Ghana’s growing agricultural sector is underserved with respect to access to inputs, such as fertilizer. While the government-supported fertilizer market is worth over US$15 million annually of the total national fertilizer market of US$160 million, about 40% of farming communities are not able to access the government-subsidized fertilizer program. The cost of these fertilizers is too high for farmers, and many farmers are concerned about the negative effects of the continuous application of the chemicals on their land.
Farmers Hope Company Limited (FHCL) provides a viable alternative for farmers that require fertilizer to expand yields, given FHCL’s very high-quality and affordable products. FHCL has significant room for expansion, as it can only serve 4.7% of the farmers in Ghana at present. This translates into 500,000 farmers annually with four 50 kg bags of organic fertilizer each.
FHCL estimates that an internal rate of return (IRR) of more than 55% is achievable for any investor over a period of 3 years. In addition, there are high social returns tied to this investment, given its potential to support farms to access critical inputs. It would also generate direct employment, as it would enable the firm to expand its employees from 6 to about 30. FHCL estimates that indirect employment generated could be upwards of 200. In addition, deposits of agricultural waste, such as rice husk, cocoa pods, and poultry manure generated across the country would be converted to organic fertilizer.
FHCL seeks US$800,000 in debt, equity, or a mix of the two, to procure machinery and expand production, in order to meet market demand for its fertilizer. The financing would be used to procure pellet machines, establish a power plant, and procure inputs needed for the 2015–2016 farming season.
FHCL has contracted Growth Mosaic, a BAS provider, to support the firm in attracting investment. Additional BAS services could be used to support market penetration in northern Ghana.
An ERR needs to be undertaken, however the company’s operation helps to control waste deposits in the environment by converting agricultural waste products into organic fertilizer.
There are a number of donor-supported initiatives to increase agricultural production in Northern Ghana which can be leveraged to support production advances of small farmers, such as the Northern Rural Growth Project, USAID ADVANCE II, and USAID Agriculture Technology Transfer (ATT) Project.
In terms of the public sector:
- MoFA and Cocoa Inputs Company can encourage farmers to use organic fertilizer. The role of Ghana Agro Input Dealers Association (GAIIDA) in facilitating distribution of organic fertilizer is crucial for enhancing adoption by farmers.
Akwasi Osei-Bobie Ansah, +233 (0) 243 163 824, firstname.lastname@example.org