Ghana - Agricultural sector review

Report No. 5366-GH Ghana Agricultural Sector Review August 6, 1985 Western Africa Region FOR OFFICIAL USE ONLY ;- .: Document cA the World Bank This document has a restricted distribution and may be used by recipients only in the performance of their official duties. Its contents may not otherwise -be disclosed without World Bank authorization. ., ~ ~ ~ ~ ~ ~ ~ ~. -- , , -.-  GHANTA AGRICULTURAL SECTOR REVIEW Currency Equivalents 01.00 = US $0-019 US $1.00 = 053.00 Weights and Measures 1 metric ton 0.98 long ton 1 long ton = 2,240 lb. = 1.016 metric ton I hectare (ha) = 2.47 acres I acre - 0.405 ha I kilometer (km') 0.62 mile I mile = 1.609 km Abbreviations ADPs - Integrated Agricultural Development Projects CDB - Cotton Development Board CRI - Crops Research Institute CRIG - Cocoa Research Institute of Ghana CSIR - Council of Scientific and Industrial Research DRC - Domestic Resource Cost Coefficient ERP - Export Rehabilitation Project FDC - Food Distribution Corporation FASCON - Farmers Services Company GCB - Ghana Cocoa Board GGADP - Ghana/German Agricultural Development Project MOA - Ministry of Agriculture NERP - Net Effective Rate of Protection NNRP - Net Nominal Rate of Protection NORRIP - Northern Region Rural Tntegrated Program SSVD - Swollen Shoot Virus Disease URADEP - Upper Region Agricultural Development Project IVORADEP - Volta Region Agricultural Development Project  FOR OMCIAL USE ONLY GHAA AGRICULTURAL SECTOR REVIEW Table of Contents Page No PREFACE v EXECUTIVE SUMHARY vii CHAPTER I: OVERVIEW 1 Economic Setting 1 Recent Policy Steps 2 The Agricultural Sector 2 Role and Structure 2 Land Use and Ecological Zones 2 Production Techniques and Yields 3 Price and Production Trends 4 Government Objectives and Strategy 8 Comparative Advantage and the Incentive Framework 9 Comparative Advantage 10 Incentives 13 Implications of the Analysis 14 CHAPTER II: ISSUES AND RECOMMENDATIONS 17 Food Policy 17 Self-Sufficiency 17 Role of FDC 19 Producer Price Support Scheme 20 Consumer Price Stabilization 21 Food Security Reserve Stocks 22 Cocoa Policy 22 Production Projections 23 Producer Price 24 Input Prices 30 Other Elements of Cocoa Strategy 30 Industrial Crops 31 Research and Technology 33 Research 33 Irrigation 36 Mechanization 39 This document has a restricted distibuti and may be usd by recipcnts only in the perfomance of their fricial dutes. Its contents may not otherwise be disclosed without Wodd Bank authorizati  - ii - Ministry of Agriculture 40 Decentralization of MOA 40 Input Supply 42 CHAPTER III: CONCLUSIONS, DEVELOPMENT STRATEGY AND AN ACTION PLAN 45 Short-Term Strategy 45 Medium-Term Strategy 47 Institutional Approaches 48 Investment Level and Composition 52 Action Program 53 TABLES IN TEXT Table 1 - Incentives and Comparative Advantage 11 ANNEXES Annex 1 - Traditional and Potential Yields under Prevailing Ecological Conditions in Ghana Annex 2 - Wholesale Prices Annex 3 - Rural Consumer Price Indices Annex 4 - Wholesale Prices Deflated by Nonfood Rural CPI and Rural CPI Annex 5 - Crop Production Annex 6 - Food Production Per Capita Annex 7 - Estimated and Projected Average Cocoa Production Capacity in Ghana, 1973/74 - 1989/90 (ICCO) Annex 8 - Trends in Nominal and Real Cocoa Producer Prices (1970/71 - 1984/85) Annex 9 - Relative Profitability of Cocoa and Other Competing Crops Annex 10 - Implications for Government Revenues of Doubling of Cocoa Producer Price Annex 11 - Implications for Goverrment Revenues of Tripling of Cocoa Producer Price MAPS IBRD 15116R Rainfall and Ecological Zones IBRD 18469 Vegetation Zones IBRD 18470 Geology IBRD 18471 Agricultural Products IBRD 18475 Rlver Basins and Climatic Zones IBRD 18393 Great Soil Groups IBRD 18395 Soil Suitability for Crop Production IBRD 18484 Administrative and Transport Infrastructure  - iii - IBRD 18474 Food Distribution Corporation - Purchasing Centers and Storage Capacities IBRD 18476 High and Low Potential Cocoa Growing Areas IBRD 18473 Irrigation Projects IBRD 18396 Soil Suitability for Mechanized Farming IBRD 18472 Erosion Hazard Background Papers Available on Request Paper 1: Incentives and Comparative Advantage Paper 2: Crop Technology, Research and Potential Paper 3: Overview of the Irrigation Subsector Paper 4: The Institutional Framework for Agricultural Policy in Ghana Paper 5: Marketing and Input Supply Bibliography  - ; i t:se-I -4 X Ae , /~~~  v GHANA AGRICULTURAL SECTOR REVIEW Preface 1. The principal objective of the Agricultural Sector Review was to analyse major issues in the crops subsector, which accounts for about 80% of agricultural GDP, and help formulate a short-to-medium term (3-5 years) strategy and policy framework for the sector, with particular attention to identification of the policy adjustments needed for the Economic Recovery Program (1984-86). Subsequent to this report, a review of forestry, livestock and fisheries subsectors and agricultural credit and, as a follow-up to this report, an in-depth review of the irrigation subsector and agricultural research are recommended to be undertaken. 2. This report is based on the findings of a mission which visited Ghana in May 1984, consisting of Messrs. S.Z. Husain (Leader - Economist), M. Raine (Agricultural Economist), M. Thobani (Economist), R. Krishnan (General Support), E. Reusse (FAO/CP - Input Supply and Marketing), G. Rao (FAO/CP Consultant - Irrigation), J. Westerhout (Consultant - Agronomist) and Ks. B. Nunberg (Consultant - Institutions). The mission had valuable assistance in the field from Dr. A. Asante and Ms. P. Mensah of the Economic Research and Planning Service of the Ministry of Agriculture. 3. The Green Cover version of this report was discussed by Messrs. G.E. Schuh (Director, AGR), S.Z. Husain and D.D. Taneja with the Government of Ghana in Accra on February 28-March 1, 1985, and substantial agreement was reached on the recommendationz of the report. This final report takes into account comments made by the officials of the Government of Ghana during the discussions on the Green Cover version.  I 1\ I lij N4  GHANA AGRT CILTITRAL SECTOR REVIEW Executive Summary Economic Setting 1. The Ghanaian economy deteriorated steadily in the 1970-82 period with the GDP declining at 0.5% per annum. Real per capita income fell by 30%, import volume fell to one-third of its previous level and real export earnings declined by 52%. There was a marked deterioration in critical infrastructure. Real GDP growth for 1983 is estimated at 0.7%. Agriculture which had declined at the rate of 0.3% per annum in the 1970-80 period declined further in the drought years of 1982 and 1983 by 6.7% and 1.5% respectively. With good rains and a bumper harvest, agriculture is officially estimated to have grown at 9.8% in 1984. This together with accelerated growth in manufacturing is estimated to have led to a 7.6% growth of GDP in 1984. 2. The economic policies pursued in Ghana during the past decade were mainly responsible for the decay of the economy. The present Government, which entered office at the end of 1981, has implemented an impressive list of policy reforms since April 1983, the most important being the progressive exchange rate adjustment from