Government agricultural subsidy programmes impact on rice production in ghana from 2005 to 2018

Abstract

Agricultural subsidies are considered an essential tool of policy to improve food production (or productivity), farmers’ income and  welfare in developing countries. There is no doubt that the role of subsidies programmes is important for farmers or rural areas, but impacts of subsidies are different from crops, inputs, government programmes and so on. Over the past years, Ghana’s agricultural sector has experienced policies changes such as Ghana Shared Growth and Development Agenda (GSGDA I and II), Food and Agricultural Sector Development Policy (FASDEP I and II) and Medium Term Agricultural Sector Investment Plan (METASIP I and II) that support improving agricultural productivity, creating jobs and increasing income. The government of Ghana recognizes that food and nutrition are high priorities and conducts various subsidy programmes of agricultural inputs and outputs. Rice is the second most consumed crop in Ghana. Rice consumption in Ghana would keep increasing due to the growing population, urbanization and change in consumer lifestyles or food preference. This study analyzed the impacts of different subsidy programmes on rice production across
the 10 regions in Ghana. The data used in the study starts from 2005 to 2018. The first estimation model evaluated the impacts of before-subsidies and after-subsidies on rice production in Ghana. The results from the first model showed that rice production increased after subsidies. Specifically, fertilizer after subsidies had a positive impact on rice production. However, labor after subsidies did not have statistically significant effects on rice production. The second estimation model compared two different subsidy
programmes: Fertilizer Subsidy Programme (FSP) and Planting for Food and Jobs (PFJ). This study found fertilizer with FSP was more effective than with PFJ; however, labor with FSP was less effective with PFJ. The programme of FSP was intensively focused on fertilizer; however, the programme PFJ aims to cover a diverse range of fertilizer, seed, extension services, marketing and so on.

Key words: Rice, Ghana, Fertilizer, Labour, Subsidy programme, Random effects