Abstract:
Understanding how and the extent to which contract farming arrangements impact
agricultural productivity is important to ensuring that policies are designed to maxi mize the likelihood of success. Using cross-sectional data from 516 soybean farmers in
Northern Ghana, we provide empirical evidence that contract farming increases soy bean productivity and technical efciency in Northern Ghana. We use propensity score
matching to reduce bias from observables, and then estimate a stochastic production
frontier model that addresses selection bias arising from unobservable variables. We
find that the technical efficiency levels of contract farmers are 77 percent compared
with 69 percent for non-contract farmers. We also find that access to credit, extension contact, and farmer group membership are key determinants of participating in
contract farming.