Organic Food Market Ghana Essay

Main international trade partners| South Africa, Netherlands, India, United Kingdom, Malaysia, Switzerland, United States, France, Nigeria, Burkina, China, Spain, Italy, Turkey, Germany and etc. | Macro-economic opportunities and risks The World Bank’s Ease of Doing Business rankings placed Ghana at 63 place among 183 countries in 2012 (1 = best ranking), just behind Poland (62) and ahead of the Czech Republic (64). Ghana’s performance is defined as especially poor in â€Å"obtaining construction permits† and â€Å"resolving insolvency†. Nevertheless, Ghana is among the top five countries in sub- Saharan Africa. Economic risks in Ghana include a relatively high inflation rate of 10. 4% estimated in 2013. Consistently high unemployment over the years is another negative factor keeping the country in poverty. About 28. 5% of the total population is living below the poverty line. Other urgent challenges in Ghana are the inadequacies in education and health care that limit social development in the country. It also must address crime. Underdeveloped infrastructure, poor management of natural and human resources, and lack of a fully conducive and cordial business environment in the country also require public sector attention. According to the knowledge portal Global EDGE, Ghana’s strategic goals focus on future economic growth, improving quality of life by boosting employment and decreasing poverty, increased private investment and overall social and rural development. With such plans, international companies can expect incentives for initiating business in Ghana. Low corporate taxes, low equity requirements, custom duty exemptions forplants, machinery, equipment and parts, and relief from double taxation are some of the incentives and guarantees that the government presently offers to encourage future foreign investment. Coca-Cola Co. and Heinz have already been operating successfully in Ghana while companies like Caterpillar, Unilever, IBM, AT&T, to name a few, are undertaking new investments. Companies are encouraged to establish themselves and operate in the country’s many potentially lucrative markets including hydro-power projects, pharmaceuticals and information technology. Subsequently, as African countries consider fully implementing the African Economic Community (AEC) established in 1991, Ghana’s trading access to other African nations could increase significantly in the coming years. Ghana is a member of the World Trade Organization and has quota-free access to United States and European Union markets. The country has export free zones where goods can be traded without customs duties. The government is putting forth efforts to improve infrastructure to ensure hassle-free movement of goods and produce. While Ghana faces difficulties, all these factors make Ghana a promising market for foreign businesses. Organic food market data General Market size | n. a. | Market growth rate | n. a. | Domestic production | n. a. Exports (US$, 2006)| $75. 64 million| Imports | n. a. | Shares/sizes of market segments| Fresh fruits, vegetables, palm oil, cocoa, bananas, cashews, culinary herbs, cereals, cotton, shea butter and etc. | Number of producers, names of big producers, important brands| Benrod Group (producer and exporter), Ibrahim Jalilu Adventure (producer of spices), Botim Farms (group of cashew farmers), Joansspiceworld (producer of spices), Mercydan (black soap, red palm oil, coconut oil), Eagle Gold Company (gold, diamond), Best Organic Fodd Venture (organic food) and etc. Smallholder farms dominate the agricultural sector, accounting for about 80 percent of total production. (organic agriculture in general is well suited to small-scale farmers because usually small-scale farmers do not have much cash to purchase external inputs, chemical inputs, pesticides, or chemical fertilizers)| Typical distribution channels| The Ghana Organic Agriculture Network, Afrikeco Organic Products Ltd, Andea-African Network for Development of Ecological Agriculture, Armajaro Ghana Limited, Black Volta Organic Society, Ebenut, Ecasard-Ecumenical Ass. For Sustainable Agr. And Rur. , Eloc Farms Limited, Ghana Bio Network, Ghana Export Promotion Council, Ideal Providence Farms Accra, Integrated Tamale Fruit Company, Natures Best Fruit Ltd. , Quin Organics, Tracs Farms Ltd. , TOFA (Traditional Organic Farmers Association), Wad African Foods Ltd, Yayra Glover Limited| Characteristics of the organic food market Supply: Mainly from the domestic market Production: Fresh fruits (mainly pineapple, bananas, watermelon), vegetables, palm oil, cocoa, cashews, culinary herbs, cereals, cotton, shea butter and etc. Distribution: Just over 28% of the organic producers in Ghana export their production and the remaining 72% do not export their production, but possibly sell it domestically. With regards to exports, virtually all organic products (85%) are exported to Europe. The data is taken from a survey16 made in 2009 among 688 producers, marketers and consumers. Consumption: Worldwide sales of organic chocolate produced in Ghana increased to $304 million in 2005 from $171 million in 2002. However, the total market share of organic cocoa accounted for less than 0. 5% of total cocoa production in the same period, possibly because conventional cocoa yields more and is more profitable than organic cocoa. When a conventional producer converts to organic production, there is an immediate yield loss. Organic cocoa production has an estimated 30% lower yield than inorganic production. Additionally, a producer must wait three years for the organic certification that will allow him or her to be compensated with an organic price premium. Therefore a sufficient and stable organic price premium is needed. The current premium price of organic cocoa is far below the estimated premium needed to entice producers to switch to organic production. Information on yield loss and price premium trade-off is very important to cocoa producers to determine whether organic production is sufficiently profitable to be adopted. For manufacturers, the information indicates the price premium necessary to secure a reliable supply of organic cocoa. Opportunities and risks in the organic food market for DEG’s clients There are not many opportunities for import of organic food, because the organic market in Ghana is still relatively undeveloped. However, there are opportunities for export of organic agriculture, because about 19,132 hectares of land are under organic cultivation, which accounts for 0. 13 % of the total agricultural area in Ghana (IFOAM & FiBL 2006). The risks are definitely big. Additional information Ghana has had little exposure to the global economic recession and will continue on its growth path. It is experiencing significant growth in 2011 and 2012 due to the start of oil production. Macroeconomic stability and ongoing reforms have contributed to economic expansion, which is helping the country to raise incomes and reduce poverty. There has been limited exposure to the global financial crisis, as banks rely on domestic funding. Case examples n. a. [ 1 ]. http://www. ghanaembassy. org/index. php? page=population [ 2 ]. http://www. tradingeconomics. com/ghana/gdp [ 3 ]. http://www. tradingeconomics. com/ghana/gdp-growth [ 4 ]. http://www. indexmundi. com/ghana/gdp_per_capita_%28ppp%29. html [ 5 ]. http://www. tradingeconomics. com/ghana/inflation-cpi [ 6 ]. http://www. tradingeconomics. com/ghana/unemployment-rate [ 7 ]. http://www. indexmundi.com/ghana/gdp_composition_by_sector. html [ 8 ]. http://ageconsearch. umn. edu/bitstream/95955/2/54. %20Market%20potential%20for%20organic%20fruit%20in%20Ghana. pdf [ 9 ]. http://countries. bridgat. com/Ghana_Trade_Partners. html#. 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