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:
- The structure of an agriculture industry
- The state of the current agriculture sector in Ghana
- 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.