Venture Capital Fund helps boost local poultry, maize, sorghum and soya production
Ghana’s poultry industry, which used to be counted among the country’s major economic growth drivers two decades ago, is gearing up for a comeback to economic significance, thanks to the support of the Venture Capital Trust Fund.
Today, many of the industry’s household names, like Darko Farms and Afriwaa Farms, are fast
fading away as they struggle fruitlessly to shake off the massive onslaught of cheap poultry imports, high costs of production inputs and inadequate financial support.
“Have you wondered why the yolk of eggs produced in the country lately is whitish as against the naturally rich yellow colour?” Nana Owusu-Afari, president of the Association of Ghana Industries (AGI), asked during an interaction with GB&F on the sidelines at a recent corporate event in Accra.
“The shift from the traditional yellow maize as the main ingredient in poultry feed - due to its ever increasing cost. to other substitutes such as soya bean accounts for this,” he explained.
Nana Owusu-Afari, shot to public prominence by establishing Afariwaa Farms, which in its peak days had a feed mill with a production capacity of four metric tonnes of animal feed per hour and a hatchery capable of producing six million dayold chicks per year for the local poultry industry as well as for the ECOWAS market. Other assets of the farm included a chicken slaughter and processing plant, capable of processing 400 birds per hour, and a breeding farm with 30,000 parent stock breeders, producing hatching eggs for the hatchery.
Now, perhaps soon, Ghanaians will once again enjoy their egg with its natural rich yellow yolk.
The Venture Capital Trust Fund’s (VCTF) CEO Daniel Duku has disclosed that the Trust is currently working to replicate its bespoke financing of sorghum and soya bean farming,
in yellow maize production across the maize growing belt of the country. The VCTF, since 2007, has successfully implemented its special purpose vehicle for financing the commodity value chain for sorghum and soya bean. In the process, it has developed a network of 8,000 smallholder farmers who have cultivated in excess of 18,000 acres of sorghum and soya bean.
The intervention has led to the production of 12,600 metric tonnes (MT) of sorghum and soya bean with a total cumulative turnover of about GH¢7.4 million with a corresponding GH¢‘6.2 million paid to farmers as gross revenue. The Trust’s venture into yellow maize production may prove to be the lifeline to a beleaguered local poultry industry.
The Daily Graphic reported that, against popular opinion, the 2007 winner of the Best Agro Company Award of the Chartered Institute of Marketing Ghana (CIMG), Alhaji Abdul Salam Akate, said a ban on the importation of poultry products would not be the solution to the failing local poultry industry. It is against that backdrop that the VCTF’s intervention could be the game changer.
According to a discussion paper by Gideon Onumah and Jonathan Coulter, both of whom are international consultants in agriculture, maize is a major staple crop in Ghana and by far, the most important cereal crop in the country, exceeding total output and acreage planted for rice, millet and sorghum. “Though the crop is adapted to nearly all the agro-ecological zones of Ghana, production is concentrated in the forest-savanna transition zone comprising the Ashanti, Brong Ahafo and Eastern Regions, which in 2006 accounted for more than 60% of the 1,188,836 tonnes produced,” the paper said.
“However, because it is not a cash crop like cocoa, grown in this ‘maize belt’, farm holdings are small, between 1-2 hectares with only about 15% of maize farmers cultivating more than 2 hectares. Maize is an important component of poultry and livestock feed, with about 13% of total annual maize output going into poultry and livestock feed," the paper added.
Ghana's poultry farmers prefer yellow corn, but the country produces mainly white corn and farmers currently have to pigment the feed in order for the egg yolk to produce a yellowish colour. Feeding the birds with yellow corn makes the egg yolk naturally yellowish, thereby saving them significant input costs. Experts say estimating maize consumption by the poultry industry is problematic because of unreliable data on poultry population in Ghana.
Venture Capital Fund, CEO, Daniel Duku
However, according to Onumah and Coulter, based on the relatively more reliable data on day-old chicks, some studies have estimated demand for maize in the commercial sector at about 54,000 tonnes per annum and calculate that this demand could rise if broiler production increased substantially to satisfy demandm currently met by imports of poultry products, which rose from 7,939 tonnes in 1997 to over 13,000 tonnes in the early 2000s. Another study by WBS Consulting indicated that to produce the latter quantity of poultry products would require approximately 37,000 tonnes of feed of which about 20,000 tonnes would be maize. “On the average, the volume of maize produced in Ghana has increased annually by 3.1% from 1997 to 2006. Currently, the national average maize yield is estimated at 1.6 tonnes per hectare. Using improved technologies, yields of 4-5 tonnes per hectare have been recorded in onfarm demonstration fields. Lower yields have been attributed to traditional farming practices, the use of low-yielding varieties, poor soil fertility and limited use of fertilisers, low plant population, and inappropriate weed control,” the report said.
There is significant potential for improving yields through the use of hybrid maize varieties. It is these challenges that the VCTF hopes to address through financing which will include providing technical support with regards to the provision of extension services in addition to farming inputs, providing high yield seeds, agro chemicals and fertilizer, as well as tractors and storage facilities where necessary. It may be too early to try to estimate what impact the VCTF intervention may have on yellow maize production, and by extension its impact on the local poultry industry, but an assessment of the Trust’s success with the Sorghum Value Chain project may throw some light on the possibilities for yellow maize.
Sorghum, until as recently as 2006, was produced mainly for consumption as food. For sorghum farmers of the Upper East, Upper West, and Northern Regions as well as the northern part of the Brong-Ahafo Region, it was primarily a subsistence activity. For them, it was a product with a limited market that did not encourage increased production. Their yield per hectare was 0.8 tonnes and total output was about 100mt,with each farmer earning an average of GH¢30 annually. In August 2006, the VCTF got involved in the Sorghum Value Chain Project, where it provided about GH¢360,000 to seven nucleus farmers in an outgrower scheme in the four northern regions of Ghana for the production of sorghum for Guinness Ghana Brewery Limited (GGBL), in replacement of imported barley, which the company uses as raw material to brew beer and other beverages.
It was the first of a five-year financing package to farmers, to locally produce the sorghum variety used by the brewing company. This eventually led to 80% substitution of imported barley by GGBL. The VCTF provided the funding to the farmers through a special purpose vehicle (SPV). In certain circumstances the Fund, as a means of priority funding, engages in specific purpose financing arrangements where it lends directly to participants of a specific project.
In the 2006 season, the Fund’s investment assisted the farmers to supply GGBL with 903.4mt sorghum, a whopping nine fold increase, in just one year, compared to the previous year’s 100mt output. Sale in the sorghum industry increased from GH¢35,000 to GH¢373,000, creating a net income of GH¢102,000 to the farmers and a collateral income of approximately GH¢36, 000 to other incidental industries.
The project is estimated to have assisted in creating over 500 rural jobs for the youth who were engaged along the various components of the supply chain. But the benefits go far beyond that. It also saved the country the equivalent value of foreign exchange that would otherwise have been used by Guinness to import barley. Encouraged by the outcome, the VCTF signed another financing agreement extending GH¢800,000 to farmers under the Sorghum Value Chain Project, in 2007. Despite extensive flooding in the three northern regions, the project supplied 1,270mt of yield to GGBL. A total of 3,500 farmers benefited directly from the Fund’s facility in 2007, with an additional 53, 698 people affected indirectly. Direct net income to farmers was GH¢371,250, an impressive 264% increase over the previous year's figure of GH¢102,000.
The 1.7 mt/ha yield of sorghum production in Ghana for 2007 exceeded the world average of 1.5mt/ha for that year, despite the floods in the northern regions. The efficiency employed by the Project Manager, TechnoServe, and the farmers accounted for the high yield. In 2007, farmers in the sorghum belt supplied 1,270mt to Guinness Ghana Brewery
Limited (GGBL), recording a yield of 1.7 metric tonnes per hectare (mt/ha) with an increased average annual income of GH¢72.80.
In October 2008, the Venture Capital Trust Fund (VCTF), together with TechnoServe, a United States based non-profit organization, presented equipment including six tractors and accessories and eight cereal threshers, valued at GH¢164,000, to seven nucleus farmers in the Upper West and Northern regions. That was a collaborative effort between VCTF and its partners to step up financial and technical support to sorghum farmers under a project where Ghanaian farmers are expected to supply the 3,000 mt annual sorghum needs of GGBL. The VCTF in 2008 also started working to provide storage facilities in the form of conveniently located warehouses, as well as transportation for farmers to enable them to better manage their operations and obtain the best value for their produce.
Peace FM online reported last year that the impressive success of the VCTF’s special purpose vehicle on commodity value chain for sorghum inspired the Fund to extend the same model to soya bean and that led to the development of a network of 8,000 smallholder farmers who have cultivated in excess of 18,000 acres of sorghum and soya bean by 2010. The intervention also led to the production of 12,600 metric tonnes (MT) of sorghum and soya bean with a total cumulative turnover of about GH¢7.4 million with a corresponding GH¢6.2 million paid to farmers as gross revenue.
With the success so far chalked in the production of sorghum and soya bean, the VCTF feels very confident its bespoke financing model will work with yellow corn as well.