Introduction

The Grains for Growth Program officially commenced in September 2021 with the aim to develop inclusive, and economically viable grain-supply chains in Ghana. The goal is to create employment and entrepreneurship opportunities particularly for women and youth.

Just over a year after Program implementation, IDH and key business partners (Nestlé, Guinness Ghana Breweries Plc., Amaati Company Ltd, Warc, Degas, Farmerworld, Rujo Agritrade, Tamanaa company Ltd, Kedan Ghana Ltd, and AgroCenta) convened in a Learning Workshop in Accra on November 8, 2022, to review progress, share feedback, learnings, and identify opportunities for future strategic decisions and adaptation in the subsequent years.

Overall, the program has made some commendable strides, notwithstanding the global economic recession, and sociocultural challenges impacting the sector businesses, and has made some significant contributions to the grains sector and lives of smallholder farmers in northern Ghana.

This publication aims to highlight the key takeaways from year one of the Grains for Growth Program.

In the first year of the program, 20,924 smallholder farmers from seven SMEs in the maize, rice, millet, and fonio commodity chains in Northern Ghana were supported by the Program to cultivate grains on a combined total of 19,124 acres of farmland.
Specifically, the Program significantly contributed to the increased production of quality grains include by facilitating:

• The timely supply of high-quality agriculture inputs, such as seeds and fertilizers
• Mechanization services support, such as ploughing, and harrowing
• Training SMEs and their outgrower farmers on agricultural best practices

These program contributions are critical support mechanisms given the current landscape where there’s a drastic increase in cost of production due to high inflation, high cost of seeds and fertilizers, limited mechanization services, weather uncertainties from climate change, and depreciation of the local currency that deterred many farmers from producing grains in 2022.

With the climax of harvesting for all commodities (early and late planted grains like rice, maize, fonio) expected in December 2022, the Program estimates a combined yield projection of 28,105 MT which will further complement and boost the food security (accessibility, availability, and utilization) levels in the country, reduce importation, and increase income of farmers due to high demand of grains. The inclusion of five sorghum SMEs in 2023 will continue to increase grain production volumes in subsequent years.

SMEs extended their outreach in existing territories and explored new communities as part of their scale-up ambitions through the support of the program in the first year. This activity created a ripple effect beyond the 20,924 smallholder farmers currently on the program, and in their communities as well. The seven SMEs, and their Service Providers contracted by the Program, reported a combined total of 105,093 new, sustained, and improved job opportunities through various activities on-farm (from crop production to harvest stages of activities) and off-farm (retailers, distributers, processors etc). A total of 461 administrative and field level staff were also employed by SMEs in 2022 in off-farm positions such as administrative jobs, drivers, retailers, distributers, agrochemical sprayers, processors, warehouse officers, and field level positions to meet the increasing activities and operations of SMEs, Service Providers, and farmers as well.

Ultimately, this has created vibrant economic activities in communities, entrepreneurship opportunities, and increased income for community members and will contribute to poverty reduction in northern Ghana. The on-farm jobs, where the majority of work have been created, were calculated and reported by SMES based on the number of people employed by their farmers to work on their farms during the various on-farm activities in a season per acre. Total job creation value stands at GHC 2,748,898 (equivalent to USD 211,454).

The progressive inclusion of women and youth under the Program will ensure that women and youth are economically empowered to expand their operations, increase their participation in agriculture become integral in commercial value chains, increase and sustain income, improve livelihoods, and actively contribute to food security and economic growth in northern Ghana.

The gender intentional design of the program ensured that all beneficiary SMEs were deliberate in their farmer selection process and disbursement of intervention inputs and this has facilitated the inclusion of more marginal social groups in communities. A 60:40 rule was adopted (60% percent of intervention support to women and 40% to men) to ensure that critical support such as high-quality seeds, fertilizers, agronomy training, and mechanized services directly benefit women and youth smallholder farmers who until now have struggled with low yields due to limited access to fertile lands, access to high-quality agro inputs and services, and high cost of grain production.

The Program’s deliberate intervention targeting gave a lifeline to commercial cultivation for these groups, especially during the challenging socioeconomic situation experienced in Ghana, that initially prevented most from farming. The community sensitization and lobbying activities for access to land for women has also facilitated more participation of women and created a desire to expand grain production in the coming years, especially with the assurance of ready market provided by the program.

Other women groups have expressed interested to onboard into the program in subsequent years due to the Program support and impact so far. Women currently constitute 53% of registered commercial farmers under the program, and the youth account for 49% which is a massive improvement, as reported by the SMEs, from the initial situation.

The program supported SMEs to stretch beyond their comfort zones and explore new strategies, approaches, and recommendations based on findings from diagnostic analysis and Service Delivery Models (SDMs) that have resulted in a change in business practices. So far, SMEs report that these changes have proven profitable, inclusive, and further strengthened their business models.

From experimenting with the cash-and-carry system, where one SME (WARC), was able to revolve the Program’s input support and grow the proceeds by ten times, to the use of foliar and organic fertilizer on commercial basis where rice-based SMEs are reporting a drastic reduction in cost of production with increased yield, to drawing up strategic business plans, employing specialized staff, digitization, adoption of gender intentional policies, piloting regenerative agriculture, inclusion of mechanization services and as part of business services, investing in processing equipment to meet off-takers’ specifications and standards, among others, SMEs and their farmers are currently on course to reap further benefits from their alignment with the Program in subsequent years.

The onboarding of Nestlé and Guinness Ghana Breweries PLC in the first year of the program, and advanced engagement with other private sector organizations, has served as motivation to SMEs to increase grain production to meet the huge local demand. The availability of end-market to absorb the projected grains yield of 28,105 MT in year one alone will see SMEs earning a projected total gross value of USD 6.6 million. This will inject necessary capital for further expansion to ensure sustainability of SME businesses and ensure that they pay competitive prices for smallholder farmers produce.

Long term commercial relations and partnerships have also been established between the businesses and private sector partners through the program facilitation which has increased SME brand visibility, exposure, and ensured stable long-term market for their produce. The SMEs are leveraging these opportunities to attract further market and investment to build processing facilities, CAPEX, strengthen business models, increase operational capacity and efficiency, diversify their market, and make their operations more profitable, and sustainable. For instance, one SME in the first year, Kedan, has been able to purchase an optical sorter processing equipment valued at USD 8,500 to meet Nestle’s requirement to produce quality grains and become a long-term supplier. Investment in this kind of equipment will also help SMEs reduce dependency on single off-takers and tap into broader market opportunities provided under the Program and beyond.

Analysis from validated Program data from field activity engagements and reports from the Program participants have provided valuable insights and learnings for improvement of the program. Some of these include:

• Timely access and delivery of agro inputs such as high-quality seeds, fertilizer, and mechanization services facilitates an increase in production and yield volumes. Farmers are currently reporting an increase in yield per acre due to timely support from the Program, some attesting to receiving such timely support for the first time in the history of their businesses. Rice farmers are currently recording an average of 2.5 MT per acre, fonio farmers an increment of 300 kg, and maize farmers are projected to attain about 2.5 MT per acre (projections based on field monitoring) as well due to timely access to inputs and mechanized services like ploughing and harrowing.
• Land development is critical for women and youth inclusion under the Program. Women currently constitute 53% of registered smallholder farmers under the program who have been supported with agro inputs, and mechanized services for land preparation. Available lands for further cultivation are virgin lands that require additional cost to develop. To ensure the participation of more women and youth, and subsequent expansion, more resource allocation should be targeted at land development to facilitate access for women and youth.
• Direct funding to SMEs is more beneficial to SMEs and will strengthen their business models and operations. SMEs are self-sufficient and currently offer similar services that third party service providers, under the program, provide to them. They have made the recommendation for direct funding to have control and manage services more efficiently, especially due to the fact that they operate as social enterprises and will have the ability to extend free services to needy farmers, unlike for-profit Service Providers, and can do so when in control.
• Regenerative Agriculture is promising but the approach impacts crops differently due to their natural characteristics and soil nutrient requirement. Experiments on fonio and maize fields so far have presented promising results. However, it is important to note that though the benefits apply to all crops, the impact and output cannot be generalized since the regenerative capacity of fields depends on the type of crops, and the soil replenishing duration, and each will require specific mechanisms to promote regenerative agriculture. For instance, maize farms will not achieve the same yields through regenerative agriculture without the use of fertilizer unlike fonio farms that are currently experiencing about 300kg increase in production even without the use of any synthetic inputs like fertilizer. In this regard, the incentive for adoption on commercial basis for especially crops like maize will have to be clear, and targeted, to serve as a motivation for farmers to do it on commercial scale.
• SMEs and farmers are able to cut down their cost of production while maintaining similar levels of yields through the use of foliar/liquid fertilizers which are relatively cheaper. A bag of granular fertilizer costs GHC 450 while foliar costs GHC 35 cedis, and farmers are able to make savings of up to a GHC 900 per acre when using foliar fertilizer on rice fields. Given the high cost of granular fertilizer, SMEs and their farmers are able to cut down cost production through the use of foliar fertilizers. One SME in particular reported a yield of 1.9 tonnes (which is similar to when using granular fertilizer) of rice per acre through the use of foliar fertilizers. This presents a cheaper option of production to be explored by farmers.
• Delivery of quality grains require some level of significant investments by SMEs. Processing and cleaning equipment such as optical sorters and other recommended CAPEX are expensive and require significant capital investment by SME to ensure that their grains meet the quality assurance standards of premium end buyers. The high cost of borrowing and unaffordable rates from financial institutions limit SMEs’ ability to acquire the needed funds to make these investments to purchase the required processing equipment that is able to meet off-takers’ specifications, add value to grains and diversify their markets.
• Lack of access to affordable finance limits the scaling ambitions of most SMEs under the program. The high cost of borrowing, double digit interest rates, high inflation, and the depreciation of the cedi against the USD, has been a hurdle in the process of facilitating access to affordable finance for SMEs under the Program to expand their operations.

The commencement of the digital service provision under the Program to SMEs and farmers by AgroCenta and onboarding all SMEs, and their farmers, on a single digital platform, when completed, will facilitate access to an ecosystem with various digital features, services (and Service Providers) and comprehensive farm management system that SMEs will benefit from. Features such as digital agronomy training, weather forecasting, payment of services, farm traceability and yield monitoring, access to finance, logistics support, among other critical needs will ensure digital inclusion and help businesses to digitize operations, ultimately, improving their service delivery, and production.

Also, the progressive roll-out of climate smart agricultural practices such as regenerative agriculture under the program currently gives SMEs and their farmers a head-start in building resilience climatic change impacts, and place them at a favorable position to explore future market opportunities from premium buyers like Nestlé, and other off-takers who have future ambitions to source and pay premium price for commodities from environmentally-friendly farms. Adoption of such practices will also ensure less dependence on costly-and-scarce synthetic inputs like fertilizers and reduce importation of them. Nestlé in particular intends to source 25% of their produce from regenerative agricultural fields by 2025, 50% by 2030 and 100% by 2050.

Regarding innovative financing, the Program team has engaged several impact investors and the results are looking promising so far. Access to innovative funding such as impact investors with affordable rates will be a game-changer and unlock potentials for SMEs to invest in critical equipment to improve production, harvesting and processing efficiency that will reflect in increased yields and quality of gains.

Access to affordable finance and high-quality agro inputs, technical capacity building, and services are main areas that SMEs have identified that have the capability to ensure sustainability of the program and promote smallholder farmers’ independency in subsequent years. Access to finance will unlock several opportunities for income generation to scale operations, invest in processing equipment and CAPEX, diversify markets, and improve operational efficiency. This will take SMEs to the next level and increase prices of commodities for farmers.

IDH is currently in discussion with several financial institutions to secure some ‘patient capital’ – long term financing with flexible terms of payment, for SMEs. At the field level, establishing of more VSLA group systems and provision of initial seed funding support to them from the Program will also ensure that women, in particular, can continue to grow their contributions, revolve funds, and have access to more capital to expand their farms through their contribution without depending on the SMEs.

The high cost of input situation can be addressed when SMEs receive support to build in-house capacity to produce high-quality seeds rather than importing and being at the mercy of market dynamic situations. This will ensure availability of quality seeds at cheaper prices for farmers, create more job opportunities, and independence, and save production cost of smallholder farmers.

Insights from the learnings from the first year have been documented and will be used for strategic programmatic decisions to ensure that successful systems and practices are adopted, and necessary recommendations and changes are made to improve areas of concern of partners. Specific areas such as access to affordable finance, improvement in quality of service delivery (production to harvest levels) and grains, and increase in premium end-market will be the focus to ensure that all other progressing components of the program fits into the complete picture of an inclusive, and economically viable grain-supply chains driven by local growing-and-competent businesses, that are able to supply quality grains to premium markets, and create employment and entrepreneurship opportunities for smallholder farmers, especially women and youth.

Reflections from Partners

The Head of Agricultural Services for Nestlé Central and West Africa, Olivier Marchand, acknowledged the impressive program impact so far, giving the challenging situations, and has provided assurance for continuous technical support and commitment to offtake the grains produced under the program.

This workshop has given us the opportunity to assess the impact of the Grains for Growth program and we are proud of the progress that has been made. Through this program, Nestlé is able to purchase quality grain from smallholders and SMEs locally. The results are evident and though there is still a lot to be done, we see a big impact being made. There are still things to change and improve, but overall we look forward to continuing this program together and are thankful to the Mastercard Foundation for supporting this, and IDH for coordinating all of it.

IDH’s Global Director, Kebba Colley, who is the initial brain and originator of the Grains for Growth Program, shared his optimism about the future of the program based on the results from the first year and projections. He assured everyone that IDH will continue to push the boundaries to ensure that quality is ensured in the program, and that businesses under the Program will have access to affordable funding and market opportunities to be able to maximize their potentials become part of Global supply chains of international businesses.

This project is for the next generation Ghana, the next generation of farmers, the next generation food processors, branding, marketing, whatever agricultural space you need, with proper financing from the infrastructure side, from the working capital, from the CAPEX of the companies, so these companies do not remain small but they grow to become the prominent producers in Ghana that are businesses that hire, recruit so many jobs in this sector. Ghana needs it, Ghana deserves it, this needs to go that way.

The Country Director of the Mastercard Foundation, Rosy Fynn, expressed satisfaction with the results and coordination of the program. The Foundation has particularly taken some cues from the programmatic practices which will inform their program review process and designs in other sectors beyond Agriculture sector to ensure relevance and sustainability. During the Learning event, the Mastercard Foundation also announced their intention to commence immediate discussion with IDH on further scale-up of the program and other partnership opportunities. The scale-up will include horticulture value chains to empower more women, youth and create more jobs and income.

It has been really great working with IDH, I think they have got a model that works and we are looking forward to even more impacts in the future, and hopefully expand to other products beyond the grains we have today. So, great experience and looking forward to more impacts with IDH and off-takers like Nestle, etc.