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Ghana Agribusiness Report Q1 2011
Business Monitor International, Oct 2010, Pages: 57
Business Monitor International's Ghana Agribusiness service provides proprietary medium term price forecasts for key commodities, including corn, wheat, rice, sugar, cocoa, coffee, soy and milk; in addition to newly-researched competitive intelligence on leading agribusiness producers, traders and suppliers; in-depth analysis of latest industry developments; and essential industry context on Ghana's agribusiness service.
BMI View: Over our forecast period, we expect strong production growth across most Ghanaian agricultural sub-sectors thanks to a growing domestic customer base on the back of strong economic growth and thanks to increased government support. However, cocoa will easily remain the dominant sector in terms of output. For livestock, production is increasing although the sector will remain dependent on imports to meet domestic demand. We are forecasting grain production to increase also, which will help increase production for the livestock sector as well as allow for a small amount of exports.
Key Trends
- Poultry consumption to increase to 2014: by 70%. This growth will come on the back of rising incomes. Also, convenient pre-cut and frozen poultry products are popular with Ghanaian consumers.
- Cocoa Production to increase to 2013/14: 22%. Increased access to fertiliser and the resultant positive impact on production yields will drive growth. Better farmer education and a rise in the country's fixed price will also encourage production.
- Corn and Sorghum Production to increase to 2013/14: 58.2% and 35.7% respectively. This will largely come from increased domestic demand, greater processed goods demand and improved export opportunities.
- 2010 Real GDP Growth: 5.6% (up from 4.2% in 2009; predicted to average 10.8% from 2010 until 2014).
- Consumer Price Inflation: 9.4% year-on-year in July 2010 (down from 20.5% y-o-y in July 2009).
Industry Developments
Commercialisation will aid Ghana's livestock self-sufficiency ambitions in the long term, helping to bring much needed investment in breeding techniques, poultry storage, processing and distribution etc. However, in the short term, protection is probably a more urgent requirement for this fledgling sector and the government has been called upon to impose import tariffs and cut permits for importers in order to improve the relative competitiveness of locally-produced goods.
BMI believes that Ghana's decision to increase its fixed price for cocoa serves as a moderate upside production risk for Ghana, as it will help combat the constant smuggling concerns Ghana's cocoa regulator Cocobod faces. However, it will do little in the short term to increase the amount of cocoa produced in Ghana, which would require an increase in yields via better farming techniques. Nonetheless, there is also a long-term upside production risk should Ghana's price remain stable or increase from its current rate, as farmers would have greater incentive to plant and maintain more cocoa trees.
Our expectations for Ghanaian sorghum production and consumption are closely correlated with our expectations for the local beer market. Reflecting strong macroeconomic and what we see as being strong consumer spending momentum, beer sales are expected to strengthen considerably to 2014 on both value and volume counts. With the informal beer industry still thriving, reflecting strong consumer price sensitivity, estimated formal annual per capita beer consumption of eight litres does not do justice to the widespread popularity of beer in Ghana.
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