Linking Smallholder Farmers to Markets Enhances Productivity Growth: A Case Study of Rice Farmers in Ghana

ABSTRACT

Smallholder farmers are the major players in agricultural production and food supply systems in Africa. However, poor access to market limits their productivity growth. This brings into focus the need to support smallholders to become less subsistence-based and more entrepreneurial by tailoring production to market forces.

Agriculture is one of Ghana's most important economic sector, employing almost half the population on a formal and informal basis and accounting for about 20% of GDP. The multiple challenges faced by smallholder farmers in Ghana pose major obstacles that prevent them from integrating into rapidly evolving national and international markets, which contributes to sluggish growth and lingering poverty in the rural sector. This is especially seen in the rice sector as it is estimated that about 66 percent of Ghana's domestic demand for rice is satisfied through importation from China, USA, Thailand and other nations whereas local production only satisfies about 34 percent of total demand. In the 2016 market year, it was discovered that 689,000 metric tons of milled rice was imported into the country to satisfy the increasing local demand of the commodity. This action has posed serious challenges to local smallholder rice production, making it uncompetitive in local markets.

This study assessed barriers to formal market participation by smallholder rice farmers, identified the factors that influence the decision of these farmers to participate in agricultural output markets, and recommends effective strategies to improve market access among smallholder rice farmers in Ghana. Purposive sampling technique was employed to select rice farmers in the Volta and Greater Accra regions. The study was conducted in Aveyime of North Tongu district, Weta and Afife of Ketu North district and Asutsuare of Shai-Osudoku district. The sample size is made up of randomly selected 400 smallholder rice farmers. Data were analyzed using descriptive and inferential statistics. The results revealed that farm-level, social and economic factors enhance smallholder farmers’ productivity and market access.

Keywords: Market access, Productivity, Rice, Smallholder farmers.

Table of Contents

Table of Contents...........................................................4

List of Tables..................................................................6

List of Figures................................................................7

List of Abbreviations ....................................................8

CHAPTER ONE...............................................................9

INTRODUCTION.............................................................9

1.1. Background to the study .......................................9

1.2. Problem statement .............................................10

1.3. Research questions.............................................11

1.4. Objectives.............................................................11

1.5. Research hypotheses..........................................12

1.6. Justification of the Study....................................12

1.7. Plan of the study..................................................12

CHAPTER TWO...........................................................13

LITERATURE REVIEW..................................................13

2.1. Review of Theory ................................................13

2.1.1. The concept of smallholder farmers...............13

2.1.2. Rice production in Ghana ...............................15

2.1.3. Political Economy of Rice in Ghana................19

2.1.4. Concept of Linking Smallholder Farmers to Markets.......................................................................19

2.1.5. Means by which smallholder farmers have been linked to markets .......................................................23

2.1.6. The journey so far in the study area...............24

2.2. Review of Methodology .....................................27

2.3. Review of Empirical studies...............................29

CHAPTER THREE.......................................................33

METHODOLOGY ........................................................33

3.1. Study Area ..........................................................33

3.2. Nature and Sources of Data ..............................37

3.3. Method of Data Collection ................................37

3.4. Analytical Methods/Techniques.......................38

CHAPTER FOUR........................................................39

RESULTS AND DISCUSSION ....................................39

4.1. Socio-economic characteristics of the rice farmers.......................................................................39

4.1.1. Gender of the farmers....................................39

4.1.2. Age of the farmers...........................................41

4.1.3. Marital status of the rice farmers...................41

4.1.4. Education level of the farmers........................42

4.2. Barriers to formal market participation by smallholder rice farmers ..........................................44

4.2.1. Preference for informal markets ...................44

4.2.2. Transaction costs............................................45

4.2.3. Farm size..........................................................47

4.2.4. Unorganised seed industry ............................48

4.2.5. High post-harvest losses.................................48

4.3. Factors influencing the decision of smallholder rice farmers to participate in agricultural output markets. .....................................................................49

4.3.1. Distance to market and Produce price ..........49

4.3.2. Exploitation ......................................................50

4.3.3. Share of rice produce sold and household size .....................................................................................51

4.3.4. Climate change and infestation of pests........51

4.3.5. Farmer Based Organisation membership.......51

4.3.6. Financial literacy...............................................52

4.3.7. Inputs support to farmers by off-takers/marketers.......................................................54

4.4. Level of empowerment of the rice farmers.......54

4.4.1. Production .......................................................55

4.4.2. Resources.........................................................56

4.4.3. Income..............................................................58

4.4.4. Leadership .......................................................58

5.1. Summary of findings...........................................61

5.2. Conclusion ..........................................................63

5.3. Recommendations..............................................64

References..................................................................66

Appendices.................................................................72

Appendix 1: Research questionnaire.........................72

Appendix 2: Pictures from the field...........................81