Agric needs practical incentives to sustain economic growth
For agriculture to sustain economic growth of the country in this pandemic period, there will be the need for practical incentives to be formulated across the value chain, speakers at an agriculture conference have said.
The suggestion comes after data from the Ghana Statistical Service (GSS) showed that agriculture was the only sector, among the three main sectors, to record growth in the second quarter of the year.
While the other two sectors, industry and services, were decimated by the impact of the coronavirus pandemic as they experienced contraction of 5.7 percent and 2.6 percent respectively, the ‘rejected stone’ – agriculture – didn’t succumb to the pressure, but rather saw a growth of 2.5 percent.
This, the discussants, speaking on the theme: ‘Boosting Agricultural Value Chains in the Midst of COVID-19 and Political Party Manifestos’ which was organised by the Institute of Statistical, Social and Economic Research (ISSER) at the University of Ghana said, can be improved if there are deliberate efforts by government to provide tailor-made incentives which will cut across the agriculture value chain.
Director of the Institute, Professor Peter Quartey, said government should formulate policies that will provide incentives and cushion financial institutions to lend to players in the agriculture. This, he added, will in turn provide a cheaper source of financing to the sector.
“Agriculture has a level of risk which is slightly higher than that of commerce. Agriculture cannot pay the same rates on loans just as other sectors do. So it needs cheaper source of credit and this calls for government policy. Government doesn’t necessarily have to directly lend to players in the sector. It can provide incentive schemes for banks or development financial institutions to lend to agriculture.
Then talking about the risk, what makes agriculture risky? First, agriculture depends on rainfall. So how do you help farmers to engage in irrigation? Once that is done, it reduces the risk. How do you help them get access to market? How do you get them to add value to their products instead of just selling them as raw materials? How do you get them to store to prevent post-harvest losses? So these are all the things government will have to provide for the environment for agriculture to thrive. When that is done, agriculture will become a viable entity which will even attract the youth to move there,” he said.
CEO of the Ghana Incentive-based Risk Sharing System for Agricultural Lending (GIRSAL), Kwesi Korboe, said a holistic approach is what the sector needs to address its challenges to become resilient.
“Agriculture is a holistic thing so you need to tackle it holistically. When you have broad incentives, you may not address the problem because the agriculture value chain is a very complex thing, even within production. Some are doing the physical planting, some are providing seeds, and so you need to address it across the value chain that takes care of each participant. That is the best way of providing incentives,” he said in an interview with the B&FT.
Then, Professor Irene Egyir of the Department of Agriculture Economics and Agribusiness at the University of Ghana, also said government must put in the necessary infrastructure and macroeconomic policies which will make the environment conducive for players in the sector, and further attract the youth into agriculture.
“We have to create a rural economy that will attract people to venture into agriculture. There should be good roads, water, and electricity that will make it possible for people to move there so that when you set up a factory and you want to add value, you will find the environment convenient. Giving out fertilizer to farmers is a good policy but it goes to a few people. We want that which is public good.
And again, government should do something about the macroeconomy so that interest rates may go down so that the system itself will ease,” she said.