Important Risks Facing the Agricultural Sector in New Mitigation Measures and Improve Existing Ghana
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Public Disclosure Authorized AGRICULTURE GLOBAL PRACTICE TECHNICAL ASSISTANCE PaPER Public Disclosure Authorized GHANA: AGRICULTURAL SECTOR RISK ASSESSMENT RISK PRIORITIZATION Public Disclosure Authorized Vikas Choudhary, Garry Christienson, Henri Josserand, and Stephen D’Alessandro WORLD BANK GROUP REPORT NUMBER 94228-GH JUNE 2015 Public Disclosure Authorized AGRICULTURE GLOBAL PRACTICE TECHNICAL ASSISTANCE PAPER GHANA: AGRICULTURAL SECTOR RISK ASSESSMENT Risk Prioritization Vikas Choudhary, Garry Christienson, Henri Josserand, and Stephen D’Alessandro © 2015 World Bank Group 1818 H Street NW Washington, DC 20433 Telephone: 202-473-1000 Internet: www.worldbank.org Email: [email protected] All rights reserved This volume is a product of the staff of the World Bank Group. The fi ndings, interpretations, and conclusions expressed in this volume do not necessarily refl ect the views of the Executive Directors of World Bank Group or the governments they represent. The World Bank Group does not guarantee the accuracy of the data included in this work. The boundaries, colors, denominations, and other information shown on any map in this work do not imply any judgment on the part of World Bank Group concerning the legal status of any territory or the endorsement or acceptance of such boundaries. Rights and Permissions The material in this publication is copyrighted. Copying and/or transmitting portions or all of this work without permission may be a violation of applicable law. World Bank Group encourages dissemination of its work and will normally grant permission to reproduce portions of the work promptly. For permission to photocopy or reprint any part of this work, please send a request with complete information to the Copyright Clearance Center, Inc., 222 Rosewood Drive, Danvers, MA 01923, USA, telephone: 978-750-8400, fax: 978-750-4470, http://www.copyright.com/. All other queries on rights and licenses, including subsidiary rights, should be addressed to the Offi ce of the Publisher, World Bank Group, 1818 H Street NW, Washington, DC 20433, USA, fax: 202-522-2422, e-mail: [email protected]. Cover Photos from left to right: 1. Neil Palmer (CIAT), Failed maize crops in Ghana’s Upper West Region. 2. Nana Kofi Acquah (CGIAR), Using a petrol pump to pump ground water for watering plants. Buying petrol is a more expensive way to farm. 3. IITA, Infected dried maize cobs in a farm store in Ghana. 4. Lava Kumar (IITA), Field training on yam virus disease indexing at CRI, Kumasi Ghana. CONTENTS Acronyms and Abbreviations vii Acknowledgments ix Executive Summary xi Chapter One: Introduction 1 Chapter Two: Overview of Agricultural Systems in Ghana 5 Agro-Climatic Conditions 5 Rainfall Patterns and Trends 7 Crop Production Systems 8 Agricultural Markets and Producer Price Trends 11 Livestock Production 12 Principal Constraints to Agricultural Production 14 Chapter Three: Agricultural Sector Risks 15 Production Risks 15 Market Risks 22 Enabling Environment Risk 26 Multiple Shocks 28 Chapter Four: Adverse Impact of Agricultural Risk 31 Conceptual and Methodological Basis for Analysis 31 Aggregate Crop Production Risks 33 Impact of Livestock Diseases 36 Chapter Five: Assessment of Stakeholder Vulnerability 37 Rain-Fed Agriculture 38 Irrigated Agriculture 39 Agro-Pastoralism 40 Commercial Farmers 41 Traders and Processors 41 Ranking of Stakeholder Risk Perceptions 42 Chapter Six: Risk Prioritization and Management 43 Risk Prioritization 43 Risk Management Measures 44 Description of Priority Risk Management Measures 47 Filtering and Prioritizing Interventions 51 Conclusion 53 References 55 Risk Prioritization iii Appendix A: Regional Risk Profi les 59 Appendix B: Commodity Risk Profi les 71 Appendix C: Rainfall Patterns and Implications for Crop Production 79 Appendix D: Climate Change Impact Assessment of Agriculture in Ghana 87 Appendix E: Stakeholder Vulnerability Analysis 95 Appendix F: Agricultural Risk Financing and Insurance for Ghana: Options for Consideration 101 Appendix G: Indicative Losses 105 Appendix H: Economic Indicators 113 Appendix I: Timeline of Events 115 Appendix J: Assessing Vulnerability in Northern Regions 119 Appendix K: Irrigation Development in Ghana 123 BOXES BOX 3.1: Rainfall Patterns and Crop Production 18 BOX 6.1: Veterinary Services in Ghana 48 FIGURES Figure ES.1: Agriculture Sector Growth (%), 1980–2012 xii Figure 1.1: Agriculture Sector Performance, 2007–12 2 Figure 1.2: Agricultural Sector Risk Management Process Flow 3 Figure 2.1: Administrative Regions and Agro-Ecological Zones 6 Figure 2.2: Monthly Rainfall Patterns by Region 7 Figure 2.3: Composition of Crop Production 8 Figure 2.4: Cocoa Production, 1990–2011 9 Figure 2.5: Maize Production, 1990–2011 10 Figure 2.6: Cassava Production, 1990–2011 10 Figure 2.7: Trends in Real Cereal Prices, 1991–2010 11 Figure 2.8: Trends in Real Prices for Root Crops and Plantain, 1991–2010 12 Figure 2.9: Producer Prices for Cocoa and Groundnuts, 1991–2010 12 Figure 3.1: Adverse Crop Production Events, 1980–2011 16 Figure 3.2: Impact of Risks on Cereal Production and Yields, 1980–2011 18 Figure 3.3: Cocoa Prices and Production, 1991–2010 24 Figure 3.4: Nominal Exchange Rates, 1980–2012 25 Figure 3.5: Commercial Bank Interest Rates, 2004–12 26 Figure 3.6: Trends in Maize Production and Prices, 1995–2011 27 Figure 3.7: Ghana/Côte d’Ivoire Cocoa Producer Price Diff erential 28 Figure 4.1: Frequency and Severity of Adverse Production Events by Crop 34 Figure 4.2: Crop Production Shocks by Region, 1992–2009 35 iv Ghana: Agricultural Sector Risk Assessment Figure 4.3: Frequency and Severity of Diff erent Crop Risks 35 Figure C.1: Weather Station Distribution with Region Centroids 80 Figure C.2: Monthly Rainfall Patterns by Region 81 Figure C.3: Correlation Matrix Plot 84 Figure C.4: Factor Loadings Plot 85 Figure C.5: Mean Factor Scores by Region 86 Figure D.1: Changes in Mean Precipitation by 2030 (left) and Changes in Mean Precipitation by 2050 (right) 89 Figure D.2: Changes in Mean Annual Temperature 2030 (left) and Changes in Mean Annual Temperature 2050 (right) 90 Figure D.3: Current Suitability of Cocoa Growing Area (left) and Future Suitability of Cocoa Growing Area (right) 91 Figure D.4: Yield Changes 2010–50 92 Figure E.1: Crop Yield Sensitivity Indexes (left ) and Regional Vulnerability Indexes (right ) 98 Figure E.2: Livelihood Zones 98 Figure E.3: Food Consumption 98 Figure E.4: Mean Vulnerability Indexes of Upper East Districts (top left ), Upper West Districts (bottom left ), and Northern Districts (bottom right ) 99 Figure H.1: Agriculture, Value Added (2007–12) 113 Figure H.2: Growth in Gross Domestic Product (2006 Constant Prices), 2007–12 113 Figure H.3: Agriculture, Value Added (Annual % Growth), 1980–2012 113 Figure H.4: Agriculture, Value Added (Annual % Growth), 2000–12 114 Figure K.1: River Basins in Ghana 124 Figure K.2: Distribution of Irrigation System Typologies in the Regions of Ghana 124 TABLES Table 1.1: METASIP’s (2011–15) Six Program Areas and Agricultural Risks 2 Table 2.1: Agro-Ecological Zones of Ghana (North to South) 6 Table 2.2: Trends in Crop Production, 1990–2011 8 Table 2.3: Coeffi cients of Variation for Crop Production, 1990–2011 9 Table 2.4: Domestic Food Supply and Demand for Food Staples 10 Table 3.1: Frequency of Low Rainfall Events by Region, 1981–2010 17 Table 3.2: Frequency of Excess Rainfall Events by Region, 1981–2010 19 Table 3.3: Pests and Disease Risks for Ghanaian Agriculture 21 Table 3.4: Inter-Annual Crop Price Variability, 1991–2001 23 Table 3.5: Seasonal Price Variability for Food Crops, 2004–08 24 Table 4.1: Severity and Cost of Adverse Events for Aggregate Crop Production 33 Risk Prioritization v Table 5.1: Risk Ranking, Rain-Fed Farming 38 Table 5.2: Risk Ranking, Irrigated Farming 39 Table 5.3: Risk Ranking, Agro-Pastoralists 40 Table 5.4: Risk Ranking, Commercial Farmers 41 Table 5.5: Risk Ranking, Grain Traders 41 Table 5.6: Stakeholders’ Risk Perceptions and Rankings 42 Table 6.1: Ranking of Risks by Sub-Sector 44 Table 6.2: Ranking of Risks and Vulnerability by Region 45 Table 6.3: Indicative Risk Management Measures 46 Table 6.4: Relative Benefi ts of Risk Management Interventions 51 Table 6.5: Decision Filters for Risk Management Measures 52 Table 6.6: Integration with METASIP 54 Table C.1: Standardized Cumulative Rainfall 82 Table C.2: Impact of Rainfall Parameters on Crop Yield 83 Table C.3: PCA Analysis: Three Eigen Values and Proportion of Variance Explained 84 Table C.4: Correlation of Components 84 Table E.1: Food Insecurity and Vulnerability by Region 96 Table E.2: Vulnerable Groups 97 Table G.1: Indicative Losses (US$ Million) for Adverse Crop Production Events by Crop, 1991–2011 (Constant Prices = 2004–06) 106 Table G.2: Indicative Losses (% Gross Agric. Output) for Adverse Crop Production Events by Crop, 1991–2011 (Constant Prices = 2004–06) 107 Table G.3: Indicative Losses (US$ Million) for Adverse Producer Price Movements by Crop, 1991–2010 (Real Prices 2010 = 100) 108 Table G.4: Indicative Losses (% Gross Agric. Output) for Adverse Producer Price Movements by Crop (Real Prices 2010 = 100) 109 Table G.5: Indicative Losses (US$ Million) for Adverse Crop Production Events by Region (Constant Prices = 2004–06) 110 Table G.6: Indicative Losses (% Gross Agric. Output) for Adverse Crop Production Events by Region (Constant Prices = 2004–06) 111 Table J.1: Household Cropping Activity 120 Table J.2: Distribution of Household Farm Size, by Region (Acres) 120 Table J.3: Type of Access to Land, by Region