Ghanaian rice farmers are calling for urgent government intervention after being left with large stocks of unsold grain, in a crisis development economist Dr Frank Bannor says is the predictable result of conflicting macroeconomic policies.
Farmers across the country have reported that vast quantities of locally produced rice remain in warehouses, leaving producers facing mounting financial pressure. The Peasant Farmers Association has been seeking immediate support, including the recapitalisation of the National Food Buffer Stock Company (NAFCO) so it can purchase surplus grain.
But Dr Bannor, a Senior Research Fellow at the Institute of Economic Research and Public Policy (IERPP), argues that the problem goes beyond agriculture or a temporary disruption in the supply chain. He says current economic policies are simultaneously weakening domestic demand and making imported rice more attractive to consumers.
Responding to reports that local rice producers risk financial ruin as their harvests remain unsold, Dr Bannor criticised the country’s macroeconomic management in a post on Facebook.
“The opportunity cost of artificial inflation and exchange rate! You don’t restrict demand, cut spending and expect businesses to do well. At the same time, it is cheaper to import than to buy locally!”
His argument centres on what he describes as a policy contradiction. Measures designed to reduce inflation and support exchange-rate stability can restrict spending across the economy, while the conditions governing the exchange rate may leave foreign goods cheaper than locally produced alternatives.
Inflation-control policies commonly involve efforts to manage demand and reduce government expenditure. However, Dr Bannor says those measures can also reduce the purchasing power available to businesses operating in the domestic market. If consumers and the state spend less, local producers may struggle to sell goods even when they have successfully increased output.
Rice farmers are also dealing with higher production costs, including more expensive inputs. With household budgets under pressure, consumers are likely to choose the cheaper option available to them. In this case, imported rice can gain an advantage over rice grown and processed in Ghana.
That combination has left farmers caught between rising costs and weak demand. Many had invested in production after responding to national calls for greater food self-sufficiency, but now face difficulties repaying loans and settling debts linked to the season’s output.
The immediate appeal for state intervention reflects the scale of the financial threat. Recapitalising NAFCO to enable it to buy the unsold rice could provide farmers with relief and prevent further losses. However, Dr Bannor’s analysis suggests that such a move would address the symptoms rather than the underlying problem.
A short-term purchase of surplus grain could clear warehouses, but it would not change the economic incentives facing producers. Unless monetary, exchange-rate and fiscal policies are coordinated to support domestic value creation, Ghanaian businesses may continue to compete against imported products that are cheaper on the market.
The rice crisis therefore represents more than a backlog of agricultural stock. For Dr Bannor, it demonstrates the cost of trying to contain inflation and manage the exchange rate while restricting demand and leaving imported alternatives relatively inexpensive.
That trade-off, he argues, is being absorbed by Ghana’s farmers, who have increased production but are now unable to find buyers for the rice they have grown.
