Book Description

The fertilizer subsidy, reintroduced in Ghana in 2008, seems to have led to increased fertilizer use and use intensity among farmers, but there is limited empirical evidence as to whether this increased fertilizer use has reached the optimal intensity level and has contributed to increased productivity. Using cross-sectional data on 630 maize farmers and 645 maize plots in Ghana, this paper provides empirical evidence on the responsiveness of maize yield to fertilizer use and use intensity and the economics of fertilizer use with or without subsidy. Similar to previous studies in Ghana and Africa south of the Sahara, the results show that there is a statistically significant maize yield response (that is, 1 kilogram of nitrogen leads to a yield increase of 22 kilograms per hectare). Despite subsidized prices, the actual application rate for fertilizer adopters (at 44 kilograms of nitrogen per hectare on average) is far below the optimal level (at 225 kilograms of nitrogen per hectare, where the fertilizer price intersects the value of marginal physical product derived from the yield response model). This result suggests limits to fertilizer subsidy as a strategy to increase fertilizer application, productivity, and income among maize farmers in Ghana. Results suggest that fertilizer prices seem not to be the binding constraint in greater fertilizer application and productivity increases in maize. Other factors, including accessibility to modern seed varieties, mechanization, and hired labor, appear to be major obstacles to greater fertilizer application and productivity increases, and these factors would need to be improved to help increase intensity of fertilizer use in both the northern and southern parts of Ghana. Aside from fertilizer, other factors found to positively contribute to higher yield included modern seed variety use, animal manure, herbicide, and the total number of family labor hours spent working in the maize plot. Plots planted with modern varieties have about a 570-kilogram higher yield per hectare than those planted with traditional varieties, while plots fertilized with animal manure have about a 400-kilogram higher yield and plots with herbicide have about a 170-kilogram higher yield than plots without. Significantly higher yields are obtained when fertilizer application is complemented by these inputs. There is no evidence that certified seeds have a significantly higher yield than recycled or uncertified seeds.