Ghana horticulture sector assessment

Horticulture Alerts identify current challenges and urgent action in the Ghanaian horticulture sector, based on surveys and focus group discussions with various stakeholders.
Below, please find the most recent horticulture alert for Ghana with key actions defined. You can also download the complete assessment.

Methodology

Rapid assessments are conducted at the country level in May and June 2020 through survey and focus group discussions (FGDs). In its approach the rapid assessments are inspired by the sector model developed by AidEnvironment. Read more about the methodology on our page 'Rapid assessments: methodology'.

Horticulture assessment - July 2020

Alert 1: Limited resources for operational costs and reduced access to finance hamper the purchase of inputs for the next growing season

The impact

  • Less resources are available for farmers since revenues have declined as a result of the COVID-19 crisis
  • Many outgrower contracts have been cancelled due to the reduction in exports, especially at the start of the crisis
  • Farmers are more likely to experience problems with pre-financing their horticulture production (e.g. purchasing inputs, land preparation, etc)
  • Value chain actors are experiencing difficulties in repaying loans obtained before the onset of the pandemic
  • Lack of short-term funds for aggregators and producers has hindered timely harvesting, this is especially apparent in the fruit sector
  • The inability of exporters to repay on time has led to a reduction in cash flow
  • Limited access to finance particularly affects farmers and other value chain actors who lack buffers against adversity or shocks
  • The cost of credit rises as risks increase, while the amount of credit available decreases. Financial institutions are not keen to provide short-term loans
  • Lack of funds has been a long-standing issue since before the COVID-19 crisis as the vegetable sector is a high-risk sector that has a high rate of default on loan repayment. The current crisis exposed this issue, particularly during the lockdown with restrictions in mobility and social gathering

Actions required

  • Reduce interest rates and increase the moratorium period to make up for the low sales resulting from the COVID-19 crisis
  • Form an apex body of all stakeholders, similar in structure to the Ghana Cocoa Board (COCOBOD), to assist in making funds available for the horticulture sector
  • Make revolving funds available, especially for those that do not have access to the formal financial sector
  • Strengthen the capacity of producers and processors in record keeping to facilitate access to funding. Inaccessibility of funds is due to a lack of collateral, which could be replaced by financial records as proof of performance and knowledge of the horticulture sector
  • Engage financial institutions in a timely manner before production season begins
  • Develop the provision of business advisory services for producers and processors to access support from financial institutions
  • Provide guarantee funds to banks for funding horticultural production; farmers should be able to receive a guarantee for accessing funds from banks
  • Funds should be accessed through the triangle model (producer, buyer and financial institution). This is to reduce the risks associated with it. However, most of the time, farmers breach trust by diverting produce to other buyers
  • Develop cooperatives that comprise actors from different sectors to help the horticulture sector deal with issues of financing; the core should be cropbased associations
  • Institute policies for reduced interest rates targeted at agricultural/ horticultural activities, to attract youth participation and reduce unemployment

Alert 2: Reduced household income threatens livelihoods and weakens resilience to future shocks

The impact

  • The drop in exports of fruits and vegetables, alongside reduced demand in markets such as schools and hotels, resulting from restrictions in mobility, have led to a decrease in income in outgrower households
  • The price of inputs has increased owing to their limited availability, which is driving up production costs despite the fact that the overall market prices remain the same
  • While some opportunities have emerged for new, domestic markets and supermarkets etc., they have been minimal. The vast majority of markets have been facing low sales and reduced incomes
  • Due to restricted mobility and the general drop in economic activity, off-farm incomes have also diminished
  • Farm households have experienced a reduction in their livelihoods and consequently may need to cut expenditure on food, education and health
  • Farm resilience has weakened, which will potentially lead to households becoming more vulnerable to shocks
  • The reduction in income due to the COVID-19 crisis is likely to spill over into the next seasons as well
  • On a positive note, the crisis has also enhanced the adaptability of value chain actors to meet domestic demand

Action required

  • Coordinate market access to ensure farmers’ produce finds a market and generates income. This can be conducted through a structured apex body
  • Schedule production to prevent seasonality, which results in either a glut or scarcity of horticultural products
  • Diversify business enterprises by growing alternative crops and venturing into other value chain activities, such as processing, to generate additional income
  • Enhance the capacity of value chain actors in processing and value addition
  • Encourage producers and buyers to specialize in certain crops
  • Diversify the value chain through alternative packaging, produce mixes, etc.
  • Implement a policy for year-round subsidies on inputs to reduce the cost of production
  • Develop different channels of marketing, such as e-marketing and home delivery (online), creating a niche market
  • Diversify export commodities and destinations

Alert 3: Early implementation of mobility restrictions causes disruptions in markets and input supply

The impact

  • Under restricted mobility conditions, value chain actors have been hindered from marketing their products or purchasing inputs
  • Agro-input shops have had to close during lockdown, leading to input shortages
  • Supply chains have been disrupted and market pull has drastically diminished
  • Farm produce could not be marketed and has been left to waste
  • Income of all value chain actors has been reduced (see also Alert 2)
  • Lower availability of produce for consumers

Action required

  • Set up guarantee funds to assist farmers with the purchase of inputs (input credit scheme/subsidy; see Alert 1).
  • Increase access to markets in the horticulture sector through coordinated action
  • Document lessons learned concerning logistical challenges, mobility restrictions, and Ghana’s response mechanisms to shocks as a country
  • Add horticultural produce to the list of goods and services considered essential during emergencies.

Alert 4: Restrictions on physical meetings impede the mechanisms for sector alignment

The impact

  • Due to restrictions in face-to-face meetings, the functioning of horticulture sector platforms and governing bodies has been severely disrupted. This impedes their ability to identify and initiate an effective response to the crisis
  • The sector, which is already fragmented, has not been able to respond adequately to combat the impact of COVID-19
  • There is a risk that the more vulnerable value chain actors will be left behind; smaller entrepreneurs are not registered with the Ghana Revenue Authority (GRA) and so do not qualify for the COVID-19 alleviation fund
  • The crisis presents an opportunity to (re)develop production and market linkages to shape the industry

Action required

  • Set-up an apex body to help with structured sector coordination and strengthen national crop associations
  • Design strategies for the new normal and for post-COVID-19
  • Set up a project to focus on skills training for sector actors
  • Develop smart subsidies that are properly targeted and well placed
  • The Government of Ghana is to launch a COVID-19 revitalization scheme at a cost of 200 million Ghanaian Cedi (GHS1) to cushion losses incurred

Read the full assessment (PDF)