Agribusiness according to Investopedia, refers “to any business related to farming and farming-related commercial activities.” Thus, it “involves all the steps required to send an agricultural good to market, namely production, processing, and distribution.”
Agribusinesses play a vital role in ensuring food security and the overall growth and development of the nation. However, these benefits came under threat at the onset of the novel coronavirus.
In June 2021, a survey was conducted by the Ghana Statistical Service, funded by the German Ministry for Economic Cooperation and Development (BMZ) and implemented by Deutsche Gesellschaft für Internationale Zusammenarbeit (GIZ) GmbH in partnership with the United Nations Development Programme (UNDP). Findings included the following:
- an estimated 16,091 representing 11.6% of agribusinesses closed due to the lockdown remain closed after the lifting of the lockdown measures (May 2020-Jan.2021).
- about 30.7%, an equivalent of about 42,396 agribusiness firms, were closed during the lockdown.
- 175, 255 Agribusiness workers had their wages reduced during the lockdown. During the post lockdown period, that figure rose to 267, 211
- 44.7% of the total workforce in agribusiness in the industry sector were laid off by the firms as a result of the lockdown. This translates into the laying off of an estimated 22,873 workers and a wage reduction for 63,167 workers.
- more than two-thirds representing 67.6% of agribusiness firms reported a decrease in average monthly sales by 48.8%.
- post the lockdown, 61.5% of agribusiness firms still reported a decline of 41.2% monthly sales.
How COVID-19 drove most agribusinesses into closure and massive layoffs
The above statistics reveal a cut-throat impact of the coronavirus on the Agribusinesses. But how did COVID-19 unleash such devastation?
After the confirmation of two positive cases of the coronavirus in the country last year, the Government swiftly introduced restrictive and preventive measures to contain the spread of the virus as well as a 3-week partial lockdown in the major cities (Accra and Kumasi). The lockdown protocols included:
- A ban on public gatherings (weddings, parties, concerts, funerals political rallies, religious ceremonies etc)
- Restrictions on movement of persons
- School closures
- Travel bans
- Border closures
- Social distancing protocols
- Wearing of masks among others.
After the 3-weeks partial lockdown, the Government began to ease restrictions. This however, did not mitigate the devasting impact of the lockdown on Agribusinesses.
Although food supply was exempted from the restrictions, non-food agribusinesses such as extension services, farm inputs, and agricultural labour were all impacted by the lockdown. This had the resultant effect of derailing the food supply network. Also, hotels, restaurants, chop bars, schools and public events that demand a high intake of food supply had to close down. With the lack of demand, most agribusinesses had to go out of business since their key buyers were facing restrictions in their operations. This led to dwindling sales, wage cuts and the laying off of workers to ‘keep their head above water.’
Lessons for Others
Despite the struggle for some agribusinesses, others managed to stay in business with some recording increase in profit margin. The question of how comes to play.
According to the report, some agribusiness firms adopted the use of digital technology (social media, mobile money, the internet and audiovisual media) to market their products and services. Also, some agribusinesses resorted to the use of courier services to transport their goods to existing and potential consumers. Thus, they managed to mitigate the impact of the coronavirus.
- About 5.1% of all agribusinesses either adopted or increased the use of the internet for their operations, and 36.5% used mobile money in business transactions.
- 4.8% of agribusinesses began using or increased door-to-door delivery via courier services in response to the COVID-19 outbreak.
- Agribusinesses within the industry sector used fairly more digital solutions (internet, 8.7%; mobile money, 37.5%) with 10.7% door-to-door delivery via courier services.
The foremost lesson here is for businesses to remain dynamic, innovative and resilient in difficult times. The boat may stay afloat irrespective of the storm if its is steered in the right direction.
The post Why Agribusinesses suffered during Covid-19 lockdown – Lessons for other Businesses appeared first on Ghana Talks Business.
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