Tag Archives: agriculture subsidies

The State of the Agriculture Sector in Ghana

Ghana is located on the West Coast of Africa, referred to as the Gold Coast due to its abundance of the precious metal.  It is the second-largest producer of cocoa, with about 15% of the world market.  Cocoa is dominated by Ghana’s next-door neighbor, Cote D’Ivoire, which has spent the last decade in disarray after a civil war and the ensuing post-war violence.  Despite the fact that agriculture accounts for about 40% of GDP and more than half the workforce, Cocoa is the only commercial crop of economic significance.  While other industrial crops, including cotton, rubber, and tobacco are grown, they are small potatoes compared to cocoa and other exports.  (The major exports are timber, gold, diamond, bauxite, and manganese.  It is difficult for African economies to be competitive in global agriculture markets due to agriculture subsidies in the U.S. and Europe, efficient farming practices in Brazil and Argentina, and the scale of rice production in Thailand and Vietnam.  For a more complete explanation, see here.)

The main food crops grown in Ghana are maize, yams, cassava, and, to a lesser extent, sorghum, and millet.  More recently, rice Cocoa is the only with a specific framework for facilitating trade.  All cocoa grown for export must be sold to the Ghana Cocoa Board (COCOBOD), which aggregates the crop for sale in the international market.  International demand and the presence of a single buyer to coordinate trade means the market for cocoa is guaranteed.   COCOBOD has experimented over the last thirty years with various market liberalization tactics in order to make the industry more competitive, including privatizing more companies and investing in the development of the market.  Technoserve currently runs the Cocoa Abrapopa project in Ghana, which has raised farmer incomes by a remarkable 270%. Continue reading

The Structure of an Agriculture Industry

I have been in Ghana now for one week, and think that it is time to give an update on what I am doing here.   I will be working on the ADVANCE project, which has the lofty goal of establishing an effective value chain in the agriculture industry.  It is a four-year, USD $30 million project with about 100 staff, including a mix of agronomists, business development people, rural finance specialists, and a handful of outside consultants providing support.  To describe the project requires providing an overview three dynamics:

  1. The structure of an agriculture industry
  2. The state of the current agriculture sector in Ghana
  3. The specific challenges in the West African context.

I will address each of these topics in three posts, beginning with an overview of how the agriculture sector works.

The term “value chain” refers to the pathway that crops take in their journey from the ground to your plate, or your wardrobe, or the tires of your car.  The farmer plants the crops and tends to them sporadically throughout the growing season.  With sugar in the Philippines, the growing season is nine months.  During the first two months, the farmer spreads fertilizer, sprays the crop with pesticides and fungicide, and weeds the plot.  He then lets it sit for six months before harvest time, which lasts one month.   The amount of inputs (fertilizer, pesticides, etc.) and mechanization used by the producers depends on the location.  Most farmers in sub-Saharan Africa (SSA) are smallholders, managing less than two hectares, on average.  In contrast, the average farm size in the U.S., which is dominated by corporate giants like Archer Daniels Midland and Cargill, is 431 hectares.  These economies of scale give American agribusiness a big advantage on the global market.

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