Maize, rice, and soy are in high demand due to the fast growing and urbanizing population of Ghana. Demand significantly exceeds current production capacity, in part because of low agricultural yields caused by rain-fed production on small plots of land. Meeting Ghana’s future staple food production requirements necessitates use of new irrigation systems, but these are expensive and challenging for small farmers to finance. In addition, small-scale farmers lack equipment to prepare land to cultivate staple food crops, and they lack the ability to access quality inputs (mainly seed and fertilizer) required to meet the production and quality targets required by buyers offering the highest premiums. There is a compelling business case for investment in firms that can expand yields by both introducing new technologies and supporting local partners to meet production requirements.
Arima Farms Ghana Ltd. (AFGL) is a commercial farm ready to initiate a 7,000 hectare (ha) irrigation project in the Northern Region for rice, maize, and soy production. The company has cultivated 500 ha of its
7,000 ha (contiguous) land in Yapei, and is looking to eventually put the rest of its uncultivated land under production. This will include investment in center-pivot irrigation systems, land preparation, harvesting and postharvest mechanization systems, and construction of warehouses. The company has off-take agreements with processors including AVNASH for rice and Vester Oil Mills for soy bean.
AFGL is interested in pursuing a nucleus farm model, in which it would expand existing production services and new technologies to outgrower farmers and farmer associations in the three VCs and provide input financing, land preparation, irrigation, a secure market, storage, and processing. The proposed outgrowers site is adjacent to AFGL’s 7,000 ha. AFGL envisions that 50% of the farmland will be given to ingrowers, people from the surrounding communities, some of whom have already been engaged on the initial farmland under cultivation. About 40% are women. As part of its social responsibility, AFGL will facilitate establishment of school and health facilities for the surrounding communities to be employed on the nucleus farm or to serve outgrowers.
AFGL requires $25 million for a mix of short-term and longer term working capital and capital expenditure financing (debt and equity mix) to finance land and infrastructure development (a 20,000 MT storage facility and center-pivot irrigation system), technology and machinery (harvesters, tractors, and accessories), and inputs (seed and fertilizers).
BASs were effectively used by AFGL in 2014–2015. Follow- on BASs are needed to facilitate the remaining $25 million in required finance.
A USAID-FinGAP ERR has not been completed yet.
Numerous donor-supported initiatives to increase agricultural production in northern Ghana that can be leveraged to support production advances of small farmers include:
- University of Development Studies will partner to provide training and agricultural extension services to outgrowers
- An Israeli firm has been identified to provide land development and irrigation infrastructure consulting services.
- AFGL has signed an MOU with John Deere for the latter to provide tractor and equipment servicing, and to train AFGL staff on how to do this after expiration of the MOU.
Rtn KC Echilarasan, Chairman, +233 (0) 261 029114;
Ms. Saalai Manikam, Managing Director, +233 (0) 261 029115