Ghana’s poultry farmers battling for survival as country imports $200m frozen chicken

Ghana’s poultry farmers are struggling to survive crippling competition from their counterparts in developed countries as the country imports $200 million worth of chicken every year.

The major factors behind the declining state of Ghana’s poultry industry are varied and complex, but the most significant is government policy towards the sector’s growth.

In small remote communities of Ghana, poultry farming is everything. It is the mainstay of rural communities, providing the major and — in some cases — the only source of income for many inhabitants.

But failure of successive governments to come out with clear policies that will create much protection for the local poultry industry has triggered the import surge of frozen chicken from the United States of America (USA) and the European Union (EU).

Worse still, imported chicken is being sold at below the cost of local chicken, and farmers in Ghana simply cannot compete — resulting in the collapse of dozens of farms and the loss of hundreds of jobs.

Last year alone, the EU, USA and Brazil together exported over 200,000 tonnes of frozen chicken to Ghana, valued at US$200 million.

In 2002, more than 26,000 tonnes of chicken was imported into the country, mostly from the EU where farmers receive generous subsidies for production. In 2005, the figure was estimated to be as high as 50,000 tonnes. Ghana imports almost one-third of the EU’s total frozen chicken that goes to Africa.

At a recent debate on the topic “Is Importing Chicken Good for Ghana?” organised by Channel Two Communications, a strategic communications and media company, poultry farmers expressed their dissatisfaction with the status quo, blaming government for letting the poultry industry down.

“I don’t think the government sees agric as an important tool – that’s how I see it,” says Alhaji Abdul-Salam, Managing Director of Akate Farms, one of the largest poultry farms in Ghana.

But Dr. Yao Graham at Accra-based research and advocacy organisation, Third World Network-Africa, attributes the demise of the industry to various factors including government policies.

“I’m not interested in the importers. Importers are entrepreneurs – they will find other opportunities in the economy, if the economy is doing well.

“I’m interested in the policies which create opportunity to import poultry – as having greater weight than the policies which stimulate local production,” he says.

Unfair advantage

The Managing Director of Sydel Farms, Kenneth Quartey, explains that Ghana’s development partners invest about $240 billion a year in their countries through subsidies in agriculture.

“That’s a capital base that is difficult to compete with when you’re looking at it from the perspective of developed versus under-developed countries,” adds Quartey.

Several Central and West African nations are victims of injustice by the US and EU. These countries subsidise their agricultural producers, ignoring the rules of the World Trade Organisation (WTO).

The U.S. and the EU are the ‘subsidy superpowers’, accounting for over 60 percent of rich- country agricultural support spending.

Europe spends more in absolute terms—and its subsidies represent a larger share of the value of farm output.

However, the U.S. spends more per farmer. It also concentrates subsidies on a narrower range of commodities.

EU and U.S. subsidies matter to the rest of the world because of their dominant position in global markets. On the surface, the argument against subsidies is quite revealing.

Dr. Graham notes: “They get subsidies for keeping land in production. Things which are in surplus are bought by their governments.

“Once bought, a way has to be found to let them go. In the U.S., for instance, the amount of subsidies given to cotton farmers was more than the export value of all cotton produced in West Africa.”

Quartey, who is also a former president of the Ghana Poultry Farmers Association, remarks: “You can’t look at just one product in the food-chain, because a subsidy in the downstream of a product’s food-chain is effectively a subsidy for everything above.

“For instance, if you have heavy subsidies for maize production, you’re effectively subsidising the cost of poultry production – because it has an impact on the cost of feed, which is a major part of the cost of poultry. And hence poultry can lead on the table at a much cheaper price.”

But the debate over agricultural subsidies is often clouded by legal language and technical jargon. US officials insist their country is in compliance because its subsidies (those that fall under WTO rules) do not distort international trade.

US officials also accuse developing countries of lumping all US subsidies in a single basket, even though WTO rules lay out different schedules for different types of support. But leaders and activists in developing countries insist the US is not playing fair.

Production costs

Interest rates in Ghana far exceed the international norm. A farmer in the U.S. borrows at 4 percent, while his Ghanaian counterpart pays anything up to 28 percent. And loans are not easy to come by because banks see agriculture as high-risk.

Commenting on the issue, Charles Otoo, General Manager of First National Bank, says: “Basically – say for poultry – you appreciate the fact that the initial investment by the promoter himself is huge, because of land acquisition, what he has to go through with the preparations, and [the fact that] the equipment they bring in is specialised.

“For huge investments, what kind of collateral do they have to support it? And if you look at the competition, and the fact that the imported ones are much, much cheaper, then you see – even if you support, and they’re able to produce – the marketing then becomes a problem. So the risk is very high.”

While foreign poultry farmers receive substantial support from their governments, Ghanaian farmers receive none.

Otoo explained that Ghanaian poultry farmers put in everything to buy feed and pay duties at the ports, adding that, “we don’t even give them any tax incentives. And it’s a huge problem.”

In a country endowed with abundant fertile land, poultry farmers have to import maize – a major component in chicken feed – because there isn’t sufficient local supply.

And what is available costs the Ghanaian poultry farmer double what it costs his/her American counterpart – because of mechanisation.

While the average Ghanaian farm yields 10 bags of maize per acre, the same land in Brazil, for example, yields 36 bags.

“If we want to compete, I believe we should learn from other places – South Africa, Brazil. They empower their farmers to do maize, soya, rice – we have all this in the country. We can easily do that. What are we doing?” asks Alhaji Abdul-Salam.

IMF, WTO under scrutiny

The International Monetary Fund’s role is to oversee the global financial system and improve support to countries needing financial assistance – through loans, debt relief and aid.

But there are strings attached – along with aid comes IMF’s right to interfere in the recipient’s economic policy.

Given that the IMF is chief proponent of the free market and trade liberalisation, this means that recipient countries must open their markets to international trade, recognise the private sector as the market’s driving force and limit state intervention in the economy.

Ghana is heavily dependent on aid, and has agreed to all of these conditions – and hence the low tariffs and lack of subsidies for farmers. Those are the rules, but the farmers aren’t buying them.

Quartey counters: “It contradicts the sovereignty of a nation – because a nation is there to provide opportunity for its people first and foremost, and the rest of the world second.

“Hopefully we will do it in such a manner that everyone in the world benefits. But when you have a system where only one part of the world is going to benefit, and the other is going to suffer, I don’t think it will sell – no matter how many treaties you get signed. The implementation will fail.”

Dr. Graham shares Quartey’s pain. He says that despite all the treaties signed, and international commitments to free and fair trade, many first-world countries haven’t lived up to the spirit of their pledges.

“Their farmers are still subsidised and their markets protected. And they get away with it. It’s a frequently-heard criticism that the World Trade Organisation (WTO) is not impartial, and has a bias towards rich countries and multinational corporations,” says Dr. Graham.

The growing consensus is that much of the blame also lies with the shortcomings of the WTO pact that was intended to fairly govern trade in agricultural products, the Agreement on Agriculture.

The agreement, which came into force in 1995, in theory requires all member countries to reduce subsidies that hinder trade.

But numerous loopholes, and rules weighted in favour of the more dominant members of the WTO, have not only allowed industrial countries to avoid reducing agricultural subsidies, but to continue raising them in some cases.

“They will give us money and come and sell their products – and take that money back. And so we remain poor,” comments Alhaji Abdul-Salam.

He adds: “We’re giving them employment over there, and we’re denying our people employment here. They’re manufacturing their cars, their planes, cloths, shoes, everything, and selling it to us, and we sit down for them to come and take the agric we’ve inherited from our great-grandfathers.”

“They’re telling us – you relax. We’ll give you food to eat. And we just say yes, yes – we will relax. And all the time the tears are going in there. We have to one day take a bold decision for us to be able to move forward.”

Despite punitive threats from the IMF and World Bank, Nigeria didn’t trouble itself with raising tariffs – they simply banned the importation of poultry outright, and today are enjoying a thriving industry, with big plans for regional expansion.

Bans aren’t the only option in the regulations of the WTO, the body that policies the lifting of trade barriers. Provision is made to protect developing nations.

If a specific domestic industry is threatened by increased imports, that member country may legally raise its tariff and restrict imports.

Armed with the regulation, the Ghana Poultry Farmers Association petitioned President John Kuffour’s Administration in 2003 to raise import tariffs from the current 20 percent.

“Good step, but the tariff was never applied – because they gave in to pressure from the IMF, who claimed it was not in the interest of the poor,” says an angry Dr. Graham.

Dr Graham says the IMF has never had the poor as its primary concern. “They put pressure on the government and they never applied the tariff –which was a terrible act – because the decision of a sovereign parliament can be put under pressure by the IMF.”

Loud  mouth, no action

Government keeps repeating promises to increase taxes on imported chicken, and help farmers to acquire equipment.

Dr. Tia Alfred Sugri, Ghana’s Deputy Minister of Agriculture in-charge of Livestock, says government is finding ways to use tariff and non-tariff measures to restrict the importation of chicken into the country.

When asked the timeline for implementing them, Sugri said: “We’ve started discussions on the measures with stakeholders, and very soon we will implement them. We’re capable of serving our people better provided these hurdles are cleared.”

But Dr. Graham puts it succinctly: “The elite – their outlook about what this country needs – is too subordinate to other people’s vision. Whether the New Patriotic Party (NPP), the National Democratic Congress (NDC) or the Convention People’s Party (CPP) – they’re all exactly the same.

“The Ghanaian elite love to be praised by the West. They love it when Obama comes and says you’re the model to the world. They love it when Tony Blair or some such character, comes around and says you are the model, the fastest, and quickest reforming. You’re number five in the world; you’re going to become number two, and so on. There’s no qualitative evaluation.”

By Michael Sarpong Bruce

Email: [email protected]