Godwin Debrah Michigan State University 3/24/15 Is farm size inversely related to Productivity in Ghana? Placing tests of the “IR” hypothesis in the broader context of development policy challenges in Africa Godwin Debrah Michigan State University 3/24/15

Introduction and Motivation There has been a renewed interest in the IR because of Rising doubts about small-holder led Agricultural growth in African (Collier and Dercon, 2009) Recent trends in land acquisition which is affecting farm structure in Africa (Jayne et al, 2014)

Introduction and Motivation continued Despites these concerns, little is known about the relationship between farm size and productivity among medium and large scale farmers Medium scale farmers ( 5 to 50 hectares) Large scale farmers (above 50 hectares) Previous policy prescriptions relied on data on small-holder farmers

Recent studies Measurement Error- Carletto et al (2011), Holden and Fisher (2013) Omitted Variables bias- Chen et al (2011) Inverse relationship between scale and household labor use- Larson et al (2012) Market imperfections- Ali and Deininger (2014)

Why Ghana? One of the focus countries in Jayne et al (2014) Emerging trend of land acquisition and farm structure Remaining arable land Employment effects- short and medium term Little or no work has been done on IR in Ghana

More intervention in Ghana

Data and Methods Data on 498 farmers in Southern Ghana From four districts Bibiani Anhwiaso- Western region Offinso north- Ashanti region Afram Plains south- Eastern region Nkwanta North – Volta region

Data continued Table of data points by district

Methods 𝑦 𝑖 =𝛼+𝛽𝑙𝑛 𝐿 𝑖 + 𝑋 ′ 𝛾+ 𝑖=1 3 𝛿 𝑖 + 𝜀 𝑖 𝑦 𝑖 =𝛼+𝛽𝑙𝑛 𝐿 𝑖 + 𝑋 ′ 𝛾+ 𝑖=1 3 𝛿 𝑖 + 𝜀 𝑖 𝑦 𝑖 is the measure of productivity 𝐿 𝑖 is Area planted in acres 𝑋 ′ is a vector of covariates 𝑖=1 3 𝛿 𝑖 district dummies 𝜀 𝑖 is the error term

Methods continued Measures of productivity (includes valued family, communal labor, and fixed costs) Net value of production per acre planted Cost per metric ton of maize produced Ratio of net value of production to household members time spent on the farm Total factor productivity (TFP)

Descriptive results

Regression results

Regression results contd.

Regression Results contd

Some Graphs Net value of production on Area planted in Acres Net value of production on Landholdings in Acres Net value of production on Area planted in Acres

More graphs Cost of maize production on Landholdings in Acres Cost of maize production on Area planted in Acres

More graphs Family labor productivity on Area planted in Acres Family labor productivity on Landholdings in Acres Family labor productivity on Area planted in Acres

More graphs Total factor productivity on landholding in Acres Total factor productivity on Area planted in acres

Conclusions The relationship between farm size and productivity to some extent depends on the measure of productivity Net value of production shows no relationship after labor demand is controlled for Non-smallholders are efficient with cost of producing a metric ton of maize Total factor productivity upholds the IR (needs panel analysis?)

Conclusions Labor market imperfections play a significant role in the observed relationship between farm size and productivity However Findings on the relationship between production efficiency and farm size while relevant should not be the decisive factor in guiding agricultural development and land policies in Africa since there are other considerations; employment effects, nonfarm growth

Appendix Family labor-land ratio against landholdings Family labor-land ratio against area planted

Appendix Capital-land ratio against landholdings Capital-land ratio against area planted

Appendix Capital-family labor ratio against area planted against landholdings Capital-family labor ratio against area planted