Boom in food processing sector deepens reliance on imports, risks cedi pressure

By Prince ASUMAH

The domestic food processing industry is expanding rapidly, but analysts warn that its growing dependence on imported ingredients could fuel pressure on the local currency if left unchecked.

A new report from the United States Department of Agriculture’s Foreign Agricultural Service (FAS) notes that the industry has become one of the economy’s fastest-growing segments, bridging the gap between agriculture and consumer markets. However, the report stresses that much of this growth is fuelled by foreign ingredient inflows.

In 2024 alone, Ghana imported US$1.24billion worth of food processing inputs – a 44 percent jump from US$857million in 2023, says the report.

Data from the Ghana Statistical Service confirm this trend, highlighting sugar and raw cocoa beans – despite Ghana being a leading cocoa producer – among the major imports, valued at approximately GH¢2.37billion and GH¢2billion respectively.

GSS explained that the import of raw cocoa beans is likely to meet specific requirements of local processing industries.

The sector’s growth has been propelled by foreign investment, digitalisation and rising consumer demand for convenience and ready-to-eat foods. Urbanisation is also driving shifting diets, with increasing preference for fast food, fried foods and sweetened beverages – all of which require significant imported inputs.

The restaurant and hospitality sectors, among the economy’s fastest-growing segments, remain unable to source all their food needs domestically – further fuelling demand for imports.

While this trend signals a recovering economy and rising consumer spending power, economists warn it has broader macroeconomic implications.

“High import dependence in the food processing sector raises Ghana’s foreign exchange demand. Sustained import bills of this size, particularly for items that could be locally produced, exert downward pressure on the cedi,” one analyst told the B&FT.

The cedi has enjoyed some stability in recent months, aided by tighter monetary policy and lower inflation. However, any prolonged reliance on imports for value-added industries such as food processing could erode these gains as rising demand for foreign currency outpaces supply.

Programmes such as the Agriculture for Economic Transformation Agenda (AETA) and Feed Ghana Programme have been flagged as critical to addressing the structural gaps in food processing.

Policywatchers argue that unless these are implemented effectively, the sector’s expansion risks becoming unsustainable – exposing the country to currency depreciation, food price volatility and worsening trade imbalances.

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