Structure of the Ghanaian Economy

The Ghanaian economy is made up of three main sectors namely:

The Agricultural Sector

The Industrial Sector

The Services Sector

The Agricultural Sector

Structure of the Agricultural Sector • Ghana covers an area of approximately

239 million square kilometres. Abt 57% of the country’s land (i.e. 136 million hectares) is suitable for agric purposes. • However, only abt 53million hectares

representing abt 38.9% of the total agric land was under cultivation as at the 2007.

Structure Cont.• Agricultural activities in country are influenced by

agro-ecological conditions which divide the nation into three major zones namely;

the coastal savannah, the equatorial rain forest, and the northern savannah. • The conditions in these ecological zones determine

the types of crops that can be cultivated. Agricultural crops include yams, grains, oil palms, cocoa etc

Structure Cont.The agricultural sector is divided into five sub-sectors

namely;• The cocoa sub-sector –this sector consist of the prodn of

cocoa beans, paste and butter.• Crops − this sector consist of all other crops apart from cocoa

i.e. starchy stable, pulses and nuts, vegetables, cereals etc.• livestock−livestock such as poultry, goats, sheep, cattle

etc.• Forestry and logging−covers all activities associated with

the prodn of timber logs and sawn timber.• Fisheries− this sector include the prodn of fish and fish

products such as tuna, tilapia etc

Nature of the Agriculture in Ghana

Broadly speaking, there are two types of agriculture in Ghana namely • the subsistent, small scale traditional

system of agric and • the mechanized, large scale system.

Characteristics of Agriculture in Ghana

• Heavy dependence on rainfall. Irrigation farming is very minimal. E.g. the total agric land cultivated under irrigation was estimated at 10,500 million hectares in 1994

• Use of low level of technology i.e. the use of cutlass and hoes, highly labour intensive

• It is dominated by small-scale prodn enterprises. Data show that abt 80% of food crop farms were cultivated by subsistence farmers

Characteristics Cont.• Predominant use of traditional farming

methods−scarce use of fertilizers, pesticides etc. slash and burn system, shifting cultivation, and mixed cropping etc.• The use of institutional credit i.e. loans

from financial institutions is very low

Role of Agricultural Sector• In the past agriculture was the major contributor to

GDP. In the 1970s and 1980s, its contribution to GDP averaged over 55%. But this progressively reduced to 41% in 1995 and 38% in 2007. However, after the rebasing the sector cannot be termed as the major contributor to GDP.

• It contributes significantly to foreign exchange earnings for the country. This is achieved in two ways via exports of agric products and producing import substituted food and raw materials. In 2010, foreign exchange earnings from the sector were US$ 2,639 million.

Role Cont.• The sector is a major source of govt revenue via duties paid

on exports on agric products particularly cocoa. The contribution of the sector has decline steadily from abt 26% in 1987 to an average of abt 20% in the first half of the 1990s.

• The sector is the main source of food supply for the large non-agricultural and mainly urban population.

• The sector produces raw materials for agro-based industries• The sector offer job opportunity to the highest proportion of

the economically active population mainly as farmers, farm labourers etc.

• It provides substantial mkt for industrial and services sectors outputs.

Challenges and Constraints • Low level of productivity. This can be attributed to poor

farming practices and poor land preparation and weed management

• Low level of technology• Population growth• Land tenure system• Inadequate extension services• Low level of education• Inadequate credit• High post-harvest losses• Poor infrastructure in the farming areas (e.g. poor roads,

poor marketing etc )

Significance Interventions/Policies in the Agricultural Sector

• A major feature of agricultural policy in the early 1970 was the formation of single product devt board for cotton, fabric, grains, cattle, and meat.• They were set up to offer advice,

provide incentives and to oversee the prodn of the agricultural raw materials.

Interventions Cont.Other policies during this period included:• Institution of minimum guaranteed price schemes.• Massive rural devt schemes designed to provide

basic infrastructure such roads, water, and electricity to curb rural-urban migration.

• In the cocoa subsector, the multiple buying systems were est. to replace the monopoly enjoyed by the United Ghana Farmers’ Cooperative Council which was subsequently dissolved.

Interventions Cont.• However, a monopoly system of cocoa

purchasing (unitary buying system) was reintroduced in the 1977 during the Acheampong era. • There was an upsurge of interest in

raising agric prodn to self-sufficiency level. This led to the Operation Feed Yourself (OFY) and Operation Feed Your Industries (OFYI) programmes.

Interventions Cont.• Agricultural devt b/w 1976-1982 took place in an

unfavourable macroeconomic and political environment characterised by a rapid expansion of money supply, high inflation rate, and BOP deficits.

• Smuggling operation was a commonplace. • Agricultural mechanization suffered as basic spare

parts required to maintain machines were lacking. • To compound the economic problem, the period

saw frequent changes in govt (May, 1978 Afrifa, June 4 1979 AFRC, and Dec 1981 PNDC).

Interventions Con’t

• As the largest sector, agric received a lot of attention in all phases of the ERP and SAP.

• The main feature of agric policy was the increase in producer prices with particularly sharp increases for cocoa relative to other crops.

• The Agricultural Services Rehabilitation Project (ASRP) aimed at rehabilitation of agric services was implemented.

Interventions Cont.Other special programmes included:• Natural Agricultural Research Programme aimed at rehabilitating and

reinforcing agricultural research systems.

• Rural agricultural finance scheme aimed at addressing the credit needs of farming community and expending prodn capacity and empt in the rural areas and strengthening credit institutions operating in the rural areas.

• The International Fund for Agricultural Devt (IFAD) sponsored scheme to help smallholders in the savannah and transitional areas of the country.

• USAID sponsored Agricultural Productivity Promotion (APP) aimed at improving productivity among food crop farmers via maintenance of feeder roads leading to these areas.

Interventions Cont.• Agricultural policy in the rural phase of adjustment

was implemented within the context of the medium term devt programme (MTDP-1991-2000).

• As part of the liberalisation programme, the guaranteed minimum prices for maize and rice were abolished and all subsidises were removed.

• Also, the procurement and distribution of agric inputs (hitherto done by MOFA and COCOBOD) were privatized in order to enhance competition and efficiency in the marketing of agricultural inputs.

Interventions Cont.• The Agricultural Sector Investment Project (ASIP) is another

World Bank sponsored project (1994-1998). MOFA through this project sought to provide:Financial support to producer associations and their support organs

such as local authoritiesTechnical support to these groups by way of the devt and design of

their identified project need, and their implementation andSkills training on effective management of projects to these same

groups.• Projects eligible for ASIP support included the construction of

new and rehabilitation of existing water resources for agric use, market sites, access roads into high food producing areas and villages and farm level arable produce storage and processing units.

Interventions Cont.

• The Agricultural Sector Support Investment Project (ASSIP) was a govt initiative meant to move agric sector growth to higher level.

• It was set up as the main instrument for implementing a Accelerated Agricultural Devt Strategy (AADS) that was itself formulated to enabled Ghana achieve the status of a prosperous middle income country by the year 2020.

Interventions Cont.• In 2002, another major intervention that is Food

and Agricultural Sector Devt Project (FASDEP) was developed.

• FASDEP was necessary because of the urgent need to modernise the agric sector with the aim of turning Ghana into a leading agro-industrial country in Africa by the year 2020.

• FASDEP sought to bring out the linkages among various subsectors in agric and other non-agricultural sectors.

Policy Initiatives and Implementation 2010

Buffer Stock Management− The establishment of the

National Food Buffer Stock Company. Acquisition and

rehabilitation of two warehouses for the storage of

grains. Also, abt 6,949 metrics tonnes of paddy rice and

416 metric tonnes of maize were purchased and stored.

Fertiliser Subsidy Programme− To increase productivity,

the govt subsidised 60,000 metrics tonnes of fertiliser at

an average cost of GH 16.00 per bag.

Policy Initiatives 2010 Cont.

Livestock and Fisheries Development− Livestock farmers in the three Northern

Regions, Brong-Ahafo, Ashanti and Volta Regions were supplied with 2,584 livestock

of various improved species. Also, 35,000 cockerels were distributed to 1,750

farmers in 25 districts. Construction of cold store at Nyanyanor, Kromantsi, Apam,

Half Assin, New Takoradi, Shame and Sekondi. Abt 11.07 hectares of pond and 192

cages were constructed to promote and develop aquaculture and cage culture.

Agricultural Mechanisation− 84 service centres were operationalized by

September, 2010 as against 69 in 2009. Purchase of pro-cocoon to store 30,000

metrics tonnes of grains.

Youth in Agriculture− Under the Block Farm Programme, abt 47,000 hectares of

land were cultivated with maize, rice, sorghum, soybean and vegetables. 80,000

benefited financially.

Future Outlook/the Way Forward

• We expect to see a shift from extensive agric to intensive agric where increases in productivity would be the result of increasing yield per area cultivated rather than an increase in the acreage of land.

• We expect to witness a shift from rain-fed agric to irrigated agric. In particular, the harvesting of water in valley bottoms and the construction of dams in the savannah region for irrigation purposes.

Future Outlook Cont.• There should be intensification of agric extension in

support of improved and scientific farming practices of the small-scale farmers. An effective shift would require adequate and timely supply of modern inputs, availability of credit etc

• There should be a shift from small-scale to medium and large-scale farming. This should emerge if educated and other people with relatively high opportunity costs are attracted into farming.

• Attention should be paid to research and devt of farming techniques that are unique to our kind of climate. Research institutions should develop post harvest handling and storage techniques to reduce losses.