2012 Budget-Grabbing A Share of The Agricultural Cake | Business ...

This is the second in the series of articles aimed at drawing attention to the key growth poles in 2012 and how investors, entrepreneurs and businessmen/women can access the opportunities and pointers in the 2012 Budget Statement

In my last piece on this topic, I recalled the tag line of Government?s policy direction in the 2012 Budget that ?the key focal areas of government in the Economic Sector for the medium term are: enhancing competitiveness of Ghana?s private sector, accelerating agricultural modernization and natural resource mobilization and the
development of the Energy, Oil and Gas industry.

The modernization of agriculture will be accelerated to ensure its linkage with industry through the application of science and technology innovation.

Government and other stakeholders will partner the private sector to enhance competitiveness by the transformation of the economy through industrialization and modernized agriculture.

The key ministries to drive this agenda are; Food and Agriculture, Lands and Natural Resources, Trade
and Industry, Tourism, Energy and Environment, Science and Technology.

I also indicated that for businesses
and individuals who need to plan their budgets and business strategies for the year, business volumes and
profitability will be driven largely by events prompted by the statement above.

The statement seeks to make agriculture the centerpiece of government?s development programme for 2012.

I believe that the idea is to endanger growth across all sectors in a manner that does not leave this important sector of the economy out. Through improved crop yield via modern agricultural practices that rely on ICT, accessibility and value addition, the value in the sector will filter through industry and the services sector which lately, have leapfrogged over agriculture to become Ghana?s growth drivers.

Since independence, agriculture has been the backbone of Ghana?s economy, contributing to employment generation, national income and other economic areas.

This enviable influence has diminished consistently over the last decade.

The sector has actually been overtaken by the services sector and most recently in 2011 by the industrial sector. It has missed its growth targets for most parts of the period.

In my opinion, this is a healthy sign for the following principal reasons:

1. It is a sign that the clarion call for a structural change in the Ghanaian economy is being heeded to-
strategically or unconsciously. This is the only way we can correct the persistent balance of payment deficits and its attendant challenges to the stability of the economy.

2. It will help correct the ?erroneous? impression that we have a competitive and comparative advantage in agriculture. Our over-reliance on this facade is probably one of the reasons why we continue to burn valuable resources on this sector.

The only challenge with this phenomenon is the decline in the growth of the sector.

According to the 2012 Budget Statement, the decline in growth rate to 2.8% against the projected rate of 5.3% was the result of the decline in afforestation activities.

I do not necessarily see this trend as a blip; it is essentially a continuation of a trend that has developed over time. The Statement emphasizes that the expansion of the crop sector for instance is primarily the result of improved cocoa production. We must therefore re-double our efforts in other crops and sub-sectors to sustain the sector.

The implementation and success of Government?s medium term growth policy communicated above does not lay in the large scale agribusiness practices it seems to depict.

It rather lies in the chain of small, medium and large scale cultivation, cultivating, rearing and manufacturing activities within the agricultural value chain.

It simply means that everyone can have a share of the pie this policy will generate.

In 2011, agricultural modernization was allocated GHC 13 million as outlined on table 11 of the 2012 Budget statement. How much of this amount was the typical agribusiness person able to access?

These are the basic questions we need to be asking as businessmen.

Once we forecast what we can realistically make out of such allocations, we can clearly map out strategies on how grab a piece of this pie.

For 2012, Government?s focus has beer
outlined to capture the following areas:

The Ministry of Food and Agriculture will continue with its mandate to implement programmes and projects in the Medium Term Agricultural Sector Investment Plan (METASIP). The plan aims at leading the growth and structural transformation of the economy to maximize the benefits of accelerated growth.

For those of us who missed out on the 2011 pie, aside from the comprehensive cocoa sector policies, the key areas of attention for 2012 are as follows;

- Agriculture Subsidy Programme

- Agriculture Mechanization

- The Ghana Commercial Agricultural Programme (GCAP)

- National Food Buffer Stock Company (NAFCO)

- Youth in Agriculture Programme

- Nutrition Education, Food Processing and Food Safety

- Fisheries Development

- Livestock Development Programme

Many equate agriculture to crop production in hinterland Ghana and focus entirely on the peasant farmer?s activities. Agriculture however encompasses a chain of activities ranging from the large scale production of crops and the rearing of animals to the backyard garden activities we practice as a hobby. Ghana?s budget statements classify the following activities under agriculture:

- Crops

- Forestry and logging

- Fishing and

- Livestock

For the peasant crop and livestock farmer, the statement is asking us to consider forward and backward integration in the production chain.

The peasant farmer may not be able to access the opportunities inherent in this policy because the policy has not been communicated in the language he/she can understand and access. Secondly, even if he does, will he/she easily have access to products and practices that enhance his/her business? Are fertilizers easily and readily available to him/her?

But for the small-scale fertilizer distribution outlet and service providers in the value chain, the projected expenditure for 2012 up to the 2014 provide a huge opportunity to reach as many farmers as possible.

Page 68-80 of the 2012 budget provides details of what is available and accessible to the businesses in the agricultural sector.

By Nana Amoto-Mensah, Head of Corporate Finance of Ecobank Development Corporation.

Sources: Business World.

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Source: http://www.businessguideghana.com/?p=6183

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