 Hello everyone today. I'm pleased to be presenting a paper titled the agro-processing industry and its potential for structural transformation of the Ghanaian economy This is a paper that has been authored by myself and Monica Lambo and Cuevue both from the University of Ghana Department of Economics This is the outline that my presentation will take our start of providing an introduction and background to the study I'll then talk about the evolution of agro-processing in Ghana and talk about its contribution To Ghana's economy. I'll discuss some of the characteristics of agro-processing firms in Ghana and talk about some of the challenges that they face in Their operations. I'll describe the policy environment of agro-processing firms and then touch on a few highlights of key agro-processing sub sectors in the country. I'll then present my concluding remarks So although its Contribution to Ghana's GDP has fallen over time. The agricultural sector continues to play a very important role in Ghana's overall growth Particularly because it continues to hire or employ a lot of people within that sector The sector is broadly divided into five main parts. There's the crop sub sector of which cocoa forms a very important component There's also livestock, forestry and then fisheries. In 2017 the crop sub sector alone contributed about 77.5% to the sector and within this sector food processing is a very important activity Generally the FAO describes agro-processing as the transformation of products originating from agriculture, forestry and then fisheries In Ghana the focus on agro-processing is important for a number of reasons First of all is the potential to reduce post harvest losses So for example after a root and tuber crop like cassava starts to spoil after only about seven days of harvesting and According to the Ministry of Food and Agriculture in 2012 only about 5% of food crops harvested in Ghana go through any type of processing Now of course this there's a large amount of food spoilage that we tend to see and it has implications for the food security position of the country The focus on agro-processing is also important because it can generate potential important forward linkages like in improvements in employment opportunities and also rural income diversification Now according to Ocali and Quating Agro-processing activities in Ghana can be traced all the way back to the colonial period During this time these activities tended to be performed on a small scale and the products from the activities tended to be consumed locally After independence however there was an industrialization drive that the government embarked on that's resulted in the establishment of a number of states owned processing factories that were linked Directly to the country's agricultural sector So there were important backward linkages created between the agric sector and then industry So examples include the sugar factories in commando and asutriere in the western and eastern regions respectively Also the pualugu tomato factory or gatanga meat processing factory and the insawam fruits cannery Unfortunately many of these state-owned processing plants are currently inactive More recently they have been increases in agro-processing activities Mostly among private firms for both local and then international consumption Now I want to talk about some of the characteristics of agro-processing firms in the country according to Quartia and Dacoa in their 2015 publication agro-processing in Ghana may be classified into two main groups We have domestic processing and also factory processing Domestic processing is characterized by mostly female workers who tend to dominate the space Although they have very little formal training The skills in agro-processing that they have acquired have been obtained mostly through apprenticeship programs that they have attended Family labor is an integral component of these activities and the outputs from the processing activities tend to be of variable quality Examples include shea butter, gari, fish processing, flower making among others Factory processing on the other hand tends to be performed on a larger scale That it tends to be mostly foreign owned and examples include Nestle and Kadri Some are also publicly owned like Fan Melk Ghana So like I said large quantities of raw materials tend to be processed by these firms and they contribute significantly to Ghana's economy through their export activities Now a lot of the Agro-processing firms in Ghana tend to be predominantly small According to a study by Afo cumson and others in 2014 Over 80% of all agro-processing firms in Ghana are actually micro enterprises They are not very well advanced in terms of their processing activities and there's a relatively low value low degree of value addition These firms tend to operate mainly in the informal sector of the country with very few linkages with marketing and then financial services The technologies that are adopted tend to be simple and locally made although over time these have evolved to more semi-mechanized and fully mechanized methods The patterns of production tend to be predominantly local to local and these locally produced commodities are often consumed locally as well The export is dominated by horticultural products fruits and beverages in addition to some vegetables roots and tubers and palm oil I'll talk more about the policy space in a bit But then there are few policies that are tailored specifically to the needs of agro-processing SMEs in the country Now although the information of the data on the output of agro-processing firms in Ghana tends to be limited We've been able to put together some statistics that we hope will give you an idea About the contribution of agro-processing firms to Ghana's economy Now within the manufacturing sector in Ghana the agro industry represents about 55 percent of total manufacturing value added Between 2008 and 2013 the industry grew at an average rate of about fourteen point nine three percent a Number of micro-studies have also been done to give an idea as to the contribution of this agro industry to Ghana's economy in terms of employment and income earning potentials According to a study by Ampedu Amayal and Omair in 2015 They found that the agro industry is a very important source of employment for rural individuals Particularly for women like I said who tend to dominate this space In a 2014 study by Afuqumzun and others there was a study of 272 small and medium-scale agro-processing in enterprises in Ghana done Where they found that the Bronca half of Western and Northern regions were very important for the employment of labor force within this industry With regards to exports Processed and semi-processed agricultural products accounted for about eighty six point three percent of the country's non-traditional exports in 2014 Examining the figure on the right you can see that between 2004 and 2011 Export earnings from agro-processing increased from about a hundred and eighty one million dollars to about nine hundred and two point five Million dollars this represents a growth of about of about four hundred percent for that period Between 2011 and 2013 and 2014 we also noticed an increase In export earnings from about two point one one billion to about two point one six billion according to the Ghana Export Promotions Authority in 2014 Now I'd like to talk about some challenges that are faced by firms within the agro industry So first of all there's a general complaint that some of these firms lack the adequate Access to resources that they need to operate their factories or their firms at maximum capacity There's also a lack of facilitating services like good transportation systems storage facilities among others Their lack of enabling institutions like credit facilities food safety and standards boards in addition to access to technical knowledge There's also a recognized low interest on the part of the youth in farming activities and agro-processing and agribusiness in general one potential explanation is Possibly the influence of the mining sector which tends to attract the youth away from the agricultural sector and more towards those activities There's also a recognized low demand for processed products firstly perhaps because of the general low income levels of individuals But also there's a noticed preference for foreign products And that might also impact the demand for these processed products from Ghanaian industries There's also a lack of appropriate technology the labor-intensive and time-consuming features of the traditional and technologies adopted often tends to present a Limitation to the to be able to scale up operations from these firms There's also a high cost of equipment and local technology and an apparent disconnects between local product development and uptick by local agro-processing firms Nonetheless the agro-processing sector does have some potential for driving higher economic growth and development within the Ghanaian economy first of all over two-thirds of the total land area is fertile and Requires little fertilizer to produce to produce farm commodities There's also a well-endowed network of water bodies which may be sourced for irrigation purposes So the implication of these is the potential to generate a lot of raw materials to feed these local industries that we have There are also numerous opportunities to add value to agricultural commodities So as I said before there's the exports of processed horticultural products tend to be very significant within the Ghanaian economy The country also has a diverse also has diverse Agro-ecological zones and there's a diversity of commodities that could be easily processed for example in the coastal zones Fishery and forestry is particularly important in the forest zones We have the exports of certain cash crops like cocoa The northern region is known for the production of cereals root crops and legumes while the southern savannah is characterized by the cultivation of root crops The government has also demonstrated Significant interest in agribusiness and the commitments to continue to support increased investment in this area The 2017 launch of the small and medium enterprises Association of Ghana has also been important because it has been established where I'm Advocates for favorable policies for SMEs As I said before majority of agro-processing firms tend to fall within the small and micro enterprises bracket The large unemployed youth population may also be useful to provide the much-needed labor supply for the agricultural sector I'd like to talk a little bit about the policy environment of agro-processing firms and how it appears to have evolved over time So in the colonial era as I said before there were some agro-processing activities carried out although these were done on a very small scale I'm a lot of the raw materials that were produced within the country at the time tended to be exported to European Industries where it tended to be and processed there in the post-colonial era However, the industrialization drive saw the setting up of a number of local industries as I mentioned before and The creation of important backward linkages with this industry So for example, we had a lot of raw materials cultivated and then I'm used for agro-processing activities The 1970s saw the operation feed yourself and more importantly the operation feed your industry's campaigns Which encouraged the production or the supply of raw materials towards our local industries Between 1991 and 2000 there were a number of different programs and projects that were carried out such as the agricultural diversification project that was meant to both increase agricultural production, but also increase the activities of agro-processing firms There were few commodity-specific campaigns that were undertaken like the 2001 president's special initiative which encouraged the cultivation of for example, Kassava into industrial starch Between 2002 and 2013 there were a number of development programs like the GP Ghana poverty reduction strategies and Ghana shared growth and development agenda that tended to push the agenda that the agricultural sector could Potentially lead the structural transformation of the Ghanaian economy as long as adequate focus on agro-processing was emphasized Between 2001 and 2015 the medium-term agricultural sector investment plan also aggressively promoted agro-processing activities within the country by creating incentive structures for example that tended to reward individuals who would adopt relevant technologies in their agro-processing activities and also there was the extension of certain Technical and also financial assistance to individuals who were willing to add value to important Stable crops within the country the number of other relevant policies and programs that were that are important for the performance of the agro-processing sector such as the Ghana trade policy that's encouraged the exports of these Of agro-processing firms we had the setting up of the export development agriculture and investment fund the fertilizer program the village infrastructure projects that Encouraged the development and use of appropriate technology in the in the agro-processing space and a few others Now as you can as you know You may have noticed a lot of these Agricultural policies over time have included sections that have tended to focus on the development of the agro-processing industry in Ghana The country may however benefit from a more directed integrated and strategic national plan that would take into account The specific challenges and characteristics of the small and medium skill firms in the informal sector of the country Particularly those engaged in the agro-processing activities These policies would be important for tackling weak backward linkages between Agriculture and then the industry sectors it would also be important to try to facilitate better forward linkages in Including access to markets both local and international and also access to employment opportunities. I Would like now I would now like to talk about or highlight some of the key agro-processing Subsexes in Ghana now these include nuts and oils grains roots and tubers and then fruits and fruit juices As I said before a large amount of agricultural products as I have a set at farms do not undergo any process Processing at all they tend to be distributed and then consumed directly either locally or internationally a few do undergo Some degree of processing before final sale and consumption although the value chains tend to vary Processing over time has evolved from the use of traditional methods like the mortar and pestle for the processing of grains And then the use of knives to cut up and root and tubers for drying to more semi-mechanized and then to fully mechanized methods The new technologies introduced have been important because they have tended to reduce processing times and also facilitated a more efficient use of the inputs into these processing activities For the processing of oils. We have seen the development of hydro Hydraulic and then mechanical presses for the production of grains We've seen the the introduction of locally made grinders for roots and tubers We have motorized greatest seaving machines and so on and then for the processes of for the processing of fruits and fruit juices We have juice extraction machines We have which have been very important for the continued processing of fruits and then fruit juices Now despite the importance of these new technologies there has been a problem of affordability so a lot of the technologies haven't been Accessible to a lot of the players within the agro industry space because they are unable to afford them one solution to this problem Has been to form Cooperatives however those individuals who are not able to form these Cooperatives and are not able to afford these technologies on their own and therefore continue to use the traditional systems of processing which has implications for the scaling up of activities So in conclusion although I mentioned before that the services sector contributes the largest Proportion to Ganesh GDP in the country It has been it has been noted that it may be unlikely this sector may be unlikely to sustain growth and long-term development for a number of reasons First the levels of education in the country appear to be more suited to production in light and manufacturing success Secondly the current access to only basic infrastructure may be more conducive to activities of the agricultural and agro processing sector Third the experience gathered by the labor force in agro processing industries may propel the establishment and growth of heavy Manufacturing industries which would all which may be expected to ultimately spare overall economic growth and development The current situation that we see whether sectoral contribution has moved or has shifted from predominantly the agricultural sector to the services sector May be more resembling of a structural shift and not necessarily a transformation Well, because first of all, there's the dominance of informal activities within the services sector There's the prevalence of low productivity activities and the reduced significance and performance of the agricultural sector now the focus on agro processing in Ghana is important because because of our expanding urban sector and the implications for food security The sector as I talked about before does show some important potential to bring about a critical structural transformation of the economy useful steps to be taken include an improvement in the policy environment for SMEs We also there's also the need to yes continue to develop technological Innovations but also to make these as affordable as possible There should be improvement in backward and forward linkages and also the provision of necessary infrastructure in amenities To help to encourage the activities of agro processing firms There may also be important national campaigns and increased focus on the need to attract the youth into the industry Thank you very much for your attention