Accessing funds for agricultural related projects particularly farming remains a major obstacle in Ghana.
The major part of this agony is that commercial banks in the country cast doubt over the ability of farmers to re-pay loans granted to them, which otherwise could have been used to go into large scale farming particularly during main crop seasons.
Some investigations shows that many farmers become indebted to their bankers due to post harvest losses; bad weather conditions; poor market regulations; poor commodity pricing among other things that sometimes affects their yields.
Local farmers, like other small businesses, over the years, have been complaining of lack of credit opportunities from the financial institutions, to expand their farming activities.
Some farmers in an interview noted that the banks are reluctant to grant them loans based on reasons best known to them despite the ‘outrageous’ requirements and rigorous processes that they are often subjected to.
They observed that even though the banks request too much documentation from you when you approach them for credit yet they will deny you the facility in the end.
They also expressed worry over the high lending rate of some of the commercial banks in the country.
The Agriculture Development Bank (ADB), which considered as a top priority among its objectives for establishment, to assist farmers in area of grants and loans, has strayed away from its commitment to support farmers with credit.
As farmers and other businesses, and ironically the government too, continue to compete with each other on the financial market for credit, the obvious truth is that banks, in our part of the world, will always overlook farmers in for the others.
Unfairly, farmers are relegated to the back in terms of financial support, unlike business men who have comparative advantage over farmers.
But it is therefore incumbent upon the commercial banks to design a flexible lending scheme solely for farmers in Ghana to boost food production.
The 2014 National Best Farmer, Mr. George Asamoah Amankwah, sharing his ordeal with gardja.org noted the commercial banks don’t recognize farmers as potential customer.
‘Since they don’t recognize you as potential customers they have no business whatsoever with you.’
He lamented that, commercial banks don’t accept farms as a form of collateral, making it difficult for farmers to secure loans to expand their business.
He said it is very disheartening that the country and commercial banks have in place no compressive policy that supports farmers in the country.
Similarly, the 2009 National Best Farmer, Mr. Davies Korboe, stated that the Bank of Ghana should come out with a comprehensive financial policy to support farmers in Ghana.
According to him, it will be prudent for the Central bank to come out with a flexible lending rate that would bring relieve to farmers financially.
Mr. Korboe therefore proposed a 12 percent short term loans and 5 or 8 percent long term loans to farmers in the country.
‘Ultimately, developing economies like Ghana will need a flexible financial policy to back their farmers to be able to compete with their colleagues in the neighboring Africa countries.’
Professor Amin Alhassan, the Dean of the Faculty of Agribusiness and Communication Sciences at the University of Development Studies, notes that the idea of a special loan package for farmers is so important and must be given the needed attention.