Researchers are testing whether access to improved-yield agricultural inputs and agricultural extension advice—when provided individually or in combination—leads to more intensive land cultivation and increased earnings among farmers in northern Ghana who receive access to rainfall insurance. The evaluation of the program, Disseminating Innovative Resources and Technologies to Smallholders (DIRTS), is being conducted in partnership with the Ghana Agricultural Insurance Pool, Savanna Agricultural Research Institute, and the Ghanaian Ministry of Food and Agriculture.

Policy Issue 

In Ghana, as in other parts of Sub-Saharan Africa and across the developing world, investment in agricultural inputs such as fertilizer, high-yield seeds, and farm equipment is low among smallholder farmers. One potential reason farmers may underinvest is that they face uncertain rainfall. This may provide a disincentive to invest – for example, in the case of a drought, the greater a farmer’s investment the greater their losses. Another potential reason is that these inputs may not be widely available in local markets and farmers may not have the cash on hand to purchase them just prior to planting season. Farmers may also lack information on the benefits of these inputs and how to use them.

There are many potential solutions to these three barriers. Just as in other risky enterprises, farmers may invest more if they have access to insurance that protects them from catastrophic losses, in this case from abnormal weather events. By coupling free delivery with the option to buy fertilizer and other inputs just after harvest when they have cash on hand, farmers may find it easier to make these investments. Finally, agricultural extension could potentially help farmers learn about the benefits of these inputs and use them most effectively, particularly for inputs like improved seeds which have more complicated planting procedures. In the past, these interventions have been examined individually, however their effects when provided together are not well understood. The researchers wish to better understand how extension and improved input provision— in combination or alone—may augment the impact of rainfall insurance on farmers’ yields and profits.

Context of the Evaluation 

In Ghana, agriculture constitutes 23 percent of economic output and 42 percent of total employment, yet farmers in northern Ghana achieve just 30 percent of potential crop yields.1 The farmers participating in this study face chronically low harvests and cultivate primarily maize. On test plots of land, the partner organization Savanna Agricultural Research Institute found that farmers could likely earn a net profit of US$127 per acre using inorganic fertilizer alone; however, when using inorganic fertilizer as well as organic fertilizer as a top dressing, farmers could likely earn a return of US$190 per acre. A past pilot evaluation in northern Ghana showed a 37-93 percent take-up rate of rainfall insurance depending on the relative terms and price, suggesting that there is a high level of demand for the product. Furthermore, in the same evaluation, researchers found that farmers with insurance increased fertilizer use by 25 percent, cultivated area by eight percent and labor use by 13 percent.

Details of the Intervention 

Through a randomized evaluation of 3,240 households in 162 farming communities in northern Ghana, researchers are testing the impact of agricultural extension and improved input delivery on farm output among farmers who have access to agricultural insurance. Researchers are implementing the evaluation of Disseminating Innovative Resources and Technologies to Smallholders (DIRTS) in partnership with the Ghana Agricultural Insurance Pool, Savanna Agricultural Research Institute, the Ghanaian Ministry of Food and Agriculture, and Innovations for Poverty Action.

The rainfall index insurance and agro-inputs are sold at market prices to all interested farmers in the selected communities, whereas extension services are provided to ten randomly selected farmers in each of the communities in the extension arm. Specifically, for the first year of the intervention, the households are randomly assigned to four groups:

(1) Extension Advice: In 52 communities, farmers receive interactive, individual-level trainings on farming best practices in addition to access to insurance. Trainers are community-based and compensated for each farmer interaction. Twenty households per community are randomly selected to be surveyed as part of the evaluation. These 20 households are randomly assigned to four sub-treatment groups of five households each. These four groups are free insurance, free insurance plus extension, extension only, and a comparison group.

(2) Input Marketing and Delivery: In addition to access to the insurance product, farmers in these 31 communities receive the opportunity to buy commercial inorganic fertilizer, certified seeds and other agro-chemicals, and equipment at market price to be delivered before or right at the start of planting time. During the first year of the study, farmers receive this option at four points in time, including in harvesting time when they had cash on hand. Twenty randomly selected households per community are surveyed as part of the evaluation. Of these 20 households, ten households are randomly selected to receive the grant of free insurance and ten receive insurance. Both groups get access to inputs.

(3) Combined Intervention: In addition to access to the insurance product, farmers in 29 communities receive access to high-yield inputs with delivery as well as extension advice. Twenty households per community are randomly selected to be surveyed as part of the evaluation. These 20 households are randomly assigned to four sub-treatment groups. These four groups, composed of five households each, are: free insurance plus access to inputs, free insurance plus extension plus access to inputs, extension plus access to inputs, and access to inputs only.

(4) Insurance Only: In 50 communities, farmers just receive access to rainfall insurance. Farmers in these communities are given the opportunity to buy insurance at market price. Twenty households per community are randomly selected to be surveyed as a part of the evaluation. Of these 20 households, ten households are randomly selected to receive a grant of free insurance and ten serve as a comparison.

Sources

[1] Fosu, Mathias. (2011). AGRA Soil Health Project 2010 Annual Report. 

 

 

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