Ghana’s fertilizer subsidy program (gfsp) and complementarity of agricultural intensification technologies: any role to build household food security resilience?

Abstract

There is a decline in recent times of Ghana’s agricultural sector’s contribution to national GDP. In addition, the position of the crops sub-sector slipped from being the second largest economic activity in 2018 to being the third largest economic activity in 2019. Agriculture in Ghana remains largely subsistent, contributing almost 80% of the national food consumption. These declines have risen concerns among policy makers about meeting the country’s food security needs and achieving SDGs 1 and 2. Food insecurity persists in Ghana. For instance, Ghana remains not self-sufficient in maize production. This situation is often blamed on poor yields from farmers’ fields. Decline in soil fertility has been cited in the literature as the cause of low yields. Subsequently, increased use of mineral fertilizers is being promoted in Ghana since it is considered as the alternative to improving crop yields. Climate change/variability and other shocks including increased cost of mineral fertilizer have compelled the government of Ghana to implement the Ghana’s Fertilizer Subsidy Program (GFSP). Consequently, increasing application of mineral fertilizers has been reported in the literature of between six to ten times more since 2010 than it was in the 2000s. The number of farmers using mineral fertilizers has also increased due to Fertilizer Subsidy Programs (FSPs). In the long-run, crop yield tends to increase with the application of mineral fertilizers only when integrated with that of organic materials. This calls for implementation of sustainable production systems that enhance efficiency of mineral fertilizers and soil health. Without widespread adoption of sustainable intensification practices among smallholder farmers, declining soil fertility and food insecurity will persist in SSA. This study is, therefore, aimed at addressing three identified empirical knowledge gaps in the literature regarding FSPs, farmers’ own investments in promoting intensification practices, rural development, and food (in)security. Firstly, there was the dearth of assessment that is rigorous of the impact of FSPs on sustainable intensification practices. Earlier empirical assessments on FSPs centered on their evolution and concepts, advantages and disadvantages associated with their implementation. These disadvantages finally led to their halt. Evidence exists regarding the impacts of Fertilizer Subsidy Programs (FSPs) on household welfare and input market development. However, studies in the past have not looked at the contribution of FSPs to sustainable intensification practices and, farm inputs in general, among smallholder farmers. Addressing this gap could help policy makers in designing and implementing agricultural policies and programs that address environmental sustainability, climate change-related issues and rural development. The second identified gap was the paucity of literature on the contribution of FSPs to all the four food security dimensions. Empirical evidence remains limited in explaining food security’s complex nature and its drivers to policy makers and development practitioners. The current approach does not] offer a holistic pathway in addressing food insecurity since it results from multiple drivers such as availability, access, utilization and stability of food. Evaluating what policies, socio-economic characteristics and institutional factors positively impact on these multiple dimensions of food security could help government formulate policies that could reduce food insecurity in Ghana. The third gap identified was limited attention given to the complementarity of ISFM practices in improving household food security. In addition, exit strategy has not been provided in the current literature for FSPs despite reported evidence of their unsustainability due to capture by people of influence, inefficiencies and poor targeting of program beneficiaries. Widespread adoption of ISFM practices could serve as exit strategies for FSPs, not only in Ghana but SSA as a whole. Empirical studies on the impact of ISFM practices in improving soil organic carbon has largely been limited to field experiments in Ghana. This makes it difficult to relate the impact of ISFM practices to household food security. With proper empirical evidence on the impact of complementarity of ISFM practices on households’ food security using household survey data, policies could be designed to enhance adoption of the complete package of ISFM practices at the plot level. Following the knowledge gaps identified, the specific objectives of the study were to: (i) assess the extent to which GFSP affected adoption of agricultural intensification technologies and gross farm inputs; (ii) investigate the impact of GFSP on multiple dimensions of household food security; and (iii) examine the impacts of the complementarity of Integrated Soil Fertility Management (ISFM) technologies on multiple dimensions of food security. First, two-stage least squares with instrumental variables (2SLS-IV) and endogenous switching regression (ESR) were used to study the effect of participation in Ghana’s Fertilizer Subsidy Program (GFSP) on the adoption intensity of Sustainable Intensification Practices (SIPs) and gross farm inputs. A nationally representative dataset of 4,365 maize-growing households for two survey periods (2012/13) and (2016/17) who purchased mineral fertilizers was used for the study. The study finds that participation in the GFSP increased the adoption intensity in both SIPs and gross farm inputs. The implication is that investments into climate-smart technologies and gross farm inputs by beneficiaries of GFSP is attributable to participation in the program. This finding explains the crucial role of GFSP as a pro-rural development policy beyond just the provision of mineral fertilizers to smallholder maize farmers to achieve increased productivity. This is because of the forward and backward linkages between rural agricultural input markets and farmers’ direct purchases of farm inputs. The study also found mutual aid schemes, farmer cooperatives, agricultural loans, household wealth, and connection of a farm household dwelling to the national electricity grid to positively and significantly increased adoption intensity of SIPs and gross farm inputs. This finding highlights the fact that besides government policy such as GFSP towards improving adoption of SIPs and rural development, rural infrastructure and farmer institutions also have a critical role to play. Secondly, the impact of participation in GFSP on multiple dimensions of food security was examined using propensity score matching without replacement, nearness neighbor matching, inverse probability weighting, and inverse probability weighted regression adjustment. The food availability dimension in terms of average yield of maize was 1.5 ton/Ha, still lower than the potential yield estimate of 5.5 tons/Ha by Ghana’s Ministry of Food and Agriculture. It implies that complementary adoption of technologies is key to bridging this productivity gap. Food access and stability dimensions increased in 2017 compared to 2013. However, the utilization dimension of food security declined, implying that the diversity of food intake may not necessarily be explained by increases in the access dimension of food security in terms of food and total household expenditures. The empirical results indicate that the overall average treatment effect of the GFSP was positive and statistically significant for food availability and food access. The GFSP increased maize yield/Ha between 29 to 34 percent at p < 0.01 among program beneficiaries. For food access, the GFSP increased household consumption expenditure by 37 percent at p < 0.01. The effect of GFSP on the stability dimension of food security was also positive, though weaker statistically against robustness checks. There was, however, negative effect of GFSP on food utilization. The study could not find a straight forward relationship between participation in the GFSP and household food security, as food availability may not necessarily lead to better utilization or nutrition. The less impressive performance of GFSP on utilization and stability dimensions of food security implies that maize growing households who benefited from the program are still food insecure. The positive and significant relationship between the value of agricultural equipment owned and engagement in off-farm enterprise with participation in GFSP may imply that smallholder farmers who may have 2Ha or less of farmland under cultivation but can afford the full cost of fertilizer are benefitting from the subsidy program. The study also found significant and negative correlation between increasing farm size and participation in the subsidy program. It means that farmers with farm sizes greater than 2Ha have not benefitted from the program. Finally, the study examines the impacts of the complementarity of Integrated Soil Fertility Management (ISFM) technologies on multiple dimensions of food security using the Multinomial Endogenous Switching Regression (MESR). Regarding the complementarity of adoption of ISFM technologies, the results show very low adoption of complementary technologies among maize growing households in Ghana. The empirical results from the MESR showed that all the ISFM choices positively and significantly determined all the dimensions of food security. Joint adoption of the complete ISFM package gives the highest gain in all the dimensions of food security, except the stability dimension. Joint adoption of mineral and organic fertilizers gave the highest gain for achieving household food stability. The implication is that the availability dimension of food security can be met whilst households’ food utilization can still fall below acceptable threshold. Rural development interventions have to focus on the adoption of the complete ISFM package. Otherwise, the piecemeal adoption of any one or two components will not have the desired impact. Input subsidy programs should include organic fertilizers to optimize program benefits. The implication is that policy makers and farmers should see organic and mineral fertilizers as complementarities but never as substitutes as it is currently the case in Ghana. From the multinomial logit results, the study found that household characteristics (e.g., number of years a household spent in school, land ownership, and household head engagement in off-farm work) and institutional factors (such as presence of a mutual aid scheme, access to extension visits, and distance to agriculture office) positively and significantly increased the likelihood of joint adoption of all the ISFM technologies. This finding underscores the need for a dual approach in promoting the adoption of ISFM practices among smallholder farmers by policy makers. This approach should take into account the role of government in increasing the number of extension staff and provision of the necessary infrastructure and logistics and the role of pro-farmer institutions such as farmer credit schemes and cooperatives. Future studies could quantify the potential contribution of ISFM technologies, and broadly, SIPs to the national GDP. Such an effort could add empirical evidence on the pay-offs associated with these technologies for increased adoption by smallholder farmers. Examining these and other related questions employing panel data could result in better understanding of the temporal and spatial dimensions of ISFM practices and their food security impacts and environmental sustainability.