Ghana ranks 59th out of 83 rice producing countries globally with average 3MT/ha paddy productivity compared to a global average of 4.66MT/ha. The low productivity is attributed to poor quality inputs, limited irrigation, limited market and credit access as well as inadequate processing infrastructure and machinery. Ghana’s rice self-sufficiency ratio was about 43% in 2020, a ratio that the government would like to see increase soon by strengthening the industry.
Rujo Agri-Trade Ltd (Agri-Trade), a paddy and soy aggregating and processing company located in Northern Ghana, is one of the 7 SMEs supported under the Grains for Growth program. The company, founded in 2014, has 3,000 acre own farm an outgrower scheme with about 2,600 outgrowers and an ingrower scheme with about 100 farmers. Agri-Trade’s vision is to grow its share in the milled rice market by investing in own mill and processing more of their Maraba Brand rice. To achieve this, Agri-Trade seeks to enhance the performance of its farmer base to secure consistent supply of quality (wet) paddy. envisions. The company also seeks to address the inadequate wet rice harvesting capacity by investing in more combine harvesters.
This Service Delivery Model analysis sought to provide critical insights to inform Agri-Trade’s strategy and share some key outcomes below:
On company level:
- The cost benefit analysis of investing into combine harvesters showed that the investment in every additional combine reaps twofold benefits: by service margins and higher sourcing profitability. However, Agri-Trade should price the service as such that value from the investment ripples down to its farmer base.
- The investment analysis in a mill showed a logical sequence of events before investing into the mill. High moisture harvesting capacity and yields at farm-level should be optimized, such that the mill starts operating at high capacity from the beginning. Therefore, Agri-Trade needs to strengthen its farmer base.
On farmer level:
- The scenario analysis between multiplying paddy seed on the own farm or outsourcing this to women in the communities showed a significant business case for farmers since net income from seed is higher than from paddy. There was no significant business case for Agri-Trade suggesting balancing between partially multiplying on its own farm and partially at the community, since both scenarios come with their benefits and risks.
- The cost benefit analysis between supplying farmers with chemical or organic fertilizer showed that there is a significant business case from the 2nd year farmers use the organic fertilizer and this business case will remarkably increase over time. Such a shift can decrease Agri-Trade’s working capital needs, which are expected to grow over time due to increasing supported acres per farmer.