Profitability analysis of rice production: a microeconomic perspective from northern Ghana

Abraham Zakaria, Shaibu Baanni Azumah, Gilbert Dagunga and Mark Appiah-Twumasi

Agricultural Finance Review, 2021, vol. 81, issue 4, 535-553

Abstract: Purpose - The purpose of this study is to estimate the profitability of rice production for irrigated and rain-fed farmers; determine the factors that influence farmers' decision to participate in irrigation and the impact of irrigation on rice farmers' profitability in northern Ghana. Design/methodology/approach - Using cross-sectional data collected from 543 rice farmers in northern Ghana, the study employed both non-parametric (cost benefit analysis) and parametric (endogenous switching regression) approaches to analyse the data. Findings - The empirical results reveal a significant difference between the profits of irrigated (GHS 2442.30) and rain-fed farmers (GHS 576.20), as well as the cost-benefit ratios between irrigators (2.53) and rain-fed farmers (1.37). Also, participation in irrigation was found to be influenced by relatively small farm size and off-farm income; while profitability was influenced by membership in a farmer-based organization, access to agricultural extension services and perception of decreasing rainfall intensity. Irrigation also had a positive significant net impact on profitability of rice production. Research limitations/implications - The results provide justification for development partners and the government of Ghana through the “one-village-one-dam” policy, to invest in irrigation in northern Ghana in order to improve household welfare as well as build resilience for sustainable production systems. Originality/value - This study is the first of its kind to provide a robust analysis of the difference in profits of rain-fed and irrigated rice farmers while estimating the determinants of Ghanaian farmers' choice of either of the regimes within a bias-corrected framework.

Keywords: Cost-benefit analysis; Endogenous switching regression; Profitability; Rice; Treatment effect; Ghana (search for similar items in EconPapers)
Date: 2021
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Persistent link: https://EconPapers.repec.org/RePEc:eme:afrpps:afr-07-2020-0108

DOI: 10.1108/AFR-07-2020-0108

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