Crop Diversification Improves Technical Efficiency and Reduces Income Variability in Northern Ghana

Agness Mzyece

No 266608, 2018 Annual Meeting, February 2-6, 2018, Jacksonville, Florida from Southern Agricultural Economics Association

Abstract: Crop diversification is a climate smart agricultural technique which helps improve resilience for farmers in the face of volatile weather due to climate change. Previous research on its effect on technical efficiency shows contrasting results (positive and negative effects). Other literature show that crop diversification has a positive impact on income variability. Is it possible that choosing crop diversification involves a tradeoff between efficiency and resilience (income variability) for rural smallholder farmers? It is likely that merging these two separate sets of previous literature, one on the effects of crop diversification on technical efficiency, and another on its effect on income variability, can provide valuable insights on the decision making process faced by a farmer considering to adopt crop diversification. So essentially, the question we try to answer in this study is what is the effect of crop diversification on technical efficiency and income variability on the same farm household of northern Ghana? Without addressing this question, policy makers cannot tell for sure if crop diversification is a good CSA option for their farmers, and if it is, they still may not know how to promote its adoption effectively. To answer our research question, we use the Agricultural production data from northern Ghana and employ a Cobb Douglas stochastic input distance function for efficiency, and ordinary least squares for income variability. The results show evidence against ‘tradeoff’. Crop diversification significantly improves efficiency and reduces income variability in northern Ghana so farmers do not have to give up efficiency for income stability or vice versa. Thus crop diversification is an ideal CSA strategy for promoting agricultural growth and resilience in northern Ghana. The data we use in this study has a maximum three crops, so our results cannot be generalized to farmers who grow more than three crops.

Keywords: Agribusiness; International Development; Production Economics (search for similar items in EconPapers)
Date: 2018-01-17
New Economics Papers: this item is included in nep-agr, nep-dev and nep-eff
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Persistent link: https://EconPapers.repec.org/RePEc:ags:saea18:266608

DOI: 10.22004/ag.econ.266608

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