Reaching middle-income status in Ghana by 2015 : what are the constraints and opportunities for raising agriculture productivity

Using data from the recent Ghana Living Standards Survey (GLSSV) to estimate the determinants of (i) adoption and intensity of adoption of purchased inputs, (ii) crop productivity, and (iii) agriculture income per capita, this paper analyzes the constraints and opportunities for raising agriculture production in order the above challenge. The main determinants of higher agriculture productivity were purchased inputs, especially fertilizers and pesticides, which had positive impacts on productivity. The marginal returns (or profitability) to use of purchased inputs are large and statistically significant, especially in the forest and savannah zones. None of the purchased inputs was profitable in the coastal zone. These results show that investment in extension and other programs to promote use of fertilizers and pesticides will be important. Of course, given that these inputs are costly, providing credit to farmers to help them acquire the inputs will be important, as is improving their availability through investment in infrastructure and development of input markets. With the exception of access to telephones, access to services and infrastructure seem to have mixed impacts. For example, households with access to a telephone (either fixed or mobile) were associated greater spending on improved seeds in all but the coastal zone, greater spending on fertilizers and pesticides in the southern savannah zone, and greater spending on hired labor in the forest zone. This suggests that those who are connected are better able to access information and inputs. Districts with better year-round access to roads were associated with lower spending on improved seeds and fertilizers, likely due to lower unit prices of those brought about by lower transactions cost. Districts with better year-round access to roads were also associated with greater spending on hired labor in the northern savannah zone. With the improvement in the road infrastructure and migration of labor to the south, it households do not have adequate family labor to tend their farms and must resort to hired labor to manage their now larger farms. Districts with greater access to markets were associated with greater spending on improved seed in the forest and northern savannah zones, but it was associated with lower spending on fertilizers across the board. Greater access to markets was also associated with opposing effects on spending on hired labor in the coastal and forest zones. These show that different types of policies, strategies, and public investment strategies will be needed in different agroecological zones to promote agricultural intensification, raise agricultural productivity growth, and increase incomes. In general, increased investment in agriculture research that leads to the development of profitable technologies in local environments will be important. Increased investment in extension and other training programs to promote proper use of improved seeds will also be important. Similarly, improving the availability of improved seeds and helping farmers to acquire purchased inputs will also be critical. (Author abstract)