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16.10.2008 Business & Finance

Agriculture sector not attracting credit loans ... poultry not doing well-Quartey

By The Statesman

The lingering effects of the world food crisis are taking their toll on small-scale Ghanaian farmers, who are receiving dwindling credit loans from financiers.

Credit loans to the agricultural sector have dropped dramatically over the last ten years. In 1998, 25% of government spending was directed towards agriculture, yet come 2006, this figure had been cut to 7%. Furthermore, lending to agriculture as a percent of total bank lending has decreased from 9.7% to 4.3% over a five-year span.

Similar reductions in credit lending have affected the industrial sector, which has seen their loans decrease from 25% to 12%.

President of the Ghana National Association of Poultry farmers, Ken Quartey speculated that perhaps bank and other lending institutions "don't see various policies in place that mitigate the risks of lending' to the agricultural sector.

'If credit is dropping as dramatically as the data shows, then you need to start looking at why.'Ghana imports almost one third of the EU frozen chicken that goes to Africa.

Cameroon, Togo, Senegal and South Africa are among the other nations receiving imported frozen chickens and chicken parts.

Ghana"s position was further made hopeless when the poultry industry lost the battle with government not to reduce tariff on imported poultry. The tax on imported poultry was reduced from 40% to 20% whilst that on rice also came down from 25% to 20%.

This was seen by most farmers (poultry and rice) as a reversal of the government's plan and pledge in 2003 to increase tariffs on imported poultry products and rice to boost their production in the country.

The European Union, the source of most of the imported chicken provides 43 billion euros to its farmers annually.

The President of Ghana National Poultry Farmers? Association Kenneth Quartey said the decision to pass the law is a symptom of weak leadership in the country?s governance system by bowing to external pressures.

The current situation of the poultry industry would be compounded when the EPAs takes effect in 2008 in its current state with the removal of tariffs across board.

The total opening of borders, which it is all about on both sides, under this agreement, can only lead to a paralysis of productive sectors in the countries of the South such as Ghana, with the invasion of European goods and services.

Especially in the agricultural field where Ghanaian producers would face up to largely subsidised products.

On the other hand, it is not obvious that the removal of tariff barriers in Europe means free access of ACP exports to this market.

Several limitations can exist which are related to quality standards or to phytosanitary measures.

The poultry sub-sector might be in danger of collapse. Already, big and small poultry farms in Ghana including Darko Farms, Afariwa Farms among others have cut down output and staff considerably because they can not compete with the cheap imports from EU and USA.

Similarly, by removing tariff barriers, African countries would be reduced to putting a cross on their main source of internal financial revenues.

Mr Quartey is particularly concerned about the impact these policies are reaping on the poultry industry, which has seen European imports increase to nearly 50,000 tones.

As The Statesman asserted in February of this year, the government's inability to generate sustainable trade policies to protect the poultry industry has allowed the business to collapse.

These agreements, developed in 2006, marked a shift in trade associations between the EU and ACP countries towards more reciprocal relationships.

African countries are now required to open their markets to almost all EU imports, with the removal of tariffs across the board. Says the non-governmental organization Friends of the Earth Ghana, in a document addressing the impact of EPAs on Ghana, 'When trade is used as part of national strategies to reduce poverty, countries should be able to how and when they open their own markets and use trade policies that best suit their own level of development, their priorities, and their needs.'

Otherwise, they warn, the results could lead to deindustrialization.

In fact the document itself is marred by irregularities and contradictions, claims Mr Tanor.

'There are some serious, serious gaps in the document. On one level they say that we will not use import tariffs to affect imports and domestic production,' he says.

 'And later they say that they will use tariffs to ensure and encourage domestic production. So which is which? Are you going to use tariffs or are you not?'

Too, he asserts that the government is 'entering into different trade policies which make these things redundant. In the case of the EPAs, it makes it illegal to implement those.'

He believes that the government needs to ensure that local lenders are lending to small holders, and banks lend to commercial farmers. Eighty percent of farmers in Ghana practice small-scale agriculture.

But the larger commercial farms comprise the bulk of food production and are therefore substantially more profitable. Anna Antwi of Actionaid Ghana says, 'Small farmers are not getting any money now because everything is going commercial, from banks to other lending institutions.'

This has long-term, devastating impacts on the agricultural sector, she believes, which leads to less government support and limited market access for local producers.

The chief problem with Ghana's agricultural trade policies, says Mr Tanor, is that they are not integrated at a national level.

'You can address everyone in terms of their different needs and still not integrate them into one cultural market or cultural industry.

 Without that, even though there are some sectors within the industry that are commercial, they will not have the kind of support inside the system that will allow them to compete against imports.'

The workshop will also address specific concerns such as food security, market access, distribution, and investment in food production.

But Food and Agricultural Minister Ernest Debra said government has a comprehensive package for the poultry sub sector and the sector as a whole which will be unveiled at the upcoming farmers' day celebrations later next month.