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

Abraham Zakaria (Agricultural and Resource Economics, University for Development Studies, Tamale, Ghana)
Shaibu Baanni Azumah (Solidaridad Network, West Africa, Accra, Ghana)
Gilbert Dagunga (Agricultural and Resource Economics, University for Development Studies, Tamale, Ghana)
Mark Appiah-Twumasi (Agricultural and Resource Economics, University for Development Studies, Tamale, Ghana)

Agricultural Finance Review

ISSN: 0002-1466

Article publication date: 6 January 2021

Issue publication date: 8 July 2021

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

Citation

Zakaria, A., Azumah, S.B., Dagunga, G. and Appiah-Twumasi, M. (2021), "Profitability analysis of rice production: a microeconomic perspective from northern Ghana", Agricultural Finance Review, Vol. 81 No. 4, pp. 535-553. https://doi.org/10.1108/AFR-07-2020-0108

Publisher

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Emerald Publishing Limited

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