Towards a Legislative Framework for Agro-Processing and Agribusiness in Ghana

Ghana, often heralded as an agricultural economy, has long relied on agriculture for GDP contribution, employment generation, and export revenue. In 2023, the agricultural sector contributed approximately 19.57% to Ghana’s GDP, highlighting its continued importance. However, from 1950 to 2023, Ghana’s agricultural GDP growth in US Dollar terms has lagged significantly compared to Malaysia, a country with a similarly resource-driven economy in the mid-20th century. While Malaysia leveraged strategic legislation and policy to transition from raw material exports to agro-industrialisation, Ghana has neglected establishing a dedicated legislative framework to promote agro-processing and agribusiness. This glaring gap persists despite the transformative potential of value addition to agricultural products. This paper advocates for the development of such legislation, critically examines the existing legislative architecture, identifies its deficiencies, and explores pathways for progress by drawing on international best practices.

A Historical Overview of Some Agricultural Legislation in Ghana

Since 1950, Ghana has enacted various laws addressing agriculture, focusing on production, land use, and resource conservation. However, the promotion of agro-processing and agribusiness has remained peripheral. Below is an analysis of key legislative instruments:

1. Farm Lands (Protection) Act, 1962 (Act 107):?The act's mandate?is to protect farmland for agricultural use and ensure sustainable practices.?Its core Elements are?Regulating land use to prevent conversion to non-agricultural purposes and ensuring fair acquisition processes.
2. Grains Development Authority Act, 1970 (Act 324): Mandate: Enhance grain production and storage. Core Elements: Establishment of the Grains Development Authority (GDA), with a focus on production techniques and infrastructure for storage and distribution.
3. Cocoa Board Act, 1984 (PNDC Law 81): Mandate: Oversee cocoa production, marketing, and export. Core Elements: Farmer support, research in cocoa cultivation, and export promotion. The Act minimally addresses domestic cocoa processing.
4. Environmental Protection Agency Act, 1994 (Act 490): Mandate: Regulate the sustainable use of natural resources, including agricultural land. Core Elements: Environmental impact assessments for agricultural projects and measures to prevent degradation.
5. Forestry Commission Act, 1999 (Act 571):?The mandate is to?manage forest resources, including timber, for agro-industrial purposes.?The Core Elements are?the conservation of forests, which indirectly benefits industries reliant on timber.
6. Internal Revenue Act, 2000 (Act 592): Mandate: Provide tax exemptions for key industries, including agriculture. Core Elements: Limited incentives for agro-processing despite broad support for agricultural production.
7. Fisheries Act, 2002 (Act 625):?The mandate?is to develop and regulate the fisheries sector.?The Core Elements?are sustainable fishing practices and aquaculture promotion, with a minimal focus on fish processing.
8. Plants and Fertilizer Act, 2010 (Act 803): Mandate: Regulate fertilizers, seeds, and plant protection. Core Elements: Productivity enhancement through quality inputs.

Interconnectedness and Overlaps in Legislation

The existing legislative framework reveals significant overlaps but limited integration. For instance, the Cocoa Board Act emphasises production and export, focusing on supporting farmers and ensuring Ghana’s competitive position in the global cocoa market. However, its objectives are not synchronised with policies that could incentivise domestic cocoa processing, such as tax breaks for processors or mandates for local value addition. Similarly, the Internal Revenue Act provides tax incentives for agricultural production broadly, but these are not harmonised with other laws to ensure a cohesive value chain that transitions smoothly from production to processing and distribution. Additionally, overlaps in mandates between the Forestry Commission Act and the Environmental Protection Agency Act, particularly regarding the sustainable use of resources, sometimes result in conflicting or redundant compliance requirements for agro-industrial projects. This lack of integration undermines the potential for a unified strategy to support agro-processing and agribusiness growth.

The Persistent Focus on Production

Ghana’s agricultural policies have historically prioritised production due to:

1. The colonial emphasis on exporting raw materials.
2. Post-independence strategies for food self-sufficiency.
3. Structural Adjustment Programmes (SAPs) of the 1980s, emphasised liberalisation over industrialisation.

This production-centric approach has led to:

• Limited domestic value addition has had profound consequences for Ghana’s agricultural economy. Major industries such as cocoa processing, fish canning, grain milling, and fruit processing have struggled to scale due to the production-centric focus of existing legislation. For example, cocoa, Ghana’s flagship export crop, sees less than 20% processed locally, leaving the country dependent on the volatile prices of raw cocoa beans on the international market. Similarly, the fish processing industry remains underdeveloped, limiting the value derived from the nation’s abundant fisheries resources. The grain industry also faces significant gaps, with much of the maize and rice consumed domestically being imported due to inadequate local milling capacity.

This production-centric approach has created a twin impact: increased importation of processed foods, which undermines local industries, and the forfeiture of potential export revenue from value-added products. The dominance of raw material exports also limits Ghana’s ability to access premium international markets, which increasingly demand processed and certified agricultural goods. Addressing these gaps requires a deliberate shift towards legislation that integrates production with value-added processing and trade.

• Ghana’s agro-industrial development trajectory highlights significant missed opportunities for intensifying growth and sophistication. Despite its abundant natural resources, the country has struggled to develop robust agro-industrial capacity. Key opportunities have been missed in areas such as the establishment of large-scale cocoa processing plants, the development of modern fish processing facilities, and the expansion of grain milling operations.

For instance, while Ghana has remained a leading cocoa producer, the absence of infrastructure and incentives for local processing has left the country heavily reliant on raw bean exports. Similarly, inadequate investment in fisheries processing has limited the value derived from its rich marine resources. Furthermore, the lack of a cohesive strategy for agro-industrialisation has resulted in an overreliance on small-scale and cottage industries, which lack the scale and technology to meet both domestic and export market demands.

This failure to capitalise on agro-industrial opportunities has exacerbated Ghana’s dependence on imported processed goods, reduced its export competitiveness, and left critical gaps in the value chain. To reverse this trend, Ghana must prioritise investments in technology, infrastructure, and policy frameworks that facilitate agro-industrial sophistication.

• Ghana’s failure to tap into low-hanging fruits within the Economic Community of West African States (ECOWAS), the African Continental Free Trade Area (AfCFTA), and the global African diasporan markets reveals missed opportunities for export diversification and higher earnings.

Within ECOWAS, Ghana could dominate markets for processed cocoa products, shea butter, and processed fish, leveraging regional preferences and trade agreements. The AfCFTA offers a continental platform for Ghana to supply value-added agricultural goods such as packaged fruits, refined palm oil, and processed grains to a growing middle-class market seeking quality African-made products.

Globally, the African diaspora presents a significant opportunity for niche agro-processed goods, including traditional foods and beverages like gari, shito, and locally brewed palm wine, with strong emotional and cultural appeal. However, the absence of robust agro-processing legislation limits these products' scalability, quality, and marketability, leaving Ghana unable to meet demand effectively in these key markets.

Economic Impacts of Legislative Gaps

The lack of agro-processing-focused legislation has significant repercussions:

• Low Industrialisation: The agro-processing sector remains underdeveloped, dominated by small-scale operations unable to scale effectively. This reflects a deeper structural failure to select and prioritise emerging opportunities as the foundation for the New Ghana economy. A successful strategy should aim at self-funding growth through entrepreneurial ventures that generate substantial, broad, and long-term economic benefits. However, the absence of a coherent national vision and the persistence of a culture tolerating mediocrity have stifled efforts to build a sophisticated agro-industrial sector. Additionally, a lack of focus on habits like disciplined work ethics, competitive advantage creation, and prioritisation of Made-in-Ghana products has perpetuated the challenges in scaling agro-processing industries. Without these fundamental shifts, Ghana’s agro-industrial ambitions remain aspirational at best.
• Revenue Losses: Exporting raw materials denies the economy the added value of processing. This issue stems from a long-standing false paradigm: the belief that producing and selling more basic products automatically equals development and wealth. While it seems logical that increased exports of raw materials would raise GDP, and thus provide more funds for infrastructure, education, and growth-supporting sectors, this approach has not led to sustainable development or resilient wealth in Ghana. The focus on raw material exports has often failed to translate into technological advancements, infrastructural investments, environmental sustainability, social equity, or political stability. This production-centric model is intuitive on a superficial level but falls apart under scrutiny, as it has exacerbated unsustainable development patterns.

Moreover, powerful actors, such as large corporations and politicians, have historically promoted this revenue-first paradigm due to vested interests in short-term gains. This has diverted attention and resources away from creating value through agro-processing and industrialisation. Addressing these structural flaws requires a deliberate shift towards policies and legislation that prioritise value addition, long-term sustainability, and equitable economic transformation.

• Employment Deficits: Opportunities for job creation across the value chain remain unrealised, with significant losses in employment potential due to the lack of integration between agriculture, agribusiness, and agro-processing industries. Global best practices demonstrate that integrating these sectors generates substantial employment across various levels. For instance, in countries like Brazil and Malaysia, robust agro-processing industries have created millions of direct and indirect jobs, ranging from raw material sourcing to processing, packaging, distribution, and export logistics.

In Ghana, the absence of a coordinated approach has left industries like cocoa processing, fisheries, and grain milling underdeveloped. For example, limited local processing of cocoa beans denies opportunities for factory jobs, marketing roles, and technical positions within advanced processing facilities. Similarly, the underinvestment in fish processing plants has curtailed employment opportunities in post-harvest handling and value addition. The resulting unemployment not only affects rural communities but also deprives urban centres of the industrial workforce needed for economic diversification. Addressing these gaps through targeted legislation could unlock tens of thousands of jobs across the agricultural value chain.

International Best Practices for Agro-Processing Legislation

Countries with successful agro-industrial sectors offer valuable lessons:

1. India: The "National Food Processing Policy" encourages agro-industrial parks, tax incentives, and export-driven processing.
2. Brazil: Agro-industrial clusters thrive due to policies promoting credit access, technology adoption, and market linkages.
3. Malaysia: The "National Agro-Food Policy" integrates R&D, subsidies, and infrastructure for processing.

Ghana can adapt these models to develop a legislative framework that supports agro-processing and agribusiness development.

Opportunities for Economic Transformation

A robust legislative framework would:

• Enhance Food Security: Current legislation and policy in Ghana provide opportunities to refocus on agro-processing to significantly reduce post-harvest losses and ensure stable food supplies. By prioritising investments in processing infrastructure, aligning environmental regulations with industrial goals, and offering incentives to agro-industrial ventures, Ghana can transform its agricultural outputs into diverse, market-ready products. This refocusing could involve expanding the mandates of existing frameworks like the Grains Development Authority Act and the Cocoa Board Act to actively promote processing and value addition while integrating robust strategies for food storage, preservation, and distribution. Such a coordinated effort would not only stabilise food availability but also bolster resilience against global supply chain disruptions, positioning Ghana as a model for food-secure economies.
• Boost Export Revenue: Processed goods fetch higher prices in international markets. For Ghana, opportunities for sustainable competitive advantage in agro-processing and agribusiness can be leveraged in industries such as cocoa-based products, shea butter, processed fruits like mangoes and pineapples, and fish processing. These sectors offer potential for premium export markets, particularly under trade agreements such as AfCFTA and ECOWAS, where regional demand for value-added goods is on the rise. Investing in these industries could transform Ghana’s export portfolio, increase foreign exchange earnings, and position the country as a leader in high-quality agro-processed goods.
• Leverage Regional Trade: The African Continental Free Trade Area (AfCFTA) offers a vast market for processed agricultural products. By harnessing this opportunity, Ghana can expand its agro-processing industries to supply value-added goods such as processed cocoa, shea butter, refined palm oil, and packaged tropical fruits. These products have a strong appeal within Africa’s growing middle class and are well-suited to meet regional demands under AfCFTA. Integrating this effort with quality standards and robust supply chains will enhance competitiveness and ensure Ghana's processed goods become staples across the continent.

Evolution of Agro-Processing Industries in Ghana

• Cottage Industries: Cottage industries in Ghana, such as gari processing, palm oil extraction, and traditional shea butter production, play a pivotal role in rural economies. These enterprises provide essential income for households and preserve local knowledge. However, their potential remains untapped due to inadequate access to modern technology, financing, and markets. Modernising these industries could significantly increase their productivity and integration into domestic and international value chains, creating more jobs and improving livelihoods across the country.
• Medium-Scale Enterprises: Cocoa grinding firms established in the 1980s exemplify limited industrialisation. However, food manufacturing firms like Premium Foods Limited and Niche Cocoa Industries are notable examples of businesses that source locally to produce value-added products for both domestic and export markets. Premium Foods Limited has evolved its business model around processing fortified blended foods, primarily cereal-based, for both local consumption and international humanitarian markets. Its partnerships with organisations like the World Food Programme have ensured steady demand and international exposure. Similarly, Niche Cocoa Industries has implemented a vertically integrated model, handling the entire cocoa value chain from bean sourcing to producing premium cocoa products for international markets. These firms have utilised innovative financial strategies, including partnerships and export financing, to scale operations and develop robust access to global markets.
• Large Corporates: Companies like Blue Skies and Nestlé have achieved export success by leveraging innovative business models and global access strategies. Blue Skies has adopted a model focused on delivering fresh-cut tropical fruits directly to European supermarkets, using Ghana as a processing hub for its proximity to raw materials. This approach ensures a strong connection between local farmers and international markets, supported by certifications that meet stringent global standards. Nestlé, on the other hand, has capitalised on its global brand presence to introduce value-added cocoa and coffee products sourced and partially processed in Ghana, integrating the country into its extensive global supply chain. Both companies demonstrate the importance of aligning production quality with international requirements and building efficient logistics networks to access premium global markets.

Leveraging Existing Legislation

While existing laws do not explicitly promote agro-processing, they offer entry points:

1. Farm Lands (Protection) Act: Amend to explicitly allocate land for agro-industrial zones, incorporating provisions for infrastructure development, investor access, and sustainability measures to enhance and aggressively promote agro-processing and agribusiness in Ghana.
2. Grains Development Authority Act: Amend the GDA’s mandate to include a more robust focus on grain processing, including provisions for promoting grain milling, storage innovations, and the development of value-added grain-based products. Additionally, incentives could be introduced to attract private investment in grain processing facilities, while encouraging partnerships between local farmers and processing firms to ensure a consistent supply chain.
3. Cocoa Board Act: Amend to provide more robust incentives for local cocoa product manufacturing, such as tax holidays, subsidised energy for processing facilities, and grants for technology acquisition. Additionally, introduce mandates for a minimum percentage of local cocoa to be processed domestically before export, complemented by export incentives for value-added cocoa products.
4. Environmental Protection Agency Act: Streamline environmental approvals for agro-industrial projects. Amend the Act to establish expedited approval pathways specifically for agro-industrial projects that meet sustainability criteria. Introduce guidelines for environmentally friendly technologies in processing, and incentivise compliance through reduced fees and faster processing times. Additionally, require periodic reviews of environmental regulations to align with emerging agro-industrial trends and promote eco-friendly practices.
5. Forestry Commission Act: Amend to prioritise agro-industrialisation by expanding its mandate to include the promotion of timber-based agro-processing industries. This could involve providing incentives for establishing timber processing hubs, supporting research and development in sustainable timber product manufacturing, and integrating timber-based industries into national agro-industrial zones to enhance and aggressively promote agro-processing and agribusiness in Ghana.
6. Internal Revenue Act: Broaden tax reliefs for processors by introducing targeted incentives such as tax holidays, reduced corporate tax rates, and deductions for capital expenditures specifically for agro-processing businesses. Additionally, establish accelerated depreciation allowances for investments in processing equipment and infrastructure. Create a tiered incentive structure to encourage scaling from small to large-scale operations, and integrate these provisions with other agricultural laws to foster a cohesive agro-industrial ecosystem.
7. Fisheries Act: Amend to establish dedicated fish processing hubs with integrated cold storage and packaging facilities, supported by tax incentives and subsidies for small and medium-scale fish processors. Additionally, include provisions for capacity building, training in modern processing techniques, and facilitation of export market linkages to aggressively promote fish processing and contribute to Ghana's agro-processing ambitions.
8. Plants and Fertilizer Act: Support R&D for processed agricultural products by operationalising initiatives such as government-backed research grants targeting post-harvest technologies, establishing dedicated agro-research centres focused on processing innovations, and incentivising private sector investments through public-private partnerships. Funding mechanisms could include levies on agricultural exports, allocations from the national budget, and access to international development funds. Collaborative efforts with universities and international organisations could further enhance technical expertise and innovation in this field, ensuring the development of cutting-edge, market-driven solutions.

Addressing Challenges for MSMEs and Corporates

Without enabling legislation, businesses face:

• High operational costs.
• Limited access to technology, finance, and infrastructure.
• Regulatory bottlenecks, that deter investment in agro-processing.

Global Market Implications

The absence of dedicated agro-processing legislation restricts Ghana’s global market potential by:

• Undermining compliance with international standards.
• Reducing competitiveness in processed goods.
• Limiting access to premium markets for certified products.

Recommendations for Legislative Development

1. Integrated Value Chains: Link production, processing, and export policies.
2. Infrastructure Development: Establish agro-industrial parks and logistics hubs.
3. Incentive Mechanisms: Provide tax breaks and grants for processors.
4. R&D and Training: Invest in innovation and capacity building.
5. Market Access Support: Facilitate entry into regional and global markets.

Conclusion

The lack of agro-processing and agribusiness legislation in Ghana is a significant barrier to industrialisation and economic transformation. By developing a targeted legislative framework, Ghana can unlock the full potential of its agricultural sector, create jobs, diversify exports, and enhance its competitiveness. This shift would not only address historical shortcomings but also position Ghana as a global leader in value-added agriculture.

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