Fertiliser subsidy effects on fertiliser use in the northern region of Ghana

Abstract

This study examines the effect of fertiliser subsidy on application rates of fertiliser among maize farmers in Northern Region. The study uses cross-sectional data from 301 households in the northern region of Ghana. The Probit and Tobit models were respectively used to analyse the determinants of participation in the subsidy programme and the effect of participation on fertiliser application rates. The results of the study show that farm size, price of the subsidised fertiliser, distance to input dealers, amount of credit borrowed and off-farm income are key determinants of farmer's participation in the subsidy programme. Participation in the subsidy programme was found to exert a positive effect on the quantity of fertiliser farmers applied on their farms. The study recommends among other things, the inclusion of cash credit schemes in the subsidy programme as smallholders still found the down payment 79% of the cost of fertiliser high. The study also suggested restructuring in the subsidy programme to allow for channelling of fertiliser through farmer-based organisations (FBOs) in order to curb exploitation by politician and elite farmers.