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Ghana Agribusiness Report Q1 2012
Business Monitor International, Nov 2011, Pages: 49
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: After experiencing a bumper crop in 2010/11, we foresee Ghanaian cocoa yields to be depressed in 2011/12 as weather is unlikely to be as good. Another factor curbing output is the prospect of cocoa smuggling into Côte d'Ivoire resuming since the export ban in the country has been effectively lifted. Over the longer term, however, we expect various factors to boost production and challenge Côte d'Ivoire's dominant position in cocoa production.
Meanwhile, we are less optimistic towards the poultry sub-sector due to the uncompetitive industry against cheap, subsidised imports from the EU and South America. Unless the sector modernises and increases the scale of production, we expect Ghana to remain a net importer of poultry over the long term.
Key forecasts
- Cocoa Production Growth to 2014/15: 47.1% to reach 930,000 tonnes. Yield gains are likely to continue. Rising GDP should allow easier credit access to cocoa farmers wanting to expand production. This growth, combined with the ageing stock in Côte d'Ivoire, has some optimistic observers predicting that Ghana could overtake Côte d'Ivoire as the world's largest cocoa producer and exporter within a few years.
- Sorghum Production Growth to 2014/15: 18.9% to reach 417,000 tonnes. With demand for sorghum as food consumption forecast to increase 161.4% from US$225 per capita to US$589 capita from 2010 to 2015, investment should ensure continued healthy production growth
- Poultry Production Growth to 2014/15: 47.2% to reach 56,170 tonnes. The relative affordability of poultry partly explains this superior growth outlook, while the popularity of imported poultry products is also factored in to this forecast.
- 2012 Real GDP Growth: 7.9% (down from 15.1% in 2010; predicted to average 10.6% from now until 2016).
- 2012 Central Bank Policy Rate: 15.0% eop in 2012 (up from 13.0% in 2011).
Industry developments
The introduction of CocoaLink mobile information service to Ghanaian farmers, officially unveiled on July 15 2011, will be a key driver of cocoa output growth in the world's second largest producer. Although there are currently only 1,500 users on the programme at the time of writing, there is expected to be over 100,000 users by the end of 2014. While this should help expand Ghanaian cocoa output and help it compete with the world's top grower, Cote d'Ivoire, the use of CocoaLink should be part of a broader programme to aid farmers, specifically by increasing the country's set price for output.
Along with other innovations to boost cocoa output, which include farmer education seminars and better access to fertiliser, the Ghanaian government announced in mid-July that it would launch a mobile service where farmers could receive cocoa farming updates. This includes important agricultural and economic information that will allow farmers to share information and ask questions about growing techniques. The rise of mobile technology coincides with BMI's view that mobile usage in Ghana will see strong growth over the long term. The number of total access lines in Ghana grew by 15% year-on-year (y-o-y) in 2010, mainly due to a surge in the mobile sector, which grew by 15.4% y-o-y to 17.437mn customers. BMI notes the number of mobile subscribers at the end of 2010 was considerably higher than our earlier estimates of about 16.128mn. This suggests the mobile subscriber base grew faster than expected, particularly during Q410 when there were 874,853 net additions. The greater use of mobile technology will be a strong driver for output growth, as Ghana tries to overtake Cote d'Ivoire to become the world's largest cocoa producer. Increasing the availability of information in a sector that has historically used outdated farming techniques should provide a boost.
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