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Credit constraints hamper agricultural growth - Report

Oct. 14, 2016, 9:40 a.m.

Trouble that hover around credit to smallholder farmers, who constitute about 85% of the agricultural workforce, linger on as a major challenge affecting the growth of the sector in the country, a report by the Ghana Trade and Livelihood Coalition (GTLC) has indicated.

The 2014 and 2015 Agro Policy Performance Barometer (APPB) report has cataloged quite a number of challenges bedeviling smallholder farmers of which access to credit could have helped the farmers easily address most of them.

The report revealed that issues surrounding credit to smallholder farmers had to do with difficult access, untimeliness of release, and high interest rates. Majority of smallholder farmers had to rely on private individuals such as family members, traders and friends for credit at inflated interest rates. This is because mainstream banking institutions are reluctant to meet the financial needs of farmers across the country.

The incapacitation of the farmers (largely crop cultivators) has left them drowning in the pool of challenges. The report cited their inability to acquire certified seeds, buy fertilizer as subsidised fertilizer is woefully inadequate, as well as, the inaccessibility and payment for the services of mechanised machinery.

Addressing a stakeholders’ forum in Sunyani, Ibrabim Akalbila, Coordinator of GTLC, said the situation has affected the output of the crops subsector which represents a 66.2% share of the contribution of agriculture to GDP, adding “adverse changes in the growth of the crops subsector has a relatively higher implication on the general agricultural performance.”

Mr. Akalbila explained that majority of smallholder farmers do not have access to subsidized fertilizer, strategically meant to ease their financial burden.

Smallholder farmers who apply fertilizer on their farms mostly buy at expensive prices on the open market and rural agro-input shops.

Government’s subsidised fertilizer programme was introduced about eight ago to support smallholder farmers, but issues like smuggling, large quantity purchased by commercial farmers, and illegal stocking by retailers have marred the beauty of the programme, denying smallholder farmers access to it.

The Coalition among other things has recommended that policy and initiatives by government should be able to create the enabling environment to encourage “favourable lending” by financial institutions to farmers. It further advocated more private sector input credit initiatives to support smallholder farmers.

The primary objective of the APPB is to provide a critical assessment of government policy commitment to the implementation of Medium Term Agricultural Sector Investment Plan (METASIP-2011-2015) and also ensure the achievement of an annual agricultural GDP growth of at least 6%.

Two crops-rice and tomato have since been used as proxy for data collection to feed the APPB report. Rice represents the five food security crops and tomato represents vegetables. The APPB report analyses policy intervention to these two crops and make assessment of impact to the crops sector as the largest variable in the agriculture.

Source: B&FT