Effects of nucleus-farmer outgrower schemes on profitability among smallholder farmers: Empirical evidence from Northern Ghana
2020
Akuriba, George Agana | Tangonyire, Damian Felladam | Yildiz, Fatih
Nucleus farmer-outgrower schemes are contractual arrangements where a large farmer (nucleus farmer) who is well-resourced takes charge of smaller farmers by providing them with the necessary training on agronomic practices and some farm inputs for production. The study assesses the effects of nucleus farmer-outgrower schemes on profitability among smallholder farmers in Northern Ghana. A total of 330 smallholder farmers made up of 150 outgrowers and 180 non-outgrowers were interviewed using structured questionnaires. A comparative analysis is made between outgrowers and non-outgrowers. The study employs the binary logit regression model to identify the factors influencing participation in nucleus farmer-outgrower schemes and the propensity score matching technique to estimate the effect of nucleus farmer-outgrower schemes on profitability of smallholder farmers. The study reveals that the factors that significantly influence smallholder farmers’ participation in nucleus farmer-outgrower schemes are gender, marital status, farm size, membership of an FBO and extension contact. Gender and marital status of a farmer have negative influence on participation whilst farm size, membership of an FBO and extension contact have positive influence on participation. It was also revealed that nucleus farmer-outgrower schemes have significant positive effect on smallholder farmer’s gross margins, net margins and returns on investment. The study recommends that, nucleus farmers and other stakeholders who are involved in developing outgrower schemes or similar initiatives should take into consideration the social and demographic characteristics of the target farmers to enhance participation.
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