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Linkages between farm and non-farm sectors at the household level in rural Ghana: A consistent stochastic distance function approach

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  • Anríquez, Gustavo
  • Daidone, Silvio

Abstract

In the light of an expanding rural non-farm (RNF) sector in developing rural economies, this paper explores the effects of this expansion within the household. Using rural Ghana as a case study this paper explores if the RNF economy allows for economies of diversification within farms; how input demands, agricultural-specific and shared, are transformed by the expansion of this sector; and if this expansion has measurable effects in overall household production efficiency. We first explore the characteristic of the intra-household linkages (technological and welfare driven) between the agricultural and RNF sectors both assuming perfectly working input and output markets, and assuming market failures, in particular missing labor and credit markets. We then try to measure the identified linkages by estimating a household level input distance function. This function is estimated consistently without making log-transformations as has been previously done in the literature. Our empirical analysis suggests that there are 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

  • Anríquez, Gustavo & Daidone, Silvio, 2008. "Linkages between farm and non-farm sectors at the household level in rural Ghana: A consistent stochastic distance function approach," ESA Working Papers 289031, Food and Agriculture Organization of the United Nations, Agricultural Development Economics Division (ESA).
  • Handle: RePEc:ags:faoaes:289031
    DOI: 10.22004/ag.econ.289031
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    Cited by:

    1. 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).
    2. 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.
    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. 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.
    5. 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.
    6. Kaat Van Hoyweghen & Goedele Van den Broeck & Miet Maertens, 2020. "Employment Dynamics and Linkages in the Rural Economy: Insights from Senegal," Journal of Agricultural Economics, Wiley Blackwell, vol. 71(3), pages 904-928, September.
    7. 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.
    8. 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).
    9. 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.
    10. Lu, Wencong & Horlu, Godwin Seyram Agbemavor Kwasi, 2019. "Transition of small farms in Ghana: perspectives of farm heritage, employment and networks," Land Use Policy, Elsevier, vol. 81(C), pages 434-452.
    11. Adam Salifu & Godwin Seyram Agbemavor Horlu, 2022. "Nonfarm employment and mobility of farmers into different income groups: evidence from rural Ghana," SN Business & Economics, Springer, vol. 2(1), pages 1-25, January.
    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.
    13. Paul Kwame Nkegbe & Abdelkrim Araar & Benjamin Musah Abu & Hamdiyah Alhassan & Yazidu Ustarz & Edinam Dope Setsoafia & Shamsia Abdul-Wahab, 2022. "Nonfarm activity and market participation by farmers in Ghana," Agricultural and Food Economics, Springer;Italian Society of Agricultural Economics (SIDEA), vol. 10(1), pages 1-23, December.
    14. 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.
    15. 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.
    16. 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.

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    More about this item

    Keywords

    Agricultural and Food Policy; Farm Management;

    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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