Monday, September 26, 2011

Gov’t considers agric financing options

Government is collaborating with the banks to promote financing mechanisms and inventory financing such as the warehouse receipts system and commodity exchanges to expand investments in the agriculture sector, Minister of Food and Agriculture, Mr. Kwesi Ahwoi, has said.

Long-term financing, which is a priority if agribusiness must grow and become competitive, has been absent in an environment where government itself is looking for the same resources to tackle other priority areas, he said.

Plans have been disclosed to commence the establishment of a commodity exchange and to develop a regulated warehouse receipt system by 2012, to help assist farmers to gain easy access to ready markets - both locally and internationally.

The warehouse receipt system will enable producers and commercial entities to convert inventories of agricultural raw materials into a readily tradable item. Farmers can then access credit facilities by using their inventories as security.

Mr. Ahwoi made this disclosure in Accra at the Invest in Ghana Seminar, 2011, organised by the Ghana Investment Promotion Centre, under the topic, ‘Agriculture & Agribusiness: Utilising Synergies for Sustained Agricultural Development.’

He said the government is considering an agribusiness-led strategy, anchored on seven pillars, in order to modernise agriculture and make it more competitive and profitable.

The seven pillars, he enumerated, are enhancing agriculture productivity; upgrading and up-scaling value-chains; exploiting local, regional and international demand; strengthening technological effort and innovation capabilities; promoting effective and innovative financing; stimulating the private sector; and improving infrastructure and energy access.

He explained that an agribusiness-led strategy that focuses on these seven pillars will reveal the diverse actors that need to work together to achieve higher productivity, incomes and economic growth.

“An agribusiness-led strategy requires all actors in the food and agriculture supply chain to take the market as the main target of their businesses.

“The actors include equipment and machinery manufacturers, researchers for continuous development of improved technologies, producers, processors, traders, exporters, bankers, insurance brokers and policy makers who need to create the enabling policy environment for the businesses to flourish and experience sustainable growth.

“The Ministry is currently promoting the development of rice, soya, maize and chicken value- chains in addition to other works such as the Northern Rural Growth Programme, and the Marketing Project that are using the approach to increase productivity and market access.”

Mr. Ahwoi observed that the country’s new economic asset, oil, makes its more pressing for it to develop agriculture through agribuisness.

Doing this will prevent the likelihood of the country experiencing the Dutch disease, and also provide value-added foods and other products to meet the potential needs of high-income consumers.

“Local industry-players and financial institutions need to explore these opportunities and take advantage of them before external players take over the playing field.”

He urged players in the agriculture sector to redouble their efforts to ensure that they capture the emerging local, regional and international markets.

“We can do it if we all apply ourselves to the discipline of denying immediate gain and focusing on painstaking, gradual and consistent investments and improvements in the way we do business.

“We will need to intensify regulation and enforcement of rules, and will require effective market association in this direction,” Mr. Ahwoi stressed.

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