The agricultural and agro-processing sector of an economy involves everything related to farming and turning farm products into things we can eat or use.
Agricultural Sector: This part focuses on growing crops (like wheat, corn, and vegetables) and raising animals (like cows, chickens, and pigs). It includes activities like planting seeds, taking care of plants and animals, and harvesting crops.
Agro-Processing Sector: After the farm produces food, this part takes over. It’s like a factory for food. It involves turning crops and animals into products we buy in stores, like bread, milk, or packaged meat. This sector includes things like food processing, packaging, and distribution.
Overview of The Agricultural And Agro-Processing Sector In Ghana
Ghana’s agricultural and agro-processing consists of the following five(5) sub-sectors: crops, cocoa, livestock, forestry & logging, and fishing.
Ghana produces a variety of agricultural products in the categories of industrial crops, starchy staples, cereals and legumes, and fruits and vegetables.
Industrial Crops: Oil palm, rubber, coffee, cashew, shea, cotton,
Starchy Staples: Cassava, Yam, Plantain, cocoyam,
Cereals and Legumes: Maize, Rice paddy, Millet, Sorghum, legumes (beans, soybeans),
Fruits and Vegetables: Oranges, Pineapples, Groundnuts (peanuts), Coconuts, Banana, tomatoes, pepper, onion
These are some of the key agricultural products in each category that Ghana produces. The country’s diverse agricultural output contributes to its food security and export potential.
Cocoa production in Ghana has a rich history dating back to 1879 when Tetteh Quashie introduced Amelonada cocoa beans from Fernando Po (now Equatorial Guinea).
Ghana’s favourable climate conditions, characterised by ample rainfall, sunshine, humidity, and suitable temperatures, have established it as a prime cocoa-growing region. In 2020, Ghana ranked as the world’s second-largest cocoa producer, trailing only Cote d’Ivoire.
The Ghana Cocoa Board (COCOBOD), a government-owned entity, is pivotal in regulating and supervising the cocoa sub-sector. COCOBOD serves as the authority responsible for setting cocoa prices and marketing cocoa beans in Ghana, with its subsidiary companies, the Cocoa Marketing Company and Cocoa Processing Company, handling various aspects of the cocoa industry.
Ghana’s livestock sub-sector encompasses poultry, cattle, sheep, goats, and pigs. Poultry, particularly chicken, is the dominant component of this sector. Despite growing local chicken production, Ghana imported 212,000 tonnes of chicken in 2020, surpassing domestic output. This significant reliance on international markets offers a promising opportunity for local production to meet the country’s chicken meat demand.
In addition to chicken, Ghana imports cattle offal, beef, and veal to supplement local production, addressing the broader meat needs. This presents an avenue for expanding and enhancing the local livestock industry.
The growth potential in the livestock sub-sector aligns with the government’s objectives of improving food security and reducing reliance on imported meat. By bolstering local livestock production, Ghana aims to strengthen its food supply chain and decrease dependence on foreign meat products.
This scenario creates favourable prospects for both local and foreign investors looking to participate in Ghana’s livestock sub-sector, as it offers the potential for sustainable growth and self-sufficiency in meat production.
Forestry and Logging
Ghana’s forestry and logging sub-sector is characterized by its substantial forested land, comprising around 8 million hectares, with a significant portion being primary, naturally regenerating forests.
The export of timber billets from Ghana has experienced notable growth, with a 4.7% increase from 2019 to 2020 and a remarkable 40% growth recorded as of September 2021, primarily due to international buyers building up stock before the Christmas and New Year holidays.
This increased export quantity has translated into higher foreign exchange earnings for the country, with export revenue climbing from US$7.5 million in 2019 to US$13.4 million in September 2021.
The fishing sub-sector in Ghana is a vital component of the country’s agriculture and agro-processing industry, encompassing marine, inland, and aquaculture activities. Marine fishing constitutes a substantial share, accounting for approximately 80% of the total fish production between 2014 and 2018. However, despite its significance, the sector experienced a 12% reduction in production in 2018 due to uncontrolled artisanal beach seining and juvenile harvesting from lagoons.
To compensate for this decline and ensure food security, substantial investments have been directed toward aquaculture, which demonstrated impressive growth in 2018, increasing from 60,000 metric tonnes to 76,620 tonnes. This diverse fishing landscape offers intriguing opportunities for investors and plays a crucial role in meeting Ghana’s protein needs, with fish representing around 60% of the nation’s protein requirements.
Why Invest in Ghana’s Agricultural and Agro-Processing Sector
Investing in Ghana’s agriculture sector offers several compelling reasons. Here’s an expansion on why you should consider investing:
1. Stability and Growth Potential
Ghana is known for its political stability and business-friendly environment. The country has a history of peaceful transitions of power, a robust legal framework for investment protection, and adherence to international trade agreements. These factors provide a stable foundation for agricultural investments.
2. Rich Agricultural Resources
Ghana boasts a diverse range of agroecological zones, making it suitable for various agricultural activities, from crop cultivation to livestock farming. The country’s fertile soils and favourable climate provide essential resources for successful agricultural endeavours.
3. Growing Domestic and Export Markets
With a rising middle-class population, there is an increasing demand for high-quality agricultural products, including fruits, vegetables, and staple crops. Additionally, Ghana has the potential to export agricultural goods to international markets. The export of products like cocoa, oil, pineapple, and tomatoes showcases the country’s ability to tap into global markets.
4. Government Support and Initiatives
The Ghanaian government has indeed implemented various policies and established institutions to support and promote the agricultural sector. Some examples include:
- Planting for Food and Jobs (PFJ): This flagship government program provides subsidized fertilizers and improved seeds to smallholder farmers, making essential inputs more affordable and accessible.
- One District, One Factory (1D1F): This initiative aims to establish at least one factory in each district, including agro-processing facilities, to promote value addition to agricultural products and create employment.
- National Food and Agricultural Export Development (NAFED): NAFED is tasked with promoting and facilitating the export of agricultural products, and helping farmers access international markets.
- Agricultural Mechanization Centers (AMSEC): The government supports the establishment of AMSECs to provide farm machinery services to smallholder farmers, reducing the drudgery of manual labour.
- Ghana Free Zones Authority: Although not directly agricultural, the Ghana Free Zones Authority offers incentives for businesses, including agro-processing companies, to operate within designated free zones, enjoying tax exemptions and other benefits.
- National Buffer Stock Company (NAFCO): NAFCO is responsible for purchasing and storing surplus food crops, ensuring price stabilization and food security for the nation.
- Export Development and Investment Fund (EDIF): EDIF provides financial support and incentives to businesses, including agro-processors, to enhance export activities.
- Ghana Irrigation Development Authority (GIDA): GIDA focuses on the development and management of irrigation schemes, improving water supply for agriculture.
- Tax Incentives: The government has implemented various tax incentives, including tax holidays and duty exemptions, to encourage investment in the agricultural sector.
These policies and institutions collectively create a conducive environment for agricultural investments, supporting both smallholder farmers and agribusiness ventures in Ghana.
5. Diverse Investment Opportunities
The agriculture sector in Ghana offers a wide range of investment opportunities. These include crop farming (maize, rice, cocoa, etc.), livestock farming, agro-processing, and export-oriented ventures. Investors can diversify their portfolios and choose the area that aligns with their expertise and interests.
6. Potential for Sustainable and Ethical Agriculture
Ghana is making efforts to promote sustainable and ethical agricultural practices. This includes initiatives to improve land management, promote organic farming, and ensure responsible sourcing. Such practices align with global trends, attracting investors committed to environmental and social responsibility.
How To Start an Agricultural or Agro-Processing Business in Ghana
Step 1: Identify Sub-sector
Before delving into investment, it’s crucial to pinpoint the specific sub-sector, be it crops, cocoa, livestock, forestry and logging, or fishing, that aligns with your interests and goals.
Moreover, conducting thorough research on the particular seed or animal breed, such as maize, pineapple, goats, or sheep, or delving into cocoa or tomato processing, is imperative to grasp the intricacies and challenges of each niche.
Equally important is analyzing the regions within Ghana (e.g., Ashanti, Ahafo, etc) to identify the optimal location that not only suits your agricultural business but also aligns with the climatic conditions and market demand. This strategic approach lays the foundation for a well-informed and potentially successful foray into Ghana’s vibrant agricultural and agro-processing sector.
Step 2: Funding and Financing
To kickstart your agricultural venture in Ghana, securing financing is crucial. You can fund your business through personal savings, loans, grants, or investments from individuals and organizations. It’s essential to thoroughly explore the diverse financing options tailored for agricultural businesses within the country.
Step 3: Register Your Business
Select an appropriate business structure, such as a sole proprietorship, partnership, limited liability company, or cooperative, and proceed to register your business with the relevant authorities, ensuring you obtain the essential permits and licenses.
Our How to Register a Business in Ghana post will be a helpful guide for you.
Step 4: Land Acquisition and Farm Setup (for farming)
For farming ventures in Ghana, the initial steps involve securing suitable land, with guidance from the country’s lands commission and local authorities on the acquisition process. Once the land is secured, it is crucial to prepare it for cultivation, a process that includes soil testing and the establishment of necessary infrastructure.
Step 5: Step 5: Seed and Livestock Selection (for farming)
When engaging in farming, it is essential to select high-quality seeds or livestock breeds tailored to the specific needs of the local environment and market demand. For example, a maize farmer in the Ashanti region of Ghana might opt for locally adapted maize varieties like Obatanpa or Opeaburoo for better yields. Similarly, a poultry farmer may choose the local Fulani or Sasso chicken breeds, which are well-suited to Ghana’s climate and consumer preferences. Such thoughtful selection is key to ensuring a successful agricultural venture.
Step 6: Equipment and Infrastructure
To ensure the smooth operation of your agricultural or agro-processing venture in Ghana, it is imperative to acquire essential equipment and infrastructure. This encompasses a range of vital resources such as tractors, processing machinery, storage facilities, and reliable transportation. These key assets are pivotal in optimizing production efficiency, ensuring timely processing, and maintaining the quality of your agricultural products.
Step 7: Agronomic Practices (for farming)
In the realm of agronomic practices for farming, it’s crucial to implement best practices, such as precision planting methods for crops, effective cultivation techniques like crop rotation and proper land preparation, and sound animal husbandry practices such as balanced nutrition and disease prevention. These practices help optimize yields, enhance product quality, and ensure the well-being of livestock, contributing to the overall success and sustainability of your agricultural venture.
Step 8: Agro-Processing Facilities (for agro-processing)
For agro-processing ventures, it is essential to establish processing facilities that adhere to stringent quality and hygiene standards. This involves the creation of state-of-the-art facilities equipped with modern machinery and technologies, such as food processing and packaging equipment, cold storage units, and quality control laboratories.
Furthermore, strict adherence to sanitation protocols, employee training, and quality assurance measures should be a priority to produce safe and high-quality agricultural products for the market.
Step 9: Supply Chain and Distribution
It is pivotal to establish robust networks ensuring a steady flow of inputs and efficient product distribution. For instance, forging partnerships with local farmers or agricultural cooperatives can secure a consistent supply of raw materials, while collaborating with reputable logistics companies or establishing your own transportation fleet can guarantee timely and reliable delivery of your products to retailers or end consumers.
Additionally, leveraging technology-driven solutions like inventory management systems or e-commerce platforms can streamline the distribution process, facilitating seamless transactions and customer satisfaction.
Step 10: Quality Control and Standards
Quality Control and Standards are paramount in the agricultural and agro-processing business in Ghana. It is imperative to guarantee that your products adhere to both local and international quality benchmarks, a prerequisite for exporting agricultural goods. For instance, in the case of cocoa production, meeting the quality standards outlined by the Ghana Cocoa Board (COCOBOD) is essential for international market access.
Similarly, ensuring that processed food products comply with Ghana Standards Authority (GSA), Food & Drugs Authority (FDA) regulations and international food safety standards is crucial for agro-processing businesses looking to export their products.
Step 11: Marketing and Sales
In order to succeed in your agricultural or agro-processing venture in Ghana, it’s crucial to develop a robust marketing and sales strategy. This strategy should encompass local and international markets, where applicable.
For instance, if you’re producing a unique Ghanaian crop, like cocoa or shea butter, consider targeting international markets to tap into the growing demand for these products. On a local level, engage with local communities, participate in agricultural fairs and exhibitions, and build partnerships with local retailers and distributors to expand your reach and make your products more accessible to consumers.
Step 12: Training and Workforce
You may have to recruit or provide training for employees who possess the essential skills and knowledge for your specific operations. This may involve training agricultural workers in sustainable farming practices, animal husbandry, or precision agriculture techniques.
For agro-processing businesses, employees should be trained in food safety, quality control, and the operation of processing equipment. Hiring and empowering a capable workforce is fundamental to achieving efficiency and product quality in your agricultural or agro-processing enterprise.
Step 13: Environmental and Regulatory Compliance
Ensure that your agricultural or agro-processing business adheres to Ghana’s environmental laws and sustainability practices. This includes responsibly managing waste and resources, preventing soil erosion, and practising water conservation. Additionally, compliance involves abiding by relevant regulations regarding pesticide use, land use, and waste disposal to minimize the environmental impact of your operations.
Step 14: Risk Management
Employ strategies to mitigate risks stemming from diverse sources, such as adverse weather conditions, crop diseases, and market volatility. For instance, diversify your crop selection to reduce susceptibility to specific weather patterns or pests. Invest in insurance coverage to offset potential losses caused by weather-related events.
Moreover, maintain a close eye on market trends and adjust your production and pricing accordingly to navigate fluctuations in demand and pricing. By taking these measures, you can fortify your business against unexpected challenges.
Step 15: Explore Government Support
The Ghanaian government offers various initiatives, grants, and subsidies to support businesses in these sectors. For instance, the Free Zones Act (1995) provides substantial incentives, including 100% exemptions from duties and levies on imports for production and export, as well as a 10-year income tax exemption on profits not exceeding 8% thereafter for businesses operating in free zone enclaves and single-factory free zones.
Organizations like the Ministry of Food and Agriculture and the National Board for Small-Scale Industries (NBSSI) can connect you with these valuable resources and help you navigate the regulatory landscape.