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Linkages between the farm and nonfarm sectors at the household level in rural Ghana: a consistent stochastic distance function approach

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  • Gustavo Anríquez
  • Silvio Daidone

Abstract

This article explores the effects within households of an expanding rural nonfarm (RNF) sector in Ghana. We ask whether the growing RNF sector allows for economies of diversification within farms, how it affects household input demands, and whether it has measurable effects in overall household production efficiency. We explore the intrahousehold linkages between agricultural and RNF activities, first assuming perfectly competitive input and output markets and then with market failures, in particular missing labor and credit markets. We then measure these linkages using a household level input distance function, finding high levels of inefficiency in Ghanaian farms. Also, there are cost‐complementarities between the RNF sector and the agricultural sector, particularly with food crops in which the poorest tend to specialize. The expansion of the RNF sector increases demand for most inputs including agricultural land. Finally, we show that smaller farms tend to be more efficient, and that RNF output is helping the farm household to become more efficient, but the latter result is not robust.

Suggested Citation

  • Gustavo Anríquez & Silvio Daidone, 2010. "Linkages between the farm and nonfarm sectors at the household level in rural Ghana: a consistent stochastic distance function approach," Agricultural Economics, International Association of Agricultural Economists, vol. 41(1), pages 51-66, January.
  • Handle: RePEc:bla:agecon:v:41:y:2010:i:1:p:51-66
    DOI: 10.1111/j.1574-0862.2009.00425.x
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    File URL: https://doi.org/10.1111/j.1574-0862.2009.00425.x
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    References listed on IDEAS

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    Citations

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    Cited by:

    1. Katia Alejandra Covarrubias, 2015. "The role of crop diversity in household production and food security in Uganda: A gender-differentiated analysis," FOODSECURE Working papers 32, LEI Wageningen UR.
    2. Musa Hasen Ahmed & Kumilachew Alamerie Melesse, 2018. "Impact of off-farm activities on technical efficiency: evidence from maize producers of eastern Ethiopia," Agricultural and Food Economics, Springer;Italian Society of Agricultural Economics (SIDEA), vol. 6(1), pages 1-15, December.
    3. Gustavo Anríquez & Silvio Daidone, 2010. "Linkages between the farm and nonfarm sectors at the household level in rural Ghana: a consistent stochastic distance function approach," Agricultural Economics, International Association of Agricultural Economists, vol. 41(1), pages 51-66, January.
    4. Benjamin Tetteh Anang, 2017. "Effect of non-farm work on agricultural productivity: Empirical evidence from northern Ghana," WIDER Working Paper Series wp-2017-38, World Institute for Development Economic Research (UNU-WIDER).
    5. Zhu, Zhen & Xu, Zhigang & Shen, Yueqin & Huang, Chenming & Zhang, Yaoqi, 2019. "How off-farm work drives the intensity of rural households' investment in forest management: The case from Zhejiang, China," Forest Policy and Economics, Elsevier, vol. 98(C), pages 30-43.
    6. Sènakpon F.A. Dedehouanou & Dugassa Aichatou Ousseini & Abdoulaziz Laouali Harouna & Jabir Maimounata, 2015. "Spillovers from Off-farm Self-Employment Opportunities in Rural NIGER," Working Papers 2015/03, Maastricht School of Management.
    7. Salami, A. & Kounagbe Lokonon, B.O., 2018. "Entrepreneurship and Farm Profit in Rural Niger," 2018 Conference, July 28-August 2, 2018, Vancouver, British Columbia 277015, International Association of Agricultural Economists.
    8. Shashidhara Kolavalli & Elizabeth Robinson & Guyslain Ngeleza & Felix Asante, 2012. "Economic Transformation in Ghana: Where Will the Path Lead?," Journal of African Development, African Finance and Economic Association (AFEA), vol. 14(2), pages 41-78.
    9. Dedehouanou, Sènakpon Fidèle Ange & Araar, Abdelkrim & Ousseini, Aichatou & Harouna, Abdoulaziz Laouali & Jabir, Maimounata, 2018. "Spillovers from off-farm self-employment opportunities in rural Niger," World Development, Elsevier, vol. 105(C), pages 428-442.
    10. Benjamin Tetteh Anang, 2017. "Effect of non-farm work on agricultural productivity: Empirical evidence from northern Ghana," WIDER Working Paper Series 038, World Institute for Development Economic Research (UNU-WIDER).
    11. Dzanku, Fred Mawunyo, 2018. "The gender and geography of rural off-farm employment and input intensification in five sub-Saharan African countries," Food Policy, Elsevier, vol. 75(C), pages 37-51.
    12. Paul Nkegbe & Abdelkrim Araar & Benjamin Abu & Yazidu Ustarz & Hamdiyah Alhassan & Edinam Dope Setsoafia & Shamsia Abdul-Wahab, 2018. "Rural Non-Farm Engagement and Agriculture Commercialization in Ghana: Complements or Competitors?," Working Papers PMMA 2018-07, PEP-PMMA.

    More about this item

    JEL classification:

    • D13 - Microeconomics - - Household Behavior - - - Household Production and Intrahouse Allocation
    • Q12 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Agriculture - - - Micro Analysis of Farm Firms, Farm Households, and Farm Input Markets

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