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

Abstract

PurposeThe 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/approachUsing 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.FindingsThe 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/implicationsThe 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/valueThis 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.

Rice planting technologies and farm performance under different production systems in Ghana

“…For instance, Antwi and Aborisade (2017) used age, gender, education, household size, farm size, price of inputs such as land, fertilizer, weedicides, labour and price of output to examine the factors influencing rain-fed rice farming of smallholder producers and profitability in Ghana. Zakaria et al (2021) used farm size, off-farm income, membership in farmer organizations, contacts with extension agents and other socio-demographic characteristics to assess rice farmers' participation in irrigation in northern Ghana. Donkoh (2020) used sex, age, education, experience, farm size, off-farm, credit, farmer association membership and distance to farm to investigate the adoption of improved rice production technologies in northern Ghana.…”

“…A number of studies have investigated the determinants of farmers' choice of rice production systems and adoption of improved rice technologies in Ghana, SSA and beyond (Zakaria et al, 2021;Donkoh, 2020;Abubakar et al, 2019;Awuni et al, 2018;Hagos et al, 2018;Antwi and Aborisade, 2017;Ghimire et al, 2015;Yemane, 2014). These empirical studies used socio-demographic, farm level and institutional characteristics, among others, of rice farmers to determine their choice of farming system and improved rice technologies.…”

Determinants of Profit Efficiency among Rice Farmers in Kilombero Valley, Morogoro, Tanzania

“…Profit efficiency studies on rice crops that have been conducted by different researchers in different parts of sub-Saharan African Economies indicated most studies being from West Africa than other parts of Africa. This is attributable to the fact that it is the leading region in rice production [15, 16,42,43,44] (Tijani and Bakari, 2015). Among various studies on profit efficiency for the rice, crop stated previously and even from other areas even outside the African continent, social economic, and institutional factors had an influence on efficiency positively and negatively depending on the respective contexts.…”

“…The stochastic frontier approach and data envelopment analysis approach (DEA) is by far the common techniques used by different researchers in analyzing profit efficiency where the Translog and Cobb Douglas functions are popularly incorporated in the analysis [46,36,33,42,49,22]. The stochastic frontier approach (SFA) is parametric, allows for hypothesis testing, and is used with a single crop case.…”

Lowland Rice (Oryza sativa L.) Farming Performance in the Rice Production Center of Central Java Province

“…In a study by [8], the profitability of rice production in Ghana is assessed using the cost-benefit ratio. This evaluation is based on the household farm budget principle, where the net rice farm income (NRFI) is determined by deducting variable costs (VC) and fixed costs from the gross rice farm income (GRFI).…”