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Covid-19 Impact On Agriculture Sector

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NEWS COMMENTARY ON COVID-19 AND IMPACT ON THE AGRICULTURE SECTOR OF GHANA’S ECONOMY

The global COVID -19 pandemic has gripped the world and is causing a lot of havoc on almost every facet of life. The virus has affected millions of people globally in over 200 countries and territories.  A particular concern of the pandemic is its impact on the global economy in general and particularly on the Agriculture sector. Though analysts have suggested that the impact would be less on the Agriculture sector, it important to look at the possible effect the disease would have on the Agriculture sector in Africa, especially Ghana and what could be done to mitigate the impact.

According to the Organization for Economic Co-Operation and Development, OECD, global growth is estimated to reduce by 0.5%. This has been attested to by other analysts across the globe. Agriculture continues to be the mainstays of most economies in the world. It is estimated to be employing over 50 percent of the labour force of most economies in Africa. Ghana’s 2020 National Budget had projected Ghana’s economy to grow at 6.8%. However, with the onset of the COVID-19, the growth figures have been revised downward. Since Ghana’s economy is primarily hinged on the agriculture sector, it is important to look at how the sector is being impacted. Foreign Direct Investment FDI, to the Agriculture sector will decline drastically. The Centre for Strategic and International Studies based in the USA estimates that foreign direct investment flows could fall between 5% & 15% to their lowest levels since the 2008-2009 global financial crisis.

Since there are travel bans and other restrictions to movement as part of measures to contain the spread of the virus, most FDIs would be affected negatively. FDIs take place in the different sectors of the economy. Given the interconnection of the different sectors, a decline in FDI in different sectors of the economy would certainly have effect on the Agriculture sector as well. A decline in FDI in the Agriculture sector also means that the different parts of the Agriculture value chain would be affected from production through to consumption. A second challenge of the virus is disruptions in the Food Supply Chain. Restaurants and other food joints have also been affected as a result of the partial lockdown. Those that import food supplies from neighboring countries like Burkina Faso and Togo have been affected.

A key impact of COVID-19 is the possible reduction in government expenditure in the Agriculture sector which should be of major concern if it happens. Already, the pandemic has caused a sharp increase in unplanned expenses in the health sector. It has also caused a sharp decline in the prices of Commodities like oil. Though Ghana is a net importer of crude oil and related products, its revenue share from the jubilee field among others has reduced.

Consequently, government annual budget funding in the Agriculture would reduce. Overall, a reduction in Government spending in the Agriculture sector such as the input subsidies, support for Agro-industries under the One-District One-Factory, construction of warehouses, feeder roads to farming communities among others could be impacted negatively.

The way out is to mitigate the impact and find innovative ways to adapt to the current situation. Government will have to increase incentives that will attract more people into the Agriculture sector. This is because with a decline in FDI, Government will have to step up other innovative ways of getting local investors to invest in the sector. Government will also have to radically improve on the Food supply chain. The most critical thing the state will have to do is to ramp up measures towards containing the spread of the virus in the country. Since there are other competing needs with respect to national expenditure, government should prioritize the Agriculture sector. This would ensure that the relative gains made in the sector are not reversed.

COVID-19 will surely go, but what is unpredictable is the extent to which it will impact the lives of people. Government’s efforts at mitigating the negative impact on the economy especially the Agriculture sector will go a long to making Ghana more food sufficient and secure the livelihoods of many small holder farmers.

BY EMMANUEL WULLINGDOOL, A POLICY ADVOCATE AND CONSULTANT IN AGRICULTURE AND TRADE POLICIES.

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