Cereal producers and the structural adjustment programme (SAP) in Ghana: A welfare analysis of the first decade of SAP

Abstract

Small-scale food producers in Ghana produce about 90 per cent of the food in the country. Behaviourial patterns characteristic of these semi-commercial producers are complex, making it hard for policy makers to predict the consequences of policies on them. This study analyses the effects of the Structural Adjustment Programme on cereal producers in Ghana. A system of demand and supply equations was employed in a simulation analysis performed under three different scenarios to observe the aftermath of price increases; measure the impact of devaluation of the cedi; and gauge the effect of price increases and devaluation. The results show that cereal producers gain but consumers lose in terms of producer and consumer surplus. There is a net welfare loss as a result of the SAP.