more than 5,000 people – raising concerns among policy makers regarding the location and types of jobs required to employ the youth. The slow creation of for-mal urban jobs has particularly strong implications for young people entering the labor force: they are more educated than the older generation, with greater aspirations for non-farm employment and urban lifestyles (Anyidoho, Leavy, and Asenso-Okyere 2012). Without rapid industrialization to create more formal manufacturing and other non-agricultural jobs, youth in Ghana who leave the agricultural sector are increasingly likely to resort to informal services in both rural and urban areas. While much youth-related research has focused on changes in youth employment and livelihoods through rural-urban migration, a re-cent IFPRI Discussion Paper focuses on youth in the rural non-farm economy (Diao et al. 2017).

× This brief explores recent developments in Ghana that lend insight into the drivers of mechanization and the appropriate role of government policy in supporting this transition.

× Past agricultural mechanization efforts in Ghana and Nigeria have focused more on the styles of machinery used in western countries or Latin America, where average farm sizes are much larger. While West African countries, particularly Ghana, are still relatively land abundant compared to Bangladesh, seeking the right balance across various models is important for achieving mechanization growth across diverse types of farms. Learning from the experience of agricultural mechanization in Bangladesh offer useful inspirations toward how widespread mechanization growth can happen for smallholders in Ghana and Nigeria.

× Agricultural intensification has only taken off to a very limited extent in Ghana. Adoption of land productivity-enhancing technology is low, even in areas with proximity to urban markets. Rather, farmers have increasingly been adopting labor-saving technologies such as herbicides and mechanization, for which vibrant private supply channels are emerging. Further efforts to strengthen the private mechanization supply chain would help meet the rising demand for tractor services. Furthermore, mechanization could also help free up agricultural labor to perform other more labor intensive tasks.

× Rising labor costs associated with increased rural-to-urban migration have compelled Ghanaian farmers to increase the use of tractors and other agricultural machines to conduct farming operations in the country (Diao et al. 2014). The adoption of these mechanical technologies is consistent with the tendency among Ghanaian farmers to save labor, rather than embrace practices that create additional labor needs (Houssou et al. 2016). Tractor use is concentrated on plowing and other tillage operations primarily (Houssou et al. 2013), but the supply of tractor services is inadequate. Earlier research estimated that plowing services represent 90 percent of the revenues of tractor service providers (Houssou et al. 2013). Both public and private supply of plowing services may have contributed to an expan-sion of the area under cultivation in Ghana, thereby exacerbat-ing labor bottlenecks in post-tillage field operations for many farmers.

× As a rapidly-urbanizing, lower middle-income country, Ghana is experiencing diet changes that are spurring a growing demand for processed foods. Recent surveys show significant presence of processed goods in retail shops, including milled rice, processed fruits and vegetables, and frozen meats, but only about a fifth of these products are processed locally. The main reason processing has failed to take off is not lack of policy: Ghana has always been interested in processing of tomatoes, has established a presidential initiative for processing cassava, and aims to process half of the cocoa produced locally. Rather, the main constraint to a vibrant processing sector is the low production and productivity, high cost, and poor quality of local raw materials. This brief describes these key constraints for growing a thriving domestic food processing sector and high-lights some opportunities for growth.

× In 2009, Ghana was one of the first African countries to accept the Comprehensive Africa Agriculture Development Programme (CAADP) target of committing ten percent of government expenditure to agriculture. Despite this commitment, Ghana remains far short of that goal. In recent years, spending on agriculture has increased, but only to about 3.5 percent of total expenditures (Benin 2014; ReSAKSS 2015). To attain the CAADP target, Ghana needs to spend an additional 6.5 percent of total expenditures, or about 2 percent of GDP, on agriculture. Yet Ghana also finds itself needing to reduce an historically large and persistent budget deficit of about ten percent of GDP. In such difficult fiscal times, is it possible for Ghana to meet its CAADP commitment?

× Increasing agricultural mechanization has long been of interest to many African countries. Constrained by the limited area that can be cultivated through the use of the hand hoe and its association with perceptions of primitiveness and drudgery, agricultural mechanization and large-scale farming have long been a part of the vision of modernizing agriculture in many African countries, including Ghana.

× Maize is an important food crop in Ghana, accounting for more than 50 percent of the country’s total cereal production. The Ghana Grains Development Project (1979–1997) and the Food Crops Development Project (2000–2008) made major investments to improve maize yield. Despite these efforts, the average maize yield in Ghana remains one of the lowest in the world, much lower than the average for Africa south of the Sahara.

× As rice imports surge ahead of production in Ghana, increasing rice production and yields has become a priority. Annual per capita consumption of rice in Ghana grew from 17.5 kg during 1999–2001 to 24 kg during 2010–2011. President Mahama, concerned with rising importation costs, suggested that rice should be produced locally (Asare‐Boadu & Syme 2014). As only 5 percent of global production is traded, local production would also protect consumers from price shocks in the world rice market (World Bank 2013). While substantial investments in national rice production have been made, local production is still not able to keep up with growing demand for rice in Ghana.

× Theories of fiscal federalism imply that determining intergovernmental transfers based on the political incentives results in inefficient allocation of resources across geographic regions. Such practices also can result in tensions between classes, and ethnic and religious groups, which are concentrated in distinct geographical areas. Nevertheless, empirical evidence consistently confirms that the practice of allocating government resources based on political relationships continues to be pervasive around the world. This brief summarizes the results of an IFPRI study in Ghana assessing the effectiveness of formulas as a strategy to limit political motivation behind resource sharing.

× With an average growth rate of 5 percent and a reduction of poverty by one-half over the past two decades, Ghana is a recent success story and a rising star in African development. Yet the country remains dependent on relatively few external sources of income and its external debt has started to rise again (IMF 20081). The recent discovery of offshore oil is seen by many as an important new source of income, and an opportunity to overcome persisting structural weaknesses in exports and the economy as a whole, and raise Ghana's prospects of becoming a frontrunner in African development.

× The Ghana Strategy Support Program (GSSP) aims to build the capacity of agricultural stakeholders in Ghana to develop and implement agricultural and rural devel-opment policy reforms. This summary outlines findings from an IFPRI-commissioned assessment of the GSSP's performance from 2005 to 2008, which examined such factors as awareness of and comprehension of the pro-gram and its goals among intended beneficiaries, policy changes and other outcomes resulting from the program, and lessons learned.