Ghana: Rice Farmers Need Finance for New Technologies, but Banks Don't Trust Them

  • Posted on: 7 October 2021
  • Updated on: 7 October 2021
  • By: radmin

New farming technologies have the potential to improve livelihoods and food security in Sub-Saharan Africa. Better seed varieties, soil fertility practices and pest management can all increase productivity. A United Nations Development Programme report says growth in the region's agriculture is more effective than other economic sectors when it comes to ending hunger and reducing poverty.

Steps have been taken over decades to enhance farmers' access to improved seeds and technologies that are essential to stimulate agricultural transformation on the continent. The efforts were at both local, national and regional levels by government and donors.

But studies continue to show that the adoption rate of modern technologies is low among the region's farmers. This situation has resulted in poor agricultural productivity, high-levels of food insecurity and rural poverty. Over 65% of the households in Sub-Saharan Africa are mainly smallholder farmers, many are poor and vulnerable.

Smallholder farmers in the region have a common problem. They tend to lack access to the finance they need to adopt modern technologies. Finance could be in the form of loans or credit.

Using the case of rice farming in Ghana, we conducted a study to understand the challenges smallholder farmers face in accessing loans. We wanted to find out if this was preventing them from adopting modern technologies, and whether these technologies would improve their productivity and incomes.

We found that banks and financial institutions don't trust smallholder farmers. They relay their mistrust by, for example, requesting outrageous collateral, a high sum of savings capital, and a high-interest rate for agriculture loans. There are also usually long delays in accessing any funds.

We suggest mechanisms to improve access to finance that would help farmers produce more rice.

Our research

We interviewed 100 smallholder rice farmers in the Shia-Osuduku district in the Greater Accra region of Ghana. In focus group discussions and interviews, we asked about access to credit and loans, and how this influenced their use of modern production technologies.

We focused on rice farmers because rice is the second most important food crop in Africa. Rice is also a significant source of income for rural farmers. In Ghana, rice is the second most important cereal and is fast becoming a cash crop for many farmers. Rice demand in Ghana is projected to grow at a compound annual growth rate of 11.8%.

At the moment, most rice farmers are planting old rice variety seeds using broadcast seeding. These give poor yields compared to those using modern technologies. Such technologies include new rice varieties, a high-capacity thresher for rice, a mobile application called RiceAdvice that provides tips on rice farming, mechanical weeders that could reduce labour in rice production, and localised farmer advice for nutrient management... Read more on All Africa

Source: All Africa