March 31st, 2014

Fresh Air Matters... with Capt. Yaw

The phrase 'In aviation, the only way to end up with a small fortune, is to start with a large fortune!' has been the bedrock of airline, aircraft and related developments around the world. Freddy Laker, Richard Branson, etc. can all testify to having pumped in more money than they ever anticipated to create their businesses - often more than the GDP of many countries - most have lost their shirts! Richard Branson has subsidised and bailed out his own airline - he runs it as a matter of pride - because he likes aviation and can afford to like aviation!

It is easy to say 'I want to start an airline', or even 'I want to own my own plane', but you must remember that you must have money - more than you will imagine at the outset - to pursue such a direction. I remember my first aircraft. I was wisely advised 'make your first aircraft a new one'. I followed the advice, and worked hard enough to be able to save up to afford it. A second-hand aircraft would easily have cost me double that of a new aircraft - over the first few years. I have seen so many people purchase used aircraft, because 'they could not afford a new one', nor wait to save up, only to lose it all, because of the unseen costs involved. It sounds cosy: 'I have seen a used aircraft for half the price of a new one!', but then it needs more spent on it in the first few months or years than the difference in cost of the new one! We have a couple of used aircraft at Kpong, that we could put up for sale right now - but we won't. Simply because we know that if we sell them, the owners will have to spend more than the cost of a new aircraft in the first three years. We may not be good at business - but we are good at ethics and thinking about sustainable solutions. These aircraft will be gracefully retired and put on display in our new learning and discovery centre, scheduled to open next year, as part of our investment into the education of the wonderful young people of Ghana. We have a long term approach, not a 'look good quick' approach to our sector development.

Sadly, I do not get the impression that everybody understands what development really takes. Let us take just one of the topics in the news at the moment; RICE!

Ghana has a massive imported rice bill - an estimated $300,000,000 of imports per year (it grows annually as the rice demand grows in the country). So, somebody says 'that is crazy, let us grow our rice needs ourselves! We can grow all of our own rice - we have land and people and we could even export some!' Sounds good? Sounds amazing! We have lots of land and lots of people without jobs - so lets give them all some rice to plant and wish them luck! Sadly, it is not that simple. 

Let us look at the real cost of our imported and domestic rice. First of all, Ghana has one of the most diverse rice import profiles of Africa. The last time I studied rice (yes, I really did) in 2002/4, Senegal imported a lot of rice - but mainly the 'lower cost' options, such as 100% broken - well below the cost of what it could be grown for in Senegal! Ghana imports a very wide variety of rice - but not so much of the 'low cost rice' options - and much of it 'unlikely to be able to be grown cost effectively in Ghana'. Yes, Ghana has grown rice over the years - but local sales have been limited, especially because Ghanaians are very discerning when it comes to rice! 

Perhaps the most successful 'Grown in Ghana Rice Project', in quality terms, was the Kpong Farms project of the 1990's. I was privileged to have written some software for the project at the time. Out of interest I drove past the site, just last week. The fields are empty, fallow for years, the buildings have all but collapsed inwards on themselves, maintenance has not been carried out recently - if at all. Even the little yellow JCB used for ditch and dyke maintenance - that only needed a simple valve to get working ten years ago, is still sitting in the very same place it was ten years ago. 

In the North of the country there was a major project about 12 years ago, I believe it funded by the French... apparently, that also is no longer in place. So, I look out at Prairie Volta - which was just a few years ago heralded as the saviour of Ghana's rice needs. Prairie took over the Quality Grain site at Aveyime (oh, there is a story of finances lost behind Quality Grain too!). They started with a few hundred hectares and planned for ten thousand hectares of rice. They stared with fantastic investments - bulldozers, tractors, aerial dispersal aircraft (one was damaged beyond repair before it even sprayed for the first time). Prairie have not visibly grown rice for a while now - they need 'more investment'... 

What about the Kpong Irrigation Project? Yes, they grow rice more or less on an family farm lot basis, but look at their yields - they are generally below economic return levels. I can visit a village on the lake edge, and see their rice - which is fine for 'personal consumption' - the quality is not going to make it to market - not without massive infrastructural investments (that includes proper roads, sustainable power, mechanisation and clean water for hand washing in order to produce a Ghana Standards Board approvable product).

Finally, we look at the project in Sogakope, they are growing 'social rice' for local consumption, with a number of out-growers. They are subsidised by an American patient loan operation - and they will certainly need a great deal more investment - and/or government subsidies - to continue. 

It quickly becomes evident that the millions upon millions of dollars spent on getting rice production going, has not really yielded viable results. The small farmers are probably not being cost effective in their production, and the larger operations have a history of failing - not just once or twice, but repeatedly. Remember, many other countries provide heavy government subsidies to farmers to help them survive...

The rice numbers are relatively easy to work with. There is a 'break even' calculation - even with the production of rice. Let us put that break even point at a hypothetical six tonnes per hectare, for a given variety. In order to achieve that production you need a number of factors to be in place. 1. Suitable, irrigated land. 2. Inputs (fertiliser, herbicide, fungicide, etc). 3. Implements (tractors, laser levellers, harvesters, etc). 4. Post harvest handling equipment (dryers, sorters, silos, baggers, etc) 5. Transport to market (on good roads). 6. Labour - from qualified to basic - but all must be motivated and ready to work extremely hard for little money - for that is the reality of farming around the world.

The land must be fertile, close to a water source, with pumps and filters to ensure that water is in the right place, in the right quantities, at the right time. It takes a long time to prepare such land. If you started on virgin land today, you would be lucky to see your first harvest within 24months. You must be prepared for breakdowns of tractors and pumps and have a fantastic maintenance mentality, to manage large swathes of land for rice growing in this part of the world.

Rice requires a lot of inputs (fertilisers, herbicides, etc) - and they are generally imported items - requiring that hard to find item called 'foreign currency'. Obtaining that foreign currency to start-up operations is one thing, but what about maintaining the foreign currency flow to secure future supplies? If your yields are low, and the currency exchange rates shifting - not to mention the cost of duties, clearing and the horrendous transport costs to move the inputs to the farm site, it is possible that you cannot afford the inputs for even your second harvest. The last time I shipped a container from the USA, it cost me more to clear and move that container from Tema port to our site (less than 60km) than the transatlantic crossing. West Africa is an expensive place for transport!

The implements needed for cost effective, marketable quality, rice production need to be procured, shipped, maintained and will need trained operators and maintenance teams. For the good quality implements you need a very qualified operator - many have built in, programmable computer devices with sub-inch differential satellite guidance systems - and require somebody with an above average education to work them properly. Too many of such machines have been consigned to the refuse dump (or borla site), due to inappropriate use and lack of maintenance - often simply because of the cost of spares (requiring foreign currency!). The initial investment in quality farming is high, and the maintenance costs in Ghana are much higher than many other parts of the world, resulting in increased cost per kilo of the finished product - at least if you want to reinvest and expand the farm.

Post harvest equipment is expensive - and much of what we have in Ghana already has not been used. Look at the KIP - they have some fantastic kit - even gas dryers - but the cost is too high for the local farmers to use them. Hence the open air concrete slabs with goats, birds, mice and other vermin running through the rice, which is often turned by foot - yes, the human foot turning system! The labourers walk through, turning the rice by naked foot, because they cannot afford to use the handling equipment. This happens elsewhere in the world too - but not for the quality of rice in demand - that requires modern, well maintained handling equipment.

Transport to market from rural areas is killer - our local costs of transport are amongst the highest in the world - and will surely get even more expensive. The poor quality of our roads increases the maintenance costs (I estimate that wear and tear on a vehicle over 50,000 km in West Africa is about the same as 200,000km in Europe). Add to that the transport losses (rain, vermin, weevils, bags falling off the lorry at checkpoints, etc) and your real cost of local production is rising rapidly. Sadly, I cannot imagine the point being reached where Ghana is an exporter of rice - even if we produced more than the local market could consume. If we cannot export from our rice farms, that means 'growing rice in Ghana will not generate the foreign currency returns needed to sustain such farms'.

Labour is an ongoing issue. Our education system is poor - especially in the rural areas. I am exhausted at interviewing candidates - even from our universities - who are unable to understand English language instructions, even able to articulate understanding of their supposedly studied topics - and who are unwilling to work in the manual labour sectors - such as farming! It is very hard to find the right staff - even in small quantities - who are both ready and able to learn the skills needed - and committed to the development of a rural operation. 

So, the bottom line is, it is easy to say that 'we need to grow more rice', but we must have the money (lots of it) to set it up - and we must have the long term farmer subsidies - and foreign currency availability (with a stable exchange rate) to ensure that the farmers can import the millions of dollars of tractors, inputs, spares, etc necessary to ensure that they do not become another wasteland referred to as 'that used to be a rice farm'. 

The bottom line is, that in order to imagine that we could grow our own rice, cost effectively, and stop relying on imports, we would probably have to find over 200,000 hectares of land, about one thousand suitable tractors, thousands of silos and a import a workforce from the Philippines or China to ensure that it ran smoothly - and don't forget the government subsidies that will be needed to make sure that it doesn't collapse!

Surely, we can see from this that 'we should look at the real issues', and support projects that are more achievable than pursue yet another headline that sounds good, to those who do not use a calculator, to establish what the real bottom line is?

In the 1990's Ghana boosted NTE (Non-Traditional Exports), liberalised foreign currency access, did away with the foreign currency forms, made exports easier (the NTE customs form), and that led to the stable growth that was seen in the last decade. Today, we seem to be focusing back on the same policies that have failed in the past; currency controls, consumer rather export ambitions and we are rapidly moving away from the policies that have worked so successfully before. 

If we, as a nation, had a vast fortune to spend on these ideas, and did not mind ending up with just a small fortune at the end, I would be jumping with joy at the idea of building the fifty plus aircraft for aerial dispersal, that would be needed for such a massive rice field expansion! To close this longest ever column, I will simply ask you 'If you do not have enough money to purchase AND MAINTAIN a tractor, will you buy a farm or will you look for a more suitable investment?'

Next week, I will continue to be even more contentious and look at what we can do to be able to sustain our desire to eat rice, by earning the money from more practical and applicable solutions...

Capt. Yaw is Chief Flying Instructor and Chief Engineer at WAASPS, and Pilot/Engineer with Medicine on the Move, Humanitarian Aviation Logistics (www.waasps.com www.medicineonthemove.org e-mail capt.yaw@waasps.com)