The country’s coffee sector is at a vital crossroad as it remains to be seen if government will keep its word to increase production from 6,000 metric tonnes currently to 100,000 metric tonnes per annum in the short- to medium-term, to take advantage of rising global demand.
Government’s promise to revive the sector is in keeping with growth in global demand for coffee, specifically from the Asian market.
As part of the plan five million improved early maturing and high yielding coffee seedlings are being raised to be distributed freely to farmers interested in growing the crop.
“With an average yield of 2 to 3 metric tonnes per hectare and with a projected planting area of 100,000 hectares over the next six years, it is estimated that from 2020 onward about 100,000 metric tonnes of coffee can be produced annually in this country, which will subsequently increase to about 200,000 metric tonnes over the next decade,” President Mahama said in February.
“This number will be substantially increased annually to ensure that we achieve the 100,000 hectares of coffee farms in the targetted locations by 2020.”
The plan will be backed with readily available marketing channels for farmers, and coffee-growing will coexist with the cocoa industry without sacrificing the interests of cocoa farmers.
As part of government’s effort to revive the value chain, a pilot coffee rehabilitation project by the Ghana Cocoa Board (COCOBOD) started in 2010, that resulted in a gradual increase in production to 6,000 metric tonnes in 2015.
Unlike cocoa in the country, coffee has generally been grown in small holdings, scattered throughout the cocoa-growing areas, with only a few large plantations.
In 2007 and 2008, for example, Ghana received modest earnings of US$1,331,308.36 and US$2,767,378.00, respectively, from coffee exports.
This implies that coffee production, if boosted, can generate substantial income to supplement revenue generated by government from other sources – and government, of course, is not unaware of this fact and has, in fact, embarked on efforts in this direction.
Government, through the Ghana Cocoa Board, has been funding coffee research at the Cocoa Research Institute of Ghana (CRIG). Government has also supported activities aimed at enhancing the coffee industry in the country.
The Cocoa Research Institute has developed a high-yielding variety of coffee that can start bearing within two or three years after planting, with good management.
Currently, Cocobod is promoting coffee production in areas with less rainfall that are considered marginal for cocoa production.
In contrast to cocoa, coffee can thrive in areas with less rainfall; about 1,200 mm to 2,000 mm of rain per annum, but can also grow in areas with a minimum of 1,000 mm of rain per annum if supplemented with irrigation.
Parts of the Volta, Eastern and Central Regions as well as the transition areas of the Ashanti and Brong Ahafo Regions, are suitable for coffee-growing and communities like Techiman, Wenchi, Bechem, Nkoranza, Atebubu, Kwame Danso, Drobo, Akomadan, Offinso, Mampong Ashanti, Kete Krachi and Dambai are being targetted for “aggressive promotion of coffee cultivation.”
Historically, Ghana’s coffee production has been relatively low in recent times, and has not matched the high production achieved during the mid-1960s despite some initiatives to revive the sector.
Why invest in coffee?
Coffee is a universal drink with considerable economic impact.
It is the most traded agricultural product in the world in terms of volume, coming before wheat, and the second raw material, in value, after oil.
World coffee consumption is measured in bags. Current consumption is 140 million bags and is expected to reach 175 million bags by 2020. In the meantime, we therefore need to produce an extra 35 million bags, most of which will be of robusta coffee.
This is the coffee used in the manufacture of freeze-dried coffee, for which demand is exploding in Asia.
West Africa, a major producer of robusta (100,000 tonnes per year in Côte d’Ivoire alone) has the opportunity to position itself in force on this market, if not to become market leader.
The country could, thanks to this export product like cocoa, finally take advantage of the strong growth in Asia – in China in particular.
To do this, it first has to adapt its coffee sector to meet the agro-industrial and environmental challenges in this field.
Plant varieties and production challenges
The primary coffee plant varietal grown in the country is Robusta which is considered to be a lower grade coffee than Arabica.
In the 1997-1998 harvest season Ghana exported 10,000 metric tonness but then exports declined due to various causes including a poor pricing policy as well as declining world coffee market prices.
Coffee production has not really thrived in the country even though it is believed to have been the first crop exported in Ghana before the arrival of cocoa.
Due to the low yield of coffee in Ghana, most farmers are diverting from coffee farming to other farming especially cocoa farming, since it has become the major source of foreign exchange for the country.
Farmers are not willing to cultivate coffee since at the end of the day there would not be any government interventions in the sales of their produce. Farmers are forced to bargain for the price that suits buyers, at a price that does not favor them; therefore making them run into loses.
Coffee growers in developing countries receive a notoriously small share of the export price of green coffee, which often is explained with excessive government regulation of the domestic markets and market inefficiency.
Coffee is economically more and nearly three times profitable in the present context among the farmers as compared to other cereal crops.
Mostly, coffee production is organic by default and some parts of production are certified as organic.
It could be an important means for the soil conservation; biodiversity maintenance and watershed balance.
Coffee industry is in rudimentary stage and still unable to yield extra economic leverage and excess production.
However, it has been a livelihood support for many rural and marginal people.
Quality coffee provides more revenue to producers and it is a better strategy to earn more revenue for same quantity of coffee compared to low quality coffee.
Global perspective
Coffee prices strengthened significantly over the course of first quarter of 2016, despite faltering slightly towards the end of the month.
Although somewhat attributable to market fundamentals, coffee was mostly swept up in a broader commodities cycle, with similar movements observed in other agricultural markets.
Exports have maintained their high volumes, with total shipments so far this coffee year up 2% compared to 2014/15. However, speculation over potential supply concerns, particularly in Robusta, is mounting.
World coffee exports amounted to 9.32 million bags in April 2016, compared with 10.14 million in April 2015.
Exports in the first seven months of coffee year 2015/16 (Oct/15 to Apr/16) have increased by 0.7% in comparison with the first seven months of the last coffee year.
In the twelve months ending April 2016, exports of Arabica totalled 71.14 million bags compared to 68.57 million bags last year; whereas Robusta exports amounted to 41.26 million bags compared to 44.82 million bags.
Arabica and Robusta prices went in opposite directions this month, with Arabica prices dropping back down after March’s rally, while Robusta increased to the highest monthly average since November.
Total exports in the first half of coffee year 2015/16 are estimated up by 1.6% to 55.5 million bags, showing that the coffee market continues to be well supplied, although concerns linger over Robusta availability.
Source: B&FT Online