Coordination and Impact of Agrifood Value Chains on Farm Performance: Evidence from Smallholder Rice Farmers in Northern Ghana
The study examines the role of coordination mechanisms on the production and market performance among smallholder farmers in Ghana. First, it examines the impact of vertical coordination mechanisms-written contracts, verbal contracts and spot market transactions – on farm performance, using multinomial BFG model to account for selectivity bias. Second, the study employs an endogenous switching regression model to examine the impact of farmer groups and collective marketing on farm net revenues of smallholder rice farmers. Third, the study examines the impact of farmer groups on farm yields and technical efficiency of farmers. Finally, it explores the role of inclusive value chains and social networks on smallholder market performance, using a treatment effects model to account for selection bias. The results reveal that vertical coordination mechanisms increase farm performance, with the highest gains stemming from written contract use. Also, farmers who are members of farmer groups and participated in collective marketing obtained higher output prices, and also incurred lower input costs. Participants in farmer groups and collective marketing earned significantly higher farm net revenues than non-participants. Farmer groups also improve farm yields and technical efficiency. The study reveals that inclusive value chain participation increases paddy prices, quantity traded and net returns. Similarly, horizontal social networks members benefit from improved market performance. Also, inclusive value chain participation decisions and market performance are significantly influenced by social networks, distance to markets, mobile phone ownership and access to credit. These findings call for development policy measures to promote contractual engagement in smallholder output transactions, formation and development of farmer groups and encouraging collective marketing, as well as strengthen social networks for improved value chain competiveness and efficiency.