The following is a replication of the Executive Summary of a 2009 UASAID report titled “GLOBAL FOOD SECURITY RESPONSE WEST AFRICA RICE VALUE CHAIN ANALYSIS”.
“Food security in Ghana can be enhanced both by reducing need through increased incomes and by increasing supply through more efficient production. For rice to become a competitive industry and contribute to food security, widespread and large-scale upgrading is needed. This will require significant investment to deliver into a market that will either pay premiums for the product or facilitate investments in improved production and post-harvest practices.
Import substitution is the only strategy through which Ghana’s rice industry can attract such investment. In the urban market channel, the demand is greatest for long-grain aromatic varieties, which are mostly imported. Increasing productivity of these varieties on smallholder farms will ultimately drive down prices (and that supply response will benefit food security).
This will also drive down prices for local brown rice varieties. Once buyer-driven upgrading results in a shift to higher levels of mechanization services, producers will likely adopt indigenous red rice (Oryza glabberima) as well as other locally demanded varieties.
The window of time to take advantage of this opportunity to upgrade rice in Ghana is short. The value of the Ghana cedi is expected to rise due to increased oil revenues, making importers and consumers indifferent to importing.
Currently, high variability of global market prices is a sufficient incentive for the largest importers to invest in and collaborate with donors and implementers on local upgrading, but in three to four years, the appreciation of the cedi will weaken this incentive. Thus, donors, implementers and stakeholders must act quickly to stimulate upgrading in Ghana’s rice sector by working with the importers who have the means and incentives to invest.
Even with these investments, Ghana’s dependency on increasingly volatile rice imports and the consequent negative impact on foreign exchange balances will continue to increase without a significant policy shift in support of private investment in efficient domestic rice production, processing and quality upgrading.
The principal change needed in the business enabling environment is reform within the Ghana Irrigation Development Authority that allows and encourages private ownership and management of Ghana’s irrigation facilities. Currently, irrigation infrastructure is owned and maintained by the Irrigation Development Authority, an arrangement that results in underutilization of resources and inadequate maintenance.
It is also difficult for small-scale farmers to acquire larger plots of land. Ownership and operational functions such as maintaining and cleaning canals should be shifted to the firms who assume the production risk—i.e., the farmers.
The second major policy shift needed relates to equipment supply and maintenance. Currently, the government is the largest equipment provider, selling at a subsidized rate that discourages the growth of the private equipment supply sector. The stunted equipment sector in turn has the effect of inhibiting the growth of the equipment service and repair industry.
In addition, there is a shortage of spare parts for imported machinery and lack of qualified providers. Incentives must be shifted to encourage growth of the private equipment supply and maintenance sectors.
Given that all countries in the region remain net importers, neither Ghana nor its neighbors are likely to become net exporters of rice in the near future. However, Ghana could become self-sufficient in rice by 2015 if the area under cultivation is doubled, yields increased by 50 percent on average and adequate investments are made in several areas:
- Access to seeds—particularly to varieties with import substitution potential—needs to be increased.
- Appropriate equipment needs to be made available through private distributors and service providers to allow production to become increasingly mechanized.
- Mechanisms need to be put in place to ensure the efficient use and sustainable management of irrigation infrastructure.
- Significant investment needs to be made in processing equipment.
Given the complex structure of large, government-controlled irrigation facilities, a significant part of any upgrading strategy should focus on commercially viable producers growing rice on relatively small irrigated sites.”
Comments by FSG
The issue of rice in Ghana has been reported widely in the Ghana media and here on FSG, ranging from huge smuggling allegedly supported by officials and some politicians to warfare against importation and totally inadequate support and investment to support the local industry.
The debate has even gone so far that the Minister of Food and Agriculture, Mr. Kwasi Ahwoi, said that he is willing to leave if the President fired him in October this year if he could not halve rice importation.
The USAID report also miscalculated by predicting a rise in the value of the cedi – exactly the opposite happened and at time of publication the Ghana cedi has reached record lows of 1.88 to the US Dollar. This has caused increases in cost of production for local rice producers and also increases in cost of food for Ghanaians as the import portion of foodstuff such as rice and poultry is 70% of total demand.
The quest for self-sufficiency is supported by one-and-all, but the policies and actual actions by government are unlikely to have a short term impact and analysts are speculating about possible short-term moves by the government to help alleviate the plight of suffering Ghanaians.
With a looming general election in Ghana it can be expected that the government may review taxation and import regulations on basic foodstuffs. This will of course depend on how bullish the government is about their chances for a second term.