1. Godwin Debrah Michigan State University 3/24/15
Is farm size inversely related to Productivity in Ghana? Placing tests of the “IR” hypothesis in the broader context of development policy challenges in Africa
Godwin Debrah
Michigan State University
3/24/15

2. Introduction and Motivation
There has been a renewed interest in the IR because of
Rising doubts about small-holder led Agricultural growth in African (Collier and Dercon, 2009)
Recent trends in land acquisition which is affecting farm structure in Africa (Jayne et al, 2014)

3. Introduction and Motivation continued
Despites these concerns, little is known about the relationship between farm size and productivity among medium and large scale farmers
Medium scale farmers ( 5 to 50 hectares)
Large scale farmers (above 50 hectares)
Previous policy prescriptions relied on data on small-holder farmers

4. Recent studies
Measurement Error- Carletto et al (2011), Holden and Fisher (2013)
Omitted Variables bias- Chen et al (2011)
Inverse relationship between scale and household labor use- Larson et al (2012)
Market imperfections- Ali and Deininger (2014)

5. Why Ghana? One of the focus countries in Jayne et al (2014)
Emerging trend of land acquisition and farm structure
Remaining arable land
Employment effects- short and medium term
Little or no work has been done on IR in Ghana

6. More intervention in Ghana

7. Data and Methods Data on 498 farmers in Southern Ghana
From four districts
Bibiani Anhwiaso- Western region
Offinso north Ashanti region
Afram Plains south- Eastern region
Nkwanta North – Volta region

8. Data continued
Table of data points by district

9. Methods 𝑦 𝑖 =𝛼+𝛽𝑙𝑛 𝐿 𝑖 + 𝑋 ′ 𝛾+ 𝑖=1 3 𝛿 𝑖 + 𝜀 𝑖
𝑦 𝑖 =𝛼+𝛽𝑙𝑛 𝐿 𝑖 + 𝑋 ′ 𝛾+ 𝑖=1 3 𝛿 𝑖 + 𝜀 𝑖
𝑦 𝑖 is the measure of productivity
𝐿 𝑖 is Area planted in acres
𝑋 ′ is a vector of covariates
𝑖=1 3 𝛿 𝑖 district dummies
𝜀 𝑖 is the error term

10. Methods continued
Measures of productivity (includes valued family, communal labor, and fixed costs)
Net value of production per acre planted
Cost per metric ton of maize produced
Ratio of net value of production to household members time spent on the farm
Total factor productivity (TFP)

11. Descriptive results

12. Regression results

13. Regression results contd.

14. Regression Results contd

15. Some Graphs Net value of production on Area planted in Acres
Net value of production on Landholdings in Acres
Net value of production on Area planted in Acres

16. More graphs Cost of maize production on Landholdings in Acres
Cost of maize production on Area planted in Acres

17. More graphs Family labor productivity on Area planted in Acres
Family labor productivity on Landholdings in Acres
Family labor productivity on Area planted in Acres

18. More graphs Total factor productivity on landholding in Acres
Total factor productivity on Area planted in acres

19. Conclusions
The relationship between farm size and productivity to some extent depends on the measure of productivity
Net value of production shows no relationship after labor demand is controlled for
Non-smallholders are efficient with cost of producing a metric ton of maize
Total factor productivity upholds the IR (needs panel analysis?)

20. Conclusions
Labor market imperfections play a significant role in the observed relationship between farm size and productivity
However
Findings on the relationship between production efficiency and farm size while relevant should not be the decisive factor in guiding agricultural development and land policies in Africa since there are other considerations; employment effects, nonfarm growth

21. Appendix Family labor-land ratio against landholdings
Family labor-land ratio against area planted

22. Appendix Capital-land ratio against landholdings
Capital-land ratio against area planted

23. Appendix Capital-family labor ratio against area planted
against landholdings
Capital-family labor ratio against area planted