UK Trade & Investment MASDAR International Consultants 17th November 2003 1 Ghana

MASDAR International Consultants17th November 2003 1

UK Trade & Investment

Ghana

GHANA



UK TRADE & INVESTMENT

AGRO-PROCESSING SEMINAR

Miklin Hotel, Kumasi

17th November 2003



Ghana Agro-Industry Study 2001

Phase 1 Review and

diagnosis

SWOT Analysis Identify

Investment Opportunities Public Sector Projects

Phase 2 Investment Appraisal Project design

Nationwide study over 12 months funded by African Development Bank



Seminar Programme

Agro-Processing - where is Ghana today James Siggs Bsc. MBA

Marketing Processed Products Matthew Kofi Ocran BSc. MPhil.

Demand for Processed Foods Dr. Victor Nyanteng

Agro – Processing Opportunities Mr. Colin Watson BSc. MBA



Oil Palm in Ghana



Ghana Agro-industries Where are we today?

James Siggs



10

15

20

25

30

35

40

1991

1994

1997

2000

2003

2006

2009

2012

2015

2018

2021

Mill

ion

s

(3% annual growth rate)

Population Projection



Agro-Industry Flow ChartBreedstocks Seeds Equipment Agrochemicals Other Supplies

Extension& Research

Transport

Farm

Produce

Transport

Agro-Industry

Products

Transport

Exporters DistributorsStorage Storage

Storage

Storage

Raw Materials

FinishedGoods

Inputs

Own use

Land & irrigation

Fin

an

ce

Hu

man

Re

sou

rce

s



Main Features of Ghanaian Agriculture

Mostly rainfed Majority of producers are

smallholders Low levels of technology utilised Productivity is generally low and

costs of production are high Quality issues are not addressed



Average Yields (mt/ha rainfed)Crop Actual Achievable

Cassava 11.8 28.0

Plantain 7.8 10.0

Yam 12.3 20.0

Cocoyam 7.0 8.0

Maize 1.5 5.0

Paddy rice 2.0 3.0

Cowpeas 0.8 2.0

Millet 0.9 2.0

Sorghum 1.1 2.0



Agro-processing Industries?

What is an Agro-processing Industry?

Integral component in the processing chain to transform or stabilise crops/products and/or to provide added value.

What an Agro-processing Industry is not!

Disposal of periodic crop surpluses

Converting low quality raw material inputs into marketable finished products.



Pre-requisites

Market Product Product specifications Demand potential Price Competitiveness

Raw Material Supply Quality control Security of supply Supply chain logistics Price Competitiveness



Current Issues Issue

Under-utilisation of capacity

Competitiveness

Factors Raw material supply constraints Markets and market intelligence Access to credit Consumer purchasing power Competitiveness

Raw material costs Productivity Inappropriate technology Under-utilisation of capacity



Finance Issues

Long term nature of sector High risks due to markets and weather Substantial equity investment required Availability of collateral High transaction costs Exchange rates/Inflation Track record



Ghana Agro-Industry SWOT

StrengthsPolitical stabilityInternal securityLand bankAgro diversityLow labour costs

WeaknessesFragmentationNot quality consciousLack of raw materialsLow productivityPoor credit rating

OpportunitiesImport substitutionIncreasing urban populationDivestment of state assetsNon traditional exportsInflow of funds

ThreatsCheap importsExchange rate fluctuationEntry barriers in EU & USAAggressive competitorsEnvironmental degradation



Issues & Constraints

Issues Quality Trade policy Land tenure Infrastructure Training Information Sustainability

Constraints Management International treaties Custom Budget Attitudes Dissemination Cash flow



Immediate Priorities

Improved quantitative and qualitative raw material supply for existing facilities

Continued improvement in the enabling environment to augment the operational efficiency of existing facilities

Develop and introduce products with immediate potential in the domestic market

Market and quality awareness training



Marketing Processed Products

Matthew Kofi Ocran



Order of Presentation

Performance of the NTE Sector

Market and Quality Issues

Processing, Packaging and Distribution



PERFORMANCE OF NON-TRADITIONAL EXPORTS



Growth in the NTE Sector

Exports of NTE brought in US$ 504 million in 2002

(Increase of 9.7% over 2001)

Number of exporters dropped from 3,117 to 2001 to 3,083 in 2002

Products number dropped from 260 in 2001 to 257 in 2002

Product number reduction occurred in semi-processed category whilst number of exporters reductions also occurred in the agricultural commodities



Non-Traditional Exports

0

100

200

300

400

500

600

1995 1996 1997 1998 1999 2000 2001 2002

US$

Mill

ion

Non-Traditional ExportsAgricultural Non-Traditional Exports



Performance of the Horticulture Sub-Sector

Over the past 5 years; Total exports of horticultural products have increased from

33,000 tones (1997) to 70,000 tones (2002) Value of exports has also increased from US$22.9m to

US$33.6m

Progress has been restricted to a few areas Sea freighted pineapples (from 15,000t to 40,000t) Sales to Europe of Asian vegetables (increasing unit value

of air freighted exports) Fresh produce processing (fresh-cut fruits and juicing) Fresh produce sales in local and regional market



Agricultural Non-Traditional Exports – Sub Sectors

05

10152025303540

1995 1996 1997 1998 1999 2000 2001 2002

US$

Mill

ion

Horticultural Products Fish/Sea FoodsGame/Wildlife Other Ag. Pdts.



MARKET AND QUALITY AWARENESS



Quality Issues

It is important that every body in the supply chain appreciates the importance of quality in the EU Market!

(farmer-trucker-shipper)

Pesticide management

Pesticide Residue

Post-Harvest practices

Product norms and standards



Market Opportunities

New opportunities in supermarket phenomena being brought in from South Africa; U Shoprite, Woolworth e.t.c as well as local supermarkets

Cereals, roots and tubers offer the best opportunity for processing because of their huge annual supplies that matches demand



PROCESSING, PACKAGING AND DISTRIBUTION



Processing and Packaging

Need for standards and measures

Processing and packaging adds value and leads to higher returns

Need for innovation eg. gari, palm oil, chicken, e.t.c

Benefits of processing Packaging offers incentive/premium prices for high quality farm

produce Increases shelf life Expand demand for product Stabilises farm/agribusiness income Reduce post-harvest losses



Marketing Strategy Reduce cost of production

Improve quality: consistency and reliability Create local brands

Add value through processing

Introduce export quality assurance schemes Commodity Trade Associations

Take advantage of $1/kg freight cost advantage

Diversify product portfolio by entering into high value horticultural products (MD2 variety of pineapple)

Local and regional market development



Role for Public Private Partnership

Infrastructure Development To help in infrastructure support

Eg. development cold chain infrastructure at the ports

Trade Associations to pull resources particularly in ensuring high quality standards



Flowers for Export



Demand for Processed Foods

Dr. Victor Nyanteng



Content Role of Food Processing Processed Food Commodities for the

Domestic Market

Use of Processed Food Commodities in the Preparation of Household Meals Demand for Processed Food Commodities

Prospects for Increased Demand



Role of Food Processing

Adds value to low value fresh commodities Increases shelf life of the perishable fresh

commodities Improves intra-year availability of seasonal

food crops production Reduces wide fluctuations in intra year food

prices Enhances producer prices and incentives for

increased production



Role of Food Processing

Substitutes for imported processed food commodities

Opens avenues in export markets Enhances food security Improves nutritional quality of fresh food

commodities Adds unique taste to meals


UK Trade & InvestmentProcessed Food Commodities on the

Domestic Market Some food commodities enter marketing

channels and remain fresh throughout. Others are transformed prior to entering or

while in the marketing channels. Many imported and locally processed food

commodities on domestic markets including: Frozen Meats, Poultry & Fish Canned Meats Vegetables And Fish, Edible Oils



Levels of Food Processing

Food processed for use in household preparation of meals is at 3 levels:-

Primary Processing Secondary Processing Household Processing



Primary Food Processing

Minimum transformation required in marketing channels

Carried out by initial producer (farmer), using poor technology



Secondary Food Processing

Further transformation of output of primary processing or from raw food commodity where primary processing not required in marketing channels

Carried out by entrepreneurs in marketing systems

Some involve combining two different food commodities (eg dawadawa seed and groundnut).



Household Processing

Transformation of raw food commodity in household before preparation of meals e.g.

Palm fruits to puree Groundnuts to paste



Processing of Cereals

Commodity Primary Secondary Household

Maize Shell Dough/Grits/Flour

Nil

Rice Thresh/Mill Grits/Flour Nil

Millet Shell Nil Flour

Sorghum Shell Nil Flour



Processing of Roots/ Tuber / Plantain


Cassava Nil / Chips Dough/Gari/ Flour/Starch

Nil

Yam Nil Nil Nil

Cocoyam Nil Flour Nil

Plantain Nil Flour / Fried Chips

Nil



Processing of Vegetables


Tomatoes Nil Dry Slices/Powder Puree

Pepper Nil / Dry Puree / Powder Puree

Garden Eggs

Nil Nil Puree

Okro Nil /Dry Powder Grated

Onion Nil Dry/Flake Nil



Processing of Beans/Nuts


Groundnut Shell Paste/Oil Paste

Soybean Shell Paste Nil

Dawadawa Nil Paste + GroundnutPaste + Soybean

Nil

Coconut Copra Edible oil Nil



Processing of Fruits and Other Tree Crops


Oranges Nil Juice Nil

Pineapple Nil Juice / Canning / Fresh Chunks

Nil

Pawpaw Nil Nil / Drying Nil

Palm Fruits Nil Palm Oil/ Kernels /Kernel Oil

Puree



Processing of Livestock and FishCommodity Primary Secondary Household

Livestock Nil Slaughter/ Feed Production/ Butcher/ Minced/ Sausage

Nil

Fish Nil Sun Dry/ Salted/ Smoked/ Frozen/ Can

Nil

Snail Nil/ Smoked/ Dry

Nil Nil


UK Trade & InvestmentProcessed Food Commodities Not On

Domestic MarketCanned Fresh SnailCanned Palm Fruit PureeCanned Sliced PineappleFrozen Cocoyam Leaves



Processed Food Commodities in Household Meals Preparation (1)Processed Form Use in Meal Preparation

Maize Dough Porridge/Kenkey/Banku

(+ cassava dough) Grits Porridge Flour Akple (+ cassava flour)/Tuo Zafi Roasted Maize Flour Porridge/aprapransaRice Grits Porridge Flour Porridge



Processed Food Commodities in Household Meals Preparation (2) Processed Form Use in Meal PreparationCassava Dough Banku (+Maize dough) Flour Akple (+Maize

Flour)/Kokonte/PastriesCocoyam Flour FufuPlantain Flour FufuTomatoes Paste/Puree Soup/Stew Dry Slice Soup/StewPepper Paste/Puree Soup/Stew Powder Soup/Stew



Processed Food Commodities in Household Meals Preparation (3)Processed Form Use in Meal PreparationOkro Powder StewPalm Fruit Palm Oil StewFish Sun Dried Soup Salted Stew Smoked Soup/Stew Powder Soup/StewShrimps Smoked Dry Soup Powder Soup Cube Soup/Stew



Demand for Processed Food Commodities

Two sources

i). Household and

ii). Export



Household Demand

Two sets of factors

i). Positive (promoting) factors and

ii). Negative (discouraging) factors



Positive Factors

Some processes not easy at home (cassava dough, gari, edible oils

Reduction in cooking time Convenient and easy in cooking Convenient for spouses working out of home

and cooking evening meals Convenient and easy to store at home Providing colour to meals (tomato puree) Unique taste (processed fish / shrimps)



Negative Factors

Availability of fresh forms High prices compared to fresh forms Traditionalism in household meals

preparation eg, fufu Adulteration of processed food commodities

(groundnut paste/ pepper puree, roasted maize flour, etc)

Unsanitary processing environment (fish processing, drying pepper, cassava chips, etc.)



Negative Factors Contd.

Inappropriate and unhygienic packaging Suspicion of mixing poor quality/rotten raw

material in the process (pepper, tomatoes, maize, etc)

Poor packaging that make it difficult to sell in supermarkets, corner shops, etc.

Poor quality meals (fufu, discoloured cassava meal {kokonte})



Export Demand Positive Factors

Large cross-border market (cassava dough /maize dough in Togo, Smoked fish in Togo / Benin

Large population of West Africans in Europe and America

Negative Factors Phyto sanitary restrictions Poor / unattractive packaging Poor result of prepared meals Intense competition from established suppliers Limiting infrastructure



Domestic Demand Prospects

Strengthening positive factors and Effective removal of negative factors Positively correlated with rate of spouses

working out of home, and high socio-economic costs of maids

Poverty reduction strategy raising incomes and therefore affordability



Domestic Demand Prospects (Contd.) Effective monitoring of quality to remove

suspicion of adulteration and inconsistent quality (Food and Drugs Board / Ghana Standards Board)

Education to improve unhygienic processing environment

Improvement in packaging to enhance distribution outlets and acceptability

Research to improve quality of prepared meals from processed food commodities (Food Research Institute of CSIR)



Export Demand Prospects

Substantial overseas niche markets for West African specialities

Developing regional markets



Summary

Increasing demand for processed foods in Ghana

Increasing demand for West African specialities in US and EU

Today much processed foods do not mach the standards required by domestic and export markets

The prospects for high quality processors using modern methods are enormous



Cotton Bales

Documents

UK Trade & Investment MASDAR International Consultants 17th November 2003 1 Ghana