104127 A g r i c u lt u r e G l o b a l P r a c t i c e N o t e 11 Ghana Agricultural Sector Risk Assessment Vikas Choudhary, Garry Christienson, Stephen D’Alessandro, and Henri Josserand In Ghana, the agricultural sector remains the backbone of the economy. Nearly two decades of productivity growth, beginning in the early 1990s, has helped put Ghana back on a path to recovery following more than a decade of economic uncertainty. With the exception of millet and sorghum, output for most crops has increased at a faster rate than population growth. During the 18-year period between 1993 and 2010, the sector experienced only 1 year (2007) of negative growth. During the same period, it recorded 3 years when growth exceeded 7 percent. The sector’s remarkable recovery, facilitated in part by sustained public and private sector investments, has helped pull thousands of rural households out of extreme poverty. In the early 1990s, nearly two out of every three (63.6 percent) rural Ghanaians lived below the national poverty line. By 2006, the ratio had dropped to roughly two in five (39.2 percent). Ghana is now well on track to reach the first Millennium Development Goal to halve poverty by 2015. Background from pests and diseases, and higher food price volatility, among other risks. The catastrophic Sustaining the sector’s growth trajectory is a top flooding of 2007 and more recent food price priority for President John Dramani Mahama, shocks served as stark reminders of the impor- who won election in 2012, and his administra- tance of effective risk management. The govern- tion. Success will depend, in part, on the govern- ment recognizes more than ever the need to ment’s ability to manage the country’s ongoing strengthen existing risk management systems transition to a more diversified economy while to ensure continued sector growth, and more ensuring that the country’s smallholder farmers, importantly, to protect the most vulnerable food processors, and other sector actors have communities and strengthen their resilience to what they need to remain competitive. It also future shocks. hinges upon the ability of all stakeholders to recognize, respond, and adapt to a changing Improved agricultural risk management is one of landscape: one characterized by climate change, the core enabling actions of the Group of Eight’s increasing weather variability, increasing threats New Alliance for Food Security and Nutrition. AGRICULTURE GLOBAL PRACTICE NOTE — MARCH 2016 The World Bank’s Agricultural Risk Management Major Risks Team conducted a risk assessment to better understand the dynamics of agricultural risks Production Risks and identify appropriate responses, incorporate Given Ghana’s heavy reliance on rain-fed agricultural risk perspective into decision- agriculture, drought causes the highest level of making, and build capacity of local stakeholders cumulative losses with the greatest impact on in risk assessment and risk management. livelihoods, particularly in the northern savannah zones. Drought events are most likely to affect The objective of this assessment was to assist sorghum, millet, maize, and groundnut produc- Ghana’s government to i) identify, analyze, tion. In addition, flash flooding resulting from quantify, and prioritize the principal risks facing excessive rainfall occurs with relative frequency the agricultural sector (that is, production, across Ghana, but rarely causes widespread market, and enabling environment risks); ii) destruction. Crops most affected include cas- analyze the impact of these risks on key sector sava, rice, yams, and groundnuts. Existing capac- stakeholder groups (for example, farmers, vulner- ity among stakeholders to mitigate such risks or able populations, food processors, government); cope in their aftermath is severely limited. and iii) identify and prioritize appropriate risk management interventions (that is, mitigation, Posing a constant threat to both crops and live- transfer, coping) that will help improve stability, stock, pests and diseases constitute the second reduce vulnerability, and increase the resilience most important production risk after drought. of agricultural systems. Cassava, cocoa, and plantain are among those crops most susceptible to attack. However, The assessment covered priority crops (and current control measures, in some cases with livestock) that are most important to farming cocoa and cassava, have been relatively effective. families and other stakeholders in Ghana. This Note presents a summary of the assessment’s key findings. Figure 1: Agricultural Sector Growth (%) 1980–2012 Percent Year Source: Data from Bank of Ghana 2013. 2 | AGRICULTURE GLOBAL PRACTICE NOTE — MARCH 2016 Figure 2: Impact of risks on cereal production and yields, 1990–2011 2007 Metric tons Year Source: FAOSTAT; authors’ notes Market Risks operational funding and its capacity to respond to Price volatility poses the most important market multiple risk events. risk facing agricultural stakeholders. This is espe- cially true for maize; growing maize exports in Adverse Impacts recent years have contributed to higher levels of price volatility in domestic food markets. In ad- The analysis shows that although risk is a perma- dition to maize, plantain, cassava, and yams are nent feature of agriculture in Ghana, its impact on among the crops most susceptible to adverse output and growth is relatively low at the national impacts from price variability. level. In the 1980–2012 period, agricultural sector growth was positive in 24 out of 31 years (figure Enabling Environment Risks 1). Certain inherent strengths reduce the sector’s overall vulnerability to risk while limiting associ- Among enabling environment risks, the assess- ated losses. First, the diversity of agro-climatic ment calls attention to concerns over weak conditions in Ghana, of production systems, and capacity among state-level institutions tasked to of the crops and seeds used within those systems manage and respond to the most important risks lowers the level of aggregate risk for the agri- facing the agricultural sector. First, the analysis cultural sector as a whole. Second, this diversity calls into question the Ghana Cocoa Board’s reduces impacts on livelihoods when production (COCOBOD’s) ability to move forward to effectively shocks occur. However, the causes, frequency, and manage both production and price risk for cocoa; severity of risks vary between regions, commodi- this is occurring within a context of declining ties, and years, with important implications for risk international prices and current budget shortfalls. management. Second, the assessment raises questions over the National Disaster Management Organization’s Adverse events occur in most years for some AGRICULTURE GLOBAL PRACTICE NOTE — MARCH 2016 | 3 Figure 3: Frequency and severity of adverse production events by crop 140 120 100 Indicative loss US$ (million) 80 60 40 20 0 .00 0.05 0.10 0.15 0.20 0.25 0.30 Probability of shock Source: FAOSTAT; authors’ calculations regions and commodities. These events are usu- cause of transient food insecurity, especially ally offset by above-trend production in other in the northern regions. Multiple shocks cause regions and other crops, thereby reducing the the greatest losses, particularly when they are overall impact of risk at the national level. Figure precipitated by drought or other weather-related 2 highlights the adverse impact of droughts and risk events. For example, widespread wildfires flood on national cereal production and yield, in 1983 following a severe, multi-year drought particularly in 2007. (1981–82) caused colossal crop losses, including 60,000 hectares of cocoa trees. Catastrophic Disaggregated analysis by region and by crop flooding in 2007 following prolonged drought showed a much higher frequency of adverse conditions resulted in negative sector growth for production and price events. Indicative losses the first time since 1994. were also proportionally much higher than losses at the sector level. Analysis of adverse Low-income, rural households, particularly in production events by crop provides insight into the northern regions, are most susceptible to crop-specific risk. The probability of a produc- production and price shocks. With scant coping tion shock during the 21-year period analyzed capacity, they are also the most vulnerable to (1991–2011), and the average indicative cost of the impacts of such shocks. Regional risk analysis these shocks is illustrated in figure 3. showed that the Upper East, Upper West, and Northern regions are most prone to drought and flooding, whereas the Eastern Region is relatively Vulnerability susceptible to fluctuations in maize and cassava At the local level, frequent risk occurrence causes production. significant income volatility for low-income rural households. Risk events are the principal 4 | AGRICULTURE GLOBAL PRACTICE NOTE — MARCH 2016 Photo credit: Neil Palmer / International Center for Tropical Agriculture (CIAT) Risk Management ment interventions in these areas to improve To identify an effective risk management strategy stability, reduce vulnerability, and increase the that maximizes available resources, it is necessary resilience of agricultural systems. to prioritize risks based on frequency and severity 1. Improved water management of impact. Using quantitative and qualitative methods to assess risk occurrence and impacts, Effective water management will be a funda- this prioritization identified 1) drought, 2) pests mental building block to address drought and and diseases, and 3) price volatility as the most flood risk in Ghana. The Government of Ghana, important risks to Ghana’s agricultural sector. farmers, and development partners have already Flooding from excessive rainfall and bushfires undertaken a large number of initiatives, many associated with drought were also deemed impor- quite successful, to improve water manage- tant, but to a lesser extent. ment. Despite these initiatives, water resource management remains suboptimal, and losses from Based on the risk prioritization, the regional drought and floods remain high. To address the distribution of vulnerability to risks, and consulta- deficits in existing water resource management, tions with local stakeholders, actions in three the following interventions are recommended: interconnected risk management solutions areas are recommended: 1) water management, 2) pest • Scale-up dissemination and implementa- and disease management, and 3) agricultural tion of soil and water management practices extension and innovation systems. The assessment (e.g. contour bunds, grass stripping, crop identified and prioritized appropriate risk manage- residue management, cover cropping, pit composting, planting pits, agro-forestry, alley AGRICULTURE GLOBAL PRACTICE NOTE — MARCH 2016 | 5 Photo credit: Neil Palmer / International Center for Tropical Agriculture (CIAT) cropping, enclosures, rainwater harvest- regenerate, and maintain the vegetation ing, etc.) These are decentralized, low-cost, surrounding waterways in order to im- and localized interventions that have been prove water quality. proven to improve yields and reduce losses. • Strengthen the current enabling environ- • Introduce flood retention reservoirs on the ment and institutional structure of water White Volta River and establish flood warn- management in Ghana. This will require ing systems, buffer zones, and dikes. These more efficient collaboration between rel- measures and harmonized data systems evant actors in the sector, including the ir- for information monitoring and sharing will rigation authority, the Ministry of Food and help reduce losses due to floods. Agriculture, the Water Resource Commis- • Develop small- and micro-scale pump- sion, and the Department of Cooperatives. based irrigation and inland valleys using bunding, leveling, and puddling technol- 2. Improved pest and disease ogy. management Pest and disease outbreaks are a major • Invest in medium- to large-scale irrigation production risk, with severe consequences for and drainage schemes, which emphasize sector stakeholders. Under climate change, the water-use efficiency, and rehabilitate exist- incidence and severity of pests and diseases is ing schemes in strategic locations. expected to shift, increasing the potential for • Improve transboundary water resource new and more damaging types of outbreaks. management and effective implemen- Ghana needs a functional plant protection tation of buffer-zone policy to protect, system that can forecast and manage the risk of 6 | AGRICULTURE GLOBAL PRACTICE NOTE — MARCH 2016 crop pests and diseases. To create a more effective access resources to implement the package of and more responsive system, the following is practices; and c) providing real-time advisory and recommended: trouble-shooting support. • Strengthen the diagnostic, analytical, and • Formulate a national agricultural extension managerial capacity of the Plant Protection policy. Extension reforms need to establish and Regulatory Services Directorate, the prin- clear roles and responsibilities of different cipal agency responsible for plant protection organizations involved in agricultural research in Ghana. and extension. • Implement early warning systems and • Develop common guidelines for creating surveillance, including: calamity pest surveil- public-private partnership (PPP) mechanisms lance (e.g. of variegated grasshoppers and for delivering extension services. African armyworms). This requires real-time • Establish knowledge management units with monitoring of key parameters; training local sufficient infrastructure (communication units, communities in diagnostics, surveillance, and print, video editing, ICT facilities, etc.) in re- communications; and implementing an early search and extension institutes for collecting, detection and management system. digitizing, creating databases, and linking with • Improve farmers’ access to knowledge of the national agricultural knowledge portal. improved pest and disease management • Facilitate information aggregation and dissem- practices through multiple channels (exten- ination systems integrated with ICT (including sion, ICT, input dealers, farmer field schools, farmer learning videos), radio, and traditional etc.). Relevant packages of IPM practices and extension systems. guidelines tailored to specific regions and crops need to be developed and disseminat- • Scale up delivery of traditional extension ser- ed to farmers through these channels. vices such as field demonstrations, field visits, and awareness programs, as well as farmer-to- • Invest in research on innovative pest and dis- farmer approaches. ease management technologies and disease- resistant seed varieties to develop holistic • Revitalize farmer-based organizations (FBO) plant health management strategies for the created by past development projects. major crops. This is especially relevant in the context of climate change, which is expected to alter the incidence and severity of pests and diseases and to facilitate their spread to new territories. Photo credit: Consortium of International Agricultural Research Centers (CGIAR) 3. Improved agricultural extension and in- novation systems Farmers are at the front lines of risk management, however, they are often constrained by a lack of information about context-specific best practices to manage risks in their fields. An improved agri- cultural extension and innovation system is at the center of enabling farmers to manage risks by a) providing a package of location- and crop-specific practices for managing risks; b) helping farmers AGRICULTURE GLOBAL PRACTICE NOTE — MARCH 2016 | 7 • Create and improve public-private partner- factor, but integrated risk management strategies ships (PPP) in research and extension. There is are often more effective than one-off or stand- an existing mechanism for PPPs, the Research alone programs. The interventions recommended Extension Linkage Committee, which could here should be implemented as part of a holistic be improved through regular meetings and risk management strategy that takes into account additional resources. the interlinkages between different types or risks. • Encourage research and extension provid- It is expected that this analysis will inform Ghana’s ers to collaborate and share resources with Medium-Term Agricultural Sector Investment the Ghana Meteorological Agency to set-up Plan and assist policymakers in building sector a national network of agro-meteorology and resilience. Managing risk is an ongoing, dynamic weather forecasting. process that requires long-term commitment and real-time monitoring to enable appropriate Next Steps actions in short, medium, and long term. This risk assessment has provided an analytical approach There is no single measure to manage all risks; and an operational framework to understand effective risk management requires a combina- and prioritize risks and solutions. The process tion of coordinated measures. Some are designed needs to be continued by local stakeholders who to remove underlying constraints; others are ultimately have ownership over risk management designed to directly address a risk or a subset in Ghana. of risks. Available resources are often a limiting This Note was based on the publication: Choudhary, Vikas; Christienson, Garry; D’Alessandro, Stephen; and Josserand, Henri. 2015. Ghana: Agricultural Sector Risk Assessment - Risk Prioritization. Washington, D.C. : World Bank Group. This activity was funded by the World Bank, the United States Agency for International Development, and a Multi-Donor Trust Fund on risk management financed by the Ministry of Foreign Affairs of the Government of the Netherlands and the Secretariat for Economic Affairs (SECO) of the Government of Switzerland. The work was conducted by the World Bank’s Agricultural Risk Management Team. Internet: www.worldbank.org/agriculture, Twitter: @wb_agriculture