Analysis of the Effects of Fertilizer Subsidies on Crop Diversification and Income and Their Implications for Diet Quality in the Upper West Region of Ghana

Abstract

Despite the contribution of the Ghana’s Fertilizer Subsidy Program (GFSP) to increased food production, diets, especially of rural households, are still poor: lacking diversity and essential nutrients. Pro-staple strategies to tackling food insecurity, as in the case of the maize-biased GFSP, have been criticized to have potentials of reducing diversification in production, a situation which could impact negatively on nutritional diversity of rural households who are mostly subsistence-oriented. This assertion is, however, not conclusive because the potential gains in income and purchasing power from the subsidy program are expected to boost diet quality via market purchases. The relative manifestation of these two seemingly opposing views is not empirically established in Ghana and many Sub-Sahara African (SSA) countries. Using primary data from 247 randomly selected farming households in the Upper West region of Ghana, this study contributes to the discussion by exploring the pathway effects of Ghana’s FSP on diet quality. Specifically, the study first compared the structure of food production and consumption between participants and non-participants of the fertilizer subsidy program (GFSP). Secondly, it examined the effects of the GFSP on crop diversification and income, and finally, assessed their subsequent relative implications for diet quality, as indicated by Food Consumption Score (FCS). Descriptive analysis and a three-step econometric approach were used to achieve the stated objectives. The first two stages of the econometric procedure involved the application of a two-step endogenous treatment regression model to determine the effects of the GFSP and other factors on levels of crop diversification and income. The final stage used an Ordinary Least Squares (OLS) regression model to assess the individual contributions of crop diversity and income achieved from the previous stage on diet quality. The results show that the GFSP increased farm income significantly, but had a negative effect on crop diversification. However, in terms of quality of food consumption, the income gains observed did not appear to make up for the loss in production diversity. Production diversification was a stronger contributor to diet quality than farm income. Other factors like distance to market, female involvement in household agricultural decisions and non-farm income had significant effects on diet quality. These findings call for an effective expansion of the subsidy program to support a wider range of crops for both subsistence and income. The study also recommends an upgrade of market and physical infrastructure, and boosting of women’s productive and income control capacity to leverage the GFSP properly for quality diets. Ensuring market integration and support to general livelihood diversification are also recommended.