Determinants of an extended metric of agricultural commercialization in Ghana

Abstract

For smallholder farmers in sub-Saharan Africa, increasing productivity and agricultural commercialization are mooted as one of the pillars for agricultural development. However, the measurement of agricultural commercialization has been restricted to the household crop commercialization index (HCCI) that focuses on crops neglecting livestock. This study develops an extended metric of agricultural commercialization named household crop-livestock commercialization index (HCLCI), which combines crop and livestock commercialization with the argument that it is superior to the overly used HCCI. Fractional regression is used to estimate the determinants of the extended metric using secondary and primary data from Ghana. Results indicate that agricultural commercialization is low when examined with the HCCI and the HCLCI. However, the HCLCI (at 26.44 % and 29.76 %, respectively, for the GLSS7 and primary data) is much lower relative to the HCCI (at 35.20 % and 38.24, respectively) but higher than the livestock commercialization index (10.93 % and 8.21 %, respectively). The underlying simultaneous factors that boost agricultural commercialization are infrastructure variables (i.e., road, market, transport, and bank), institutional variable (i.e., agricultural cooperatives) and scale of production (i.e., land endowment and crop production diversity). These findings imply that Ghana needs to invest in infrastructure and farmer institutional development to boost agricultural commercialization.