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The challenges facing Ghana’s agriculture industry

Interview - August 19, 2014
In an interview with PM, Dr. Michael Abu Sakara Foster, Executive Chairman of Sakfos Holdings, sat down to discuss the agriculture industry in Ghana and the main challenges it faces, such as addressing the low level of mechanization and the lack of value addition industries. Dr. Foster also talks about the possibility of budding gas production contributing significantly to the fertilizer industry and what this could mean for agriculture and also draws on his own experience as both a farmer and high-level manager.
MICHAEL ABU SAKARA FOSTER, EXECUTIVE CHAIRMAN OF SAKFOS HOLDINGS
MICHAEL ABU SAKARA FOSTER | EXECUTIVE CHAIRMAN OF SAKFOS HOLDINGS
What can you tell us about Ghana's current rate of growth, as compared to what it has been previously?

First of all, we must take it into the context where Ghana is now as part of a process of growth and development. The fact that Ghana had very high rates of economic growth between 2010 and 2011 compared to its current sharply reduced economic growth should not surprise anybody. This is because our oil revenue came on-stream in 2010 and gave us additional 15% to 20% income that was unprecedented. That "peak" and immediate "claw back" in our trend of economic growth was to be expected because GDP growth is calculated as year on year growth. That is to say, annual economic rates of the current year are calculated relative to previous year's growth. Therefore what happened was predictable and I forecasted this ahead of time as evidenced in many of my interviews in 2011. I felt it was necessary to tone down the euphoria of wild expectations and unrealistic promises ahead of the 2012 election.

We need to ensure that the manufacturing sector recovers because that is what will represent the diversification. Through this, we could have a more robust economy that can withstand the vagaries of various things that happen globally. To do this effectively we must search for strategic areas of investment upon which we can anchor this economy. Such strategic investments must give us a high rate of return and shore up other sectors through synergy. The natural choice of course, is the agricultural sector.

Why is agriculture a natural choice?

Proper investments made in agriculture will have benefits that are pervasive throughout our society and also justify investments in infrastructure. That is because more than 67% of our workforce is in agriculture and more than 60% of household income of lower income groups are spent on purchasing food. So benefits from investments in agriculture and agro-processing are more readily distributed among society. In contrast, investments in oil and mining go to a very small percentage of the population. The latter fuels the distortion in distribution of income — it grows the gap between the rich and the poor (which is characteristic of what is happening in Ghana and also globally).

Does Ghana have sufficient water to support the irrigation needed for agriculture.

Ghana is a country blessed with a large amount of surface water. We have the White Volta, the Black Volta, the Oti and the Dakar rivers flowing from the north and into the Akosombo Dam. This accumulated fresh water after generating electricity passes harmlessly at a rate of more than 2 million cubic meters every 10 seconds into the Atlantic Ocean. That is fresh water into salty sea water, what a waste! Many countries would "kill" for such a resource.

How would you comment on the agricultural sector’s mechanization process?

At the moment, human labor is still the main source of power in agriculture for both production and transportation of produce. Less than 10% of Ghana's total arable land is cultivated by mechanization. Hand-held hoe and cutlass are still the main implements used for back breaking work. Meanwhile, women and children head carry loads with little support from beasts of burden (donkeys, oxen and mules). It is a chilling statistic that 92% of the food that you will eat in Ghana is carried on heads of women and children from its point of production for the first 5 kilometers of its journey to your plate. This means moving crops from fields to homes is a major source of labor demand and also a bottle-neck for improved labor productivity (that is before we even start going to rural markets and urban centers).

It would be good to immediately utilize more appropriate intermediate technology in the small-scale sector. As we diversify for the medium and large-scale sectors, we can introduce greater mechanization through service providers rather than on the path of self owned equipment lots that stand idle for significant periods. Together, both approaches will help Ghana to break that stranglehold of low labor productivity both for production and transportation.

Transportation and other infrastructure are therefore truly essential.

Absolutely so! They are also interconnected and need to all happen in concert with each other, i.e. they must be synchronized in the development process. In other words, we need to have infrastructure and transportation to go along with increased production and productivity. Otherwise, we do not have the market access and the reduced transaction costs that transfer the productivity gains from farms into competitive prices in the market place. Farmers and the economy lose out if those factors are not put together.

For example, there are several places in Ghana where one cannot travel to during the rainy season. During the 2012, campaign I remember seeing a big truck of yams stuck in the middle of nowhere on the Kpandai-Bimbilla road in the Northern region. It was supposedly stuck in a pothole but, indeed, it was more like a crater that had filled with water to become a pond. The most difficult part of this problem was that there was nobody to pull the vehicle out because there was very little traffic on that very bad road.

Do you think that Ghana’s gas production will contribute significantly to the fertilizer industry in agriculture?

Realistically, no it will not in the short to medium term. But strategically, yes it could if we made a calculated and deliberate choice to make it so. That is because actually, we do not have enough gas to put into fertilizer production since we cannot meet our demand for energy generation. The domestic use of gas in homes also takes priority over its use for fertilizer production. However, if Ghana's arrangement for gas supply from Nigeria was enforced, we could put some of our gas into fertilizer with a view to growing crops that produce renewable energy, for example ethanol from sugar cane, etc. I believe we can have a net energy gain since it will trap free sunlight with the crop. Of course, a railway track from the fertilizer plant on the coast to the hinterland savannah will be needed to transport fertilizer up and bring down produce and products.

Strategically, by putting the fertilizer in the ground and allowing the sugar cane to open its arms to trap free sunlight, we can end up with more energy. Having a fertilizer industry would give agriculture in Ghana a big "kick". It would give a synergy effects all around in reduced fertilizer prices from savings in transportation, timeliness, increased use and reliability of supply.

There is a huge gap in the area of value-addition in Ghana.

Yes, there is. That is another example of why you cannot separate the challenges along the value chain as isolated interventions. Rather, they have to be coordinated and integrated. One of the big problems that processors have is that they cannot guarantee supply of sufficient volume and quality of produce from farmers throughout the year. We also do not have sufficient agro-processing capacity in the country. This is why using out-grower schemes to support marketing of produce from nucleus and out-grower farmers makes an important contribution.

As a result, out-growers can increase the volumes of produce they handle by adding their own together with that of small-scale farmers. This helps to reduce the marketing constraint because they act as a conduit both for incoming inputs and out-going produce. Nucleus farmers can also negotiate a better deal with the processor. Nucleus farms have fixed locations so the processors know exactly where they are to arrange the mode of collection or delivery of produce.

Processing in the zone of production should be encouraged because it reduces the amount of bulk material carried over long distances. The residual matter that is not processed can be left behind to either feed animals or applied on farms to improve soil organic matter. Currently moving bulk materials to far off urban towns is contributing to reduction of soil organic matter. The latter is a key factor in declining soil fertility in rural areas.

Your experience and knowledge in the sector is vast, and puts you in a position to help at a national scale. We understand that you were the Presidential candidate of the Convention People's Party (CPP) in the 2012 general elections. What are your thoughts on being a practitioner and a politician? What are some of the things that you love about being out there in the field?

Personally, I enjoy being a practitioner. One gets to see tangible results up-front and it feels rewarding to see the progress in situ. I am impatient with delayed results and it is certainly not much fun getting posthumous results. I also won't tell people to do things I would not do myself. As you know, I am directly involved in farming. We are now expanding our out-grower scheme to involve the youth and others who wants to farm within vicinity of the town and five villages where my farm is located (Gorupe in Mankpang, Central Gonja). We want to expand from 200 acres to reach a target of 1,000 acres by 2016. We are sourcing support so we that can have irrigation and produce vegetables even in the dry season on almost all the cultivated land.

What management philosophy have held true in all your years in the industry?

Difficult decisions are made with 30% knowledge; the rest is 70% conviction and commitment. That is how you make things work. This is an essential ingredient in most human endeavors at the frontier of knowledge. Commitment is the catalyst that gets us through seemingly insurmountable problems. Sometimes too much knowledge will either make you hesitate or over confident. If you are making a crucial decision and you don't feel butterflies in your stomach then you are either foolishly brave or dead asleep mentally. Presence is a very important attribute to build trust in leadership. Absence creates doubt and uncertainty among those being lead. It can be used to strategic advantage when the situation demands it but, more often than not, trust and certainty work better. Never underestimate opponents or rivals. It is the little things that surprise you, not the big ones.

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