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Food Security

, Volume 9, Issue 2, pp 329–353 | Cite as

Moving in the right direction? The role of price subsidies in fertilizer use and maize productivity in Ghana

  • Catherine Ragasa
  • Antony Chapoto
Original Paper

Abstract

Despite major maize programs in the last two decades and costly investments in a price subsidy program in Ghana, maize productivity remains very low. Utilizing cross-sectional data on 645 maize plots in Ghana, this paper provides empirical evidence on the responsiveness of maize yield to fertilizer application, profitability of fertilizer use, and how the economics of fertilizer use have changed with the subsidy program. There was a statistically significant maize yield response to increased fertilizer application (i.e. 1-kg of nitrogen leads to a yield increase of 22–26 kg per hectare), higher than those estimated in other countries in Africa. Value-cost ratio shows that maize production with fertilizer is profitable both at market and subsidized prices in different locations and with different farming practices, even after incorporating risk into the estimation and analysis. However, despite subsidized prices and profitable fertilizer use, the actual application rate (at 44 kg/ha of nitrogen on average) is much lower than research institute’s and government recommendation and far off the computed economically “optimal” levels (at 225 kg/ha of nitrogen; where the fertilizer price intersects the value of marginal physical product derived from the yield response model). Results suggest that fertilizer prices do not seem to be the binding constraint in greater fertilizer application and productivity increases in maize; other factors appear to be major bottlenecks to greater fertilizer application and productivity increases including accessibility to modern varieties, mechanization, and hired labor. This result shows the limits to fertilizer subsidy as the focus strategy and suggests a more integrated and holistic approach to encourage greater fertilizer application, productivity and income among maize farmers in Ghana.

Keywords

Yield response Profitability Productivity Fertilizer subsidy Fertilizer intensity Ghana 

JEL classifications

Q12 Q16 Q18 C36 

Notes

Acknowledgments

The authors would like to thank Josee Randriamamonjy for the excellent research assistance and Mekamu Kedir Jemal for generating the maps. The authors are also grateful to Shashidhara Kolavalli and an anonymous reviewer for the detailed comments and suggestions on earlier versions. Thanks also go to the enumerators and supervisors in the Crops Research Institute and Savannah Agricultural Research Institute who collected the data. The authors are indebted to the farming households who shared data, information, and experiences, and the many representatives from various organizations whose active and dynamic participation in the interviews gave rich resources and insights to this paper. This paper was undertaken as a part of the Ghana Country Strategy Support Program (GSSP), which is funded by USAID, and by the CGIAR Research Program on Policies, Institutions and Markets (PIM), which is led by IFPRI and funded by CGIAR Fund Donors.

Compliance with ethical standards

Conflict of interest

The authors declare that they have no competing interests.

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Copyright information

© Springer Science+Business Media Dordrecht and International Society for Plant Pathology 2017

Authors and Affiliations

  1. 1.International Food Policy Research InstituteWashingtonUSA
  2. 2.Indaba Agricultural Policy Research Institute (IAPRI)LusakaZambia

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