Underinvestment in agricultural inputs (such as fertilizer or hybrid seeds), cultivation area, and labor is thought to drive low crop yields in many countries in Africa and other developing countries. But more research is needed to identify the primary barriers farmers face in investing more in their plots. Researchers are evaluating the impacts of access to rainfall insurance, improved input supply, and agricultural extension services—alone and in combination—on farmers’ investments, crop yields, and profitability in northern Ghana.
Underinvestment in agricultural inputs (such as fertilizer or hybrid seeds), cultivation area, and labor is thought to drive low crop yields in many countries in Africa and other developing countries. Several factors may help explain why farmers fail to invest in potentially profitable inputs. If they invest and their crops still fail due to too little rain, they risk having even less money than if they had not invested at all. Farmers may also lack the necessary funds or opportunities to purchase inputs locally. Or, farmers may not know what inputs can help their crops or when and how to apply them. More research is needed to identify the primary barriers to farmers’ investments and what investments can lead to higher yields and profits.
In Ghana in 2013, agriculture accounted for 23 percent of GDP and employed 45 percent of the workforce. Research conducted by local institutions in northern Ghana in 2010 found that the soil is low in nutrients and that smallholders achieve 30 percent of potential crop yields. Farmers in this evaluation typically own less than ten acres of land, cultivate maize and groundnut, may miss meals during lean seasons, maintain very limited savings, and face the risk of crop loss as a result of drought.
Results from a previous randomized evaluation suggest that the risk of crop failure deters smallholders from making investments in their farms, which contributes to low yields and profits. When offered rainfall indexed insurance, more than two-thirds of farmers purchased it and farmers cultivated more acres, used more inputs that boosted yields, and spent more time working on their farms. This study builds on the previous evaluation by combining offers of insurance with two additional interventions, agricultural extension services and local marketing of inputs, to continue to explore farmers’ barriers to investing in their plots and investigate whether a various combinations of interventions can increase farmers’ investments, yields, and profits.
In partnership with the Savannah Agricultural Research Institute (SARI), Ghana’s Ministry of Food and Agriculture (MoFA), the International Food Policy Research Institute (IFPRI), and the Ghana Agricultural Insurance Pool (GAIP), researchers are evaluating the impacts of access to rainfall insurance, improved input supply, and agricultural extension services on farmers’ investments, yields, and profits. Researchers randomly assigned 162 communities in Northern Region, Ghana to one of four groups.
Insurance Only: Farmers in 51 communities were offered rainfall indexed insurance, which makes payouts based on the amount of rainfall communities receive according to satellite data, at randomly varying prices that range from free to the commercial price. The policies were designed by GAIP with input from Innovations for Poverty Action and then marketed by Community Based Marketers (CBMs). To test the performance of marketers from with different backgrounds, CBMs were randomly chosen to either be a community leader, a women’s group organizer, or an individual chosen on merit from the community.
Insurance + Extension Group: In addition to an offer of rainfall indexed insurance, farmers in 51 communities received one-on-one extension services from Community Extension Agents (CEAs), paid, local workers that supplement traditional agricultural services from the Ministry of Agriculture. CEAs played specific videos and audio messages for the farmers that were relevant to the current activities that farmers reported undertaking. The video and audio clips provided recommended agricultural practices for the cultivation of four crops: maize, soya, cowpea, and groundnuts.
Insurance + Inputs Marketing Group: In addition to an offer of rainfall indexed insurance, 30 communities were visited at strategic points in the growing season by CBMs selling inputs such as commercial inorganic and organic fertilizers and improved maize seeds. The purchases will be delivered ahead of planting time to farmers, who did not pay for transport costs.
Insurance + Extension + Inputs Marketing Group: In addition to an offer of rainfall indexed insurance, farmers in 30 communities received both extension services and inputs marketing.
To measure input use and yields, researchers collected GPS data, soil samples, and crop cuttings to determine yields from farmers’ plots. Researchers additionally asked farmers about their labor during the growing season on a biweekly basis and surveyed households three times to learn about household finances, as well as investment, yields, and profitability for each plot.
Results forthcoming. Additional updates provided by implementing partner Innovations for Poverty Action, here.
 Fosu, Mathias. (2011). AGRA Soil Health Project 2010 Annual Report.