By Frederik Paraiso
TUE, FEBRUARY 19 2019-theG&BJournal-Change is coming to rural Western Africa in the shape of increased food security for, rice. Rice has become the second most important food staple after maize in Ghana and its consumption keeps increasing as a result of population growth, urbanization and change in consumer habits. For the past few years, Ghanaians have over the years developed a strong appetite for imported rice due to its availability and distribution reach in the market as well as its highly polished and fragranced nature. This has a left a huge gap in the production of local rice and the domino effect being the loss of jobs directly and directly in the agriculture.
The nation’s value of rice imports has escalated eightfold – from US$152million in 2007 to a peak of US$1.2billion in both 2014 and 2015. In the same period, the volume of rice imports climbed from 441,000 metric tonnes to 630,000 metric tonnes. According to figures from the Ministry of Food and Agriculture (MoFA) at the end of 2016, Ghana’s rice production stood at 687,680 metric tonnes. Therefore, plans to increase production by 49% in 2017 means an addition of 337,500 metric tonnes which will put total production this year to a little over one million (1,025,180) metric tonnes. A focused approach would led to creation of roughly 226,800 direct and indirect employment comprising 32,400 direct jobs, 194,400 indirect jobs.
The important questions was how would our organisation, Intervalle, play a positive role in agriculture in Ghana?
In early December of 2018, the “Ghana Rice Initiative”, an agricultural development project supporting 200 000 rice farmers in Ghana, was announced by the German government. The project was budgeted at 10 million Euros and with a three year life span, with the goal of boosting small-scale rice production through the use of subsidized seeds and technical assistance.
This will help Ghana reach self-sufficiency in rice consumption and put an end to rice imports which currently cost over 1 billion USD per year (including rice smuggling from Cote d’Ivoire). This was the result of a public-private partnership (PPP) and an international cooperation between, amongst others, the Alliance for a Green Revolution in Africa (AGRA), the German Federal Ministry for Economic Cooperation and Development, the Ghanaian Ministry of Food and Agriculture, the John Kuafor Foundation, and Intervalle.
Swiss-based Intervalle launched similar rice productivity initiatives four years ago in Senegal and Cote d’Ivoire. Those projects’ successes led to neighboring countries taking notice, and several government entities have since expressed interest in replicating the business models and public-private partnership structure for their own farmers.
In 2008, the financial crisis led to sharp increases in food prices and rioting in some African countries as desperate people took to the streets. Over reliance on food imports and insufficient agricultural productivity was putting even politically stable countries at the mercy of price hikes and could lead to mass starvation. The plan was to reduce food insecurity in Sub-Saharan Africa by focusing on one of the most cultivated crops, rice, and find a way to solve the issue of insufficiently productive farmland.
The first step was to recognize the concepts that had worked and those that failed: planned economy-styled programs had been imposed on farmers who resisted them, large-scale agricultural cooperatives hadn’t obtained enough support from the farmers either, and governments just couldn’t afford the exorbitant cost of price subsidies to incentivize farmers and boost domestic production. So we went back to square one, and instead of trying to impose a top-down approach were we told the farmers what to do through a central planning entity, we favored a bottom-up vision where we took their opinion into consideration in order to increase the likelihood they would adhere to the project.
We involved the key stakeholders such as government officials, local leaders, suppliers, bulk buyers, and of course rice farmers. Every human being is a rational economic actor in the greater context of the market. If rice farmers are unable to put money aside for emergencies and are forced to live hand-to-mouth, it is primarily because of price volatility and the uncertainty of the harvest quantity and quality. A rice farmer’s constant obsession is “How do I feed my children tomorrow?” not “What is the best way to optimize my acreage relative to my production costs over the next 5 years?”. This led us to tailor the design of our business model to answer farmer’s priorities with very short-term benefits instead of long-term promises. At the same time we had to take into account the other stakeholders’ priorities and balance them out.
When we analysed the situation our view was to look at it as ‘lifetime value of the investment’.
Another important element was the ability to provide farmers with fast cash flow cycles to soothe their concerns and lower their financial anxieties. We carried out several trials and simulations before finding the right equilibrium and the next step as to present it to the stakeholders.
The fact this was a Public Private Partnership put additional constraints in terms of procurement and oversight, but at the same time we could benefit from the credibility bestowed by the government’s endorsement of the project and this really helped get people to support us. At the end of the day we found solutions to accommodate all parties and we signed the project into existence.
The project was very successful, and as a result we increased both productivity and the net amount of rice produced on the farms where the project was implemented. I really believe that agriculture in West Africa is sleeping beauty and our lessons in this region can be shared with the rest of the continent in core agriculture driven markets such as Kenya, South Africa and many other countries.
It will take enlightened investors both in Africa especially countries that are not heavily reliant on agriculture and international investors to put aside the commonly-held beliefs on Africa being too backwards to produce anything valuable besides oil and raw minerals, and realize that there is a whole value chain of agricultural produce that is going to emerge, taking advantage of the fertile soils, exceptional climate, low cost of labor and shear market size.