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March 06, 2009

Ghana seeks to diversify farming in 2009 budget

by Kwasi Kpodo

Ghana aims to diversify its agricultural sector, the mainstay of the West African country's economy, the new government said in its first budget.

Ghana is the world's second biggest cocoa producer and benefited from high world prices last year, but as those prices are expected to fall it wants to broaden the range of commodities it produces.

"Government identifies the agriculture sector as Ghana's greatest strength and critical for the country's industrial growth," the full text of the budget said. But it added that to ensure increased and more reliable income from agriculture, farmers need to diversify into cash crops, livestock and value-added commodities.

The document was distributed after its presentation in Parliament by Finance Minister Kwabena Duffuor.

The National Democratic Congress administration of President John Atta Mills, elected by a wafer-thin margin in January, is targeting a 42 percent rise in maize production and a 23 percent increase in the rice harvest, as well as bigger soybean and groundnut production in 2009.

The budget foresaw an increase of 200 hectares each for oil palm, citrus and rubber production in the humid south of the country, and an expansion of 3,000 hectares each for cashew, mango and cotton cultivation in the drier northern regions.

Agriculture was the greatest contributor to an economy that grew by 6.2 percent last year, the budget said, but that growth was expected to slow to 5.9 percent in 2009.

The value of its cocoa and gold shipments, Ghana's biggest export earners, will fall by 2.8 and 11.8 percent respectively in 2009, the budget forecast.

Cocoa exports were estimated at $1.46 billion, while an 1.8 percent decline from 2008's gold income would leave Ghana with around $2 billion.

"The downturn in the advanced economies in 2009 is expected to have negative effect on Ghana's exports and, thus, our external balance," the budget text said. "Weak demand for exports and weak commodity prices imply less export revenue."

RIPE FOR DEVELOPMENT

Ghana, struggling with government overspending, rising inflation and a weakening currency, is targeting agriculture as the sector most ready for development and greater profitability, as well as a way to create more jobs.

COCOBOD, the state cocoa firm that markets all of Ghana's cocoa crop, raised $1 billion for purchases in the 2008/09 season, up from $900 million last year.

The government wants to increase the amount of cocoa processed domestically to 60 percent from its current level of less than half the crop, a move which would reduce Ghana's vulnerability to the price of raw materials on world markets.

Some of these prices have lurched wildly in the past year, as the global financial crisis tore commodities from their highs of mid-2008.

"The projected decline in the rate of growth of the world economy is expected to have a negative impact on cocoa's world market price," Duffuor said.

Reuters

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