Investment Opportunity in Ghana Maize, Soya and Rice

14th May, 2010 –

Reasons to Invest in Commercial Farming in Ghana

Business Opportunity Summary

Ghana has attractive attributes for commercial farming, with large tracts of land available with excellent soil and climate suitable for the production of many crops. Lake Volta, the world’s largest man-made lake, is fed by an extensive system of rivers. Labor is inexpensive with typical farm labor costing between GH¢3-5 per day ($2.22-$3.57). Together, Ghana’s vast resources of agricultural land with plentiful water for irrigation and available labor make it ideal for commercial farming of key staple crops such as maize, soya, and rice.

Maize is Ghana’s number one staple crop followed by rice, and domestic demand for both is growing. Between 2010 and 2015, rice demand is projected to grow at a compound annual growth of 11.8 percent and maize at 2.6 percent. However, the country is not self-sufficient in either of its two most important staple crops, as Ghana has experienced average shortfalls in domestic maize supplies of 12 percent and domestic rice supplies of 69 percent in recent years. Therefore, the Government of Ghana has an interest in increasing production of these key staple foods to meet the country’s growing demand for rice and maize and to improve food security.

Maize, soya and rice production are currently dominated by smallholder farmers who rely on rainfed conditions with limited use of improved seeds, fertilizer, mechanization, and post-harvest facilities. As a result, average yields in Ghana are well below attainable levels and post-harvest losses are high. Investors in commercial farming have the opportunity to realize yields per hectare of 5.0-5.5 metric tons in maize, 4.5 metric tons in soya, and 4.0-4.5 metric tons in rice using the best agricultural practices in order to capitalize on the large and growing demand for these critical staple crops in Ghana.

Price points within Ghana are favorable for local commercial production. Local wholesale prices for maize have ranged between $280 to $560 per metric ton between 2007-2009. Wholesale prices per metric ton for rice have ranged from $700 to $1,000 for local varieties and from $750 to $1,250 for imported varieties from 2007-2009.

MiDA offers unique support to facilitate new investments in commercial farming based on its involvement in local communities with land and water resources that are interested in attracting external investors. Because identifying, negotiating and acquiring land for commercial farming can be difficult for external investors, MiDA’s services can prove invaluable in helping investors to work through the process to establish long-term, mutually beneficial relationships with land owners and the communities. Activities within MiDA’s agricultural project in these communities include farmer and enterprise trainings to accelerate the development of commercial skills and capacity among farmer-based organizations (FBOs) and their business partners; land tenure facilitation to ensure tenure security for land users and facilitate access to land for high-value crops; and credit services to increase farmers’ access to credit for the improvement of value chain activities.

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