National Food Buffer Stock Company (NAFCO)
National Food Buffer Stock Company (NAFCO)
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Background of National Food Buffer Stock Company (NAFCO)

Government, in line with its mandate to accelerate the modernisation of Agriculture and to increase the productivity of the Ghanaian farmer, has introduced a number of interventions to achieve this mandate.

These interventions include:

The introduction of block farms program which has made it possible for mechanisation and extension services to be spread out to cover a large acreage and a large number of farmers.

Increased subsidization of fertilizers and improved seeds.

The injection of more tractors and other farm machinery and equipment at subsidized prices for increased mechanisation

These interventions coupled with investment in irrigation over the last cropping season has led to a larger than anticipated increase in the production of cereals.  To ensure the security of farmers and insulate them against losses resulting from the anticipated increases in production, the Ministry of Food and Agriculture has set up the National Food Buffer Stock Company (NAFCO)

 

Mandate of NAFCO

 

  • To guarantee an assured income to farmers by providing a minimum guaranteed price and ready market.
  • To mop up excess produce from all farmers in order to reduce post harvest losses resulting from spoilage due to poor storage, thereby protecting farm incomes.
  • To purchase , sell, preserve and distribute food stuffs.
  • To employ a buffer stock mechanism to ensure stability in demand and supply.
  • To expand the demand for food grown in Ghana by selling to state institutions such as the military, schools, hospitals, prisons etc.
  • To manage governments emergency food security.
  • To carry out such other activities that are incidental to the attainment of above objects or such other duties as may from time to time be assigned by the Minister of Food and Agriculture.

 

Objectives

 

To Stabilize Food Grain Supply and Price

The creation of NAFCO will ensure the stability of food grain supply and price which is of continuous concern to the government.  According to Yr. 2009 data by SRID, the total domestic production of maize amounted to 1,619,600 MT with a demand of 1,197,000 MT, thus, showing a surplus of 422,600 MT which needs to be stored.  In times past such surplus goes to waste.  NAFCO will mop up the excess food supply and release them to the market at appropriate times to ensure a continuous food supply and therefore stabilization of food prices.

 

To Create Employment

Guaranteed prices and ready market for food items will motivate farmers to increase production and for others to go into farming.  It will also sustain the block farm concept within the Youth in Agriculture Program (YIAP) and result in the creation of more employment avenues for the youth.

 

To ensure Emergency Food Reserve

Since a stabilization policy involves the build-up of food stocks at the time of buying, this stabilization reserve could also be used for emergency relief should the need arise.  The recent earthquake disaster in Haiti has increase awareness for governments to have emergency food reserves to avert food crisis during disasters.  NAFCO food reserves could therefore be used as emergency food relief.

 

To ensure Macro-economic Stability

Season-to-season variations in food grains production do have very unpalatable consequences.  It may result in high food prices which lead to upward pressure on wages with undesirable macro-economic consequence of inflation.  NAFCO will ensure stability of food supply and prices and therefore help to reduce inflationary pressures.

 

To act as a Foreign Exchange Earner

Increased food production resulting from MOFA’s interventions and storage by NAFCO will afford the country the opportunity to export surplus food items when the local food requirement has been met.

 

To Promote the Consumption of Locally Grown Produce

Cereal importation over the last few years has become a source of worry to government, thus, MOFA to initiate moves to increase the level of cereal production locally such as rice, maize and soya.  The role of NAFCO to purchase these cereals from farmers and the request to supply state institutions will boost cereal production locally and consequently its consumption.

 

To Boost Agro-Processing Factories

NAFCO can supply agro-processing factories with raw materials (food items) to ensure consistent supply to help production and also enhance employment in the sector.

 

Target Quantities

NAFCO keeps two kinds of stocks, operational stocks and emergency government stocks.

Operational stocks are the stocks used to run and operate the company, and the emergency government stocks, are stocks held for the government for use in emergency situations.

The target quantities for 2012 are listed below:

Operational Stocks

 

Maize

15,000 mt tons of white maize

15,000 mt tons of yellow maize

 

Rice

15,000 mt tons of paddy rice

 

Soya beans

1,000mt ton of soya

 

Emergency Government Stocks

 

Maize

10,000 mt tons of white maize

 

Rice

10,000 mt tons of milled rice

 

Soya beans

1,000mt ton of soya

 

Price Determination

The Farm gate prices are determined by the post harvest committee.  The main aim of these farm gate prices to protect the Ghanaian farmer by guaranteeing a secured income for them.  They take into consideration the production cost to the farmer plus a 10% profit margin. The current farm gate prices are as follows; Maize(100kg)- Gh¢45 ,  Paddy Rice(85kg) – Gh¢35  and Soya(100kg)- Gh¢75

NAFCO currently has 73 Licensed Buying Companies. Licensed buying companies are mandated by NAFCO to reach out to farmers at the farm gates. Theses LBCs buy the cereals from the farmers on behalf of NAFCO. Most of the farms in Ghana are located in remote areas and it would be difficult for NAFCO to reach them all, which is the reason why NAFCO has employed the services of these LBCs to work on their behalf.  A margin is added to the farm gate prices for the LBCs prices. The committee takes into consideration factors like transportation, sacks, drying, bagging, sewing and handling to come up with this margin. The LBC prices are as follows; Maize(100kg)- Gh¢70  Paddy Rice(85kg)- Gh¢45 and Soya(100kg)- Gh¢85.