Ghana farmers lose money as COVID-19 disrupts key export markets

By Joseph Opoku Gakpo

April 7, 2020

Some Ghanaian farmers are losing much of their income as the novel coronavirus, COVID-19, disrupts the global food supply chain.

In Ghana, where millions of smallholder farmers grow fruits, vegetables and various cash crops that are sent to Europe, China, America and elsewhere, exports are grinding to a halt as land, sea and air borders are closed or restricted around the world.

“The coronavirus has stopped all of our shipments,” Alex Kravecas, owner of Ghanaian fruit export firm MakolaHub Fresh, told freshplaza.com in an interview.  The company is a small supplier that fills niche gaps in pineapple and papaya by air freight to Europe. “But we are not doing anything now.”

The company recently lost new business contacts made in February during an international trade fair in Germany and saw export deals fall apart due to lockdowns brought on by the coronavirus spread in Europe. Kravecas said a potential buyer told him that “the virus is putting much pressure on the market in Europe.”

Cashew, a major export cash crop that generates between US$378 million and US$981 million annually for Ghana, has been especially hard hit by the spread of COVID-19, causing huge losses for farmers. They’ve seen prices plummet from US$130 for a 100kg bag of raw cashew nuts to just US$75.

“We are forced to sell the fruit at a profit-less price,” lamented cashew farmer Clement Anane, who is also secretary of the Ghana National Cashew Farmers Association. “The cashew sector had its own challenges, but the coronavirus epidemic has exacerbated matters.”

The spread of the coronavirus has forced the world’s largest importers of cashew products, including India, China and Vietnam, to cut orders as their processing factories close due to lockdowns imposed to slow the spread of the virus. This has caused a glut, forcing the international market price of the commodity to slump by 63 percent since January 2020.

Ghana’s most important cash crop, cocoa, is also feeling the negative impact. The price of the commodity on the international market fell by about 4 percent last week and continues to worsen as the coronavirus impacts the world economy. Many of the countries that import cocoa from Ghana and Cote Divoire, which together produce more than 65 percent of the world’s cocoa, are under lockdown, forcing the closure of cocoa processing plants.

“The price of cocoa has tumbled,” Joseph Boahen Aidoo, chief executive officer of the Ghana Cocoa Board, a government agency that buys cocoa from small scale farmers and sells on the international market, told Joynews in an interview.  “Immediately it brings to Ghana a deficit of almost US$1 billion. If this thing should continue, paying our farmers will be difficult.”

According to Maximo Torero Cullen, chief economist at the United Nations Food and Agriculture Organization (FAO), “a protracted pandemic crisis could quickly put a strain on the food supply chains, a complex web of interactions involving farmers, agricultural inputs, processing plants, shipping, retailers and more.”

Currently, the BBC estimates a third of the world’s population is under lockdown as governments close their borders and direct citizens to stay at home to stem the spread of the coronavirus.

“Restricting trade is not only unnecessary, it would hurt producers and consumers and even create panic in the markets,” Cullen observed in a paper published on the organization’s website. “It is imperative that countries keep the food supply chains going. As countries combat the coronavirus pandemic, they must also make every effort to keep the gears of their food supply chains moving.”

Where to from here?

Kravecas of MakolaHub is pinning his hopes on the pandemic easing soon, even as his firm looks for alternative export markets for its fresh fruits.

“We will look for buyers in new markets like the Middle East, although they’ve been hit badly by the virus as well,” he said. “We will just have to ride it out and hope the warmer weather brings an end to the virus. Luckily our mango season starts in May-June when the weather is warmer in Europe.”

There has been some suggestion that warmer summer weather could help push the novel coronavirus into remission.

Ed-Malvin Nii Ayibonte Smith, president of the Association of Cashew Processors Ghana, said the situation provides a good opportunity for players in the cashew value chain to pay more attention to local production, processing and preservation of the crop.

“Government must invest in the building of modern processing machinery while financial institutions help with credits,” he told modernghana.com in an interview. “This is our way out from this kind of crisis we have found ourselves in today.”

Dr. Eli Gaveh, a lecturer in the Department of Horticulture at Kwame Nkrumah University of Science and Technology, Ghana’s second biggest university, agrees.

“Primary commodities should be processed to improve their storability,” he wrote in an opinion piece published in the Ghanaian media. “Some farm products such as cassava, yam and pepper can be solar-dried. Fruits such as mango, pineapple and citrus can be stored as concentrates. Tomato can be turned into purees or paste and stored in hermetic containers. Local food processors should be supported to acquire simple processing equipment for value addition to fresh produce.”

Other players advocate hoarding commodities like cashew for subsequent release onto the market when the global economy recovers.  “Our cashew farmers are in crisis and this is the time they need more of our support,”  Dr. Anthony Augustus Mainoo of the Adventist Development and Relief Agency (ADRA) said in an interview. “ADRA will soon begin talks with some financial institutions and individual investors and see if we can find a way of buying the raw nuts and storing while waiting for the pandemic to normalize across the globe.”

But exports aren’t Ghana’s only concern. Finance Minister Ken Ofori Atta told parliament late last month there will be disruptions which “could limit farmers’ access to inputs, such as seeds, fertilizers and insecticides. [A] general shortage in food supply is anticipated if the pandemic intensifies. This could lead to inflation in food prices, especially rice, bread, poultry and other meat products, vegetables, sugar and other commodities.”

He predicted the government will lose revenue in the 2020 fiscal year to the tune of about US$1.9 billion, which is equivalent to 2.5 percent of the country’s  Gross Domestic Product (GDP), as a result of Covid-19.