The 2010 Budget: What are the prospects for the smallholder farmer [opinion]

Nov 24, 2009 (Ghanaian Chronicle/All Africa Global Media via COMTEX) -- The importance of the agriculture sector to the Ghanaian economy was manifest once again in the 2010 national budget statement presented by the Minister of Finance and Economic Planning, Dr. Kwabena Duffuor, to Parliament on November 18, 2009. The sector grew by 6.2 percent, against a target of 5.7 percent, driven largely on account of good rainfall patterns and by extension of the land under cultivation, suggesting that the sector can indeed be a driver of growth when the conditions are right.

This growth is well within the projected annual growth rate of 6 - 8 percent for the agriculture sector for the next 3 years. Even though the recent agriculture performance has been impressive, the lack of productivity growth in selected food crops (maize, rice), poultry and fish, brings to question the national vision of ensuring food security for all and increasing access of the poor to adequate food and nutrition. The World Food Program notes in its 2009 Comprehensive Food Security and Vulnerability Analysis report that 5 percent of the Ghanaian population or 1.2 million people have very limited access to sufficient and nutritious food for an active and healthy life.

In a bid to increase agriculture productivity, the government through the Ministry of Food and Agriculture has embarked on a policy of 'modernizing' agriculture. A number of strategies were outlined in the 2010 budget in pursuit of this policy goal. What are the prospects for the smallholder farmer? How can the smallholder farmer position herself/himself to take advantage of the opportunities in the current budget? Positive Outlook The 2010 budget provides a number of indirect openings for the smallholder farmer and/or Farmer Based Organizations (FBOs) to participate in the agriculture modernization agenda aimed at enhancing productivity. First, the concept of block farming heavily driven by government support should enhance farmer's access to critical factors of production (e.g. land), and other forms of modern technology such as the application of irrigation.

Second and related to the above is the establishment of mechanization centres in the districts. These centres provide smallholder farmers a perfect opportunity to intensify and commercialize their production through the hiring and use of tractors and other machinery, though this may be dependent on the availability and easy access to credit.

Other budget projections expected to benefit smallholder farmers are: - Availability and access to farm inputs (fertilizer subsidy, improved seeds and planting material).

- Double cropping of staples (maize and rice) using existing water bodies in all the regions. This has the added advantage of engaging farmers in the production processes all year round.

- Establishment of a buffer stock management agency responsible afor holding food security buffer stocks and intervening in the markets to ensure that competitive prices are paid to farmers at all times. This intervention is critical as post harvest losses continue to bedevil the agriculture sector. The Ministry of Food and Agriculture estimates post harvest losses to be 20-50 percent for fruits, vegetables, roots and tubers; and about 20-30 percent for cereals and legumes.

- Launch of the Sustainable Land Management Strategy and Action Plan. This provides a framework for ensuring sustainable use and continued productivity of agricultural lands. Reflections for the Future I have argued so far about some unique prospects in the 2010 budget that smallholder farmers can exploit to enhance their role and contribution to modernizing agriculture in Ghana. These need to be complemented by interventions in 3 areas (agriculture financing, agriculture land policy reform, access to credit). Lack of progress in these areas will impact negatively on policy implementation. The facts are very familiar! Modernized/commercial agriculture, or any scale of farming, will find it hard to progress when governments do not invest in rural roads, agricultural research and extension, rural schooling and health care - key public goods for agricultural development. Government spending is one of the direct and efficient methods of enhancing agriculture productivity and reducing poverty. However, budget allocations to the Ministry of Food and Agriculture from government sources remain considerably low - it is estimated to be less than 2 percent of the total share of government expenditure since the 1990s (Ministry of Food and Agriculture, 2007) (this excludes allocations to the cocoa sector). Efforts by past governments to transform and modernize agriculture have not yielded the right outcomes due mainly to inadequate funding and investment from government sources. To reverse the trend, the Government of Ghana committed to allocating at least 10 percent of annual government expenditure to the agriculture sector in fulfillment of the 2003 AU Declaration on Agriculture and Food Security in Africa. So far, the closest Ghana came to achieving this target was in 2006 when 9.7 percent of the annual budget was allocated to the agriculture sector according to the World Food Program. Particularly damaging to the prospects of Ghana's agriculture has been the low level of investment in agricultural research, combined with its fragmentation into many small and underfunded institutions.

Making Ghanaian agriculture competitive also depends on private sector participation and investments in the sector. One way to guarantee private investment in the sector is to institute land policy reforms that will provide secure and transferable land rights to private individuals. A vast proportion of Ghana's arable land (about 80%) remains uncultivated, in part due to insecure property rights. Fast-tracking the enactment and implementation of a new land act remains the surest way to go in order to streamline land ownership and administration in Ghana.

The share of credit from the formal banking sector to agriculture, fisheries, and forestry (excluding cocoa) has been generally low (9 percent according to recent estimates) as compared to other sectors (services, manufacturing and domestic trade), mainly due to the perceived risks associated with agriculture. Rural community banks/loans and savings associations are beginning to bridge the credit gaps in the short term. However, in the long term, we may need to find ways to tie rural savings and loans associations more effectively to the broader commercial banking systems in order to provide greater financial intermediation and diversification of risks.

Conclusion The 2010 budget certainly provides hope for smallholder activity, which is necessary in the current scheme of agriculture modernization. The state needs to put in place institutional arrangements to address some of the persisting constraints identified in this article if the recent gains in the sector are to be sustained. Monitoring and tracking of budget implementation by non-state actors is one way of also ensuring that government stays committed to increasing its support to the agricultural sector (the food crop sub-sector especially).

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