The impact of output price support on smallholder farmers' income: evidence from maize farmers in Ghana

Instability in smallholder farmers' income in developing countries due to unstable farm prices has been a challenge for farmers and agricultural policymakers over the years. Sustained price stabilization mechanisms are mostly lacking. In some countries, output price support has been initiated to stabilize incomes and as an incentive to enhance farmer investment and boost production. This paper investigates the impacts of output price support on smallholder farmers' income in Ghana, using a household and farm-level data from 252 beneficiaries and 268 non-beneficiaries of buffer stock operations in Ghana. We applied the Coarsened Exact Matching and Propensity Score Matching methods to balance the data among the two groups. We estimate the smallholder farmer income effect from participating in buffer stock operations by combining the matching methods in a regression framework. The results affirm that buffer stock operations increase the incomes of participating smallholder farming households by at least 12%, providing evidence that output price support via buffer stocks is a critical tool for improving incomes and alleviating poverty among farmers in Ghana. The results further indicate that age, gender, access to market, and use of extension services, as well as transport and packaging costs, drive the participation of smallholder farmers in the buffer stock operations in Ghana. The findings are relevant to local policymakers and development partners who develop tailored interventions to stabilize and increase income for smallholder maize farmers in Ghana.