Rural non-farm income diversification: implications on smallholder farmers' welfare and agricultural technology adoption in Ghana

Abstract

This study explored the potential impact of rural non-farm income diversification on households' welfare and adoption of Zai-technology (a proxy for agricultural technology adoption) using primary data collected from agricultural households in the Upper East region of Ghana. We used Propensity Score Matching (PSM) and Inverse-Probability-weighted Regression Adjustment (IPWRA) techniques to estimate welfare and Zai-technology impacts of non-farm income diversification. After controlling for differences in covariates, the results show that non-farm income diversification increases the likelihood of Zai-technology adoption and contributes to significant household welfare gains. We therefore suggest that the activities of agricultural extension services and farmer-based organizations (FBOs) be enhanced as they facilitate the diversification of non-farm incomes, thereby increasing investment in productivity-enhancing technologies (Zai) and household welfare.

Keywords

• Ghana
• Non-farm diversification
• Propensity score matching
• Inverse-probability weighted regression adjustment
• Zai-technology
• Agricultural economics