Need for agro-processing and agribusiness legislation in Ghana

Ghana, often heralded as an agricultural economy, has long relied on agriculture for gross domestic product (GDP), contribution, employment generation and export revenue.

In 2023, the agricultural sector contributed approximately 19.57 per cent to Ghana’s GDP, highlighting its continued importance. 

However, from 1950 to 2023, Ghana’s agricultural GDP growth in US Dollar terms has lagged significantly compared to Malaysia, a country with a similarly resource-driven economy in the mid-20th century. 

While Malaysia leveraged strategic legislation and policy to transition from raw material exports to agro-industrialisation, Ghana has neglected to establish a dedicated legislative framework to promote agro-processing and agribusiness. 

This proposal advocates such legislation, critically examines the existing legislative architecture, identifies its deficiencies and explores pathways for progress by drawing on international best practices.

Legislative context: Existing frameworks and gaps

Since 1950, Ghana has enacted various laws addressing agriculture, with a predominant focus on production, land use and resource conservation.

However, the promotion of agro-processing and agribusiness has remained peripheral. Below is an analysis of key legislative instruments:
1. Farm Lands (Protection) Act, 1962 (Act 107): Introduced protections for land for agricultural use and regulation of land use to prevent conversion to non-agricultural purposes and fair acquisition processes. Aimed to ensure sustainable practices. 

2. Grains Development Authority Act, 1970 (Act 324): Designed to enhance grain production and storage. Established the Grains Development Authority (GDA), with a focus on production techniques and infrastructure for storage and distribution.

3. Cocoa Board Act, 1984 (PNDC Law 81): Provides a framework for overseeing cocoa production, marketing and export. Entrenched farmer support, research in cocoa cultivation and export promotion. The Act minimally addresses domestic cocoa processing.

4. Environmental Protection Agency Act, 1994 (Act 490): Regulates the sustainable use of natural resources, including agricultural land. Formalised environmental impact assessments for agricultural projects and measures to prevent degradation.

5. Forestry Commission Act, 1999 (Act 571): Covers the management of forest resources, including timber for agro-industrial purposes and the conservation of forests, indirectly benefiting industries reliant on timber.

6. Internal Revenue Act, 2000 (Act 592): Provided tax exemptions for key industries, including agriculture though it only had limited incentives for agro-processing despite broad support for agricultural production.

7. Fisheries Act, 2002 (Act 625): Addresses the development and regulation of the fisheries sector and promotes sustainable fishing practices and aquaculture industry development, with minimal focus on fish processing.

8. Plants and Fertiliser Act, 2010 (Act 803): Regulate the use of fertilisers, seeds and plant protection. Focuses on productivity enhancement through quality inputs.

The existing legislative framework reveals significant overlaps but limited integration. For instance, the Cocoa Board Act emphasises production and export but fails to incentivise domestic cocoa processing. 

Similarly, the Internal Revenue Act provides tax incentives for agricultural production broadly, but these are not harmonised with other laws to ensure a cohesive value chain that transitions smoothly from production to processing and distribution.

Challenges of a production-centric approach

Ghana’s agricultural policies have historically prioritised production due to:
1. The colonial emphasis on exporting raw materials.
2. Post-independence strategies for food self-sufficiency.
3. Structural Adjustment Programmes (SAPs) of the 1980s, which emphasised liberalisation over industrialisation.

This production-centric approach has led to:

1. Limited value addition: Major industries such as cocoa processing, fish canning, grain milling and fruit processing have struggled to scale. For example, less than 20 per cent of Ghana’s cocoa is processed locally, leaving the country dependent on volatile international prices for raw cocoa beans.

2. Dependence on imports: The production-focused model has increased imports of processed foods, undermining local industries and limiting export revenue from value-added products.
3. Missed opportunities: Ghana’s failure to dominate markets within ECOWAS, the African Continental Free Trade Area (AfCFTA) and global African diasporan markets reveals untapped potential for export diversification and higher earnings.
4. Employment deficits: The lack of integration between agriculture, agribusiness, and agro-processing has stunted job creation across the value chain.

International best practices
Countries with successful agro-industrial sectors offer valuable lessons:
1. India:
   - Policies such as the "National Food Processing Policy" encourage agro-industrial parks, tax incentives and export-driven processing.
2. Brazil:
   - Agro-industrial clusters thrive due to policies promoting credit access, technology adoption and market linkages.
3. Malaysia:
   - The "National Agro-Food Policy" integrates R&D, subsidies and infrastructure for processing.
4. South Africa:
   - The Agro-processing Support Scheme offers grants and subsidies to small and medium agro-processors to enhance their capacity and competitiveness.
Ghana can adapt these models to develop a legislative framework that supports agro-processing and agribusiness development.

Proposal for legislative reform
A robust legislative framework would:
1. Enhance Food Security: Prioritise investments in processing infrastructure to reduce post-harvest losses and ensure stable food supplies.
2. Boost Export Revenue: Focus on high-value products such as cocoa butter, shea butter, processed fruits and fish.
3. Leverage Regional Trade: Align with AfCFTA and ECOWAS opportunities to supply value-added goods.

Specific legislative amendments
1. Farm Lands (Protection) Act: Amend to explicitly allocate land for agro-industrial zones, incorporating provisions for infrastructure development and sustainability.
2. Grains Development Authority Act: Expand to include grain milling, storage innovations and the development of value-added grain-based products.
3. Cocoa Board Act: Introduce incentives for local cocoa processing, such as tax holidays and export rebates for value-added products.
4. Environmental Protection Agency Act: Streamline approvals for agro-industrial projects and incentivise sustainable technologies.
5. Forestry Commission Act: Support timber-based agro-processing industries through research and development incentives.
6. Internal Revenue Act: Broaden tax reliefs for processors, with tiered incentives for scaling operations.
7. Fisheries Act: Establish fish processing hubs and provide subsidies for small and medium-scale processors.
8. Plants and Fertiliser Act: Support R&D in post-harvest technologies and processing innovations.

Addressing challenges for MSMEs and corporates
Targeted legislation can:
1. Reduce operational costs through subsidies and tax breaks.
2. Improve access to technology, finance and infrastructure.
3. Streamline regulatory processes to attract investment.

Going forward
The absence of agro-processing and agribusiness-focused legislation has constrained Ghana’s economic potential. 
By leveraging international best practices and introducing a cohesive legislative framework, Ghana can unlock opportunities for value addition, job creation and export diversification. 
A robust agro-industrial strategy will transform the agricultural sector into a cornerstone of sustainable economic growth.

The writer is an accomplished management consultant with nearly three decades of experience in governance strategy development, and business and institutional transformation. His career spans leadership roles in fast-moving consumer goods, telecommunications, agribusiness and consulting, where he has driven brand and business development, innovation, policy development and execution.
Email - Michael.Yamson@gmail.com