Ghana’s Agricultural Economic Input Deficits

Agricultural values in Ghana’s economy and its impact on the manufacturing industry are the major issue being discussed within the circle of economy experts.

Despite the sector’s been acknowledged as one of the key economy development factors that has the capacity to influence Ghana’s economy, low level of agricultural outputs in the economy are being traced to high cost of agricultural inputs, inability to invest in mechanized and irrigation farming, coupled with little or no incentives to motivate farmers.

Arguably rated as the highest contributor of Gross Domestic Product (GDP) in Ghana, however, its contribution to GDP’s growth has dropped from 40% to 22% and its workforce has reduced from 60% to 50%.

Gross Domestic Product at 2006 Constant Prices: (Millions of Ghana Cedi)


Source: Bank of Ghana

Relating to the falling percent of its contribution to GDP and employment, President John Mahama’s 2014 nation address revealed that Ghana spent total of $1.5 billion on importation of consumable products in 2013 while sum of $1.3 billion was lost in export revenues as a result of the decline in cocoa and gold prices within the same period.

Agricultural Empowerment: More Exports, More Jobs

Prior to the fall in oil prices, unstable cocoa and gold international prices down sliding, and to strengthen dollar currency’s liquidity in the system, the needs for Ghana to refocus its interest into agricultural sector is highly recommended by financial and economy experts.

In Senchi’s report, it was also recommended that an inclusive growth that unlocks value addition and promotes diversification will need more radical structural policy interventions that increase mechanization in Agriculture, paving way for more local processing of natural resources into exportable commodities.

Economic experts, Kwesi Livingstone and Alhassan Andani, assured that if more investment policies are implemented to favour the local players, coupled with financial empowerment through coordinated institution, the sector has capability of leading the country’s economy diversification plan that may reduce large sum of foreign currencies that are frequently on demands.

However, the recent Ministry of Trade and Industry’s ambitious plan to recuperate the local sugar industry through implementation of Nation Draft Sugar Policy indicated a welcome development that will eventually boost the Ghana’s low economic input of sugar production and reduce the country’s over-reliance on the importation of this commodity.

During maiden consultative meeting on national draft sugar with the stakeholders, Ambassador Spio-Garbrah, Minister of Trade and Industry, revealed that despite the favourable climatic and soil precondition for sugarcane production Ghana is endowed with, the country spends approximately $400m on importation of sugar annually.

Within similar initiative, first month of second quarter of this year, Ghana’s government partnered with International Fund for Agricultural Development (IFAD) signed a US$36.6 million loan and $10 million grant agreement to finance Ghana Agricultural Sector Investment Programme (GASIP). But how well could this programme meet large scale of surging domestic demands that have resorted to imported commodities draining the cedi value?

However, the aggressive approach of both Ministry of Trade & Industry (through implementation of National Sugar Policy) and Ministry of Food & Agriculture (GASIP) should be viewed as a general declaration by the Ghanaian government’s intentions to enhance the sugar industry and small scale agricultural sector’s commercial value and expand the exportation capacities while increasing its domestic production, within and outside Africa.

If these approaches are well implemented strategically, it would accelerate growth in the agricultural sector, (towards its contribution on reduction in the export deficit) absorbs larger percentage of the unemployment in Ghana, and further improve the budget deficit in Ghana.

However, the implementation of proposed aggressive approach is subject to be altered if the policy does not represent a firmly established relationship with the stakeholders.

Furthermore, the sheer proportion of investors’ interest, from within and outside the country, may not bring forth this intention if local bureaucratic and export-related obstacles, during the process of implementing the policy, are not properly addressed.

If these obstacles can be overcome, it would initiate significant increase in agricultural production, income growth, and enhanced integration, from domestic, into international markets (apart retaining the large sum of dollar currency back to the economy system) through local manufacturing of goods for exportation, and appreciate the falling value of cedi and reduce export deficit.

This raises the need to refocus declining fortunes of the agricultural sector by investing more in the sector and earning more foreign currencies from the sector.

When these approaches become the driving force to critical survival and development of Ghana’s economy, food security, employment, cedi stability and foreign exchange are sustained.