Rice in Ghana and the FAO blunder

In a recent interview with Business and Financial Times the UN Food and Agriculture Organisation (FAO) says Ghana¹s over-reliance on foreign imported rice is becoming a source of worry. The FAO Representative in Ghana, Musa Saihou Mbenga, said that, ³By limiting the importation of rice, the country will save money and invest in market development to increase productivity and expand growth.²

Few people can argue with the revealing statement by the FAO representative. However, the rep neglected to put the issue of rice in Ghana in perspective and therefore contributed little to the debate that has been raging since 2009.

In the first instance Musa Saihou Mbenga neglected to say that at the current stage of the development of Ghana¹s rice industry where local supply only caters for 30% of local demand the importation of rice to Ghana is essential to ensure food security in Ghana.

In a FAO document titled Trade Reforms and Food Security (Rome 2003) food security is defined as follows:

Food security exists when all people, at all times, have physical, social and economic access to sufficient, safe and nutritious food which meets their dietary needs and food preferences for an active and healthy life. Household food security is the application of this concept to the family level, with individuals within households as the focus of concern.

Food security revolves around availability, affordability and nutrition according to the preference of the people. The local rice industry fall short on most aspects of this definition, and the only solution - at this stage - is the importation of rice.

The FAO rep also neglected to mention that the solution to this problem has both short and long term implications. Everybody, even rice importers, are fully behind a strategy that will reduce Ghana¹s dependence on imported rice. Such a strategy, however, is a long term strategy and will take considerable time and resources before it is reached. In the meantime government policies are in fact increasing food insecurity by reducing the affordability of rice through excessive import duties.

The issue of import duties on basic foodstuff such as rice, a now acknowledged staple food in Ghana, vegetable oil and other foods has been hotly debated over the last few years.

It will be remembered that the previous government scrapped a 20% import duty on rice in 2008 amidst the 2007 - 2008 food crisis to help consumers. In 2009 the new government reintroduced the duties stating that the food crisis was something of the past and because it was necessary to protect the local industry.

Both the above arguments have been criticised by analysts. In the first place the World Bank announced one month prior to the re-introduction of the duties that a new food crisis is looming.

One just need to watch major news headlines to know that the 2010 - 2011 food crisis is real and will probably be worse than the 2007 - 2008 food crisis. The re-introduction of the high import duties was therefore not only done with deceitful statements, but was indeed insensitive to the plight of Ghana consumers.

In the second place the argument on protection of the local industry just does not hold water for a country that only produces enough to satisfy 30% of local demand. What the local industry needs is massive investment in the industry addressing aspects of seed, fertilizer, irrigation / water management, mechanisation, quality improvement, access to markets, access to credit and overall policy tools.

The only thing the government achieved by creating a massive gap between import duties on rice in Ghana (37%) and the Ivory coast (12.5%) was to promote massive rice smuggling on Ghana¹s Western border that not only caused massive loss in revenue collection, but also distorted local markets and increased the cost of living for millions of Ghanaians.

A proper study of government policies in other developing countries will reveal that the government in Ghana may have it all wrong. When India, a net exporter of rice, found that local production may fall short in 2009 it dropped import duties from 70% to 0% to protect its consumers. In South Africa, a net importer of vegetable oil, there is a 0% VAT levy on cooking oil.

It is clear that there is a confusion on the use of policy instruments in Ghana. The high import duties on a staple food such as rice will not protect the local industry - it will only add to the plight of the consumers in Ghana. A sensible policy would have been reduce the duties dramatically to protect consumers and increase it over time as local supply catches up with local demand.

An analogy can be made with the motor industry. Ghana is a 100% importer of motor vehicles and one would expect that government policies on import duties would be favourable to ensure transport security. However, consumers have been complaining for many years about excessive import duties on vehicles that have led to massive smuggling of cars via Togo. The same has happened with rice.

MOFA (Ministry of Food and Agriculture) has made statements of closing the 70% gap within two to three years. These statements date back to September 2009 when the Minister, Mr. Kwesi Ahwoi, promised to step down by September 2011 if he has not achieved his objectives.

The FAO rep also neglected to put the true situation on the table. In the same article a statement was made that it is estimated that the Aveyime rice project, when it reaches full-capacity production of about 800,000 tonnes, will save Ghana over US$600 million at the current cost of rice importation, possibly yielding a surplus for the country. In the same article Everett Anderson, Managing Director of Prairie Volta Limited and manager of the project, was quoted to have said that the Aveyime project could put Ghana in a position to meet the entire rice needs of the West African sub-region.

The above figures must be put into perspective to expose it as ³lies, damned lies and statistics². A recent presentation on the National Rice Development Strategy (NRDS) for Ghana mentions that the per capita rice consumption in Ghana is currently 38kg and that it will rise to 63kg in 2015 giving an aggregate demand of 1.68 million metric ton by 2015. One does not need to be a rocket scientist to make the calculation that the 800,000 ton from the Aveyime rice project will therefore still leave a 50% gap between local supply and local demand.

Statements on self-sufficiency in rice production within two to three years in the light of the true facts can only be seen as the use of agriculture for political gain.

The problem in Ghana is not the problem of the gap between local supply and local demand, but rather a problem of misinformation, lack of transparency and using agriculture for political propaganda and gain.

The consumers and voters in Ghana expect it from the government to make the necessary investment in agriculture to reduce Ghana¹s dependency on imported foodstuff, even if it will take ten years.

On the other hand the consumers and voters in Ghana expect the government to be sensitive in the short term given a severe food crisis and while the longer term strategy unfold.

It is important that both the media and important functionaries such as the FAO rep in Ghana put the issue of rice in Ghana into its true perspective. Headlines such as ³Rice imports killing Ghanaian growers ­ FAO² are deceitful and do not reflect the true picture. It only supports the government to defend indefensible short term policies such as high import duties on basic foodstuffs.

A responsible organisation such as the FAO must contribute in a responsible way in order to be part of the solution, and not part of the problem.

Food Security Ghana

http://foodsecurityghana.com