Guinness Ghana Breweries Plc Fact Sheet

By November 13, 2019UKGCC Blog

LRM Socio-Economic Impact Study Findings

Background

Guinness Ghana’s LRM intervention started in 2012 in line with Government’s Policy initiative to incorporate the use of local raw materials in the production of our alcoholic and non-alcoholic beverages. Since its inception, Guinness Ghana has grown its percentage of LRM usage from 12% in 2012 to the 55% this 2019, a firm demonstration of our commitment to the LRM agenda. This consistent growth in LRM uptake has been achieved through significant capital investment to re-engineer plant and equipment, as well as technical and financial support to farmers to improve crop yield.

Key Findings of our 2019 LRM Socio-Economic Impact Study

Guinness Ghana’s activities in the maize, sorghum, and cassava value chains have contributed to positive changes for farmers along these value chains. As a result of the ready and reliable market provided by Guinness Ghana, farmers have increased average acres under cultivation and this has translated into increased yields, labour employment, gross revenues and profits. Key gains identified include:

  • The main categories of stakeholders impacted are farmers, aggregators, processors, input dealers, and traders. Beside smallholder farmers who constitute the bulk of beneficiaries, there are several others who directly and or indirectly have been impacted by the LRM initiative along the three commodity value chains.
  • It is estimated that about 30,000 smallholder farmers have been impacted by the LRM initiative. With an average household size of 7 across the study regions, it is estimated that 210,000 smallholder farmers and their households have been impacted by the LRM by Guinness Ghana.
  • Average income from crop sales increased for farmers in the maize and sorghum value chains from 2017 to 2019. The average gross revenue per maize smallholder farmers increased by 126% from GH¢ 2,194 to GH¢ 4,964. Farmers engaged in the sorghum value chain increased gross revenue by 120% from GH¢ 957 to GH¢ 2107. There was a slight decrease of about 3% in gross revenue for farmers in the cassava value chain from GH¢ 3410 to GH¢ Revenue from the target crops made up about 43% of households income in the past year.
  • Average profit for smallholder farmers across all crops was estimated at GH¢ 2167.42. Using a farmer population of 30,000, a total of GH¢ 65,022,600 is estimated to have been earned as profits by farmers across the study regions.
  • Increase in the number of paid workers, along with increases in average expenditure on hired labour in the sorghum value chain. There has been an increase in the average number of hired workers employed by sorghum farmers (by 45%, from about 11 hired workers in 2016 to 16 in 2019) with slight decrease in hired labour along the maize and cassava value chains, although farmers in the maize and cassava value chains report an increase in the average full-time workers.
  • The LRM initiative has led to the establishment of some new business entities operating along the value chains. The LRM initiative has led to the establishment of some multi-million business entities which have entered into a contract to supply maize and sorghum to Guinness Ghana because of the enhancement of the LRM. There are about twenty (20) aggregators/commercial farms spread across the country who are expanding and registering more out-grower farmers to boost their capacity to supply to Guinness Ghana. Other existing companies have also expanded and reformed their production systems.
  • Increased investments in the maize, sorghum, and cassava value chains. Our assessment of the companies linked to Guinness Ghana under the LRM intervention showed investments in large tracts of land, new technologies and equipment, varietal trials in sorghum, maize and cassava and recruitment of high level human resource. All these investments, we found, were aimed at meeting contractual agreements with Guinness Ghana LRM
  • Investments in quality of life improvements such as investments in children’s education housing, water, sanitation, health and nutrition. The percentage of respondents who were house owners has increased from 67.1% in 2017 to 74.5% in 2019.
  • The potential for taxation in the three targeted commodities’ value chains is huge. Besides the smallholder farmers who constitute the majority of actors, others in the value chains include transporters, input dealers, processors, aggregators, commercial farmers and traders. The estimated quantum of income of smallholder farmers available in the interventions regions for taxation was estimated to be GH¢ 101, 525,000 per annum in 2017 and this figure was calculated from an average income of GH¢ 4,061 per annum from crop sales multiplied by the target beneficiaries of 25,000 in the intervention regions. By similar calculation, the figure is estimated at GH¢ 187,710,000 for 2019, using an average income of GH¢ 6,257 per annum from crop sales. However, the study established that most of these smallholder farmers do not pay formal income taxes. Corporate taxes and import duties were other major sources of tax which have been stimulated by LRM. At least, US$50m of investment in equipment has passed through the country’s ports between 2018 and 2019, which have been taxed.
  • Illicit alcohol consumption.

The level of alcohol consumption is generally low across the study districts. However, respondents who consume alcohol indicated their preference for local/mainstream spirits because of the comparatively lower prices and perceived benefits such as appetite, sexual prowess, extra energy for work, etc.

Key Findings of our 2017 LRM Socio-Economic Impact Study

Guinness Ghana’s activities in the maize, sorghum, and cassava value chains have contributed to positive changes for farmers along these value chains. As a result of the ready and reliable market provided by Guinness Ghana, farmers have increased average acres under cultivation and this has translated into increased yields, labour employment, gross revenues and profits. Key gains identified include:

  • The main categories of stakeholders impacted are input suppliers, farmers, aggregators, processors and traders. There are several others who directly and or indirectly have been impacted by the LRM initiative as shown in the three commodity value chains. For instance, planting materials suppliers, agrochemical dealers, transporters, commercial farmers, wholesalers and retailers, extension and credit service providers. In the intervention areas of GGBL’s, the major stakeholders are the smallholder farmers who constitute the bulk of the actors in the value chains and this is where GGBL’s LRM is likely to make the most impact.
  • The total number of smallholder farmers being impacted by the LRM is estimated around 25,000. With an average household size of 7 across the study regions, it is estimated that 175,000 smallholder farmers and their households have been impacted by the LRM by GGBL.
  • Income for smallholder farmers increased in the cassava value chain from 2014 to 2017. The highest change in income was recorded in the Upper West Akim district in the Eastern region; the change in income from 2014 (GH¢ 3,454) to 2017 (GH¢ 7,797) is 125.7%. Similarly, the figures for the other districts where the baseline was undertaken in 2014 show significant increases in incomes: in Awutu Senya district the change was 42.6% (from GH¢ 2,681 in 2014 to GH¢ 3,822 in 2017); Agona East, 38.3% (from GH¢ 3,450 in 2014 to GH¢ 4,773 in 2017); and Atebubu-Amantin, 20.5% (from GH¢ 2,863 in 2014 to GH¢ 3,451 in 2017).
  • Investments in quality of life improvements such as improved housing, water and sanitation, education, and asset ownership. The majority of the respondents (67.2%) indicated they were owners of their houses, although the situation has not changed much since the 2014 baseline studies (67.3%). The percentage of respondents with access to improved water source increased from 73.8% in 2014 to 87% in 2017. Similarly, there was 17% increase in the number of respondents with access to an improved toilet facility.
  • Increase in the number of paid workers, along with increases in average expenditure on labour. The average number of all paid workers a farmer hired per season increased by 25% from 8 in 2014 to 10 hired labourers in 2017. With an estimated beneficiary population of 25,000, it is estimated that a total 250,000 hired labourers were engaged by farmers in the three commodities value chains as a result of the GGBL LRM intervention in the six study regions. On average, expenditure on hired labour increased from GH¢ 513 in 2014 to GH¢ 706 in 2017. Using a beneficiary population of 25000 as of 2017, a total of GH¢ 17, 650,000 is estimated to have been earned as income by hired labourers.
  • The estimated quantum of income of farmers available in the intervention regions for taxation is estimated to be GHC101, 525,000 per annum. The target beneficiaries are mostly smallholder farmers who constitute the majority of the actors in the three commodity value chains and do not pay direct taxes. They are only levied by the district assemblies if they sell produce in the markets in the districts. But most farmers sell at the farm gate and thus escape these taxes. However, as a result of the GGBL’s LRM intervention, there has been an improvement in the incomes of farmers. The other actors in the value chains are taxed per the incomes they earn.
  • Income variance

Compared with non-intervention communities, income variance of approximately 80 percent was found

  • Alcohol consumption
  • Improvement in the value chain

Companies have invested in large tracts of land, new technologies and equipment, varietal trials in sorghum, maize and cassava, irrigation facilities, rehabilitation of equipment and recruitment of high-level human resource including experienced international agronomists and managers. All these investments made by new companies such as Gorshen Porshe Ranch, Mango City and Agriaccess were aimed at meeting contractual agreements of GGBL’s LRM initiative.

 

LRM Benefits to Government

  • Besides the revenue returns to government, GGBPLC’s LRM provides ready offtake to farmers for sorghum, cassava and maize, which directly supports governments Planting for Food and Jobs agenda.
  • It also supports the government’s manifesto policy on providing tax and related incentives for manufacturing businesses in sectors such as agro-processing and light industries among others
  • Guinness Ghana’s LRM offtake reduces Ghana’s forex exposure as forex otherwise needed for importation of raw barley
  • As Guinness Ghana expands production capacity, demand for sorghum and other raw materials will increase, thereby creating additional jobs through the opportunities to diversify the supply chain, such as:
  • malting of sorghum which will create additional job opportunities locally and across the sub-region
  • building infrastructure for storage and cleaning of the LRM
  • Conversion of cassava starch to High Maltose Syrup
  • Opportunities in flavours manufacturing

 

LRM Benefits to Farmers

  • GGBPLC spends approximately GHC 45 million per annum on sourcing local raw material (particularly sorghum, maize and cassava starch) from Ghanaian farmers thereby providing sustained livelihoods to farmers and the supply chain that depends on our LRM sourcing.
  • From our 2017 LRM Socio-economic Impact Study, Guinness’ LRM sourcing directly employed 30,000 smallholder farmers and created additional 210,000 jobs in the supply chain, which generated income revenue of more than GH¢ 180 million through the chain.
  • Improvement in the livelihood of farmers as a result of a ready market for their farm produce – improved access to clean water, sanitation and housing

 

Conclusion

The LRM initiative has contributed to positive changes for farmers and actors along the maize, sorghum, and cassava value chains. This has led to improved living conditions amongst smallholder farmers, in the areas of child education, housing, water and sanitation, health and nutrition, among others. Farmers are convinced that the intervention has the potential to transform agriculture in their localities because of the ready market provided by Guinness Ghana.