I have explained how the agriculture supply chain works and talked about the state of the agriculture sector in Ghana. It is time to talk about the specific challenges of agriculture in the West African context and explain a bit more about how my work fits into this picture. I am working on the USAID-funded ADVANCE project, which seeks to improve the agriculture value chain and increase competitiveness in domestic, regional, and global markets. There are two specific challenges for Ghana: achieving food self-sufficiency, and becoming competitive in the global marketplace. The first is largely achievable for most crops. The latter is achievable for some crops (and already achieved, in the case of cocoa and certain fruits) and impossible (or near-impossible) for others. I’ll explain why in a minute.
ADVANCE employs what is called a “market facilitation approach” to agriculture sector development. For the last half-century, aid and development in agriculture in Africa has focused on providing technical assistance and giving things away for free. Building warehouses and processing facilities, subsidizing the cost of seed and fertilizer, offering low-interest loans, and providing cost-sharing for mechanization purchases have had the adverse impact of decreasing industry competitiveness and making private sector investment unattractive (can’t compete against the government and Big Aid). There has been a long parade of agriculture development projects that treat Africa like an academic petri dish, without much understanding of the crippling effects hand-outs have on the competitiveness of an industry. To be fair, the cards are stacked against developing countries when it comes to agriculture. The United States and Europe exhibit socialist tendencies by heavily subsidizing their agriculture industries, while at the same time demanding that the recipients of World Bank and IMF loans (read: poor countries) undergo “Structural Adjustment Programs.” SAPs, as they are called, call for the wholesale adoption of neoliberal trade policies, including dropping all import tariffs, removing government subsidies, and allowing foreign imports. The hypocrisy is a little mind-blowing, but you can type “Food Aid” and “Africa” into Google and find all the information you need.
Long story short, the net result of these programs is, more often than not, the complete decimation of the domestic agriculture sector. In 1975 and 1976, Ghana was entirely self-sufficient in rice production, producing 70,000 metric tons. In the early 1980’s, it accepted a loan from the IMF and underwent a structural adjustment program. By 1983, rice production dropped to 27,000 MT, as commercial rice producers in Ghana were forced out of business by rice imports from the United States and Europe. Today, domestic rice production only accounts for 30% of consumption, as Ghana imports long-grain jasmine rice from Southeast Asia, Brazil, the U.S. and Europe. The country spends massive amounts of its foreign currency reserves on buying rice. Tastes have changed and urban consumers now prefer imported to domestic rice, making the rebuilding of the rice industry in Ghana an uphill battle.
Back to the ADVANCE program and my role. ADVANCE is different from all those projects in the past in that it does not give anything away for free (with the exception of a grant program for entrepreneurs, whom I will help to write business plans and to scale up). They use a facilitation approach. A farmer needs money for seeds and fertilizer? A field business facilitator, the soldiers of the ADVANCE program, will connect that farmer with an aggregator, who will extend them credit in exchange for a guarantee of that farmer’s crop. They will then connect the aggregator with a financial institution, who will provide them credit to purchase the seeds and fertilizer from an input dealer. The market exists, but some of the market players don’t know where to find one another. That is where ADVANCE comes in – making those connections.
I am going to be playing a lot of different roles on the project, one of which is working with the rice value chain team to identify opportunities to improve efficiencies. Yesterday I went out to a field office to work with one of the field business facilitators, Andrew, who is dealing with rice value chain actors in the Eastern region of the country. He is working with a number of aggregators, who have extended credit to farmers and are now trying to collect their harvest. The only problem is that a group of rogue aggregators (essentially traders) from the Central region in a town called Kumasi have come down to Atsusuare, where we went, and are buying the paddy (unmilled rice) from the farmers. They pay cash, and cash is king to farmers (and everyone else), so they sell. Now, the local aggregators have to take a loss because the farmers have screwed them over in a practice called side-selling. I will be going to the different rice offices to assess the impact of the “Kumasi women” on the local rice trade, find out where they are selling their rice, and figure out a way to make the system more efficient, inclusive, and prevent the quality improvements that are necessary to achieve import substitution from being undermined. It is like a detective novel.
This is an example of one project I’ll be working on. I will also be provide business consulting to grant recipients in order leverage their investment and improve their go-to-market strategy. I will hopefully be leading a project on developing a logistics solution for the southeast mango corridor. Right now, mango traders load mangoes into a sack, shove it in the back of a car, and drive it to the capital city of Accra, resulting in a spoilage rate of 50%. If we can connect these farmers and traders to a packhouse that will pre-screen mangoes for export and those for domestic consumption, to a logistics company that will offer trucking services, and to a plastic crate manufacturer that sells specially-designed mango packing crates, the traders will reduce their spoilage by 100%, effectively doubling their profits (a little less, when you factor in the principles of supply and demand), which will trickle down to the farmers themselves.
I have been here for two weeks and have been steadily getting up to speed. Unfortunately, the year is winding down and everyone is preparing for Christmas break. It isn’t the best time to start working, but it has given me the opportunity to read and to learn and prepare myself for the tasks ahead.