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Business News of Tuesday, 21 April 2020

Source: Ruth Aboagye, Contributor

Collapse in oil prices call for urgent agro-industrial transformation - PPD

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The Patriots for Peace and Development, (PPD), is calling on the government to set aside the agro industrialization under the 1D1F secretariat to the Ministry of Agriculture.

“The agro focused industrialization should be placed under the Ministry of Food and Agriculture, (MOFA), since they have the convergence of technologies, and are well entrenched because they train the agriculture extension officers. They have demonstrated professionalism and hard work under the one district one factory initiative by making available tax incentives for companies under MOFA.

This, according to the PPD would enable enterprises and institutions to deliver material inputs to the farming sector and transform, distribute and otherwise add value to agricultural and food products targeting and identified market demand effectively in the country.

According to NASDAQ report captioned “the Good, the Bad and the Ugly”…”the good news is that we have been reminded the lessons that had been forgotten from the 2008-2009 recession. Investors in the Risk Zone, who cannot afford much risk, are nonetheless invested about 60/40 stock/bonds. Consequently, they suffered significant losses in their target date funds.

The bad news is that the economy is already in a recession and likely to get even worse. Some have described the recent run-up in stock prices as a “ bear rally’ that will not last long.”

“What we are saying is that the agro focused industrialization should be facilitated by MOFA in partnership with the private sector and in collaboration with other financial institutions because the agric sector is the major backbone for everyone to survive.

The MOFA has proven that their inputs into the 1D1F is what has catapulted the growth of many factories in the country” according to a statement issued in Accra and signed by Richard Danso, Convener of the group.

The statement said Ghana been 60 to 70 percent agro driven and “that is why we say the focus should be on agro industrialization” it said.

According to the statement, the country needs to focus on commodities such as rice, soya beans, pineapple, cashew, citrus, cassava, maize, cocoa processing, avocado, sweet potato among others, saying these are the very commodities that could bring back Ghana’s economy in the next five years.

“The government should take agriculture seriously by setting up a directorate within the Ministry of Agriculture for agro-industrial transformation. In the next five years, the world is likely to experience food drought, as wise as the President is like Joseph in the Bible, the President must wise up quickly and take agro processing as a serious venture and separate it from any other Ministry and put it under the agric ministry, this is to give it the needed support and supervision” it said.

The government must see agriculture industrialization as a main unit for growth hence must put all resources and tools to make sure that the agro industrialization is working, it said.

“The COVID 19, which is very scary, has proven to us that agriculture and agro processing is what we need us a country. The likely scarcity of food after the COVID 19, may lead to commodity price inflation. Food inflation has been in single digit for the past six months or so which has resulted into lower inflation for the country. However during the recent partial lockdown, prices of food commodity went up astronomically due to panic buying which may not drop now” it said.

The negative impact of COVID-19 on exports, imports, taxes, and foreign exchange receipts will culminate in a slowdown in economic activity. GDP growth is forecasted to decline to 5.0 percent in a baseline scenario. In the worst case scenario, GDP growth estimates could be halved to about 2.5 percent in 2020.

These assessments are preliminary as the situation is very fluid and the degree of uncertainty concerning the outbreak is very high. This means that there is a likelihood that these assessments could change rapidly.

There is also a likelihood of export restrictions from advanced economies and other emerging market economies which could create supply chain shortages for Ghanaian businesses, with significant impact on imports of intermediate and capital goods, as well as consumption goods.

This is expected to negatively affect inputs in the domestic production channels with severe consequences for growth and tax revenues which could become more pronounced by the second or third quarter.