Contract farming and riceproduction efficiency in Ghana

Abstract

Purpose–Even though many studies identify positive effects of contract farming (CF) on the livelihood offarmers, the use of CF as a tool to increase farm performance is unsettled debate. Information on CF is relativelynot available in staple food chains. Theoretical considerations have shown that there are challenges inemploying CF in staple food chains such as rice. With the increasing trend of rice CF in Ghana, it is very criticalto establish its performance in rice production in Ghana. It is therefore imperative to analyse the impact of CFon the performance of smallholder rice farmers.Design/methodology/approach–A survey was conducted where 350 rice farmers selected through a stratifiedsampling technique using structured questionnaires were interviewed. Descriptive and inferential statisticsincluding stochastic frontier analyses and endogenous treatment effect regression were used to analyse the data.Findings–The results from the endogenous treatment effect regression model show that CF improves ricefarmers’technical, allocative and economic efficiencies by 21, 23 and 26%, respectively. Farm size and CF wereidentified as common factors influencing technical, allocative and economic efficiency measures of the farmerspositively. It further identified age of farmer, educational level and household labour as factors influencingfarmers’participation in CF positively.Research limitations/implications–It is recommended that CF is a good tool to enhance rice productionefficiency, and hence, farmers should be encouraged to participate in CF as strategy to enhance the local riceproduction in Ghana.Social implications–The outcome of this study has the potential to influence rice production in the country.The country is a net importer of rice and just about 35% self-sufficient in rice production.Originality/value–This study is the first to assess performance of CF in rice crop production in Ghana andalso one of the few to use efficiency as a performance measure.