Farmers risk loans default: Food security, investments under threat - GIRSAL
About 34,000 farmers in the middle and northern parts of the country risk defaulting on their bank loans due to the destruction of some farmers’ crops and the inability of others to plant as a result of inadequate rainfall.
Advertisement
The inadequate rainfall has resulted in a long spell of drought in parts of the country, prompting fears of food insecurity.
Experts predict that food production in the areas considered to be the biggest agricultural zones of the country is likely to drop significantly, if the drought continues in the next few weeks.
The Chief Operating Officer of the Ghana Incentive-Based Risk-Sharing System for Agricultural Lending (GIRSAL), Samuel Yeboah, told the Daily Graphic in an exclusive interview yesterday that "it is a very dicey situation in which we find ourselves".
Projects
"We have some projects that are working with over 34,000 farmers from the middle belt to the northern regions and we have provided some kind of guarantee for their businesses”.
"The reports we are having from the field is not looking good and so there is the risk of these farmers coming to say we have lost our crops and, therefore, we cannot pay the loans," he said.
Mr Yeboah explained that some crops had been affected by the little rains, while other farmers who had prepared their farmlands were in a dilemma as to whether to plant or not, after incurring costs in the land preparation.
He said the organisation supported projects that were being undertaken by the farmers.
Other Trending Stories
Restructure
Mr Yeboah said the situation meant that the risk-mitigating institution would have to work with the banks to restructure the facilities for those who would not be able to repay their loans.
"Obviously it is going to be very difficult because the banks don't have that patient capital and anytime you restructure a loan facility for a farmer, it comes with additional costs," he said.
That was because the tenure of the loan was going to be extended which would lead to the accumulation of interest, among other things.
“This means that the farmer will pay the previous interest, the principal loan and additional interest for the number of months extended for the repayment,” the Chief Operating Officer of GIRSAL stated.
The prolonged drought hit parts of the country, with the northern parts and the middle belt, including Bono, Bono East and Ahafo regions, suffering the most devastating consequences on agriculture and the livelihood of residents.
Many farmers who have planted large hectares of crops this year have lost their crops because of the dry spell or little rain.
The situation is more severe in the five regions of the north as large tracts of crops have wilted, leaving farmers in despair.
The North is in its major farming and rainy season but that is being dashed because of low rainfall. While some farmers are still waiting for rain to plant, others who planted grains and are waiting for rain to enable them to apply fertiliser were unable to do so due to the dry spell.
Unlike the forest and southern parts which have two planting seasons, the major season up north is July, August and September, and the current situation has worsened their plight.
The middle belt of the country always experiences heavy rainfall in June and July, a period for the major farming season, but the situation is different this year because the rainfall pattern changed drastically.
Fields that once thrived with maize, millet, groundnut, yam, beans, watermelon and sorghum now stand barren, unable to sustain the crops crucial to both food supplies and farmers' incomes.
For instance, checks revealed that more than 22,000 hectares of farmlands have been severely affected in the Yendi Municipality.
Advertisement
The drought has not spared even farmers who cultivate along water bodies, as many of them have dried up.
Some farmers in the Bono, Bono East and Ahafo regions told the Daily Graphic that they were considering cutting down their crops and wait for the rain to replant.
They said they had lost hope in farming because of the current state of their farms.
When the Daily Graphic visited some farms in the Northern, Upper West, Upper East, Savannah and Bono East regions, it was observed that many crops, particularly cereals, had withered while others were fast wilting.
Advertisement
Some farmers who spoke to the Daily Graphic expressed frustration and hopelessness as they had lost their crops to the prolonged drought.
"I have never seen such drought before, I lost about five acres of maize, millet and soya beans to the drought. I am very frustrated and confused because that is my only hope. I don’t know what my family and I will survive until the next crop season," a farmer in the Wa East District, Eliasu Mohammed, said.
He said at this point he was only hoping for a miracle as there was no sign of a downpour to facilitate replanting.
Another farmer at Zebilla in the Bawku West District, John Abugri, indicated that he had lost about 10 acres of crops made up of onions, cabbage, maize and millet, saying “my crops are dying and I am not even sure if it rains heavily today they will survive”.
Advertisement
For a person with disability as Mohammed Wanye, who is into agriculture, the situation has worsened his plight. "This situation is dire, especially for farmers like me who rely heavily on consistent weather patterns to sustain our farms,” he said.
Investment at risk
A farmer and private security guard in Sunyani, Joseph Atimbila, told the Daily Graphic that he risked losing his 12 acres of maize farm. He said he invested a huge amount of money to prepare the farmland, control weeds, pest and disease.
Mr Atimbila said he borrowed from two different banks to venture into maize farming.
"I may go to jail if I lose my farm, because I borrowed to farm, where else will I get money to pay the loans and interest”. "As I speak, I am supposed to apply fertiliser for the second time, but I can't do so because of the lack of rainfall," he said.
The assembly member for the Akrobi Electoral Area at Wenchi, Eric Osei, who is also a farmer, told the Daily Graphic that some farmers in the area had abandoned their farms for weeks because of the situation.
Food insecurity
In an interview with the Daily Graphic, the Yendi Municipal Director of Agriculture, Abubakari Mohammed, said the drought was severer on crops that were at reproductive stages, resulting in loss of crops and low yields.
"If the crops get to a permanent wilting stage, you can even give it a whole river water, it won’t survive, so if the drought extends for so long crops that are at their vegetative growth stage will all die," he explained.
For crops that are drought resistant and have high water holding capacity, Mr Mohammed said they could survive the drought with little moisture.
The Wa East District Director of Agriculture, Mavis Derygubaa, expressed fear of possibly food insecurity in the country due to the impact of the drought on food production.
She, however, advised farmers to plant early maturing and drought resistant varieties to enable them to survive the shocks of prolonged droughts.
Worrying situation
The Ahafo Regional Director of Agriculture, Kingsford Nyame, said the situation was very worrying, particularly in the northern parts of the country.
He said the regional department of agriculture was currently gathering information on the issue.
"This year the rainfall is not the best, especially in the northern parts of the country. Food production in the northern parts will reduce because there is only one farming season in the area," he said.
Mr Nyame advised farmers to practise mulching farming, by using leaves and other organic materials to cover the top of the soil to preserve moisture and improve the condition of the soil.
He also urged the farmers to adopt micro irrigation to water their crops.
Mr Nyame advised those who intended to cut down their crops to halt their intention for now, since the rain was unpredictable and encouraged them to seek advice from the agriculture extension agents before taking the decision to destroy their farms.
Climate crisis
A lecturer at the Tamale Technical University (TaTU), Mahama Wayo Smith, attributed the situation to the negative consequences of climate change.
He explained that climate change had altered the weather patterns, leading to more frequent and severe weather events such as the prolonged drought and changes in the rainfall patterns in the north.
“If you look five months back, you will realise that the harmattan was severe and there has been changes in the weather patterns over the years”.
“We have not been fair to nature because what we are seeing today is the result of the negligence of humans, the continuous felling of trees, emission of gas from vehicles using fossil fuel, urbanisation and other human activities are all contributing to factors of climate change,” Mr Wayo Smith, who is also a PhD researcher in climate change, explained.
He expressed fear of food insecurity in the country, saying “even if there is a downpour, we are likely to experience food shortage because most farmers have already lost their crops and have no resources to cultivate again”.
Sustainable agricultural practices
A research scientist at the Council for Scientific and Industrial Research (CSIR), Plant Genetic Resource Institute at Bonsu, Dr Joseph Bandanaa, called for sustainable agricultural practices to mitigate the impact of climate change.
He said farmers must adopt practices such as agroecology, conservation agriculture and mixed cropping because those practices could help mitigate the impact of climate change.
“When you look at the crop calendar, you realise that it has changed from the usual June and July where we experience heavy rains, so what farmers need to do is to adopt practices and varieties that can withstand drought,” Dr Bandanaa, a Food Systems and Agroecology Consultant said, and recommended weather-indexed insurance that would provide cover for farmers in the event of such disasters.
Solution
Asked about how the situation could be dealt with, Mr Yeboah said for its part, GIRSAL would continue to monitor the projects, as recent visits had indicated that the rains would occur in bits.
But he said "production volumes are going to reduce, which is a threat to the country because we would not meet the level of production we are expecting to feed ourselves and to feed livestock and poultry".
Regarding the projects, he said, GIRSAL had supported rice farmers, maize producers, soya farmers and some poultry farmers.
GIRSAL
GIRSAL is a non-banking financial institution established to de-risk agricultural financing and stimulate increased lending to the agricultural sector by financial institutions in the country.
It provides credit risk guarantees to financial institutions lending to agriculture to help increase agriculture lending in the country.
GIRSAL also provides technical support to improve their knowledge and understanding of the agriculture sector and to strengthen their capacity to assess and structure agribusiness loan applications.
GIRSAL is a company wholly owned by the government of Ghana through the Ministry of Finance and is capitalised with seed funding from the Bank of Ghana and the African Development Bank (AfDB).
Writers’ emails: emmanuel.bonney@graphic.com.gh; mohammed.fugu@graphic.com.gh; biiya.ali@graphic.com.gh