Agriculture is clearly important, but its priority must be judged by how much of a real difference it can make to the lives of Ghanaians. Recent performance and results of analyses of the relative gains from a business-as-usual vrs a pro-active agricultural policy bear assessing.

Ghana's recent agricultural performance has been impressive but raises questions of sustainability. In the period 2001-6, it has grown by 5.5% annually, with a lot of this growth occurring in crops-both cocoa and non-cocoa, including some new horticultural products such as fruits and vegetables. However, it is not seen as sustainable for two reasons. First, the historical average rate of agricultural growth has been lower: 2% for 1991-95, and 3.9% for 1996-2000. Second, the recent growth spurt has been driven largely by extension of the land under cultivation, and by little or no productivity growth. The scope for productivity growth is large: data on yield gaps between Ghanaian productivity levels for crops, compared to achievable yields, shows gaps in the range of 20% for oil palm, to 40% for maize and rice, to 60% for cocoa. Overall, therefore, complacency is ill advised.

An optimistic business-as-usual agricultural approach (BAU) can contribute to Ghana's growth and poverty reduction, and in particular help the poorest rural Ghanaians who tend to be concentrated in the Northern Savannah. This scenario assumes average agricultural growth of 4.2%, which is the average for 1990-2006; with 65% of growth explained by increases in land, labor, capital; and 35% by productivity growth. Productivity growth differs significantly across regions, with the highest levels in the Southern Savannah and the Coast (over 50%), the lowest in the Northern Savannah (15%), with the Forest in between (about 40%). The national level of headcount poverty falls from 24 percent in 2008 to 16 percent in 2015, with rural poverty declining from 34% to 23 % ie rural poverty falls by more than urban poverty. Poverty in the North falls from 59% to 49%, dropping also more than the national average, but still at close to 50% by 2015. The severity of poverty is much greater in the North, so even a robust growth rate lifts fewer people above the poverty line. Thus, an optimistic business as usual approach does quite well; however, it is not sustainable since it is based largely on extending the land frontier.

A more pro-agriculture policy scenario is developed by aiming for a much higher level of agricultural growth at 6% ( vrs. 4.2%), all of the increase being driven by higher agricultural productivity growth rates or yields, supported by policies at many levels. These assumptions are consistent both with the targeted yields of the MoFA, and NEPAD. Productivity growth differs again across regions in levels: it is greatest in the Southern Savannah and the Coast (60-70%), lowest in the Northern Savannah (under 50%), and in between in the Forest (about 55%). National poverty falls to 12% ( vrs. 16% in the business as usual case); the rural poverty rate falls to 17% ( substantially lower than 23 %). A key point is that an additional 850,000 people (mostly rural) would be lifted out of poverty! Another key point is that poverty reduction in the North also speeds up: among the rural households, income growth in the North is higher than that in the other regions:. Poverty in the North falls from 62 % in 2005 to 41% in this policy case, compared to 49% in the BAU case. Thus the additional poverty reduction in the policy case benefits the North and the rural populations much more than the rest of the country. This makes a major dent in the poverty problem in the North! It does not, of course, solve it: the North would have over three times the national headcount poverty index and additional policies would need to be developed to address that challenge.

The upshot of this discussion is three fold: first, agriculture has significant potential to grow beyond the levels seen in recent years, which may be unsustainable; second, such additional growth can only be attained by a strong pro-agriculture approach driven by productivity growth or yield growth, plus associated public investments; third, and most significantly, this pro-agriculture approach can revolutionize rural Ghana and change the face of poverty in the country as well as in the North. Business as usual cannot be a preferred option when this policy scenario offers so much more on growth, reduce poverty reduction and equity. We now turn to address the policy challenges.

What is to be done?

What exactly is to be done in a pro-agriculture policy approach? In what follows, we draw from the lessons of international experience, and highlight what we believe are the key binding constraints for promoting growth and poverty-reducing productivity growth in agriculture, which we define to also include the non-farm rural economy.

The Ghana Government's Food and Agricultural Sector Development Policy ( FASDEP II, 2007) also provides a comprehensive statement of the problems and approaches for attaining the goal of 6% growth in agriculture over the next 4 years. However, even though it fully recognizes that the challenge of implementation has been the primary cause of past unsuccessful attempts, it does not yet include a ranking of priorities, a clear mapping of results and responsibilities to itself and other Government agencies, and a time line for all the high priority actions.

Drawing from the literature on Ghana and on FASDEP II, we propose a set of 10 priority actions below. And we begin to address the political economy of implementation in the next section. The 2007 World Development Report develops a very useful framework for thinking about an agriculture-for-development agenda. Drawing on it, and customizing its recommendations to Ghana, we define the agenda for Ghana to have three building blocks each with three priorities: assets, markets, and institutions, and one cross-cutting issue-gender. As we go through these ten actions, please note that each will require some changes in public policies, in actual public expenditures undertaken and in the way in which public services are organized and delivered.

A. Assets: Many assets are important for small farmers: land, education, health, water, finance and knowledge. Here, we deal with what I believe are the three most important constraints for the Ghanaian farmer: land, education and finance.

(1)Land: Land markets have played a fundamental role in facilitating agricultural revolutions. China's economic reform began with making possible private land use, and just recently, new land reforms have institutionalized longer term leases to allow for larger land holdings and migration. Vietnam's recent agricultural revolution was initiated with a major land reform. Complex and uncertain land tenurial relations seem to hamper private investments in Ghanaian agriculture as recent work by Goldstein and Udry , and earlier by Besley, has suggested. Goldstein and Udry found, for example, that investment and hence productivity in agriculture in Akwapim was held back by farmers who lacked political power and were uncertain about their property's security during fallow periods; and that such restraints, if true for the whole country, would be worth some 2% of GDP. Estimates suggest also that the rate of return to land titles is about 39%, which also suggests that the economic potential from improved security is substantial. Some recent estimates suggest that as much as about 80% of Ghana's arable land is uncultivated, in part due to insecure property rights. Reform of land tenure systems under customary tenure is a sensitive issue and poses a severe long term challenge. There is much change occurring in land tenure systems currently, under the impetus of new interests and market pressures, and the Government has initiated a new Land Policy and a Land Administration project that seeks to address land issues comprehensively (Kasanga and Kotey). But these changes fall short of laying out an action plan or an implementing strategy. The general sense is that land is still a major constraint on agricultural investments, both for small farmers and for commercial investments. There is a need to speed up the pace of reform here in a pro-agriculture policy approach. The 'land bank' proposal, broached by the Government, and also being tried in Tanzania and other African countries, promises to unleash a more immediate response, akin to what was seen in China and Vietnam. It deserves policy implementation attention, even as attempts are made to reinforce the Land Administration project's comprehensive goals.

(2)Education: Basic education is critical for small farmers who need to adopt new technologies, seeds and crops. While Ghana has made major strides in recent years in expanding gross enrolments in primary education, there remains a major unfinished agenda here, relating to the quality of education, the need for a focus on vocational training as an integral part of the education system, the relative neglect of secondary education and programs of adult literacy that will help current farmers to absorb new methods of agriculture. The single most important recent lesson on the quality of education is that involving local government, communities and parents in the running of schools can bring about radical changes in school performance, as exemplified by the El Salvador EDUCO experience, among others.

(3)Rural Finance: Financial constraints originate in the lack of asset ownership to serve as collateral, and in unclear land property rights or titling. Lack of credit, particularly for input purchases, was the most prevalent constraint to agricultural development in a 2007 MoFA survey. Agriculture is largely excluded from the formal banking system, with only 9% of credit going to the sector. The reliance on rural finance and micro finance credit means an average loan size of under $300. The micro finance revolution, providing credit without formal collateral, has made inroads into benefiting many poor farmers, including women. Yet, it remains limited in its scale and scope, reaching farmers engaged in producing cash crops, livestock and horticulture. Finance is increasingly provided through the contract farming approach by interlinked agents. Information technology is making loans less costly. But many of these innovations are still at a pilot stage or on a small scale. They require evaluation and scaling up to make a real difference to small farmers. This is the key challenge in Ghana, where the dynamism of the financial sector in recent years gives some hope. But using approaches such as those of the Grameen Bank and BRAC from Bangladesh, as in Sierra Leone and other parts of Africa, is extremely necessary.

B. Markets: Making markets work better for small farmers will require a major shift in the scope, efficiency and effectiveness of government programs. Three key challenges relate to: rural infrastructure, input and output markets.

(4) Rural Infrastructure: There is now a consensus in Ghana on the need for increased investments in infrastructure for development. But this has yet to pay heed to the lack of rural infrastructure. Again, the experiences of Indonesia, China, Vietnam and Bangladesh demonstrate the power of rural infrastructure such as roads, irrigation and electricity, to improve growth and reduce poverty. The impact on agricultural productivity and on the growth of the non farm rural economy can be profound. For example, Vietnamese experience suggests that living in a rural community with roads increased the probability of escaping poverty by about 70% compared to being in a non-road community. In China, a 1% increase in irrigation resulted in a 1.2% poverty reduction impact in the average community, through higher agricultural productivity. And irrigation investments are very low in African countries: only about 4% of land is irrigated, compared to 40% in South Asia. In Ghana, the reliance on rain fed agriculture is overwhelming. Existing irrigation schemes include 10 small scale ones, 6 medium scale schemes and 6 large scale schemes, for a total of about 20,000 ha, compared to an estimate of cultivable land of 13.66 million ha.( about 7%). But even for this low level, utilization rates are extremely low with estimates of 64% (gravity), 8% (pump and gravity) and 40% ( pump and sprinkler systems). Electricity has an impact on productivity similar to that of irrigation in Asia. Finally, project design and location are important: given scarce resources, it will be important to locate roads, provide irrigation and electricity, and increase rural investments in areas where the multiplier effect on economic activity and productivity will be highest. The implied rebalancing of the infrastructure budget in favor of rural areas, selectively, will be politically difficult, given the strong urban bias in such expenditures.

(5) Input Markets: Raising agricultural productivity will require the adoption of new seeds and the use of fertilizer. Access, knowledge and risks hinder the adoption of new technologies. Governments, using markets, have a role to play to streamline input markets. There is growing interest, despite past failures, in experimenting with subsidies on seeds and fertilizers, using a "smart subsidy" approach that does not bypass the private sector. These must be used carefully because of the risk of political capture and of irreversibility. India introduced fertilizer and rural electricity subsidies decades ago to facilitate adoption of new technologies, and is still battling vested interests in trying to reverse these subsidies. Subsidies must be part of a broad productivity growth strategy, and must have agreed exit benchmarks.

(6) Output Markets: The participation of small farmers in high value markets, both domestic and global, including the supermarket revolution, offers a new opportunity. These are the fastest growing agricultural markets, led by livestock and horticulture. Fresh and processed fruits and vegetables, fish and fish products, meat, nuts, spices and floriculture now account for about 45% of agrofood exports from developing countries, worth about $140 billion in 2004. Enhancing small farmer participation in high value markets depends on infrastructure, extension services and financial instruments. Doing this well depends on joint public and private efforts.

C. Institutions: One of the casualties of fiscal adjustment programs in the 80s was the indiscriminate dismantling of state institutions in developing countries, including in Ghana, under the advice of the IMF and the World Bank, among others. We have now learnt that what developing countries need is a capable state, not just a small state. Three institutions are particularly important for a pro-agriculture policy approach: producer organizations, R & D, and extension services.

(7) Producer Organizations: For small farmers, producer organizations are essential to achieve competitiveness. They have expanded partly to fill the gap left by the closure of marketing boards and in response to democratization. Their growth has been spectacular in Senegal, Burkina Faso and historically in the diary industry in India. They are not problem free: they tend to have low managerial capacity and to be captured by elites. Contract farming or outgrower systems are another manifestation of this. Cautiously promoting such organizations is now considered essential to support small farmers.

(8) R & D: Agricultural productivity growth is essentially driven by the adoption of new technology tailored to local conditions. R & D in SSA has grown only by about 20% in the last 20 years, while it has tripled in India and China. Brazil, with its research organization EMBRAPA, has grown to become a world class producer and exporter of agricultural products such as soybean, oranges, sugarcane-based ethanol and poultry. Ghana and other African countries have had national and regional R & D organizations for decades, but they are poorly staffed, resourced and managed. Not surprisingly, crop yields have been well below world standards, and the yield gap has been increasing. A further challenge is to narrow the gap between better and less good regions in the country. Because most of these technologies are location-specific, they need to be adopted through participatory and decentralized approaches. A major effort to revamp R & D institutions will be indispensable, as the experience of Malaysia strongly shows. Experimentation with new varieties, including Genetically Modified crops (GM), has to be encouraged as part of the new policy.

(9) Extension Services: A pro-agriculture stance will need to rest on a strong extension service capability, as part of the capable state Sanitary and phytosanitary standards for the export of high value agricultural products require the provision of extension support to small farmers either through the private or public sectors. The conditions of work of public extension officers, and the management of their efforts pose tremendous challenges relating to the broader question of public service reforms, which have been very slow for largely political reasons. It is sufficient to note here that without a revamp of extension services, SSA countries including Ghana will be missing a key link in the chain to boost agricultural productivity .

(10) There is a tenth issue that cuts across all of the others: gender disparities within agriculture are pervasive. Women are typically confined to food production, while men dominate cash crop production. Agricultural development, including efforts to diversify into marketable crop production and higher value crops will imply changes in the relative roles of women and men. Access to all inputs, to credit and to land tend to be biased in favor of men. Simulations for Burkina Faso suggest, for example, that equalizing access to inputs would increase output by 10-20% ( Udry). Gender issues in agriculture will be central to any effort to raise agricultural productivity, and in addition, will advance gender equality which is a value in itself.

The upshot of this section is that there is a clearly identifiable set of ten critical tasks that need to be addressed to gain the advantages that a higher agricultural productivity growth trajectory can offer. Let me turn to my concluding thoughts, in which I ask the question: what has got in the way of implementing such policies in the past, and who should do what to help pave the way?

*Executive Director, International Growth Center, London, and former Vice President for Africa, World Bank.