RURAL NON-FARM INCOME DIVERSIFICATION: IMPLICATIONS ON SMALLHOLDER FARMERS' WELFARE AND AGRICULTURAL TECHNOLOGY ADOPTION IN GHANA

Abstract

This study explored the potential impact of rural non-farm income diversification on households' welfare and adoption of Zai-technology (a proxy for agricultural technology adoption) using primary data collected from agricultural households in the Upper East region of Ghana. We used Propensity Score Matching (PSM) and Inverse-Probability-weighted Regression Adjustment (IPWRA) techniques to estimate welfare and Zai-technology impacts of non-farm income diversification. After controlling for differences in covariates, the results show that non-farm income diversification increases the likelihood of Zai-technology adoption and contributes to significant household welfare gains. We therefore suggest that the activities of agricultural extension services and farmer based organizations (FBOs) be enhanced as they facilitate the diversification of non-farm incomes, thereby increasing investment in productivity-enhancing technologies (Zai) and household welfare.