Contract Farming and Smallholder Farmer Productivity in Northern Ghana: Does Farm Size Matter?

Abstract

Data seems to suggest that smallholder’s share of area under cultivation in Ghana and Africa in general, is declining while medium-scale farms are increasing rapidly. Without any empirical evidence, there is a perception that the steady rise in the share of farms in the medium-scale category would usher in an Asia-like green revolution, where technology revolution expanded access to modern inputs and led to a dramatic increase in farm productivity and food production. This study explored the question of whether changes in the scale of farm operations, from small to medium-sized farms led to an increase in farm productivity. The study used data from 420 maize farmers in Northern Ghana, and the estimation of naïve, semi-log, and stochastic frontier models, the paper tested the farm-size-productivity hypothesis and explored the factors that influence farm output and input use efficiency. The study found the presence of an inverse farm-productivity relationship in maize farming. While the value of farm output increased with farm size, input use efficiency followed a quadratic pattern where farms in the range of 1-10 acres (smallholder farms) were found to be more efficient in terms of output per unit input than medium-sized farms in the ranges of 11-50 acres. It can be concluded that smallholder farmers were not able to transfer their productive efficiency to medium-sized farms. This reality needs to be considered in the government’s agricultural modernisation policy.