EXAMINING THE DETERMINANTS AND EFFECTS OF CONTRACT FARMING ON FARM INCOME IN THE NORTHERN REGION OF GHANA

Abstract

The study sought to determine the factors that influence farmers’ decision to participate in contract farming as well as the effect of contract farming on farm income in the Northern Region of Ghana. It involved 230 crop farmers selected through multi-stage sampling procedure. A treatment effect model was estimated to determine the factors that influenced farmers’ participation in contract farming and its effect on farm income. The factors that positively influenced participation in contract farming were access to extension services and credit. However, farm size and off-farm income negatively influenced participation in contracting. In general, farmers who participated in contract farming had a higher income than their non-participating counterparts. Other factors that significantly influenced farm income positively were land, labour and fertilizers. Weedicide however impacted negatively on income, suggesting that it is being over-used. We recommend that farmers are supported to access the facilities that enable them to participate in contract farming such as credit and extension services. To increase their farm incomes, farmers also need support in increasing the levels of farm inputs such as land, labour and fertilizers. Farmers also need education on the accurate use of weedicides.