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Public Agriculture Investments to support MIC

Public Agriculture Investments to support MIC. Sam Benin Tewodaj Mogues Godsway Cudjoe Josee Randriamamonjy 16 th November 2007 Accra. Rationale for public investments. Public investment is instrumental in: Improving public services Attracting private investment and inputs

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Public Agriculture Investments to support MIC

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  1. Public Agriculture Investments to support MIC Sam Benin Tewodaj Mogues Godsway Cudjoe Josee Randriamamonjy 16th November 2007 Accra

  2. Rationale for public investments • Public investment is instrumental in: • Improving public services • Attracting private investment and inputs • Broad strategic questions from a macro or rural development perspective: • What is the level of investments needed to raise agriculture growth from 5.3 to 6.0 percent? • Can the current budget cover these investments? • If not, what is the funding gap? Page 2

  3. Estimating public agriculture expenditure required to raise agriculture growth • Effect of public investment in agriculture and rural areas on agriculture production and productivity • Effect of public investment on private investments in agriculture • Effect of private investments in agriculture on agriculture production and productivity • Investment-Growth Elasticity percentage increase in agriculture growth due to 1 percent increase in public agriculture investment • Additional public agriculture investment = (additional agricultural growth / elasticity ) * unit investment Page 3

  4. Estimating investment-growth elasticity in Ghana’s agriculture sectordata and methods • Data • Public agriculture expenditure (PAE) data, 2002-2006 • Agricultural Services Sub-sector Investment Project (AgSSIP) • Government allocation to MOFA • Household agriculture production data: GLSS5 • Agriculture output (crops, livestock, fishery, forestry) • Investments (tractors, livestock, outboard motors, etc.) • Inputs (seed, fertilizer, feed, fuel, labor, etc.) • District level data on access to other public services, etc: (2003 CWIQ, 2000 Census, Ministries, etc.) • Econometric methods Page 4

  5. Public agriculture expenditurespatial distribution and trends Page 5

  6. Returns to public agriculture expenditureresults of econometric estimations • Expenditure-Growth Elasticity = 0.17 • One percent increase in public agriculture expenditure leads to 0.17 percent increase in agriculture production • To raise agriculture growth from 5.3% to 6.0%, public agriculture expenditure has to grow by an additional 3.9% Page 6

  7. Estimated effects of public expenditure on agricultural growthexamples from other countries Page 7

  8. additional 1,912 billion Cedis ($0.2 billion) per year Public agriculture expenditure required to raise agriculture growth from 5.3% to 6.0% Page 8

  9. Conclusions • Since Ghana is already close to achieving the agricultural growth rate target of 6.0, it needs to raise growth in PAE by only 3.9% • This will raise the share of PAE in total expenditure from 8.5% to 11.5% by 2015 • This is consistent with the Maputo declaration of allocating at least 10% of national budgetary resources to the agriculture sector Page 9

  10. Issues • Achieving higher efficiency of public spending • Reallocation of public agriculture expenditure resources • Function (R&D, extension, irrigation, input support, etc.) • Spatially (region, district, north-south, agro-ecology) • Raising additional resources Page 10

  11. Thank you

  12. 10% budget allocation to agricultureexamples from other countries Source: AU 2007 Page 12

  13. Returns to public agriculture expenditure Page 13

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