The contribution of non-farm income to Agriculture: the Case of Pineapple Production in Akuapem South Municipality

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This study investigates the contribution of non-farm income to agricultural activities; specifically examining the use of non-farm income in financing the purchase of farm inputs for pineapple production in the Akuapem South Municipality. The study focuses on exploring the determinants of non-farm income, the share of non-farm income within farming households, the factors determining its use in farming activities and recommends the measures to be undertaken to improve the access to investment capital for farming activities, including the use of non-farm income. The study utilizes survey data collected from a sample of 92 farmers from three settlements within the municipality, namely Fotobi, Amanfro and Pokromu. A stepwise multiple regression model is used to estimate input use in the pineapple production and fertilizer is employed as a proxy. The results of the study indicate that farmers* own cash is the most important source of capital financing. Furthermore, the findings of the study show that non-farm income is associated with an increase of fertilizer use and thus suggesting the use of non-farm income in the purchase of farm inputs within households engaged in non-farm activities, fligh levels of education and formal employment have also been found to determine the level of non-farm income. On the other hand, distance from the town centers influences the cost of production in the pineapple farming. Following the findings of the study, ways to improve liquidity of small scale farmers and the entire farming sector are proposed. These include improving access of farmers to affordable credit financial schemes and increase market access and competitiveness of the non-farm activities. On the other hand, as non-agricultural income has become more substantial among farming households, a new perspective on the linkages between farm and non-farm economy need to be created. This study proposes inclusion of non-farm activities in the current agricultural extension services. In order to sustain these measures, keeping of updated statistics on non-farm and farm sectors; and increased research on the linkages between non- farm and farm sectors are also recommended. The study concludes that non-farm income relaxes liquidity constraints in farming households; however, well functioning credit facilities for small scale farmers are required for improving investment capacities, thus ensuring better and sustained income of the farmers and the development of the nation as a whole.
A thesis submitted to the Department of Planning, Kwame Nkrumah University of Science and Technology in partial fulfilment of the requirements for the degree of Master of Science.