Aging farmers killing oil palm sector

Aging farmers and lack of access to subsidised fertilisers have been identified as major factors hindering the cultivation of oil palm in the country, Rosemary Addico, Oil Palm Programme Manager at Solidaridad has said.

“Aging farmers in the oil palm sector is a major problem in the country’s farming sector, while lack of access to an improved subsidised fertiliser supply chain up to the farm gate also poses a major challenge to development of the crop.

“If Ghana invests in an improved fertiliser supply chain, it is going to support the oil palm crop growers.

“Fertiliser is the driver. With fertiliser we can hit over 200 percent increase of crop yields,” she told B&FT in an interview, after a workshop aimed at brainstorming on revival of the Ghana Oil Palm Development Association (GOPDA) to serve as a strong and vibrant mouthpiece to begin constructive negotiations and dialogue with government on developing the oil palm sector.

The workshop, funded by Business Sector Advocacy Challenge Fund (BUSAC) and organised by Solidaridad -- a not-for profit organisation that is interested in developing small- and medium-scale oil palm producers to be sustainable and profitable, was targetted at developing a vibrant sector, one dominated by small-scale farmers, to be more productive and profitable.

It brought together various practitioners in the value chain ranging from agronomists to oil palm farmers.

Addico said: “We have seen the potential in the oil palm sector. The crop has a huge potential but nobody is supporting the sector. We have subsidised fertilisers for other crops but oil palm is not getting any support.”

She described the oil palm value chain as a sector that can be described as a good crop for poverty alleviation, food security, and job-creation for the youth, observing that there are a lot of opportunities existing in the crop’s value chain: “If you go to the rural areas a lot of women are into oil palm processing, and this has a huge benefit for the local economy”.

She acknowledged the BUSAC fund for supporting trevival of a vibrant advocacy body for a better business environment.

Mr. Nicolas Jorgensen Gebara, Fund Manager, BUSAC Fund explained that the outfit decided to support Solidaridad’s oil palm programme because of the huge potential the crop holds for the country’s economy.

“It is the second-most important crop with good export potential, and it’s an essential avenue for a lot of people to create growth and employment. All these factors meet our objectives, we believe that by providing support to the sector for the creation of sound business association that will advocate and represent its members from the palm oil sector will promote the quality, the standards and export,” he said.

The Fund is expected to run till 2015, and will support advocacy training of the operators in the oil palm value chain to help develop credibility to stand as partners and as counterparts for constructive negotiation with government, he remarked.

Oil palm is the fifth-largest crop in the country in terms of area planted after cocoa, maize, cassava and yam.

Approximately 305,758 hectares of plantation is being cultivated nationwide, with an additional 20,000 hectares needed to meet local demand.

In 2010, oil palm processing groups projected a production output of 260,000 metric tonnes of palm oil, which indicates a deficit of 35,000 metric tonnes -- leaving government with no other option but to spend US$100million annually on importation of oil palm to make up for the deficit.

An estimated unmet demand of oil palm in the ECOWAS sub-region is between 850,000 and 1,000,000 metric tonnes annually, a huge market the country can take advantage of if properly managed.

The country is said to have a total area of 305,758 hectares of oil palm. More than 80 percent of this is cultivated by private small-scale farmers who mostly use varieties of unimproved planting material. This has contributed to the very low productivity in the Ghanaian oil palm industry.

The rising trend in international demand has been precipitated by increasing demand for palm oil in bio-fuel activities.

Crude Petroleum Price determinants continue to push upward pressure on the price, and demand for crude palm oil (CPO) is steadily rising in India, China, Europe and America for bio-fuel. In view of this development, investors have been diverting their investment portfolios into CPO.

SWAPP investigates oil palm mill efficiency levels

Solidaridad’s Sustainable West Africa Palm Oil Programme (SWAPP) says it is conducting a research study to determine efficiency levels of the small scale oil palm processing mills in the country.

The research is expected to cover four different mills; namely Yabosson Oil Mill in Adonkrono, Worfapa Ye Oil Mill in Kusi, Serendipalm Organic, and Fair Trade Oil Mill in Asuom, all located in the Eastern and Central Regions.

SWAPP contracted Lawrence Atsrim, a palm oil processing and refinery expert with 32 years of experience working in oil palm processing in Ghana, to lead the team of researchers to carry out a Mill Extraction Efficiency Research on the different types of artisanal mill set-ups existing in the country.

Ghana has over 1,250 local small-scale,artisanal palm oil processing mills located in the Central, Ashanti, Eastern, and Western Regions of the country. These mills process approximately 60 percent of the country’s fresh fruit bunches.

According to Mac Makafui Amedzi, SWAPP Mill Engineer, “The study is set to provide baseline information on overall mill extraction efficiency for the various types of artisanal mill set-ups.

“The research will assess efficiency of the following mills: a typical spindle press, a hydraulic press; single-worm screw press without a digester, but where whole-bunch cooking is applicable; and a single-worm screw press that does not have a digester and you cook loose fruits,” said Makafui Amedzi.

Data collected will help inform SWAPP on the various interventions needed to further improve the efficiencies, and hence profitability, of the various types of artisanal mill set-ups.

Over 60,000 cocoa growers to benefit from US$70m

The World Cocoa Foundation (WCF) says its US$70million funding for the country’s cocoa sector is to cover activities that are expected to reach more than 60,000 cocoa-growing households by February 2018.
 
The support is also to increase farm-level cocoa productivity to 1,000kg/ha; to improve service delivery efficiency including access to planting materials, fertiliser and agrochemicals; and improve farmer resilience through the production of food crops.

The support is part of implementing of Phase Two of WCF’s Cocoa Livelihood Programme (CLP) and will afford cocoa-producing households in the country opportunity to produce food crops alongside cocoa, thereby accessing important economic, nutritional and environmental benefits.

Mrs. Suzanne Ngo-Eyok, Director of CLP II, told the media at a signing ceremony between the WCF and the Ministry of Food and Agriculture (MoFA) in Accra that the programme has already successfully mobilised chocolate and cocoa companies to actively engage with the cocoa farmers and increase direct investment in selected cocoa farming communities.

“What we are doing is to use the expertise and resources from MoFA to assist our farmers diversify their food crops, mainly cassava and plantain.

“It is really to make sure that you are getting income from the production of cocoa but you are not obliged to buy food. You can also grow your own food and invest the money to get things like education, provision of services, improving your life conditions,” she said.

Mrs. Ngo-Eyok indicated that the WCF’s CLP programme, which started in 2009 with a 10-year lifespan, is operating in the four cocoa-producing countries of West Africa -- namely Ghana, Cameroon, Cote d'Ivoire and Nigeria.

She explained that the programme will create a mechanism for knowledge-exchange and utilising the skills of MOFA’S technical experts dedicated to CLP II activities in the area of food crops.

“It will link MoFA’s food crop technical experts to WCF member-companies in the country, and provide technical assistance in curricula development and training activities for food crops.

“It will again ensure cocoa farmers’ access to planting materials and other food crop inputs by linking chocolate and cocoa companies to MoFA planting materials production centres and inputs suppliers.

“Cocoa-producing households in the country will have additional income and become more resilient by diversifying income opportunities during cocoa’s non-harvest season,” she stated.

The WCF is a non-profit international organisation, representing more than 110 members that comprise an estimated 85 percent of cocoa trade and chocolate production.

The regional programme is being managed by WCF with funding from the Bill & Melinda Gates Foundation, the Walmart Foundation, the Dutch Sustainable Initiative IDH, and 15 chocolate and cocoa companies that are members of WCF.

In Ghana, the programme involves Mondelez International, Noble Resources and The Hershey Company.

Mr. Fiifi Kwetey, signing on behalf of MoFA, said WCF -- which has a long-standing relationship with the Ghana Cocoa Board, is expanding its partnership base with government institutions to include a focus on food crops.

“The programme will provide training in relevant techniques and technologies for selected food crops such as plantain and cassava,” Mr. Kwetey remarked.

Inflation at 4-yr high

Consumer inflation kept an upward trend in August 2014, surging to a four-year high of 15.9 percent from the 15.3 percent recorded in the previous month on the back of increases in utility tariffs and fuel prices, the Ghana Statistical Services has reported.

 

This makes it the 12th straight month that inflation figures have risen since August last year when the figure reached 11.5 percent, which shows that the rate at which prices of goods are going up is gradually eating consumers’ savings away.

The latest inflation figures, which is 0.6 percentage points higher than the previous month’s figure, pushes it further away from the revised end-of-year inflation target of 13 percent -- plus or minus two percent -- set in the mid-year supplementary budget presented to parliament in July.

Government spending including civil-servant pay increases and lower revenue from key exports such as gold weighed on the fiscal deficit, which was forecast in July to reach 8.8 percent of gross domestic product this year from an earlier target of 8.5 percent.

The cedi has also slumped 35 percent this year against the dollar, pushing inflation to the August figure.

Government hoped to reduce inflation to 11-12 percent by the end of the year as part of a broader package of reforms to transform the economy and restore fiscal stability.  It is also expected to commence talks with the IMF this month for support.

 Food inflation is expected to ease during the August to October harvest season, and this could influence the index in coming months.,The monthly inflation rate in July was 1.6 percent.

The Deputy Government Statistician, Baah Wadieh, at a media conference in Accra explained that the main price-drivers for the non-food inflation rate were housing, water, electricity, gas and other fuels which recorded the highest rate of 61.7 percent, followed by transport which recorded 38.0 percent and the education sub-group that recorded the lowest of 3.5 percent.

The inflation rate for imported items, which registered 21.3 percent, is almost twice that of locally-produced items -- underlining government’s agenda to push made in Ghana goods to top of the consumption list.

The price-drivers for the food inflation rate were mineral water, soft drinks, fruit and vegetables juices which recorded a figure of 22.1percent, followed by coffee, tea and cocoa which recorded 14.8 percent.

Fast growth in the economy, driven by exports of gold, cocoa and oil, has been undermined by problems including a rising budget deficit and the cedi's rapid decline -- 27.5 percent since January, according to Bank of Ghana data.

Sugar, jam, honey, chocolate and confectionery had 11.7 percent while Milk, Cheese and eggs had 11.6 percent. Other food products had a figure of 10.9 percent, while cereals and cereal products had 10.9 percent. Meat and meat products and oils and fats recorded 10.5 percent and 5.9 percent respectively during the month under review.

The food and non-alcoholic beverages group recorded an average year-on-year inflation rate of 5.1 percent, 0.1 percentage points higher than the 5.0 percent recorded in July 2014.

Eight sub-groups of the food and non-alcoholic beverages group recorded inflation rates higher than the group’s average of 5.1 percent.

The non-food group recorded an average year-on-year inflation rate of 24.0 percent in August 2014, compared to a rate of 23.1 percent recorded in July 2014.

On the monthly rate, the change for August 2014 was -0.2 per cent, compared with the 1.6 percent recorded in July 2014.

On the regional level, Mr. Wadieh said Central Region recorded the highest year-on-year inflation rate of 20.4 percent while the Upper West Region recorded the lowest inflation rate of 12.3 percent.

Four regions, the Central, Upper East, Northern and Eastern Regions, recorded inflation rates above the national inflation rate of 15.9 percent.

Ghana Gov’ts revenue at stake amidst 7% drop in gold output

There are growing concerns that government’s revenue target could be hard hit as the continuous fall in gold price has pushed down production in Ghana by about seven percent in the first six months of the year.
 

Official figures from the Minerals Commission indicate that the precious metal, which has in recent times seen a drastic decline in its price, saw a fall in production of seven per cent to 2.054 million ounces; a situation that has prompted some major mining firms to downsize their operations in the country. 

The price of gold -- which contributes almost one-third of government’s revenue -- last week dropped to its lowest in four years amid speculation that the US Federal Reserve is considering raising borrowing costs as other central banks add to stimulus, strengthening the dollar.  

Since June last year, gold prices have declined by 30 percent on the world market. Last week, gold capped the first back-to-back monthly decline this year after dropping to about US$1,161 an ounce, the lowest price since July 2010. 

Regulators of the country’s mining sector, who have observed a rise in the output of other minerals, have attributed the decline in gold production to the continuous price fall.  

“The decline in the production performance was largely on the back of the falling gold price despite an impressive performance from diamond and bauxite,” Daniel Krampah, Financial Analyst at the Minerals Commission told B&FT in an interview in Accra.

After two years of soaring gold prices in 2011 and 2012, the price of the metal recorded very low prices -- forcing industry players to re-strategise on possible policy interventions to avert consequent negative impact on the economy.

Mr. Krampah explained that the recent shut-down of AngloGold Ashanti’s operations actually affected the quantities of production expected, with small-scale mining accounting for more than 25 percent of the total gold production.

He noted that effects of the mineral’s decline in output will negatively impact government’s revenue and the economy, since gold is the country’s highest gross foreign exchange earner.

Gold currently contributes 27 percent to government’s revenue as captured by the Domestic Tax Division of the Ghana Revenue Authority.

Forecasts by mining analysts show that gold price will keep on falling and could drop further to about US$1,050 an ounce by year-end and boost demand.

Mr. Daniel Owiredu, a former President of the chamber, opined that the imminent temporary shutdown of AngloGold Ashanti’s Obuasi Mine for rehabilitation significantly blighted the minerals industry’s fortunes in 2014 -- while output at Golden Star’s Wassa Mine is projected to decline to between 130,000 and 140,000 ounces in 2014, due to ongoing rationalisation of production.

The effect of the falling gold price has caused the country to slip to ninth position in leading gold producers in 2013, compared to eighth in 2012.

Mr. Owiredu said the downturn in gold revenue drove a percentage point reduction in the share of gold in total mineral revenue for 2013, from 97.5 percent to 96.3 percent.

Alfred Baku, Executive Vice President of Gold Fields’ West Africa Operations in a recent interview explained that mining investments are under threat as companies are cancelling new projects and closing mines due to pressure from price-dips, cost increases and higher taxes.

“Equity investors have become frustrated as miners have spent their money with little to show for it. Returns just do not warrant the risk. In reality, margins and returns from mining are in decline; operating cash flows are not sufficient to cover investments,” he said.

Meanwhile, diamond production in the first half of this year surged by 115.20 percent to 161,641 carats while bauxite production increased by 2.85 percent -- from 442,990 tonnes in 2013 to 455,675 tonnes in the first six month of 2014.