MARKET PARTICIPATION AND ITS EFFECTS ON OUTPUT AND COST EFFICIENCY OF RICE PRODUCTION IN THE UPPER EAST REGION, GHANA

Abstract

Market participation in agriculture has substantial prospects, essential for providing better incomes and sustainable livelihoods for small-scale rice farmers. This study, therefore, examined factors that influence the level of market participation among rice farmers in the Upper East Region and also estimated how market participation affects the level of production and cost efficiency of rice farmers. A multi stage random sampling procedure was employed to select 400 farmers (200 FBO members and 200 non-members) from four districts in the region (Boils South, Kassena-Nankana Municipal, Bolgatanga municipal and Garu district). A semi-structured questionnaire was used to collect data during the 2018 farming season. The Fractional logit model was used to estimate the factors influencing the level of market participation. The results from this study revealed that the following factors were positively significant in influencing the level of market participation: output levels, prices offered by buyers, the reason for cultivating rice, contract farming, access to transportation and cultivation of rice as a main crop. While the following were negatively significant in determining the level of participation: household consumption, farmers’ non involvement in price setting, years of rice farming experience, distance to market, and farmers’ ability to choose between buyers. Furthermore, market participation was also found to be very significant in determining the cost efficiency of farmers, as well as their level of production in the region. The study concludes that rice is mostly produced as a cash crop in the Upper East Region and so recommends that government ensures the existence of adequate markets and better prices that would motivate farmers to increase production so as to boost economic growth.