Potential impact of groundnut production technology on welfare of smallholder farmers in Ghana

What is it about?

This study was conducted to assess the potential impact of applying a new groundnut planting density on welfare of smallholder farmers in northern Ghana. We used data from on-farm experiments, focus group discussions, and a household survey. We followed three steps in our analysis. First, we conducted cost-benefit analysis in which we showed the economic advantage of the new technology over the farmers’ practice. Second, we predicted adoption rates along timeline using the Adoption and Diffusion Outcome Prediction Tool (ADOPT). Third, using the results of the first and the second steps, we estimated the potential impact of the technology on poverty at household level using a combination of methods such as economic surplus model and econometric model. The cost-benefit analysis shows that increasing plant density increases farmers’ financial returns i.e., the benefit-cost-ratio increases from 1.05 under farmers’ practice to 1.87 under the best plant density option, which is 22 plants/sqm. The adoption prediction analysis shows that the maximum adoption rate for the best practice will be 62% which will take about nine years to reach. At the maximum adoption rate the incidence of extreme poverty will be reduced by about 3.6% if farmers have access to the international groundnut market and by about 2% if they do not have. The intervention will also reduce poverty gap and poverty severity. The results suggest that policy actions which can improve farmers’ access to the international market will enhance farmers’ welfare more than the situation in which farmers have access to domestic markets only. Furthermore, promoting a more integrated groundnut value-chain can broaden the demand base of the produce resulting in higher and sustainable impact of the technology on the welfare of groundnut producers and beyond.

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Photo by Jake Gard on Unsplash

Photo by Jake Gard on Unsplash

Why is it important?

Several ex-ante impact studies show that agricultural technology adoption would have positive economic benefits to smallholder farmers in Africa. The studies computed the magnitude of the aggregate or market level economic benefit or surplus associated with adoption of new agricultural technologies, but they did not allocate the benefits to potential market participants including poor producers and consumers. While it is difficult to make a priori generalizations about the impacts of agricultural technologies on the poor and distributional benefits are context specific, limited studies are available to justify that the existing efforts to promote improved agricultural technologies are pro-poor. This study addresses this gap of previous studies. Specifically, we estimate the potential impact of a new groundnut plant density on welfare of smallholder farmers at the household level and show the pattern of poverty reduction during the expected years of adoption. The results of our impact estimations are based on a systematic prediction of adoption of the technology which is not the case in the previous ex ante impact studies.

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