The Effects of Outgrower Scheme on Livelihoods of Smallholder Sorghum Farmers in Northern Ghana



Outgrower scheme (OGS) is widely articulated as an ideal option that can deal with subsistence farming practices of smallholder farmers (SHF) to approach their farming as a business. For OGS to attract SHF participation and lead to livelihoods enhancement, this study argues for strengthening extension services, guaranteed market and promotion of FBO formation as part of the OGS support to farmers. The study also advocates for integration of climate change mitigation services as part of the OGS package. The study combined quantitative and qualitative research methods to analyse the effects of OGS on the livelihoods of smallholder sorghum farmers in Northern Ghana. Specifically, the study examines factors influencing SHF participation in the OGS, the effects of OGS on their productivity, profitability, postharvest loss (PHL) and their vulnerability to climate change. The multistage sampling procedure was used to collect quantitative data from 516 sorghum outgrower farmers (treatment) and non-outgrower farmers (control) groups in Garu and Jirapa districts in the Upper East and Upper West regions of Ghana respectively. Using the probit regression model to determine factors influencing SHF participation in OGS, the results pointed to belonging to FBO, access to market and access to extensions services as key determinants. The study also found average productivity of 1,207kg/ha, profitability of GHS 270/ha and post-harvest losses (PHL) of 14% for the treatment group. For control group, the average productivity was 820kg/ha, profit losses of GHS 92/ha and PHL of 27%. The study further found the treatment group to be relatively vulnerable to climate change than the control group with their overall aggregate livelihood vulnerability index (LVI) of 0.393 and 0.386 respectively. (LVI closer to 1 denotes highly vulnerable). Using endogenous switching regression model (ESRM) to establish treatment effect of OGS on SHF, the results suggest positive effects of OGS on productivity, PHL and profitability of resourced endowed farmers than ordinary SHF. On vulnerability to climate change, participation in OGS have minimal effect of climate change on SHF in the study areas. To stimulate SHF participation in OGS, the study recommend improvement in market access, extension services and establishing and strengthening the existing FBOs. Finally, to help improve SHF productivity, reduce their PHL and increase their profitability, the study recommends modification of the current OGS to make it more pro- poor and also, policies that will incentivize private sector to engage SHF on OGS that are pro-poor. For OGS to become more sustainable and contribute to reducing SHF vulnerability to climate change, the study suggests inclusion of climate change support variables as part of the OGS support to farmers.


1.1   Background of the Study


There is global consensus on agricultural contribution to poverty reduction, job creation and overall economic development (Alexandratos & Bruinsma, 2012; Schaffnit- Chatterjee, 2014). The Food and Agriculture Organisations of the United Nations (FAO) (2018) identified strategic agricultural investment in Sub-Saharan Africa (SSA) as an important option that can increase incomes of smallholder farmers (SHF), reduce their poverty level and at the same time, guarantee enough food for the projected global population of 9.8 billion people by 2050. In analysing challenges and opportunities in agricultural investment in SSA, Saghir & Hoogeveen (2017) found effects of investing in the agricultural sector as eleven times effective in reducing poverty than similar investments in the other sectors of the SSA economy.

In Ghana, the agricultural sector play a leading role in the overall economic development. The sector provides jobs for about 38.3% of the population and remain the major sources of income for majority of low income earners, largely, those in the rural areas (Ghana Statistical Service (GSS), 2019). According to GLSS 7 report, about 63.3% of rural folks are engaged as skilled agricultural workers compared to 11.4% for those in the urban areas.

Several literature identified SHF constraints such as difficulty in accessing financial support; access to mechanization services; reliance on outmoded method of farming; poor extension services; poor market and storage infrastructure; high postharvest losses (PHL); limited irrigation facilities and effects of climate change as a major challenge for SHF development in Ghana (Awunyo-Victor & Al-hassan, 2014; Boateng & Nyaaba, 2014; Dittoh & Akuriba, 2018; FAO, 2017; GSS, 2014d; Intergovernmental Panel on Climate Change (IPCC), 2013; MoFA, 2017b; Villano, Asante, & Bravo-Ureta, 2019).


Smallholder farmers productivity in Ghana as is the case for most SSA countries is generally low, production is limited to home consumption and surpluses for the market (Ecker, 2018). They are classified among the poor in the country (GSS, 2019). To improve the livelihoods of SHF will require a strategy that will transform their current subsistence farming practices to approach their farming as a business.

Ghana government response to addressing SHF constraints is articulated in the Food and Agricultural Sector Development Policy I and II (FASDEP I &II) and associated first and second Medium-Term Agricultural Sector Investment Plans (METASIP I and II) (Allience for Green Revolution in Africa (AGRA), 2016; Ministry of Finance, 2018; MoFA, 2017b). Some programmes in METASIP II implemented in support of SHF include: Fertilizer and Seed Subsidy Programme, Creation of Agricultural Mechanization Centres and establishment of National Food Buffer Stock Company (Fearon & Adraki, 2015; Institute of Statistical, Social and Economic Research (ISSER), 2012; World Bank, 2012). With all these interventions, data from the Ministry of Food and Agriculture (MoFA) shows little improvement in SHF performance which reflect the stagnation of productivity of various staples in Ghana (Ministry of Food and Agriculture (MoFA), 2017a). Table 1.1 shows actuals yields and achievable yields of some selected staple crops of SHF in Ghana.


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