Uncertainty discouraging investment into local rice industry

Investors are reluctant to pump money into the local rice value chain due to the benchmark values policy that has made imported rice cheaper than rice produced in the country.

The policy allows rice, along with other products that can be produced domestically, to be imported at discounted duties; thereby making them cheaper than rice grown in the country.

This, according to the Ghana Rice Inter-Professional Body (GRIB), is negatively affecting investments into the local rice value chain.

“We have rice that we cannot sell, simply because the local market has been taken over by cheaper imports due to the benchmark discount policy.

“It makes our rice very, very expensive because we are competing with someone in Thailand and elsewhere who is able to borrow at 3 percent interest or zero interest and we are borrowing at over 20 percent; how can you compete with such a person?” GRIB’s President, Nana Adjei Arye II, told the B&FT in Accra.

He also revealed that farmers are having a hard time finding off-takers for last year’s harvest because imported rice has become cheaper due to the benchmark discount policy.

This, Mr. Arye added, is affecting investments into the value chain due to the uncertainty in policy direction.

“We want government to make it difficult for importers to bring rice into the country. This would help create a market for the local producers and create a lot of jobs for the youth and women,” he urged.

Avnash, a local processor of rice and oil palm, also told this paper that it had to shut down its rice processing plant in the Northern Region because of unfair trade practices brought about by the benchmark policy in the last nine months to November last year.

Wilmar, which has the capacity to produce 300,000 metric tonnes of oil palm annually – more than Ghana’s 200,000mt annual consumption, said it was producing about 70 percent of its capacity before introduction of the policy, but is now doing less than 50 percent due to impacts of the policy, its General Manager Kwame Wiafe said earlier.

Similarly, the Association of Ghana Industries – the umbrellabody of local manufacturers which has been critical of the policy because it encourages importation to the detriment of local production – warned earlier this year that many producers are finding it difficult to retain their employees with such an influx of imports at cheap prices, which is displacing their products on the market.

“The benchmark discount policy in its current form could worsen the unemployment situation. The future of our country and our youth should guide us in our quest to promote policies which spur economic growth, industrialisation and sustainable job creation,” its President, Humphrey Ayim-Darke, said last month.

He added that many of its members are currently operating below capacity due to the unfair trade practices brought about by the benchmark values policy.

Introduced in 2019, the 50 percent reduction on import values at ports was to make trade through ports more attractive and enhance revenue mobilisation. However, local producers say this has not been the case after more than two years into its implementation.

Consequently, government announced a reversal of the policy on selected 43 products that can be produced locally, including rice, in November last year – in what was to be a huge relief for producers.

Implementation of the reversal was to begin January 4, 2022 – but has been suspended by President