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Market Participation and Farm Profitability: The Case of Northern Ghana

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  • Agness Mzyece

Abstract

This study examines the effect of quantity sold (sales volume) on profitability of market participating smallholder farmers in northern Ghana. Market participation has been shown to be important for increasing incomes and improving production efficiency for farm households but still remains low in SSA. While agribusiness and development experts generally advocate for more intensive market participation, it is not clear if selling more results in more profits for smallholder farmers in remote markets that are prone to exorbitant transaction costs. The data used in this study is from the APS survey conducted in 2013 and 2014 in Northern Ghana which had a sample size of 527. The study is based on the theory of profit maximization, in which separability is inferred from observed market participation. OLS regression is used for empirical estimation after rejecting the hypothesis of endogeneity in the model. Mean gross margin/ kg across four groups of farmers ranked by quantity sold is also statistically examined. The results confirm the existence of economies of scale and also show that different crops have different effects on profitability. The results also show that although unambiguously positive, the relationship between quantity sold and profitability may not be linear.

Suggested Citation

  • Agness Mzyece, 2021. "Market Participation and Farm Profitability: The Case of Northern Ghana," Sustainable Agriculture Research, Canadian Center of Science and Education, vol. 10(2), pages 1-1, December.
    • Handle: RePEc:ibn:sarjnl:v:10:y:2021:i:2:p:1
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    References listed on IDEAS

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    1. Nigel Key & Elisabeth Sadoulet & Alain De Janvry, 2000. "Transactions Costs and Agricultural Household Supply Response," American Journal of Agricultural Economics, Agricultural and Applied Economics Association, vol. 82(2), pages 245-259.
    2. Omiti, John M. & Otieno, David Jakinda & Nyanamba, Timothy O. & McCullough, Ellen B., 2009. "Factors influencing the intensity of market participation by smallholder farmers: A case study of rural and peri-urban areas of Kenya," African Journal of Agricultural and Resource Economics, African Association of Agricultural Economists, vol. 3(1), pages 1-26, March.
    3. Tackie, Nii O. & Findlay, Henry J. & Baharanyi, Ntam, 1998. "Farm Products Marketing Practices by Limited Resource Farmers," Journal of Agribusiness, Agricultural Economics Association of Georgia, vol. 16(1), pages 1-9.
    4. Foreman, Linda F. & Livezey, Janet S., 2003. "Factors Contributing To Financially Successful Southern Rice Farms," 2003 Annual Meeting, February 1-5, 2003, Mobile, Alabama 35215, Southern Agricultural Economics Association.
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    1. Obed Quaicoe & Fafanyo Asiseh & Anthony Baffoe‐Bonnie & John N. Ng'ombe, 2024. "Small farms in North Carolina, United States: Analyzing farm and operator characteristics in the pursuit of economic resilience and sustainability," Applied Economic Perspectives and Policy, John Wiley & Sons, vol. 46(1), pages 13-31, March.

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    JEL classification:

    • R00 - Urban, Rural, Regional, Real Estate, and Transportation Economics - - General - - - General
    • Z0 - Other Special Topics - - General

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