Impacts of COVID-19 along the agricultural value chain in Ghana

30 Jun 2020

The global pandemic, COVID-19 has become a household name with countries in all parts of the world recording increasing cases of the virus. The current confirmed cases in Ghana as at 17th May 2020 have risen to 5,735 with the percentage of males infected being 62% and percentage of females being 38% ( Out of the 16 regions in Ghana, 13 regions have people testing positive while the rest of the three regions, Bono East, Savannah and Ahafo are all yet to report any case. It is not surprising that as Ghana continues to record more cases of COVID-19 in the short term, it will need to prepare itself challenges over the long term as well.

As the virus continues spread throughout the country, various sectors of the economy such as agriculture, services and industry have been affected. Farmers, retailers and processors along the agricultural value chain have also been negatively affected.  Social distancing, partial lockdown and a restriction on movements have resulted in the closure of some market centres throughout the country. Some of the impacts of the pandemic may not be fully realised currently but the trends show that the agricultural sector will be adversely affected in the near future. Field monitoring and interactions with farmers and AgriSMEs, indicate that should there not be strategic investments in, and targeted support for, the agriculture sector, there will be a shortfall in food production, which will threaten the country’s food security.  The food-processing sector will also be affected; the implication is a reduction in the economic power and living standards of these farmers and AgriSMEs in the country. Additionally, accessing labour for the production, processing and transportation of food products is vital to the food, beverage and agricultural industry’s ability to maintain an adequate food supply for Ghana. Although no significant labour shortages have been reported to date as a result of COVID-19, this may well change in the near future as migrants who initially travelled to city centre for jobs might be forced to move back to their villages and families.

According to Maximo Torero Cullen, chief economist at the United Nations Food and Agriculture Organization (FAO), “a protracted pandemic crisis could quickly put a strain on the food supply chains, a complex web of interactions involving farmers, agricultural inputs, processing plants, shipping, retailers and more”.

Impact on production

Over the past years, climate change and a concomitant irregular rainfall pattern has been one of the major stumbling blocks preventing farmers from achieving high yields. Farmers, and especially smallholder farmers who do not have access to irrigation and mechanised farming techniques, have been battling with low yields due to this dwindling rainfall pattern. They are therefore unable to predict the right time to plant their crops. As Ghana continues to confirm more COVID-19 cases, Government might be compelled to put in place stricter measures beyond social distancing, such as a complete lockdown and a restriction on movements.

Consequently, over the short term, agricultural production might typically be constrained by declining demand due to these preventative measures, which, in turn, could lead to increased unemployment and loss of income. Also, over the medium-to-long term, access to key inputs such as seeds, fertilizers and pesticides and rural credit might equally become a limiting factor.

Without doubt, smallholder farmers will be facing additional woes; not only the inconsistent rainfall pattern, but also the indirect consequences of COVID-19, such as the reduction in markets for their produce, an absence of labour, and the lack of available agro-inputs and extension services.

This means that farmers might not have access to the inputs required during the planting seasons and, in instances where these inputs are available, they might not necessarily be available when needed. For example, a total lockdown will result in the closure of input shops. Therefore, a maize farmer who requires fertilizer and other inputs for his crops at a particular time, might not have access to them. As a result he will not be able to apply the needed fertilizer to his crops at the correct time.

In the rural areas of Ghana, farmers usually transport their produce to small and large markets to sell and, in turn, purchase other essential items such as salt, milk and soap with the monies made from their sale. Market closures and a total lockdown mean that farmers will not be able to take their produce to market. While some of the produce, such as maize and beans, can be stored for future sale, other produce, such as tomatoes and mangos, might not necessarily be able to withstand being stored locally for a long period of time. These challenges are coupled with the fact that some farmers do not have access to storage facilities at all. If they do, they may not have enough space to store their entire yields, a reality which would compel them sell their produce at any available price. The end result of this is the adverse effect on the profits and thus the living standards of smallholder farmers. While the impact is currently minor, should the pandemic remain for a while, its negative impact on the yields of small holder farmers will be catastrophic.

Impact on access to inputs and input distribution

Another important aspect of the agricultural value chain is retailing, which includes agricultural-produce retailing and inputs retailing. Agro-inputs such as seeds, fertilizers, weedicides, pesticides and other inputs are basic essentials for every farmer especially smallholder farmers. Over the past year, government, public and private organizations such as AFAP have encouraged farmers to adopt modern farming methods such as the use of improved seeds, good agricultural practices and the right fertilizer application in order to boost their yields and subsequently improve their standard of living through increased output. While the adoption by farmers has been relatively low, there is no doubt that farmers who have adopted these techniques have seen massive improvements in their yields (AFAP ‒ SIPMA monitoring report). Linked to this phenomenon, agro-input retailers, also recorded high sales as farmers have increased their purchases of such inputs (AFAP ‒ SIPMA monitoring report). This impact is cyclical: as farmers adopt new practices such as those mentioned to increase their yields and food supplies to markets and the country in totality, they directly create jobs for input retailers; who then create more demand from farmers.

However, with the outbreak of this pandemic, this revolving effect is likely to be hindered. Closure of markets, partial or complete lockdown and social distancing will almost certainly present a stumbling block to this. In Ghana, most of these rural farmers produce to feed both the local markets and national market and, in some cases, the international market. While some buyers move to the villages to collect and purchase the produce from the farmers, the majority of farmers, due to their location, poor road networks and transportation challenges, have to transport their own produce to the markets to sell. These farmers will be greatly affected by market closure and other restrictions. Also, buyers and middlemen who, all things being equal would have travelled to the villages to purchase produce, would not be able to do so. As farmers are compelled to stay at home rather than farm, they, in turn, will not be able to purchase inputs from agro-input retailers.

Impact on agroprocessing and Industry

Over the past years in Ghana, farmers have been encouraged to add value to their produce in order to reduce spoilage, increase food security in the country, improve farmers’ standards of living, and also increase employment. Laudable as it may seem, it has not been fully adopted by smallholder farmers, the majority of whom prefer to sell the raw produce to retailers rather than add value to it. For example in the rural areas of Ghana, most cassava growers would rather grow their produce and sell it to retailers or allow it to rot on their farmlands than add value to it by turning the cassava into chips or “gari”.

The effect of COVID-19 on agriculture, might equally affect food processors who may not be able to access the raw materials needed for production. It is estimated that the constant demand, yet reduced supply of raw materials will automatically cause an increase in prices of goods i.e. food. Food processors might lay off their workers in order to reduce their production costs and small-scale processors might end up shutting completely.

Inevitably, a rise in urban unemployment could lead to workers emigrating to rural areas. Farmers who are usually encouraged to mechanise their agricultural practices in order to boost productivity will rather prefer employing cheap emigrating labour from the urban areas. This may drastically impact on technology adoption among rural farmers and possibly agricultural productivity.

As the number of COVID-19 cases keeps increasing, the continuous functioning of the food supply chain in the country is key. As such, there is a need to put strategies in place to safeguard the economy against a possible food crisis.

Access to market and impact on food pricing

Most markets throughout the country still remain closed or are compelled to practice social distancing. Traders are currently given tags indicating the days they are supposed to sell at the markets. While decongestion of the markets is necessary to curb the spread of the virus, these measures are, however, affecting the prices of most food items. Decongestion and market closures have led to a shortage of some food items in some areas and as the law of supply and demand dictates, with constant and unchanging demand for a limited supply, prices of goods will increase in response.

Despite the fact that it is still too early to determine the overall impact of the pandemic on food prices, interactions and field visits indicate that there have been increases in prices on some food items and agricultural inputs. These were largely associated with the shortage of such items as a result of the strict measures put in place by Government. For instance, farmers in the Bono region of Ghana lamented about how they had difficulties accessing inputs for their farms, and in such instances that inputs were available, they had to purchase them at higher prices.