Linkages between the farm and nonfarm sectors at the household level in rural Ghana: a consistent stochastic distance function approach

Anríquez, Gustavo

Keywords: technical efficiency, Ghana, Rural nonfarm sector, Input distance function, Cost complementarities

Abstract

This article explores the effects within households of an expanding rural nonfarm (RNF) sector in Ghana. We ask whether the growing RNF sector allows for economies of diversification within farms, how it affects household input demands, and whether it has measurable effects in overall household production efficiency. We explore the intrahousehold linkages between agricultural and RNF activities, first assuming perfectly competitive input and output markets and then with market failures, in particular missing labor and credit markets. We then measure these linkages using a household level input distance function, finding high levels of inefficiency in Ghanaian farms. Also, there are cost-complementarities between the RNF sector and the agricultural sector, particularly with food crops in which the poorest tend to specialize. The expansion of the RNF sector increases demand for most inputs including agricultural land. Finally, we show that smaller farms tend to be more efficient, and that RNF output is helping the farm household to become more efficient, but the latter result is not robust.

Más información

Título de la Revista: AGRICULTURAL ECONOMICS
Volumen: 41
Número: 1
Editorial: Wiley
Fecha de publicación: 2010
Página de inicio: 51
Página final: 66
Idioma: English