Market participation of smallholder groundnut farmers in Northern Ghana: Generalised double-hurdle model approach

Abstract

Market participation is both a cause and a consequence of economic development. Markets offer households the opportunity to specialize according to comparative advantage and thereby enjoy welfare gains from trade. The current literature on product marketing in Ghana is inadequate for designing and implementing effective policies to overcome problems in the marketing system, especially leguminous crops. Based on this, the study analyses the determinants of groundnut farmers’ decision to participate and the level of market participation in Northern Ghana using cross-sectional data from 250 smallholder farmers. We employed the generalized double hurdle model to analyse the objectives of this study. On average, the study found that 62% of groundnut output harvested by farm households in Northern Ghana was sold on the market. The most significant determinants of market participation decision and intensity of participation in the groundnut market include extension service, distance to output market, farmer-based organization, off-farm income, output price, use of improved groundnut variety, and access to transport. We recommend that strategies and policies aiming at promoting smallholder commercialization should focus on providing rural infrastructure, market-oriented extension services, and forming farmer groups for collective marketing.

Keywords:

• Market participation
• probit model
• generalised linear model
• smallholder farmers
• Northern Ghana

PUBLIC INTEREST STATEMENT

Groundnut is one of the important legumes grown in Ghana and SSA at large. About 90% of groundnut production is done by smallholder farmers in the Northern part of Ghana. Irrespective of this huge groundnut production in the region, the incidence of poverty is still high relative to other regions. One of the promising ways to remove farmers from chronic poverty is by building their capacity to participate in the output market. Meanwhile, the groundnut market participation in Ghana is low and this could be influenced by policy and household-specific factors. Our study seeks to identify the determinants of groundnut market participation in Northern Ghana. The most significant determinants of market participation decision and intensity of participation in the groundnut market are extension service, distance to output market, farmer-based organization, off-farm income, output price, use of improved groundnut variety, and access to transport. We recommend that policies aiming at promoting smallholder commercialization should focus on providing rural infrastructure, market-oriented extension services, and forming farmer groups for collective marketing.

Disclosure statement

No potential conflict of interest was reported by the authors.

Availability of data and material

The authors want to declare that they can submit the data at any time based on the publisher’s request.

Additional information

Funding

The authors received no form of funding for this research work. The research was self-funded.

Notes on contributors

Dominic Tasila Konja

Dominic Tasila Konja is currently a PhD candidate in the field of Agricultural Economics at the University of Kiel, Germany. He obtained both his MPhil. Agricultural Economics and BSc. Agribusiness from the University for Development Studies, Ghana. His main research interest includes adoption, agricultural productivity, agribusiness and value-chain analysis, climate change economics, and welfare economics.

Franklin N. Mabe

Franklin N. Mabe is a Senior Lecturer in the Department of Agricultural and Resource Economics, University for Development Studies. He is an Agricultural and Resource Economist with extensive experience in teaching, research and development work. Most of his research is in the area of agricultural productivity analysis, impact evaluation of projects, econometric modelling, climate change economics, agricultural policy analysis.