Nonfarm activity and market participation by farmers in Ghana

Abstract This paper examines the relationship between participation in nonfarm activity and participation in markets by farm households in Ghana. The study used data from the Ghana Living Standards Survey Round 6 and employed the endogenous switching probit model which accounts for selection bias from observed and unobserved factors. The results reveal that infrastructural variables such as roads, means of transport, markets and banks are important determinants of nonfarm work engagement and participation in crop market. We also find a positive and significant effect of nonfarm work participation on the probability of selling crops. The conclusion is that farmers’ engagement in nonfarm activities boosts decisions to enter crop markets in Ghana. The results of the study imply that for agricultural development in Ghana and other countries with similar characteristics, agricultural policies should incorporate strategies that enhance opportunities in the nonfarm sector as that will translate to enhanced producer market participation.