Investment Opportunities in Ghana’s Agriculture Sector

Macroeconomic Outlook

With a 2013 GDP of US$47.93 billion, Ghana is West Africa’s second-largest economy. Ghana’s GDP has experienced sustained growth of 5 to 8% per year over the past decade. While growth slowed in 2009 due to a slowdown in activity in the services sector, the economy quickly stabilized and it is expected to maintain robust growth in the near future, driven in large part by the expansion of the oil and gas sector. In addition, Ghana’s strong, stable democratic tradition, rule of law, and investor protections are unmatched in the sub-region. The World Bank’s “Doing Business” index ranks Ghana the best performer in West Africa by a significant margin.

Ease of doing agribusiness

Ghana performs quite well on the USAID’s Agriculture Climate Legal and Institutional Framework (AgCLIR), scoring positively on six of 10 indicators, and strongest on “protecting investors.”

Proximity to European export markets

Situated on West Africa’s coast, Ghana offers agribusinesses easy access to export markets in Europe at a lower cost than elsewhere in Africa. With an international airport in Accra and two major ports in Tema and Takoradi, goods can be shipped to Europe at significantly lower cost than other sub-Saharan African countries.

Transferability of Capital, Profits and Dividends

Subject to the Foreign Exchange Act, 2006 (Act 723) and the regulations and Notices issued under the Foreign Exchange Act, an enterprise shall, through an authorized dealer bank be guaranteed unconditional transferability in freely convertible currency of dividends or net profits attributable to the investment made in the enterprise.

Double Taxation Agreements

Ghana also uses Double Taxation Agreements (DTA) to rationalize tax obligations of investors who come from global tax sourced jurisdictions with a view to saving the investors the incidence of double taxation.

 

Investment incentives for agribusiness

The Ghana Investment Promotion Centre offers a range of incentives for agribusiness investors establishing production and/or processing enterprises in the country. These include:

  • A five-year tax holiday for agro-processing businesses, from the date of commencement of business
  • Custom duty exemptions for agricultural and industrial machinery and equipment imported for investment purposes
  • Location-based tax rebates for manufacturing industries located in regional capitals

Other Attractiveness

Ghana has fairly good and ever improving infrastructure, peaceful and harmonious environment with high degree of personal safety and the people are warm and friendly.

The agriculture sector in Ghana used to be the largest contributor of Gross Domestic Product (GDP) until 2005. Currently, it comes third after services and industry contributing 22% of GDP (2013). The sector is currently growing at 5.2% after a low of 0.8% and 1.3% in 2011 and 2012 respectively. The current growth has been achieved in all sub-sectors.

The Government through the Ministry of Food and Agriculture is implementing a number of projects and programmes to facilitate agriculture and agribusiness in the country. The Ghana Commercial Agriculture Project (GCAP) offers public private partnerships for provision of infrastructure in the SADA and Accra plains. The GCAP is also developing a land bank and model lease agreements to facilitate acquisition of land by investors. The Export Marketing and Quality Assurance Project (EMQAP) have constructed a pack house in the Volta region to boost horticulture exports.

Specific Investment Opportunities in the Agriculture Sector

Value chain Investment Opportunity Investment Highlights and Strategic Investment Options Estimated Minimum Capital Requirements Time frame
    1. Pineapple
Production of pineapple under irrigation for processing and fresh fruit market  Pineapple1The pineapple market in Europe is valued at 1 billion euros (2012) and Ghana’s export amounted to euro 11.2m (2012). There is room for increased supply of pineapple to the EU market.There is investment opportunity for commercial production of pineapple on 50,000 hectares under irrigation in the Bole-Bamboi District of Ghana. Feasibility studies completed indicate suitability of plots and location for commercial production of seven other crops.Investors may build and operate facility and grow pineapples themselves or partner State organisation to develop the facility for rental by pineapple growers.Pineapple2

There are however many other locations that are suitable for cultivation of pineapple under irrigation on much smaller scale which require smaller investment capital US$ 341m

US$ 100,000Short-Medium term Production of pineapple juice concentrate for local and export markets Commercial scale production of pineapple juice concentrate for export and local markets. Existing juice companies import pineapple juice concentrate for further processing for the local market and the West African sub-region.Strategic options include establishing plant within 50,000 hectare pineapple farm or centrally locating within free zone enclave and operating mobile juice processing trucks in pineapple producing zones to obtain single strength juice for production of concentrate US$2mShort term Production of dried pineapple fruits for export Drying facilities required for the production of dried fruits (pineapple, papaya, mango) for export to European Union and the United States of America.Strategic options include setting up new factories or upgrading operations of existing small scale processors through introduction of forced drying techniques and equipment, provision of convenience packaging for export market as a service and or supply of convenience packaging equipment.Fruit supply can be guaranteed through supply contracts with small scale farmers.US$100,000Short term

    2. Fresh Produce Handling

Establishment of commercial packhouses for handling of fruits and vegetablesFresh Produce Handling1Privately operated commercial packhouses are needed in farming areas as well as in marketing centres across the country.Fresh Produce Handling2 This would minimise post harvest losses which is in the region of 30% to 60 % depending on the produce.US$100,000 – US$2mShort-Medium term Investment in commercial operations of cool trucks and special utility trucks for transporting fresh fruits and vegetablesFresh Produce Handling3Private operations of fleet of cool trucks needed to maintain the freshness and quality of fresh produce as well as ensure food safety.Strategically, cool trucks could be linked with packhouses in the production areas and the city centres.US$100,000 – US$2mShort term Investment in supply, operations and management of plastic crates Plastic packaging crates are needed to ensure appropriate handling of fresh produce. This needs to be nationally operated by private investors commercially. It entails the supply, cleaning and replacement of plastic crates. Investors need to operate from multi-locations across the country US$2mMedium

    3. Tomato

Investment in commercial seed multiplication About 321,000 mt (2012) of tomatoes are cultivated annually valued at US$ 118m, whilst 75,000 mt is imported annually to augment the shortfall. Additionally, 92,120 tonnes of tomato paste valued at US$ 78m is imported annually. In 2013, tomato products imported amounted to US$112.1 million.There is the need for continous supply of thick flesh tomato hybrid seeds to the farming community. Large quantities of hybrid tomato seeds currently imported but aclimatisation is usually a challenge.Need to establish private seed breeding and seed Tomatomultiplication centres in different ecological zones of the country and develop suitable seeds for thick flesh tomato for the different ecological zones.US$200,000Medium term Establishment of tomato fruit terminals for fresh tomato packaging for the local market Fruit terminal to be established in southern, middle and norhtern parts of Ghana within the tomato growing zones for packaging of grade A tomatoes into consumer packs for the fresh produce market and passing on other grades to tomato processing plants for processing into tomato paste and tomato puree.Strategic options include partnering tomato associations who then offtake consumer packed tomatoes for sale. Also memorandum of understanding could be established with the three tomato processing facilities, each located within the three different tomato growing zones, to offtake grades other than grade A for processing.US$500,000 – US$2mShort term Cool chain Management in the tomato supply chain Cool chain Management in the tomato supply chainInvestment in and management of fleet of cool trucks which would convey consumer packaged tomatoes from fruit terminals in production areas to fruit terminals located at the market centres in the major cities.Strategic option is to coopt the existing tomato transporters who currently use open trucks, to obtain cool trucks under lease arrangements. Another option is to have contractual arrangements with the tomato fruit terminals to lift all their produce.US$100,000 – US$2mShort –medium term Drying facilities for dried tomato processing for export to EuropeThe European Union has unmet demand for dried tomatoes.Investment is needed in both equipment and technology as well as appropriate packaging material.US$ 100,000 – US $ 200,000Short term

    4. Maize

Building and operation of maize warehouses with drying and cleaning facilities Ghana has a total of 1.3million t of warehousing capacity however only 8.4% is used for storing agricultural commodities (excluding cocoa) and only 1.5% of the total capacity, less than 50,000mt, is located in surplus producing rural areas.Warehouses need to be constructed in major maize production zones for puchase of maize from small scale farmers which then needs to be dried, cleaned and stored. Other warehouses need to be constructed in major cities from where maize would be wholesaled. A strategic option is to work with organised farmers who are assisted with production inputs to guaranttee supply of maize.US $200,000 –US$ 6mShort-medium term Commercial scale production of maize under irrigation Climatic and edaphic conditions are very suitable for maize cultivation during the rainy season in many parts of Ghana. However yields under rainfed cultivation are low. Irrigating maize will result in higher yield, increased productivity and lower prices of maize.MaizeMaize is a major component of poultry feed and is consequently demanded in high quantities by poultry feed manufacturers.Strategic options include construction of new irrigation systems for maize production as well as cultivation on existing irrigation schemes.US$100,000 – US$2mShort term

    5. Soyabean

Mechanised   production of soya bean on commercial scale under irrigation Demand for soyabean and its derivatives (soyabean oil and soyabean cake) are very high. Soyabean is imported for extraction of oil for local and export markets. The resulting soyabean cake is processed for poultry feed however demand for soyabean cake far outstrips supply hence large quantities of soyabean meal is imported for poultry feed.The quantity of soybean grown locally is low 85,200 tonnes (2012) and yields are very low about 1 ton per hectare. Improved technology of production is needed. Mechanised production of soyabean on commercial scale under irrigation, will improve yields to about 6 tons per hectare, increasing yield, productivity and profitability.Strategic options include signing supply contracts with processors to ensure sales. Also turn key investment from farming of soyabean through oil extraction and production of soyabean meal for poultry is still an interesting investment option.US$100,000 – US$2mShort-medium

    6. Tilapia

Establishment of Tilapia farms using cage culture techniques Total consumption of fish is estimated at 840,000 metric tonnes (2007), however the national production of fish stood at 400,000 metric tonnes (2007) out of which aquaculture contributed 10,000 metric tonnes. Fish imports in 2012 amounted to 175, 000 mt and a total of about 46,000mt was exported.Consequently, a large percentage of fish consumed in Ghana is imported. However, there are many water bodies in Ghana with 8,520 square km of water surface area suitable for tilapia cultivation using the cage culture technique. Local demand for tilapia exceeds supply hence tilapia is stilll imported to augment the shortfall.US$100,000 – US$2mShort term Establishment of factories for the manufacture of feed for tilapia fish There is a high and increasing demand for tilapia feed. Currently most of the feed is imported and there is the need to manufacture feed locally.Strategic options include signing supply contracts with major fish farmers to ensure sales.US$ 100,0000 – US$ 200,000Short term Establishment of cold storage facilities and operation of cold trucks for distribution of tilapia. There is the need to establish cold storage facilities in the major fish farming areas especially along the Volta river to hold fish, prior to transportation. Commercially operated cold trucks are lacking and this is a necessary investment for the industry.Also, there is room for establishment of cold stores in the major cities for wholesale and retail of tilapia. US$100,000 – US$2mShort term

    7. Poultry

Establishment of hatcheries for the production of day old chicks. The poultry industry in Ghana is characterised largely by imports of poultry meat. In 2013, imports of poultry products amounted to US$169.2 million. Local participation is mainly in the layer sub-sector producing eggs for the table. All the day old chicks are however imported. There is also some importation of fertilised eggs for hatching locally.PoultryThere is need to establish farms to produce fertilised eggs for hatching. There is also need to establish hatcheries to produce both layer and broiler day old chicks.US $200,000 –US$ 6mmedium –long term Establishment of factories for the local production of vaccines and feed additives Vaccines and feed additives for the poultry industry are currently imported. With increasing production of poultry, the demand for these would increase further.US$100,000 – US$2mShort-medium term Establishment of processing outfits for processing for the local and export markets Local processing of chicken into parts is minimal. All the parts of chicken are imported into the country in high volumes. There also exists demand for whole chicken and chicken parts in the West-African sub-region.There is an existing labour force already engaged in poultry which when provided with improved technology and feed management would be capable of raising broilers for processing competitively.A strategic approach is to partner recently built privately operated abbatoirs with existing market linkages and add chicken processing as an additional line. Also importers and wholesalers of chicken and chicken parts could be brought on board to utilise their distribution networks.Alternatively an independent direct   investment in a chicken processing and distribution facility could be made.US$221,000 – US$2mShort –medium term

    8. Ruminants

Intensive ruminant production (cattle, sheep and goat)RuminantsImport of beef amounted to 16,703MT in 2012 whilst mutton amounted to 2,574.8MT to augment local production.The predorminant method of raising ruminants in Ghana is by keeping small herds in kraals and backyard gardens and feeding is mostly by free range. Production of ruminants is not integrated with processing and marketing. There is the need for the introduction of improved technology of production(breeds, housing and feeding management) to improve productivity.US$50,000-US$100,000Medium-long term Establishment of large scale processing outfits and efficient meat distribution system Processing meat into special cuts and value added meat (minced meat, sausages, smoked meat, etc) and appropriate packaging and storage for the local and West African sub-regional markets.Need for cold vehichles of all sizes and specialised display trucks for meat merchandise in distributing meat.US$2million-US$6millionmedium –long term

    9. Production in protected environments

Vegetable production in protected environments for export and local market presently, some fresh vegetables are imported to service the supermarkets and the oil drilling industry. In 2013 Ghana spent US$14.8million on onions, garlic, tomatoes and potatoes.Vegetable production in protected environments for export and local marketCultivation of vegetables in protected environments would provide produce that meets the quality and safety requirements of this elite market in Ghana as well as the requirements of the export market.US$50,000-US$200,000Short term

    10. Rice

Large scale commercial production Ghana continues to import rice annually. In 2013, rice imports amounted to US$374million in addition to an annual production of about 300,000 metric tonnes. Locally,   rice is mostly produced by small scale farmers. Large scale commercial rice production under irrigation is key to increasing yield, productivity and quantities produced to satisfy local demand competitively.Strategically, existing   under-utilised irrigation schemes can be re-habilitated for commercial rice cultivation. Feasibility studies have been conducted on the use of these irrigation schemes and what needs to be done as well as the suitability of the soils and climate.US$6 million-US$12millionShort-medium term Warehouses for storage of rice Construction and operation of warehouses in the major rice producing areas and the major cities is needed to facilitate storage, processing and distribution of rice.Opportunity exists for Public private partnerships in provision of warehouses under the Government implemented Ghana Commercial Agriculture project (GCAP)US$200,000-US$ 6 million Short term.

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