The explosion in food imports - Failure of public policy?
During the State of the Nation Address on February 25, 2014, President John Mahama stated that in 2013 the nation spent US$1.5 billion of our scarce foreign exchange resources to import eight major food items for consumption by Ghanaians.
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The President listed the eight food items as rice, sugar, poultry, cooking oil, vegetables, fish, salt and wheat. He lamented that the nation could ill-afford to spend such a huge amount to import foods that can be produced in this country.
Of the eight food items which he referred to, it is only wheat which cannot be produced economically in Ghana because of the unsuitable agronomic conditions. The seven others are major food items cultivated extensively by the gallant farmers and fishers of this country. They are also major staples for food consumers. They, together with others such as cocoa and maize, form the backbone of our agricultural industry and constitute the bulk of the food and nutrition sustenance of our people.
Given the importance of these food items in the domestic agricultural economy and in the economy in general, the mass import of these food items in such large quantities pose a serious threat not only to the livelihood of our farmers and fishers, but also to the balance of payment of the economy. These imports are obviously competing directly with local production under conditions which may be putting our local farmers, fishers and overall food security at risk.
Giving these observations, I have interrogated the trends in food imports over the past decade and the results are indeed alarming. With assistance from the Ghana Statistical Service, I have been able to assemble data which clearly confirm that over the past 10 years, the volumes and values of imports of food have gone beyond alarming proportions.
Food imports have now taken a chunk of domestic production, with all the implications for the food and nutrition security of our nation. They also constitute a major drain on our foreign exchange earnings. A few of these statistics will suffice to illustrate the point.
Source: Trade Statistics Department, Ghana Statistical Service. June, 2016. * 2015 – Provisional
NOTE: Original figures quoted in Ghana Cedis. Converted into US Dollars using prevailing exchange rates
Volumes
Between calendar year 2007 and 2015, the total value of imports of the eight major food items together sky-rocketed by more than four-fold – from US$470 Million in 2007 to nearly US$2.2 billion in 2014 and just under US$2 billion in 2015 (preliminary). During the same period, the total volume together escalated from 882,000 metric tonnes to a peak of 1,223,000 metric tonnes in 2013 with slight dips in 2014 and 2015.
The 2015 import bill of US$2.1 billion for the eight food items is equivalent to the total foreign exchange earnings from our major export cocoa in 2014/15. Looking at it from another perspective, it is more than the US$2 billion cocoa syndicated loan approved by Parliament in June 2016 for the purchase of the coming 2016/17 cocoa crop.
An examination of the individual items reveals even more disturbing trends. For example, the value of rice imports has escalated eight-fold from US$152 million in 2007 to a peak of US$1.2 billion 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.
The value of imports of sugar rose more than five times – from US$109 million in 2007 to US$ 564 million in 2014. In the case of poultry, the value of imports rose nearly seven-fold – from US$57 million in 2007 to US$374 million in 2015. These alarming trends require the urgent attention of our policy makers.
Performance
The flooding of our agricultural landscape with food imports clearly coincides with the declining growth performance of the domestic agriculture in the past eight years of this administration. Annual agricultural growth rates have steadily declined from 7.4 per cent in 2008 to 7.2 per cent in 2009, 5.3 per cent in 2010, 0.8 per cent in 2011, 2.3 per cent in 2012, 5.4 per cent in 2013 and 5.3 per cent in 2014 and 2.4 per cent in 2015 (latest estimate). The period average rate of 4.5 per cent falls well below the Maputo adopted target of 6.0 per cent per annum. With population growth rate of 2.8 per cent per annum, this means that Ghana’s agriculture is growing at a net rate of only 1.7 per cent per annum. If account is taken of rapid urbanisation typified by the Kayayei phenomenon, then agricultural growth per capita drops into negative growth. That is the fundamental pull factor behind the flood of food imports in recent years.
Public investments in the sector have declined. Budgetary and petroleum revenue disbursements to the sector have been cut drastically. And so has private capital typified by farm credits. Budgetary allocation to agriculture was cut from 3.4 per cent in 2008 to 1.1 per cent in 2014 and 2015. In spite of the loud and constant rhetoric by government officials of the importance of agriculture to this economy, the reality on the ground tells a different story. Farmers and fisherfolk are increasingly improvised and you only have to visit the rural areas and the fishing communities to confirm this assertion.
Following the State of the Nation Address of February 25, 2014, the President published an article on page 16 of the Daily Graphic of Thursday, May 1, 2014, with the title “What you don’t know”. In this article, the President yet again draws attention to the “alarming” food imports in the calendar year 2013. He questions: “Are we not capable of producing these food items ourselves?” His proposed solution was to work with the private sector and he promised to announce “initiatives and incentives in the coming days and weeks”.
Nothing was heard from the President after promising the initiatives for private sector engagement to reduce food imports. Meanwhile, the data presented in this article clearly show that food imports have risen sharply since 2013.
It is about time we walked the talk and reversed the trend of cutting public investments in agriculture. Let us restore public resources to the sector, provide financial incentives to our farmers and fisherfolk and impose structured import tariffs to give local producers the breathing space to bring back prosperity to the people of this country.