Abstract
Instability in smallholder farmers' income in developing countries due to unstable farm prices has been a challenge for farmers and agricultural policymakers over the years. Sustained price stabilization mechanisms are mostly lacking. In some countries, output price support has been initiated to stabilize incomes and as an incentive to enhance farmer investment and boost production. This paper investigates the impacts of output price support on smallholder farmers' income in Ghana, using a household and farm-level data from 252 beneficiaries and 268 non-beneficiaries of buffer stock operations in Ghana. We applied the Coarsened Exact Matching and Propensity Score Matching methods to balance the data among the two groups. We estimate the smallholder farmer income effect from participating in buffer stock operations by combining the matching methods in a regression framework. The results affirm that buffer stock operations increase the incomes of participating smallholder farming households by at least 12%, providing evidence that output price support via buffer stocks is a critical tool for improving incomes and alleviating poverty among farmers in Ghana. The results further indicate that age, gender, access to market, and use of extension services, as well as transport and packaging costs, drive the participation of smallholder farmers in the buffer stock operations in Ghana. The findings are relevant to local policymakers and development partners who develop tailored interventions to stabilize and increase income for smallholder maize farmers in Ghana.
Highlights
In Asia and sub-Saharan Africa, incomes of smallholder farmers are low and characterized by sharp fluctuations (Fanzo, 2017)
The results show that output price support (OPS) implemented via the buffer stock operations (BSO) intervention has positively impacted on the total farm income and farm income/output of the smallholder farmers
We used household and farmlevel data with matching methods (CEM and propensity score matching (PSM)) to better compare farmers who participate in BSO and those who do not as we estimate the effect of BSO on smallholder farmers' income
Summary
In Asia and sub-Saharan Africa, incomes of smallholder farmers are low and characterized by sharp fluctuations (Fanzo, 2017). In Ghana, the government has implemented a price support policy via buffer stock operations for a decade to protect smallholder farmers' income. The third scheme referred to as output price support (OPS), which is the focus of this study, is a system of agricultural marketing intervention where the government purchases farm produce from farmers at a price higher than the actual market price, providing farmers with price subsidy on their produce to support their income (Allen, 2016) This type of price support has similarities with the measure under the CAP in the EU and is common in sub-Saharan Africa (Demeke et al, 2012). The process implies that the operations have to be concluded within one season; otherwise, the prices for producers are negatively influenced
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