Agricultural inputs
Agricultural inputs
Business Model Description
Supply high-quality seeds and fertilisers to farmers and government support programmes through a loan programme to be repaid at the end of the harvest season.
Expected Impact
Enhance agricultural outputs and farmers' incomes contributing to greater food security
How is this information gathered?
Investment opportunities with potential to contribute to sustainable development are based on country-level SDG Investor Maps.
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Country & Regions
- Ghana: Upper East
- Ghana: Western Region
- Ghana: Northern
- Ghana: Savannah
Sector Classification
Food and Beverage
Development need
Agriculture accounted for 17% of gross domestic product (GDP) and 29% of total employment in 2019 in Ghana, and it constitutes most informal sector employment.(1) Total sales amounted to USD 13.2 billion in 2019, with estimated average growth of 5.6% between 2020 and 2025. Consumption was USD 10.4 billion in the same year and is estimated to grow at 4.9% between 2020 and 2025.(2)
Policy priority
Ghana's agricultural policy focuses on raising the productivity and value added in agriculture, via government initiatives such as Planting for Food and Jobs, and One Village, One Dam.(3)
Gender inequalities and marginalization issues
Women constitute the majority of agricultural employees and are most active in agro-processing and food distribution, and face numerous challenges. These challenges include poor access to land (female farmers own two times less land than their male counterparts) and credit (for every 100 men obtaining credit only 47 women do).(5b)
Key bottlenecks
Key sector challenges include poor farmer education and management skills, business atomization, poor supply chains, limited access to capital and inputs, lack of storage and poor handling practices, low access to information and information and communication technology (ICT) services, and an ageing farming population.
Agricultural Products
Pipeline Opportunity
Agricultural inputs
Supply high-quality seeds and fertilisers to farmers and government support programmes through a loan programme to be repaid at the end of the harvest season.
Business Case
Market Size and Environment
USD 100 million - USD 1 billion
The size of Ghana's seed industry was estimated at almost USD 4.5 million in 2017.(III) It is expected to grow by a compound annual growth rate of 3.8% between 2020 and 2025.(VI) The potential value based on targets of certified seeds coverage is estimated at USD 60 million.(III)
Seed production meets only around 30% of the demand within the country.(VI) Expanding the domestic supply of seeds would significantly increase the low penetration of certified seeds among farmers, which in 2017 stood at less than 7%.(9)
Ghana’s domestic demand for fertilizers is satisfied entirely via imports, which were worth more than USD 170 million in 2019.(V),(IV)
Indicative Return
20% - 25%
A company producing certified seeds in Ghana operates with a 24% internal rate of return.(X)
Investment Timeframe
Medium Term (5–10 years)
Purchasing, importing and producing seeds requires a registration (renewed every 2 years).
M&B Seeds and Agricultural Services, a company handling certified seeds trade, offers a 5-year investment timeframe to scale its activities.(X)
There is a demand for 5-10 year capital to scale investment for large-scale inputs.(X)
Market Risks & Scale Obstacles
Capital - Limited Investor Interest
Business - limited uptake due to social norms
Market - Highly Regulated
Impact Case
Sustainable Development Need
Over 65% of Ghana’s land is used for agriculture (1), which accounts for approximately 17% of gross domestic product (GDP).(7)
The food crops subsector is dominated by smallholder farmers whose cropping practices are characterized by inadequate use of technology, low use of quality seeds and fertilizers, and weak market linkages, resulting in poor yield.(4)
Ghana covers only one-quarter of fertilizer demand domestically; the rest is imported. Therefore, any disruption of international supply chains can negatively affect food production, decreasing food accessibility.(12)
More than 10% of Ghana's population lives on less than USD 1.9 / day.(7) Due to COVID-19 related disruptions in supply chains, food insecurity among the poor is rising, propelled by increasing food prices. The year-on-year inflation rate is 14.4%.(9) The pandemic also negatively affected seed accessibility for the 2020 cropping season, which will lead to decreased agricultural production.(II)
Gender & Marginalisation
Women are the key actors in Ghana's food sector. Currently, women hold more than half of jobs in the sector and produce more than two-thirds of the country's food stock.
Expected Development Outcome
Increased crop yields, increased value added from crops, reduced price volatility of staple food
Mitigated food insecurity, reduced hunger and undernourishment
Increased income of smallholders farmer and boosted their development
Gender & Marginalisation
Enhanced income generation opportunities especially for women
Primary SDGs addressed
2.2.1 Prevalence of stunting (height for age <-2 standard deviation from the median of the World Health Organization (WHO) Child Growth Standards) among children under 5 years of age
2.2.2 Prevalence of malnutrition (weight for height >+2 or <-2 standard deviation from the median of the WHO Child Growth Standards) among children under 5 years of age, by type (wasting and overweight)
2.3.1 Volume of production per labour unit by classes of farming/pastoral/forestry enterprise size
12.2.2 Domestic material consumption
15.3.1 Proportion of land that is degraded over total land area
Secondary SDGs addressed
Directly impacted stakeholders
People
Gender inequality and/or marginalization
Corporates
Public sector
Indirectly impacted stakeholders
Corporates
Public sector
Outcome Risks
Inappropriate use of certified seeds may drive up the food price if cost increases are not matched with productivity increases.(III)
New brands of seeds may cause issues only visible in the long term. Improper use of fertilizers may contribute to soil and water pollution.(XII)
Purchasing seeds may subjugate the farmers to seed companies.(XI)
Once the seeds are commercialized on a large-scale by companies, laws pertaining to seeds may result in peasant seeds being decreed illegal or branded as inadequate.(III)
Impact Classification
What
Providing certified seeds and fertilizers is likely to have a positive impact because it will increase agricultural output and farmers’ incomes.
Risk
Although the model is based on good evidence, some farmers may have low level of trust, inadequate skills or insufficient knowledge to fully benefit from the investment.
Impact Thesis
Enhance agricultural outputs and farmers' incomes contributing to greater food security
Enabling Environment
Policy Environment
Medium-Term National Development Policy Framework - An Agenda for Jobs: Creating Prosperity and Equal Opportunity for All (First Step) 2018-2021: One of MTP III's flagship projects and initiatives is implementing subsidy programmes on retail prices of seeds, fertilizers and other agrochemicals. One of the plan pillars is to distribute more than 300,000 metric tons of subsidized seeds (cumulative over 3 years 2018-2021).(3)
To increase farm productivity, 88 varieties of food crops were released to farmers in 2016. Varieties included cassava, cowpea, maize, rice, soybean, and yam. However, very few of these varieties have been adopted.(3)
Financial Environment
Financial incentives: Ghana Agricultural Sector Investment Programme provides financing and support for e.g. linking smallholder farmers to agribusinesses to enhance pro-poor growth and nationwide scaling up of a successful value chain investment approach.(5)
Fiscal incentives: Agrobusiness enjoys a 5-year tax holiday (1% corporate income tax instead of 25%) for businesses with cash crops.(13) To be eligible for any tax incentive, the company must operate entirely and exclusively in Ghana.
Other incentives: The Export Development and Agricultural Investment Fund was set to help with access to capital for investments in agriculture.(14)
Regulatory Environment
The Ministry of Food and Agriculture (MOFA) is the main government agency responsible for developing and executing agriculture policies and strategies in Ghana. It also leads the general surveillance of the seed industry.
Plant and Fertilizer Act 2010 (Act 803); This Act regulates the legal seed system, including seed imports and exports, production, registration, inspection, and quality control, among other matters. It also establishes several councils and committees related to the seed industry.(IX)
2013 Ghana National Seed Policy and 2015 National Seed Plan (Kuhlmann & Zhou, 2016): These policies support a private sector seed industry and outline the government's plans for the sector.(III)
2012 Plant Protection Regulations, Seed (Certification and Standards) Act of 1972 and 2011 Ghana Biosafety Act: These legislative instruments define the qualitative requirements with which the seeds on Ghanaian market must comply.(III)
Ghana has also signed the Plants Breeder Rights based on international standards. These standards confirm plant breeders' ownership of the varieties they release.(III)
Marketplace Participants
Private Sector
Export Development and Agricultural Investment Fund, International Finance Corporation, Agricultural Development Bank, Farmline, Seed Co Limited, Rijk Zwaan Zaadteelt En Zaadhandel BV, SEEDPAG, M&B Seeds, RMG Ghana Ltd, GLDB, Ariku Company
Government
Ministry of Agriculture, National Seed Trade Association of Ghana, National Board for Small Scale Industries
Multilaterals
African Development Bank (AfDB)
Non-Profit
Conference of Health of African and French Agricultural Research (CORAF), Seed Producers Association
Target Locations
Ghana: Upper East
Ghana: Western Region
Ghana: Northern
Ghana: Savannah
References
- (1) World Bank database. https://data.worldbank.org/
- (2) IHS Markit. Comparative Industry Forecast Tables, Agriculture, ISIC Classification Rev. 4.
- (3) Republic of Ghana (2017). Medium-Term National Development Policy Framework: An Agenda for Jobs: Creating Prosperity and Equal Opportunity for All (First Step) 2018-2021. https://s3-us-west-2.amazonaws.com/new-ndpc-static1/CACHES/PUBLICATIONS/2018/08/23/Medium-term+Policy+Framework-Final+June+2018.pdf
- (4) Sachs, J., Schmidt-Traub, G., Kroll, C., Lafortune, G., Fuller, G., Woelm, F. 2020. The Sustainable Development Goals and COVID-19. Sustainable Development Report 2020. Cambridge: Cambridge University Press.
- (5) Ministry of Food and Agriculture (2018). Investing For Food and Jobs (IFJ): An Agenda for Transforming Ghana’s Agriculture (2018-2021). https://mofa.gov.gh/site/images/pdf/National%20Agriculture%20Investment%20Plan_IFJ.pdf (5b) Send Ghana (2014). Women and Smallholder Agriculture in Ghana - Policy Brief 2014. https://www.sendwestafrica.org/phocadownload/Women%20and%20Smallholder%20Agriculture%20in%20Ghana%20Policy%20Brief%20-%20Copy.pdf
- (6) Word Bank (2017). Ghana: Agriculture Sector Policy Note - Transforming Agriculture for Economic Growth, Job Creation and Food Security.
- (7) Oxford Poverty and Human Development Initiative (2020). Charting pathways out of multidimensional poverty: Achieving the SDGs, 2020. https://ophi.org.uk/global-mpi-report-2020/
- (8) Statista. Ghana: Share of economic sectors in the gross domestic product (GDP) from 2009 to 2019. https://www.statista.com/statistics/447524/share-of-economic-sectors-in-the-gdp-in-ghana/
- (9) Nwadialor, N (2020). Ghana's inflation rises above target band – on higher food prices. https://tellimer.com/article/ghanas-inflation-rises-above-target-band-on-h
- (10) Ministry of Food And Agriculture (2019). Operational Performance (2017-2018): Planting for Food and Jobs 2019.
- (11) Ghana Investment Promotion Centre (2017). Doing business in Ghana - To Know and Invest in Ghana.
- (12) Gustafson, S. (2020). Impacts of Ghana's COVID-19 Response. The Food Security Portal 2020. http://ssa.foodsecurityportal.org/regional-sub-portal-blog-entry/sub-saharan-africa/1897/main-story
- (13) Ghana Investment Promotion Center. Ghana incentives inventory. https://www.gipcghana.com/press-and-media/downloads/promotional-materials/33-ghana-incentives-inventory/file.html
- (14) Teye, J. (2019). Agribusiness Investment in Agricultural Commercialization in Ghana: Rethinking Policy Incentives. APRA brief 19, Future Agricultures Consortium.
- (15) Send Ghana (2014). Women and Smallholder Agriculture in Ghana - Policy Brief 2014. https://www.sendwestafrica.org/phocadownload/Women%20and%20Smallholder%20Agriculture%20in%20Ghana%20Policy%20Brief%20-%20Copy.pdf
- (I) Berkeley Investors Club. Agriculture Sector – Crop Production in Ghana. https://investorsclubs.org/agriculture-sector-crop-production-in-ghana/#:~:text=The%20northern%20savannah%20zone%20is,footholds%20in%20the%20northern%20zone. (II) Cornell Alliance for Science. COVID-19 disrupts Africa’s seed supply, threatening food security. https://allianceforscience.cornell.edu/blog/2020/06/covid-19-disrupts-africas-seed-supply-threatening-food-security/ (III) USAID (2017). Feed the Future Ghana Agriculture Policy Support Project (APSP): Seed Market Industry Framework and Strategy Study (SMIFS). https://ghanalinks.org/documents/20181/0/Seed+Marketing+Industry+Framework+Study/816cfa09-0bd9-498a-a554-10b9ed6ff18b?version=1.0 (IV) UN Comtrade database. https://comtrade.un.org/data/ (V) Africa Fertilizer. Ghana Fertilizer Statistics Overview 2017. https://africafertilizer.org/wp-content/uploads/2018/11/Ghana-Fertilizer-Statistics-Overview-2017_EN.pdf (VI) Mordor Intelligence. Ghana Seed Sector Analysis - Growth, Trends, and Forecast (2020 - 2025. https://www.mordorintelligence.com/industry-reports/seed-market-in-ghana (VII) Wongnaa, C.A. et al. (2019). 'Profit efficiency among maize farmers and implications for poverty alleviation and food security in Ghana'. Scientific African, volume 6. (VIII) Loukos, P. and Javed, A. (2018). Opportunities in agricultural value chain digitization - Learnings from Ghana. GSMA. (IX) Republic of Ghana. Ghana Plant and Fertilizer Act 2010 (Act 803). https://tasai.org/wp-content/themes/tasai2016/info_portal/Ghana/Plants%20and%20Fertilizer%20Act-2010_Act%20803.pdf (X) Alliance for a Green Revolution in Africa (2019). The Agribusiness Deal Room at the 2019 African Green Revolution Forum (AGRF). https://agrf.org/dealroom/wp-content/uploads/2020/07/Agribusiness-Deal_Room-AGRF-booklet_020919.pdf (XI) La Via Campesina (2015). Seed laws that criminalise farmers: resistance and fightback. https://www.grain.org/article/entries/5142-seed-laws-that-criminalise-farmers-resistance-and-fightback (XII) Savci, S. (2012). Investigation of Effect of Chemical Fertilizers on Environment. APCBEE Procedia. https://www.sciencedirect.com/science/article/pii/S2212670812000486