Do Price Incentives Work in Incomplete Food Agricultural Marketing Systems? A Case Study in the Hohoe District, Ghana

Abstract

The debate on low subsistence smallholder food agricultural production in Ghana in particular and sub-Saharan Africa in general largely blamed supply-side constraints. Policy prescriptions advocating sector reforms and transformation consequently focused on supply-side solutions and only acknowledged demand-side limitations. Presumed in strategy-choices was subsistence food producers would necessarily respond to price incentives to increase food productivity. This paper interrogates the link between price incentives and increased subsistence food productivity in rural agricultural marketing systems by examining issues in subsistence agriculture in Hohoe District of Ghana. Findings revealed that a sustained expanded food production output is a function of demand and supply. A critical incentive to a sustained expanded food production output by way of making food agriculture a poverty reduction tool is, therefore, a sustained increase in output demand. The paper concludes that price incentives do not work in incomplete food agricultural marketing systems. Implied is that making food agriculture an effective poverty reduction tool requires both medium – and long-term state-led investments in processing and food market outlet development. This position revives the argument that the role of the state in an economy cannot be eliminated as has been proven in more fully developed western agricultural markets. As such, any free-market policy that aims at boosting food agriculture productivity must necessarily go simultaneously with the development of food agricultural output markets.

Keywords: Food agriculture, Price incentives, Marketing systems, Productivity, Policy.