Governor Addison Explains The Factors Behind Last Year’s Rise In Food Prices

Dr. Ernest Addison, Governor of the Bank of Ghana (BoG), has explained the reasons behind last year’s rise in food prices. He attributed the increase to dry weather conditions in farming communities during the early part of 2024, which led to lower crop yields.

During the 122nd Monetary Policy Committee (MPC) press conference in Accra on Monday, January 27, Dr. Ernest Addison explained that “Price developments in 2024 showed a slowdown in the disinflation process, primarily due to food price pressures.” He noted that at the start of the year, inflation rose from 23.2 percent in December 2023 to 25.8 percent in March 2024.

Dr. Addison further stated, “Afterwards, inflation steadily declined to 20.4 percent in August but rose again to 23.8 percent in December 2024, mainly due to food price increases. The rise in food prices was primarily driven by dry weather conditions earlier in the year, which negatively impacted harvest yields. In contrast, non-food inflation steadily decreased during the last quarter of the year, settling at 20.3 percent.”

Ghana’s agricultural sector faced a potential crisis as severe drought conditions threatened the livelihoods of more than 928,000 farmers and put the nation’s food security at risk.

In response, the previous Akuffo Addo government implemented an emergency relief package that included a temporary ban on grain exports, cash transfers to affected farmers, and a large-scale grain import initiative to prevent a potential disaster. The dry spell severely affected key agricultural regions across Ghana, with reports showing that almost half of the 1.8 million hectares of farmland were impacted.

The Ministry of Food and Agriculture estimated a significant loss of GHC3.5 billion in farmer investments, with potential revenue losses reaching GHC10.4 billion.

To prevent further damage, the government imposed a temporary ban on the export of essential grains like maize, rice, and soybean, ensuring these vital crops remained available in the local market. “This ban is crucial to protect our food supply and safeguard the interests of our farmers,” said Bryan Acheampong, the then Minister of Agriculture. “We must prioritize domestic needs during this crisis,” he emphasized.

In addition to the export ban, the government launched a program to purchase existing stocks from farmers to mitigate the impact of the ban. Acknowledging the urgency of stabilizing the food supply, the government planned to tap into the ECOWAS Grain Reserve and collaborate with the private sector to import up to 300,000 metric tons of maize and 150,000 metric tons of rice.

“We are working tirelessly to secure these imports and support our vulnerable farmers who have lost their crops,” the Minister emphasized.

To further assist, 26,000 metric tons of poultry feed were also set to be imported to support the poultry industry, which was also threatened by the drought. For the affected farmers, the government committed to providing cash transfers of GHC1,000 per hectare, focusing on the most vulnerable among the 435,872 confirmed affected farmers.

“Our farmers are the backbone of our economy, and we are dedicated to offering them the necessary financial aid during this difficult period,” the Minister added.

Alongside the financial support, the government introduced a replanting program, offering fast-maturing seeds and fertilizers to farmers whose crops had been destroyed by the drought.

“To prevent a recurrence of this disaster, we are strengthening our collaboration with the Ghana Meteorological Agency,” the Minister stated. “Through the Food System Resilience Project, we aim to provide accurate forecasts and advisories to better prepare our farmers for future climatic challenges.”

This crisis was especially significant as the affected regions accounted for more than 62% of Ghana’s annual grain supply.