Russian Journal of Agricultural and Socio-Economic Sciences (Apr 2022)
SMALLHOLDER MAIZE FARMERS MARKET PARTICIPATION ON A COMMODITY EXCHANGE: THE CASE OF GHANA COMMODITY EXCHANGE
Abstract
This article investigates smallholder farmers' market participation decisions on a commodity exchange and attempts to identify the most critical elements that impact smallholder farmers' decision to engage in the output market and trade their goods on the Ghana Commodity Exchange. The basic objective of this study was to look at the phenomena of smallholder farmers participating in a commodities exchange in Ghana from the standpoint of market participation. Heckman's two-step approach was used to access factors that influence smallholder farmers' decision to participate in GCX trading. The study relied on primary data gathered from 180 smallholder farmers spread across three (3) districts. The main findings of this study reveal that farmers participate at a somewhat modest level, with around 44 percent of farmers participating. Surprisingly, they participate with roughly 72 percent of their output. It was found that age, gender, farm size, land tenure, access to extension service and credit influences smallholder farmers' decision to participate in commodity exchange trading, and quantity of harvested maize, household size, and price risk exposure on Ghana Commodity Exchange (GCX) influences their level of participation. These findings also imply that if farm size, proportion of owned farmland, access to extension, access to financing, and amount of harvested maize are raised on the one hand, and price risk on GCX is reduced on the other, smallholder farmers would engage in the output market more and more. Finally, maize farmers should be educated on the need of making themselves available to extension and consulting services in order to increase their understanding of market platforms and make informed decisions to secure long-term agricultural productivity. Policymakers should guarantee farmers have access to agricultural loans as well as improved access to own acreage in order to boost productivity and marketable surplus. To encourage farmers to participate in exchange trade, price risk exposures on the exchange should be prioritized and stabilized/reduced.
