Agriculture; Food Production and Processing in Ghana

                      

The food and agricultural industry plays a major role in Ghana’s economy. From 1990 to 2000, the agricultural sector contributed an average of 43.3% to gross domestic product and 13.2% of national tax revenue. In 2000 alone, it recorded total foreign exchange earnings of $2.8 billion and employed 54.7% of the workforce.

Major food crops in Ghana generally consist of cereals and starchy foods. Cereals include maize, rice, millet, guinea corn and soghum, while starchy crops include cassava, yam, cocoyam (taro) and plantain. This profile focuses on maize, rice, cassava, yams and plantains. Farming is predominantly on a smallholder basis in Ghana, although some large farms and plantations produce rice and maize.

 There is also food processing on a semi-large scale, including flour (made from cassava, rice and maize); dried cassava and gari; and valueadded products such as Cerelac® prepared by Nestle.

PRODUCTION.

Ghana’s total production of maize, rice, cassava, yams and plantains grew an average of 16.1% annually during the 1990s. Total area cultivated in hectares (ha) showed positive annual growth of 7.6%, while yield in MT/ha for food crops averaged 5.1% throughout the decade. Despite the growth in production, demand continues to outweigh supply for many commodities. Consequently, imports make up the balance of domestic consumption for crops like rice and maize.

PROCESSING.

Most of Ghana’s food processing occurs on a small-scale. Crops that are processed on a medium or large scale include maize and cassava. Maize is mainly processed into flour, while cassava is processed into flour, dried cassava, and starch. Currently, Nestle (Gh) Ltd. processes maize into Cerelac® and Cerevita®. Other major processing companies include ELSA Foods, GRACEM Foods, Mannas Tropical Export, and Kwanoye Ghana Co. Ltd.

The government is mostly interested to welcome other companies that have the capacity to engage in food production and processing. It is very important that there is a need for a research in the various food crops that are produced by small and large scale farmers. We are of the opinion that, there is more to be done to add more value to the current food processing. When that is achieved, it is the government wish, that some of the crops produced inGhanacan attract foreign consumers.

TRENDS.

Among other factors, increases in production and yield are attributed to favourable climatic conditions and improved farming practices. A number of technologies developed by Ghana’s research institutes have also contributed to productivity, including:
• Improved varieties of cassava, maize, and rice, which have boosted yield, production volumes, and exports (Crop Research Institute);
• New technologies such as slicing, drying and fermentation equipment, which are now utilized by processors (Food Research Institute and Institute of Industrial Research).
Productivity increases come at a time when global demand for many of Ghana’s primary crops and their derivative products is high. The following table shows total imports of several processed commodities in the European, West African (excluding Ghana), and US markets, indicating export pportunities for these items.

OPPORTUNITIES.

Opportunities currently exist in the following areas of Ghana’s food industry:
PRODUCTION. Maize, rice, plantain, cassava, yam and other non-traditional foods including cocoyam.
PROCESSING. Maize oil, maize flour, rice flour, fragrance rice, ground rice, dried cassava, cassava starch, cassava flour, cassava tapioca and finished food products such as macaroni, pasta, noodles and maize powder meals.

TECHNOLOGY AND SERVICES

Irrigation; Heavy equipment hiring such as tractors, ploughs, harrows and combine harvesters; Production of inputs such as fertilisers, pesticides, and fungicides Manufacturing and supply of machinery and spares; Distribution and storage.

ADVANTAGES.

Ghana presents investors in the food sector with a number of advantages.

GEOGRAPHY.

Ghana presently has over 8.3 million hectares (61.1%) of uncultivated arable land which is available and conducive to food production and processing. The climatic and soil conditions throughout the country present an excellent environment for crop production. In addition, an abundant water supply facilitates irrigation development.

HUMAN RESOURCES.

With over 50% of the working population employed in agriculture, Ghana offers a large human resource base of both skilled and unskilled workers. From University-trained agricultural engineers and irrigation specialists to experienced farm managers and field hands, Ghana’s agricultural workers easily adapt to the introduction of sophisticated production systems and new technologies.
Other advantages include:
• A well-developed infrastructure, electricity and water supplies, internal and external communications, and sea and airport facilities;
• A strategic location within the West African sub-region and preferential access to neighbouring ECOWAS markets (with a total populace of 250 million);
• Well-established democratic institutions and a free market economy;
• Low labour rates, with current minimum wages of $1.00 -$1.50 per day;

INVESTMENT ENVIRONMENT.

Ghana enjoys a liberal investment environment and has a noted reputation for friendliness and transparency. Investing in Ghana offers a number of special benefits, including 100% ownership in local companies and joint start-ups. The minimum required equity for foreign investment in a joint-venture is US$10,000; the corresponding amount for enterprises wholly-owned by a non-Ghanaian is US$ 50,000. Foreign investors are also permitted to lease land for a period of up to 50 years with an option for renewal.

INCENTIVES.

The operative law regulating general investment in the country is the Ghana Investment Promotion Centre Act 1994 (Act 478), which makes provision for the automatic award of investment incentives and benefits without prior approval. Incentives include:
• Exemption from customs import duties on plant and machinery, equipment and accessories imported exclusively and especially for establishing enterprises;
• Depreciation or capital allowance of 50% in the year of investment and 25% in subsequent years for plant and machinery, respectively, and 20% in the first year and 10% in subsequent years for building;
• Corporate tax rebates of 40% – 75%;
• Investment allowance of 7.5% per annum;
• Full repatriation of earnings in the currency of investment.
Additional incentives have been packaged into the Free Zone Act of 1995 for parties interested in developing and operating Export Processing Zones (EPZs). These incentives include:
• Complete exemption from payment of direct/indirect duties and levies on all imports for production purposes and exports from the Free Zones;
• Complete exemption from payment of income tax on profits for a period of 10 years (the income tax rate after 10 years shall not exceed 8%);
• Complete exemption from payment of dividend taxes arising out of Free Zone investments;
• No import licensing requirements;
• No conditions or restrictions on the repatriation of dividends or net.

Attention to our dear investors:

We can assure reputable investors who are interested in food processing businesses that, there are more areas in the industry that one can explore in Ghana for export purposes. Investors are however requested to contact GIDC secretariat at all times for more information about how to secure the requisite assurance before deciding to invest in any business sector in Ghana.

You can write to the Secretary of: Ghana International Development Consortium (GIDC). Morse Strasse 5, 40215 Düsseldorf, Germany. Telephone: 0049-211-3849790. Fax: 0049-211-3885769 – or send an email: info@gidconsult.orgfor further assistance.