ABSTRACT
Agriculture is deemed as a pivot around which economies revolve. The contribution of the agriculture sector to economies cannot be overemphasized. In Ghana, for instance, the agriculture sector has consistently been one of the major contributors of GDP of the country. On the contrary, the standard of living of farmers is deplorable. In the quest of the government of Ghana to eradicate the level of poverty among farmers and improve upon their standard of living, many policies have been rolled out that is geared towards making farmers in Ghana better off. This study examined the extent to which the living standard of farmers have improved by critically assessing how well policy government’s policies on agriculture have been effective and efficient. The study employed a logistic regression method on the primary data collected from farmers in the country. The study found that farmers are relatively living better currently than in previously years. Again, it was observed that farmers, currently, are more likely to save and invest than they used to in previous years.
CHAPTER ONE INTRODUCTION
Background to the Study
Agriculture remains a fundamental instrument for sustainable development and poverty reduction in this 21st century (Kibaara, Ariga, Olwande & Jayne, 2008; World Bank, 2007). It is imperative that agriculture to African countries not only the backbone but as well, lifeblood of many economies. The agricultural industry employs about 70 percent of the workforce in Africa and contributes an average of 30 percent to the continent’s Gross Domestic Product (FAO, 2013; Kariuki, 2011). In the case of Ghana, agriculture has been historically, one of the main sectors driving the real economy and has accounted for more than 40% of GDP post-independence. For many developing countries, agriculture is the largest sector, this is as a result of its contribution to GDP as well as employment. More importantly, the majority of the world’s poor live in rural communities and depend heavily upon agriculture mainly subsistence for their livelihood.
Agriculture is therefore critical both for economic development and poverty reduction. It follows that in developing countries investing in agriculture is one of the positive consequences for government in promoting economic growth and alleviating poverty (Fan and Saurkar, 2006). In Ghana, the GDP growth rate was 4.4%, while that of the agricultural growth rate was 4.2% in the year 2000 – 2003. In 2003 – 2007, the GDP growth rate increased to 5.8%, while that of the agricultural growth rate increased to 5.2% (The State of the Ghanaian Economy in 2007). The overall economic growth and development of a country depended upon the steady progress of the agricultural sector. The reasons are that it provides food, raw materials, and foreign exchange which further provides adequate platforms for industrialization in Ghana (Johnston, 1970). The story has however taken an upside turn more
recently, it has declined sharply and is the smallest sector of the economy as at 2016 (Budget Statement, 2017).
To identify impact of government investment in agriculture and economic growth, there has been a number of research works. A number of theories have argued that, the agriculture sector contribution to an economy is not too much to consider for building sustainable development, yet plays the role of employment, export potential, financial impact on the economy among other things. Meanwhile, others have looked specifically at the link between government spending, agricultural growth and poverty reduction (Elias 1985; Fan, Hazell, and Thorat 2000; Fan, Zhang, and Zhang 2000). These studies show a positive growth as well as poverty reduction as far as investment in agriculture sector is concerned. Regardless of the impacts, lots of developing countries are gradual decline in the general investment in the agriculture sector.
Ghana as a developing economy is of no exception to the above stated facts, consequently, there is the need to assess the sector critically to be able to identify the exact impact government investment has on the economy as a whole. In a nutshell, the prominent role expected to be of agricultural sector in spurring the economic growth of a country like Ghana cannot be over emphasized. There is no gain saying that agricultures play significant role in the development process. In light of the above, the role the sector plays as the way of life in the Ghana and the critical role expected of the agricultural sector makes it imperative to study the sector and look at the policy implication (government investment) for the achievement of it economic objectives as a developing economy.
Research Problem
The AU established Comprehensive Africa Agriculture Development Programme (CAADP) in 2003 with the primary goal of eradicating hunger and poverty through agriculture. To achieve this goal, the AU encouraged African states to target a 6% annual agricultural growth
and allocate 10 percent of their national budgets to the sector. Since then, African governments have been aiming towards improving farm productivity through government spending. This increased productivity results in poverty and hunger reduction, which are the first two priorities of the Sustainable Development Goals of 2015. Similarly, a World Bank Report in 2013 indicated that Africa earns 24 percent of its annual growth from farmers and their crops. In the same report, agriculture and agribusiness together are likely to command a US$ 1 trillion by 2030. We acknowledge that several studies on the role of agriculture have been published recently (see, for example, Irz and Roe, 2005; Tiffin and Irz, 2006; Diao et al., 2007; World Bank, 2007a, Coady and Fan, 2008; Breisinger and Diao 2008), yet many puzzles remain unsolved. Despite the absence of explicit arguments against the promotion of agriculture, some economic scholars and policymakers harbor doubts regarding agriculture’s ability to drive growth and transformation, particularly in Africa. However, the recent sharp rise in global food prices underpins the need to improve our understanding of both the role of agriculture and the ways to support agriculture. In this regard, we view this research as a good opportunity to support Ghanaian policymakers in their effort to promote agricultural growth promote investment into the sector.
