Annual Forum Papers

Prospects and Challenges of Agricultural Technology Market Linkage under Liberalization in Ghana: Evidence from a Micro-Data

  • Year: 2004
  • Author(s): Tsegaye Yilma Dessalegn;Ernst Berg; Thomas Berger
  • Countries and Regions: Southern African Development Community (SADC)

There is a general consensus that bad economic policies, among other factors, are to blame for the poor performance of economies in sub Saharan African (SSA). However, there is no similar consensus on the effect of economic reforms on poverty alleviation, a primary goal of any economy in the region. This paper looked into the effect of macro-economic reforms, particularly the removal of subsidized agricultural credit for irrigator farmers in Ghana, a pioneering reform country in SSA. A theoretical model of this scenario is constructed in which it is shown that, under multiple market imperfection, farmers resort to alternative financial sources to finance irrigation. Particularly in the presence of off-farm alternative, farmers divide their labor resource between irrigation farming and off-farm employment. The long term implication of a predominant dependence on off-farm income for financing irrigation farming will be an induced increase in family size. This model is subsequently tested and validated with a household data collected from northern Ghana. Household labor endowment and off-farm participation have a positive and significant effect on household irrigation decisions. This implies that, irrigation and off-farm employment are complimentary activities, which indicates a possible induced family size increase.